While I think all of this apocalyptic talk is reminiscent of those who think Obama’s rise signals the End Days, I think a revolution in the US would most closely resemble the original American Revolution rather than Paris ’68 (or Newark, NJ of the same year for that matter). Yes, there is anger and frustration, but there is not the destructive nihilism.
Europe this year is going to resemble Paris ’68 because that is, unfortunately, all post-WWII Europe is good for: protesting any change to their lifestyle status quo. Look at the people in Spain, Greece, and Portugal already protesting austerity measures. Really – who the deuce do they think is going to pay for the big pensions, subsidized housing, generous healthcare etc? Are they never going to understand that unlimited immigration looks good, but that those immigrants are equally eligible for the same welfare state benefits? Is there no work ethic or common-sense left over there?
John Robb’s “analysis” is not only a wee bit premature, but it seems to suggest that the delegitimization of the nation-state is something that happens over a summer. That’s just silly.
And I know a construction magnate who squirreled away $1.5 million in gold and silver in his basement. A very financially astute man who nonetheless was convinced there’d be an apocalypse that never came.
And who can be so downcast on a Sunday morning? Go listen to some hymns!

As I’ve pointed out before, national debts are just legal fictions, as no police force will back up the debt-collectors like it will with personal debts. Therefore, I think all this stuff about the death of the nation state is nonsense, and what is much more likely is a renewed nationalism, probably with fascist elements. If Greece takes Germany with it, do you really imagine that Germany is going to go along with that?
When the crash first happened, the approach should have been made on the basis that any treatment of bankers short of the firing squad was excessively lenient. The banks should have been made to dance to governments’ tunes, not vice versa. I still think that is what will happen, just much more violently than it could have been.

It isn’t necessarily true that major social upheaval must be accompanied by violence, or at least not very much. For example, the “Quiet Revolution” in Québec in the 1960′s caused massive social upheaval, the end of church-state collusion and plummeting church attendance and influence, the introduction of a welfare state, new emphasis on the sciences in the province’s higher education institutions, and shifted Québécois nationalism from being a predominantly right-wing movement to a mostly left-wing one. True, hardcore elements did form the FLQ terrorist organization, but they were never terribly effective and were eventually stamped out by the government of Canada during the October Crisis. Perhaps this form of revolution is a “best-case scenario” that would be worth further study.

seriously Rod this Chicken Little shtick is getting old. give it a rest. how about if I ask nicely? pretty please?

Although the premise that we’re already in a global depression holds water, the ‘revolution’ predicted is far less likely than it was in the late 60s when the youth were disaffected to be drafted into military service for a war that was never declared in a land no one had ever heard of prior in support of God knows what…to prevent to ‘domino theory’ of communism. (Yesterday’s deadly Chicken Little cyanide capsule). Lest you forget how the draft & Vietnam war created a counterculture.
Today, by contrast, the young are far less disaffected in traditional terms than the middle aged (white) & older Americans who cannot grasp the warp speed of change in their time. The revolution that this is spawning is a multi-racial ethnic secular USA that has little use for institutionalized intolerance integral to most ‘organized’ religion & ‘conservative’ politics. A future that is naturally conscious of the environment rather than claiming dominance over nature. The government ‘entitlements’ that are a fiscal time bomb ….i.e. Medicare, health care, Social Security…. will be paid for in a time of declining citizen child-bearing numbers by your generation, Rod, by creating a path to citizenship for the millions of largely young (mostly) Mexicans living here currently illegally. While Europe has no such backup plan for the next string of young tax payers in their prime working years.
Now put down those books, go out for a walk, play with the family & thank Rawlins for clearing all this up for you.

The consequences, whatever they happen to be — and I for one do not discount the possibility of violent upheaval, having lived through and personally witnessed one of the riots that the 60s made famous — are only what we deserve. If it gets violent, that is a direct consequence of living in an open, free society. We can blame those who direct their violence at undeserving targets, no doubt from me on that, but we cannot prevent violence.
Too often, simple and short concepts get lost in the mix. Please forgive the shouting:
WE CANNOT PREVENT VIOLENCE.
We can be prepared for it. We can mitigate its occurrence or effects. We can persuade or convince its perpetrators to take it elsewhere (making it someone else’s problem). But we cannot prevent it.

Over the last 20 years, I’ve watched some interesting trends develop that are not entirely irrelevant to this kind of discussion.
In 1992 I bought a Colt AR-15 rifle as a utility/coyote/plinker. Colt was then the only company that manufactured the AR-15. I only used it openly in an extremely rural, gun-friendly area. And yet farmers who drove past in their pickup trucks more often than not looked alarmed when they saw me carrying that rifle. I shortly thereafter traded it for a double-barrel shotgun.
Today, variations of the AR-15 are considered standard for coyote control rifles– a market segment which is only a tiny sliver of all the ARs being sold. I cannot begin to tell you how many different companies are marketing AR-styled rifles. Most are being bought up by civilians for home defense, many of those people being “tactical” buffs who make a hobby out of military style combat target shooting (or planning for the worst).
Before the Clinton gun ban, a basic AR cost around $800. After the ban, a pre-ban rifle jumped to around $1,500. Today you can buy a higher-end, fully-accessorized AR for around $1,500. You can get into a basic AR like the one I got in 1994– $800. In 1994 an entry-level AR was roughly twice the price of a nice blued-and-walnut hunting rifle. Today that AR is roughly equal to the price of the traditional sporter.
This is an indication of how ubiquitous ARs have become. When you consider inflation, they’ve decreased dramatically in price. Even Nancy Pelosi recognized that this genie isn’t going to go back into the bottle any time soon– and it was bad politics to even suggest it.
So what we currently have is heavily armed criminal gangs, heavily armed police, heavily armed citizens and heavily armed private defense contractors (who are usually more highly paid and better equipped than many of our enlisted military in the field).
Robert A. Heinlein once observed: “An armed society is a polite society.” We’d all do well to start polishing our manners.

I get the feeling that the people who warn most loudly about collapse and violence are looking forward to it?
Think of the libertarians who believe that *they* are the producers and everyone else is mooching off of them. In the ideal libertarian world, they are convinced they would be the ones to thrive.
Similarly, the economic collapse and violence types fondle their guns, “survival seeds” and generators. They one-up each other with dire predictions and tales of feats of familial autarky.
After all, they’ve spent an awful lot of money for there *not* to be a global collapse.

Rawlins, I thank you for the excellent advice and will shortly go play with my kids in the garden.
But you didn’t clear up Europe 1968. Maybe tomorrow?

Period after the first sentence, not a question mark.

Rod, by creating a path to citizenship for the millions of largely young (mostly) Mexicans living here currently illegally. While Europe has no such backup plan for the next string of young tax payers in their prime working years.
Why would young Mexicans/Latinos feel compelled to pay taxes to a government that according to Robb will become weaker and less able to enforce collection of these levys? I think Rawlins is projecting a little too much.

Obviously it would help if John Robb had some idea of what a depression actually is. A depression requires that money literally stops moving in the economy. Anything other than that is a recession. Recessions are not fun for those who have the misfortune to be on the wrong side of them, but they are not depressions. If you actually look at what is going on now to the Depression of the 1930s, you will find very little to compare it to on the broader scale. And few riots in Greece, where political riots are a sport, do not count.
and a captcha that reads untwist politicians is too appropriate for words.

I came of age in the 60′s, a decade of assassinations, race riots, the political corruption of the Nixon administration, hippies and the drug culture, an endless war fomenting violent protests at home, and threats of nuclear annihilation.
This gave way to the economic crisis of the 70′s and the Carter years with it’s staggering interest rates and rampant inflation.
Maybe the apocalypse is here at last but I think it still has a long way to go to even match those two decades. So far it looks like nothing but a momentary blip on the radar to me.

Sotto Voce: Robert A. Heinlein once observed: “An armed society is a polite society.” We’d all do well to start polishing our manners.
The thing people miss when this Heinlein usage is quoted out of context is that he was specifically commenting on frontier or fringe situations, not established, mainstream societies. He noted (and noticed) that when the established structures of “polite” society are left behind, something rises to the surface to fill that vacuum in. Where the external threats make everyone being armed both rational and necessary, his quote makes the most sense. When the internal threats give rise to a controlling class, then being “polite” is something the unarmed do to make up for the fact that they are unarmed and will never become armed.

I’m inclined to agree with Rombald on this. Things get bad enough, banks get nationalized, and international financial elites with no allegiance to any one country get taken down, not necessarily in nice ways. I also agree with Franklin, alas. You can prepare for violence, but not prevent it.
Sotto Voce: Before the Clinton gun ban….
I take it you mean the Federal Assault Weapons Ban, which did not ban “guns” in general (as you imply), which still allowed the sale of banned rifles manufactured before 1994 (see the discussion here, for example), which allowed the same banned weapons to be sold with relatively minor modifications (as both supporters and critics acknowledged), and which ended in 2004 and has not been renewed?
Look, I’m a gun owner, I know people who own assalt rifles (and have target-practiced with them), and I support the Second Amendment. Nevertheless, this is the type of playing-loose-with-the-facts, somewhat hysterical rhetoric from NRA and co. that alienates people (among them gun owners) and makes proponents look like potential extremists.
Robert A. Heinlein once observed: “An armed society is a polite society.”
Yes, and he also advocated anarcho-capitalism and thought that those who didn’t serve in the military didn’t deserve the right to vote. Heinlein was one of the greats of SF, but his politics were appalling.
CAPTCHA: nucleic demilitarized

Several points:
1) This is a great depression for only half the nation – the lower middle class and down (real unemployment is around 20%). The upper third is doing fine. For now.
2) Governments of modern economies are in a serious bind. Welfare state must be pulled back and debts paid back, along with the lack of needed children to work and support said welfare state. The last 50 years was a time of growth. The next 50 will be a time of contraction.
3) Fiat currencies are done for. Gold is coming back (the dollar has lost nearly 3/4 of it’s value against gold) and thus governments are going to find they lack economic controls except via regulation, which hurts economic growth. Thanks, boomers.
4) The public is curiously unable to think and act for themselves anymore. We have hit “peak government trust” in our generation. Once the bottom falls out of our economy due to debt deflation, expensive energy, and the collapse of the vaunted welfare state in Europe and America, people will finally realize that nobody is coming to help them. They will freak out. Think: who can fix their own car, bike, or even computer circa 2010? Who can garden and hunt? Who can defend themselves effectively? Who even knows their own neighbors (or even their own family!) anymore, or if so shares enough values with them to work together under difficult times?
The last 50 years of peace and prosperity in the US has been an exception, yet folk today see it as the rule. It will be an interesting time ahead. And it’s rather fun to watch how deeply people are still in denial.

You should also read John Robb on the significance of synthetic biology.
http://globalguerrillas.typepad.com/globalguerrillas/2010/05/journal-synthbio-platforms.html
It is silly for those of you into localized, small communities to reject synthetic biology and other advanced technologies out of hand.

Yes, and he also advocated anarcho-capitalism and thought that those who didn’t serve in the military didn’t deserve the right to vote.
Well, a superficial (his fiction only) reading of Heinlein could lead to the former conclusion, but only seeing the movie version of “Starship Troopers” — which was only loosely based on Heinlein’s novel of the same title — would permit the latter conclusion.
Heinlein was one of the greats of SF, but his politics were appalling.
From your post, Turmarion, you don’t actually know what his politics were. It is an easy thing to do — believe you know the author from his fiction — but a very difficult thing to back away from even when the author himself contradicts the conclusions drawn. Years after Tolkien said, as explicitly as it is possible to say, that The Lord of the Rings was not allegory, scholars and critics continue to discuss and argue “his allegories”. Seems a bit disrespectful, to me.
Heinlein’s non-fiction indications of his politics is available to be read in the anthology “Expanded Universe”. It is also rather unlikely that an anarcho-capitalist would be invited to give the James V. Forrestal Graduation Lecture at Annapolis, which he did in 1973.

Meh.
http://www.thomaspmbarnett.com/globlogization/2010/5/21/more-signs-of-a-reviving-global-economy.html#references
Steve

Still, for all the interest I have in apocalyptica, it’s hard for me to imagine what a real revolution would look like in the US. You?
I can tell you what part of it will look like – government checks stop flowing to a lot of people – including police and firefighters. Large enough segments of the urban population begin to loot and burn their surroundings.
Armed citizens form a different sort of Neighborhood Watch group and curfews are enacted.
Who can garden and hunt? Who can defend themselves effectively? Who even knows their own neighbors (or even their own family!) anymore, or if so shares enough values with them to work together under difficult times?
I’m hoping, people in small rural communities, one of which I moved to about five years ago for just these reasons.
But, hey, maybe everything will work out okay.
I think I’ll go work on my target practice now…

Someone should take these comments from Rod’s apocalyptiposts and read them back thirty years from now.
I’m sure there were plenty of people in the ’70s who saw oil embargoes, domestic unrest far worse than a bunch of old people with signs and the threat of the USSR and stocked up on all sorts of survivalist cr*p that they never used.
You’re not being prepared, you’re being sold products based on fear.

Franklin: I am of course aware that an author is separate from his fiction and that individuals, authors or not, may have complicated views which may change over time. Also, I admittedly, haven’t read “Expanded Universe”.
However, I have read Starship Troopers, which I didn’t much care for, and which does portray a society in which only discharged veterans of Federal Service have the vote, on the grounds that only they understand sacrifice and pulling their own societal weight. Whether this represents what Heinlein actually believed optimal could be debated, but it’s in there.
Also, there is a very strong anti-authoritarian streak in Heinlein’s writing, and he has been described by the respected Encyclopedia or Science Fiction as tending towards an anarcho-capitalist viewpoint. Whether one considers such a description accurate or not, almost everyone would consider Heinlein’s views to be strongly libertarian (a philosophical perspective I tend strongly to disagree with), and in this essay David Brin describes him as “Ayn Rand with a soul”, which I think is fair. Certainly his protagonists have a John Galt-ish quality of being super-competent in everything and tending to have contempt for those who aren’t.
Anyway, I have respect for Heinlein the writer, and I am willing to consider that reading his non-fiction opinions on politics (when I have time to do that) may prove me to be grossly misreading him. Nevertheless, to the extent that I understand his politics, I am in fact appalled by them.

Gold is the corpse of value. People dig it out of the ground, refine it, then put it back into vaults in the ground!

Charles C. – you are precisely correct that many folks do not understand that a *depression* is not a recession (and certainly not just some funky feeling of dread).
But then what do I know, when I am told that *Armageddon* is certain (if not already upon us) – because of a rather moderate, centrist reform of health care!

rj Someone should take these comments from Rod’s apocalyptiposts and read them back thirty years from now.
It will be interesting. Some of my ancestors fled Germany in the 30′s. Those who stayed died, along with many other millions. I guess survivors of history is full of apocalyptics…nobody remembers the foolish dead, and all the foolish folk today don’t read history and are slated for the next round.
Also, look at the CC archives for those who were warning of economic crisis back when everyone was giddy about the future. Many made a lot of money off the stupidity of y’all who wandered around saying, “Crisis? What crisis?” And there is a lot more money left on the table to take from all the folk stay so trusting and foolish.
I’m sure there were plenty of people in the ’70s who saw oil embargoes, domestic unrest far worse than a bunch of old people with signs and the threat of the USSR and stocked up on all sorts of survivalist cr*p that they never used.
Actually, the domestic mess we see today is merely a postponement of what happened in the ’70′s:
a) the US went from the world’s largest creditor and exporter to the world’s largest importer and debtor
b) family decline due to the social experiments of the ’60′s – neighborhoods splintered, crime exploded, divorce the norm…today, 40% of children are born out of wedlock
c) US moved from replacing our population with our own children in the 1950′s to native population decline and cultural ennui starting in the 70′s
d) peak US oil in the 70′s, down from the world’s largest producer of oil back then to the third today and falling
So the doomers back then were right to be worried; the only difference was we didn’t have any debt back then and had a lot of credit, both financial and family credit. Which we quickly used up to build our record debt and cultural nightmare we have today. What we face today is merely a postponement of the mess then.
You’re not being prepared, you’re being sold products based on fear.
I’m kind of amused how Americans think that this narrow window of time they have lived in is somehow the historical “norm”. In truth, the peaceful, prosperous West is a tiny slice of humanity. Disorder, hunger, political chaos, and war are the true norm for the bulk of the world. The only thing that kept the West so clean for so long was our shared Christian culture and a strict family structure and work ethic, and that’s passing too.
Another way to look at at: a hundred years ago, one would have been called irresponsible not to have several months of food stored away and most had their own water, garden, and self-defense. Also, the average bloke had enough personal social connections to know they could get by when tough times or medial issues hit. This was the culure that built America into what we are today. But now, if you even think about preparing for tough times and living within your means, you are called a wingnut. Yet libs still buy insurance…go figure. The whole thing is pretty amusing. But eventually it won’t be so funny methinks.

The past 30 years have bequeathed to the U.S. an increasingly predatory corporate-financial sector and a political system in which the ideological center, where the heavy lifting of public policy is done, has all but disappeared. Consequently, we face a period of economic and social turbulence, and political choices that promise highly undesirable outcomes.
Over the next three election cycles, we can anticipate a choice between Tea Party “libertarianism” (in reality, government beholden to corporate-financial cartels) and some version of European-style social democracy.
The former looks to be ascendant in the short term, thanks to the Supreme Court’s conferral of personhood on corporations and their resulting ability to spend as much as need be to buy elected officials. (The Tea Party, Fox, Limbaugh, Beck, et al., make the noise, but corporate money will decide the elections.) That won’t last long, though: When the government applies no brakes to the next economic plunge, and unemployment hits 25-30 percent, and middle-class assets are well and truly wiped out, and baby boomers face old age in poverty because Social Security and Medicare are bankrupt, then the electorate will not be bought off and the backlash will be monumental. We’ll be looking not at Obama-lite social democracy but the real thing, and the stagnation that goes with it.
Political and social conservatives will be the ones who ultimately decide how things play out. Right now, they’re in no-compromise, my way-or-stalemate mode. But if they think that the majority of Americans are going to accept a hard-right, pseudo-libertarian economic and social system, in which most of the middle class is reduced to borderline-subsistence, they’re dreaming. And they – and the rest of us – will really, really hate the wake-up call.

Rod, people scoff at you as a “Chicken Little” doomist. But I’m with you on this one. The more I learn about the situation, the more I’m convinced that something big is coming, a “collapse”, an “implosion” of some kind. I don’t even expect I will survive it, and if I do, it will be a miracle. The question I have is “will our troops fire on their fellow Americians when the orders come down the pipe?”
Captcha: lowland capital

Turmarion:
Nevertheless, to the extent that I understand his politics, I am in fact appalled by them.
Thank you for clarifying your position. I hope I didn’t come off too… militantly, eh?
A key disconnect, which you used, is to equate his notion of “federal service” with “military service”. Even a hostile reading of his writing in ST should see that he draws a distinct difference even while self-snarkily remarking that able-bodied and -minded people will find themselves in a military branch of that federal service. However, he does note (perhaps not often enough) that not all veterans were in the military, and not all military veterans look down on the other sort of veterans.
I have to reread Brin’s essay. I don’t recall being favorably impressed with his views. The “Ayn Rand with a soul” is an insult to Heinlein, who was a much better writer than Rand in every category. Anyway, dragging this tangent kicking and screaming back to the topic, I strongly suggest reading Heinlein’s “…If This Goes On”, found in The Past Through Tomorrow and other anthologies of his. It doesn’t get too far into economic factors, but it does give a stark and more than a bit frightening view of how revolution could happen in the US, two examples of them for his story line.

Re: I can tell you what part of it will look like – government checks stop flowing to a lot of people – including police and firefighters. Large enough segments of the urban population begin to loot and burn their surroundings.
Armed citizens form a different sort of Neighborhood Watch group and curfews are enacted.
You have revolution confused with anarchy. In revolutions some generally radical group takes over the government per force and since they obviously need support they keep the checks flowing (though the money may end up not buying as much as it once did). After all, you need more police (and definitely loyal ones) to haul the aristos off to the guillotine or the gulag. This fantasy of every man for himself is a bizarre one: nothing of the sort has ever happened before in all history (except very, very briefly in natural catastrophe or during an invasion or sack). Revolutions create more powerful governments, not anarchic conditions. That should be the worry here: not society falling apart, but people being stampeded by fear and rage into supporting a tyranny. And yes, that can happen here.

The easiest way to understand our situation is to do the math. For 2009, Social Security, Medicare/Medicaid, and Defense spending combined to $30 billion more than the Federal Government took in in taxes. Combined discretionary and non-discretionary spending along with TARP and interest on the debt were another $1.5 trillion which was paid out by issuing more debt.
This was for 2009. In 2010, the first of the baby boomers began collecting Social Security and Medicare which will bring a rapid increase in their costs. Let’s assume you cut defense spending in half, eliminated all non-essential programs, and passed a fairly massive tax increase (or a new tax like a VAT). We would still likely fall short of a balanced budget by a trillion dollars a year for the next couple of decades. If there aren’t buyers for newly issued debt, insterest rates will spike and the Federal budget will get much worse.
Now look at the states. Several big states (particularly California) and many cities are going broke. The biggest holders of state and municipal bonds are pension bonds. If they default, millions of people will have their life savings and retirements completely wiped out. The only option to prevent default for most of them will be Federal money.
So what do we do? Do you cut Social Security and Medicare? Who’s going to pass such a thing when it will mean something like 50 million seriously ticked off retirees?
Let’s say you kill off all discretionary and non-discretionary spending. Local schools will have to layoff teachers when they no longer get Federal money. The food supply gets interrupted when there are no USDA inspectors. All sorts of transportation problems would become nightmarish. And then you have a couple million out-of-work Federal employees to deal with. Not to mention laid off state and local employees because Federal mandate money isn’t coming in.
The only way out for the Federal government is for the Federal Reserve to buy debt. Basically printing money. They would have to devalue the dollar enough to make the debt problem managable. That will wipe out peoples savings and lower everyones standard of living.
So either millions of retirees get massive cuts in expected benefits, millions of government workers lose their jobs, or inflation grinds away what’s left of the middle class (while also seriously hurting those same retirees).

I should add that I see one reason for optimism in regards to what I said above: I donlt see any alternative (ansd reasionably plausible) ideology out there that could command significant loyalty. The English in the 1600s had Puritanism, the French in the late 1700s had Englightenment “rationais’m: (scare-quotes intended), the Russians and Chinese of the 1900s had Marxism. And the Iranians of the 1970s had Islamism. We don’t have anything like that percolating in the our nation (or abroad)

Max Keiser and Gerald Celente have been talking about this stuff for quite some time.
Peter Schiff has also talked about a financial collapse, due to the crazy inflation of the money supply, which the FED did to save the banking oligarchy.
Now it’s gone worldwide.
The fiat currencies aren’t looking so good, and have no backing whatsoever.
The FED, the IMF, the World Bank…these are the guys who are running the world, or at least trying to. They don’t seem to be doing a very good job.

I feel the need to point out that Rod moved from one city to another city. If in his heart of hearts he really was expecting an implosion, don’t you think he would have moved to a small town and tried the gentlemen farmer gig?

Re: The fiat currencies aren’t looking so good, and have no backing whatsoever.
All currencies are fiat currencies (even gold does not descend from on high stamped with God’s seal of value). And modern currencies do indeed have backing: basically they represent, in the aggregate, the full value of the economy that issues them.
One problem with the Euro: there is no single economy backing it, but a bunch of local economies unnaturally yoked together. I increasingly expect the Euro (but not the EU) to fizzle.

Rich, The only way out for the Federal government is for the Federal Reserve to buy debt. Basically printing money. They would have to devalue the dollar enough to make the debt problem managable. That will wipe out peoples savings and lower everyones standard of living.
Keep in mind that buying debt (QE) is not technically printing money. It is merely trying to maintain the status quo, to backfill the exploding hole of deflation. At worst, it can leave one in the same position as they started, indebted and in recession. Another way of saying it: QE does nothing to get cash into the hands of the masses, and so it does nothing for Main Street. Just Wall Street.
This is why we still have massive deflation going on in housing, jobs, etc. We had a $50T mountain of debt, and Obama/Congress printed only a fraction of this gaping hole…the rest was simply QE. One cannot fix a debt problem by buying more debt.
Having said that, once all the government money machinations fail, and serious debt deflation hits and people are then really hurting, we finally will begin to print and destroy the dollar. And will finally be seen as the paper tiger we really are. People will be frantically demanding government to do something. But having regulated and borrowed to the max limit, all the government will have left to do is to run the printing press. The bright side: anyone “paranoid” enough to be be prepared for both these events (the debt deflation and hyperinflation to follow) it will be a buying opportunity of a lifetime. Even better than ’08.

Jon, All currencies are fiat currencies (even gold does not descend from on high stamped with God’s seal of value)
“Fiat currency” merely means “declared currency”. Nobody currently “declares” the value of gold or any other commodity; they are NOT fiat.
Fiat money is actually pretty new; for most of history, governments never could pull it off very long. In fact, the only way the US did it was by running a trade surplus and getting enough gold to corner the world gold market. Only then could FDR outlaw gold ownership inside the US and go fiat. This allowed the dollar to become the defacto world’s reserve currency, backed by the citizen’s gold, and all the other nations piggy-backed on it. Of course, this all went away in the 70′s under Nixon, and natch our debt quickly become unmanageable and the whole thing is going under.
Ominously, most fiats have lost most of their value against commodity money (gold/silver) since we tried this true fiat experiment. It’s not only possible fiat may disappear in our lifetimes, it seems likely, judging from the rapid loss of currencies against commodity money since year 2000 (the dollar has fallen hard; gold has gone from $300 to $1200 over this decade).
basically they represent, in the aggregate, the full value of the economy that issues them.
The problem with this way of thinking is that fiats can be printed without limit, and thus they also represent the greed of the government that uses them…which has nothing to do with the economy itself. This is why 99% of all fiat currencies have vanished, and we should expect a lot more in the next decade or so.

Franklin, thanks. I admit my original statement was a bit tossed off and over-simplistic.
However, [Heinlein] does note (perhaps not often enough) that not all veterans were in the military, and not all military veterans look down on the other sort of veterans.
True, but I’m skeptical that in any real-world scenario you’d have such amiable relations between military and non-military veterans.
As to Brin, it seems that writers on Heinlein, even those who knew him personally and/or who are experts on his writings, are savagely divided on his ideology; that is, what it was and whether or not it’s a good thing. I guess that’s one thing that keeps him current–people still trying to figure him out!
Of his more explicitly political works I’ve read The Moon is a Harsh Mistress, Farnham’s Freehold, and Starship Troopers. As to the books you suggest, I’ll take you up on that–some of those have actually been on my to-read list for some time. I’d like to note again that whatever I think of Heinlein’s politics, I’ve always thought he was one of the best hard-SF writers of all time, and many of his works are among my favorites. Certainly Heinlein at his worst is far better than Ayn Rand at her best. I was just noting a similarity in characters, not in literary quality!
One more interesting thing: those who knew him personally, even if they vehemently disagreed with his views, to a man seem to have thought him a genuinely decent person. Joe Haldeman (whose classic The Forever War should be read in tandem with Starship Troopers) said that he and Heinlein agreed to disagree on politics, but were on excellent terms, did each other favors, and that Heinlein was a “true gentleman”. Philip K. Dick, who was pretty much the anti-Heinlein in all ways conceivable, had nothing but praise for the man, since Heinlein gave Dick a huge sum of money to tide him through a particularly rough time (Dick spent most of his adult life in borderline poverty) with no expectation for repayment and for no reason other than that he thought Dick a good writer who deserved the help when down on his luck. We could use more people like that, for sure!

The other week I had a discussion about Greece with some young people. What I said basically was this: “There are more claims on the public purse in Greece than money to pay them. So everyone is going to suffer to some degree”.
The same can be said for the entire industrialized world. Promises have been made on top of other promises for the last 50 or more years, and there is no way to keep all of those promises anymore. So some promises will not be kept.
It’s that simple.
The question is how to go about breaking promises in the least damaging way. Fingerpointing at political parties may be emotionally satisfying, but the reality is that in the US both parties have been engaging in vote-buying for generations. The politicians who bought votes with the public purse just never expected to have to pay off so many claims at once, that’s all. Watch Europe to see where the US may go: they have bigger social welfare states, higher taxes, more regulation, and worse demographics.
Expect to see all sorts of subtle repudiations of the various parts of social contracts, ranging from increases in retirement age to reductions in health care funding to things we’ve not yet thought of.
In the US, the biggest task before legislators and mayors and government commissions and public school boards and public university presidents, etc. right now is coming to grips with the facts: the easy money is gone, and it won’t be coming back any time soon. From watching this process in various places, I can assure everyone it is a lot like the Kubler-Ross stages regarding death. Legislators in state governments have been handing out pork to favored constituencies in some cases for decades, and when they are told that next year the pork barrel will be smaller, they get very, very angry. They deny that could possibly be true. Then some of them get into cut-throat mode to protect their constituencies, others become despondant and even inert. What they do not seem to be able to easily do is prioritize. So strange things are funded while other things, like higher education, are cut.
I”m seeing large highway projects and civic projects (civic center, hotel development, etc.) popping up in some places that can’t possibly every pay back the cost. But that’s what’s been done in the past, you see, so that’s what must be done. I’m seeing cuts in school systems that are “bottom heavy”; the $100,000/year administrators are left alone, while various techinicians making half of that are let go. The math doesn’t work, but that’s how things were done in the past. Because all that mangerial talent is so rare…
Easy money has led to a lot of interesting attitudes that are not going away without a fight, in government, in industry, in churches, in a lot of places. The other day a friend told me his church, which has stagnant membership, is planning to expand its building. The leadership expects that will attract people. They plan to borrow money to do this, too. It’s a micro version of the same thing that states are doing. Denial is still quite rampant all around me, and I expect it to continue for a few years more.
I also expect to start seeing retirements from state legislatures in the next 2 years. It won’t be fun anymore to be going to the statehouse, because instead of handing out pork to friends, the job will be taking pork away. A lot of the old guard, old boy and old gal network will find that unpleasant. Some will stay around to defend pet constituencies, but they may find themselves thrown out in the next election cycle, too. After a number of years of shrinking budgets, states will eventually have to just quit doing some things, because the money won’t be there.
Which reminds me, a lot of Federal mandates are probably going to go unenforced in a few years. The states won’t have the money , and the Feds won’t either.
There is a side to this recession that no one has mentioned: it is a “mancession”. If you dig into the unemployment figures, the majority of unemployed are men. Women are much less affected by layoffs so far. I have no idea what social effects this will have, but doubt they will be very good.

The demographics in the northern hemisphere do not favor armed revolt. Sure, sure, I know aging baby boomers who will rant about their ‘Nam experience (some might even be telling the truth) but let’s face it, pensioners generally make poor rioters. This does not rule out some sort of coup d’etat down the line in some places, mind you, and a police state to match it. But frankly I don’t see anyone re-storming the Bastille today…besides, it’s just a Metro stop now.
I do expect to see elective turmoil. I’d rather see that than some other things. Many of the TEA party participants that I’ve personally seen are over fifty, and people of that age tend to vote very regularly. As noted in my previous posting, many of the old guard politicians are likely to decide that the game isn’t fun anymore and they are going home. That will lead to new faces, some of them surely very foolish/dogmatic/corruptable, and some hopefully intelligent/wise/honest as well. Voter frustration will likely lead to a lot of “vote the bums out” elections. Look at Britain, with essentially a hung Parliament; such conditions never last long.
This is not to say that some degree of separatism can’t happen. The US federal government requires states to do a lot of things, and for years has partly paid for them: medicaid, a lot of k-12 education requirements, drinking age, and other things. When Uncle Sam can’t pay the states to do those things, I expect to see some pushback from the states. If the Feds get too heavy handed, some states may begin disconnecting themselves.
There are more remote possibilities, such as Mexican revanchism manifesting in parts of the US Southwest; the recent comments by President Calderon while visiting DC were quite interesting, if inflammatory. A hypothetical “Atzlan liberation” movement would give young men a cause, and the demographics do support possible armed conflict there. But again, it’s remote for now.
So I would say that a ‘revolt’ for now in the industrialized northern hemisphere will mainly take the form of protests and electoral efforts. There are only a few groups with the demographics to support actual armed conflict, and for now they are numerical minorities. I expect a lot more hunkering down and grumbling, frankly.

Rob, I’m afraid that John Robb is pretty far off base comparing Mexico to the US. Mexico has always been a stratified society, much more so than the US. The poverty rate a couple of years back in Mexico was 40%; that’s 4 out of every 10 Mexicans living at or below the Mexican government poverty level. At the same time, Carlos Slim is one of the 3 richest men in the world. It is a very different culture than the US, and has been for centuries. I suggest Enrique Kraus’s work “Mexico: Biography of Power” for an easy to read introduction to Mexican history.
It is also off base to compare the USSR and its collapse. Despite the best efforts of a series of governing groups from FDR to Nixon and on to the present day, the US is not a centralized, command economy as the USSR was. A failure of the central government will not affect the US the same way, for a variety of reasons, not the least of which is the still present Anglo-Saxon Protestant culture of self government.

mdavid said:
Another way of saying it: QE does nothing to get cash into the hands of the masses, and so it does nothing for Main Street. Just Wall Street.
I agree, with a couple of “buts”. QE allows government to maintain high spending levels. The number of federal employees including federal contractors is somewhere around 18-20 million. Add in state and local employees who are partially funded by federal mandates and you have a very large chunk of our overall workforce. That’s a lot of spending power being maintained by QE.
And we may see a loss of confidence in U.S. bond offerings leading to failures of bond auctions. The Fed would become the principal, or even only, buyer of U.S. debt offerings. Once that starts you could see a run of foreign investors (including sovereign holders) to dump their positions with only the Fed to soak them up. The dollar would crater – a defacto devaluation that would appear as rampant price inflation in a country with a huge trade deficit.
So I don’t think we need prolonged debt deflation to kill the dollar. A bond panic could do it, and it could happen in a flash.

Mdavid, the value of gold is a social construct. You can’t eat it, wear it, drink it, or sleep under it. In a crisis no one with food would trade it for gold. It only has value as money because other people expect it to have value, not because it has some intrinsic value.
Its only practical uses are electroplating contacts and personal adornment. The amount of gold in vaults underground would serve that purpose for an enormous period of time.
Salt would make more sense because at least you can cure food with that in a pinch.
recaptcha: dizzier Presidents

Anti Dhimmi said:
I”m seeing large highway projects and civic projects (civic center, hotel development, etc.) popping up in some places that can’t possibly every pay back the cost. But that’s what’s been done in the past, you see, so that’s what must be done.
That reminds me of a scene in an old Michael Moore film called “Roger and Me”. After the closing of a GM plant, the city of Flint MI began scrambling for ways to replace the economic loss. They decided to spend millions on a project to build a high-end tourist hotel and theme park to try to attract tourism to Flint. Flint is a small landlocked city with average high temperatures below 50 F for almost half the year and with no natural features or unique offerings to draw large numbers of tourists. The plan was beyond absurd – it was delusional. Yet somehow the city leaders convinced themselves that Flint would become a tourist mecca.
I fully expect to see lots more Flint-style boondoggles by other failing cities in the next couple of years.

Rich, I can mention with no names that for, oh, 5 – 10 years now the fashion in some university circles has been to build a hotel on state land, tying it to “tourism and hospitality” degrees. Now the latest trend is to privatize those buildings; sell them off any way that is possible. Because they are operating at a loss in almost every case. Just like civic centers, I don’t know of a one that breaks even, maybe the Las Vegas, Nevada one does.
It’s a cargo-cult mentality, frankly. Sometimes a hired consultant comes in to a municipality and for a fee tells them how to develop economically, but it’s always the same advice: build up tourism, give sweet tax breaks to light manufacturing, and so forth.
Expect more of this, for a while. Then it won’t be possible to borrow…

Re: If you dig into the unemployment figures, the majority of unemployed are men.
And more than that, it’s concentrated haevily among the young and the less-educated. Late last year I saw a demographic breakdown. My demoghraphic shocked me: the unemployment rate for 25-45yo white males with college degeres was a mere 3.9% (I would have guessed at least 7%). That’s not even a recesson.
Re: Nobody currently “declares” the value of gold or any other commodity; they are NOT fiat.
Actually yes, they are fiat. Governments can and have fixed and manipulated the price of gold in the past. The 17th century, when everyone was using gold as coinage, was a wretchedly inflationary era. This was mainly due to Spain putting huge amounts of gold and silver in circulation from its American mines spending wildly to maintain its power in Europe– without any sort of real productive economy backing up all that new money. Inflation has nothing to do with money: it’s caused by an excess of demand relative to supply (when supply for some reason is constrained and cannot increase to match demand).

The tea partiers include a very heavy representation of people out to defend their own entitlements, masquerading as serious small government folks. What a revolution….

MH, Mdavid, the value of gold is a social construct. You can’t eat it, wear it, drink it, or sleep under it
The value of anything on the free market is a social construct. For example, when I catch a salmon, I toss the eggs to the seagulls – technically the best and most expensive part of the salmon. I do this because my redneck culture doesn’t value it.
But the value of gold is a sure bet, as sure as anything else out there that lasts (food rots). Humans have valued gold longer than anything except food and housing – longer than oil, computers, guns, etc. This has never changed in the history of mankind – even the natives in the New World valued it for some reason.
I believe the next generation will find fiat money to fail as democracies loose the ability to act sanely due to an insane voting population, and the free market will step in. In fact, it’s already happened – the dollar has already slipped to 1/4 it’s value against the market currency of gold/silver in a mere 10 years of debt creation. At this pace, we could be done in another decade or two.

Other than death, there are NO “sure bets”, and anyone who tried to sell you a sure bet is selling snake oil, however golden-glossy it may appear.

Turmarion, the “Clinton Gun Ban” didn’t really ban anything and the fact that I was able to trade my AR for a nice over-under shotgun (instead of having it confiscated) indicates what a red herring that piece of legislation ultimately was. But it was indeed touted as a ban by both proponents and opponents, occurred during the Clinton administration and was likely the straw that broke the camel’s back in terms of putting the GOP in control of congress. At worst, I’ve committed combox historical shorthand. No Kool-Aid is being distributed here.
My point was ultimately about the unprecedented proliferation of AR-type rifles, particularly among persons of middle class income levels who can afford them. There is a glut of these rifles on the market. Supply has not only met demand, it has evidently exceeded demand as evidenced by prices. And look at the magazine stands. For every traditional hook and bullet periodical there are five to 10 titles dealing with “tactical” firearms, gear, etc. Given that “SWAT” folks are a small subset of the LEO community, exactly who are all the “operators” in the market these advertisers are pitching to?
This isn’t lunatic fringe survivalism. This is a growing subculture that is in the process of becoming somewhat mainstreamed. I’m not advocating hysteria. There are moral, well-meaning people associated with this movement. But this all seems unprecedented to me. What is behind it? What does it mean? Where is it headed?

This isn’t lunatic fringe survivalism. This is a growing subculture that is in the process of becoming somewhat mainstreamed. I’m not advocating hysteria. There are moral, well-meaning people associated with this movement. But this all seems unprecedented to me. What is behind it? What does it mean? Where is it headed?
Three non-exclusive possibilities:
1. They are more fun to shoot because you can pop off 30 round quickly before reloading.
2. They have superior ergonomics as compared to traditional rifles
3. Their use is a carry-over from first person shooter video games.

Jon
Re: If you dig into the unemployment figures, the majority of unemployed are men.
And more than that, it’s concentrated haevily among the young and the less-educated. Late last year I saw a demographic breakdown. My demoghraphic shocked me: the unemployment rate for 25-45yo white males with college degeres was a mere 3.9% (I would have guessed at least 7%). That’s not even a recesson.
Yes, this is a significant point. While new college graduates from 2009 are having a hard time finding jobs, skilled labor got hit hard in 2009 in layoffs. Semiskilled and unskilled laborers weren’t in that good a position prior to the crash, and are taking a big hit now. I suspect the unemployment numbers for black men aged 18-25 are something horrific, 20% or worse.
None of this invalidates the larger point, though. Men are much more affected by the current economy than women, due to the jobs that each tend to do. So what we have are men who were the prime breadwinner now laid off, while the wife who has some office job still working. Some number of the lost jobs won’t be coming back, either. So this unemployment pattern could become structural. I don’t know what the social implications are but likely they are not good.

Jon – of course there is an *ism* that could command the loyalty of the majority. Call it Big Babyism.
It’s the natural outcome of the ‘Culture of Narcissism’, American Exceptionalism, and blamimg EVERYONE else (politicians, CEOs, etc) for any problem that comes along.
What kind of “leader” appeals to the Big Babyists?
Reagan was the master – so far. However, the development-in-reverse may well reach the point where a Reagan would be considered to be too demanding of Americans.

I”m seeing large highway projects and civic projects (civic center, hotel development, etc.) popping up in some places that can’t possibly every pay back the cost. But that’s what’s been done in the past, you see, so that’s what must be done.
I agree this has been the typical behavior of cities that lose industry but there are other trends (small I admit)starting now – especially in the rust belt where the arena/tourism thing was tried and clearly failed. Some midwestern cities are literally making themselves smaller – buying out homes on the periphery and creating incentives to move into the city core. Other cities ( most notably Detroit) are looking at agriculture. There is also the development (small again) of employee cooperatively owned businesses. Some communities are looking to tap their potential for alternative energy. So there is some hope that people will get past the tried and failed approaches.
But in general – denial does seem to be the most frequent condition.
My town proudly announced that they are ONLY raising property taxes by 7.5% – they just do not get it.

Re: Jon – of course there is an *ism* that could command the loyalty of the majority. Call it Big Babyism.
Bradley, I’ll be happy to join in bashing the anile follies of the American people. The older I get the more I think old Mr Hamilton had it right– “The people, sir, are a great beast!” Nevertheless, neither tea-party whining nor Greek Leftist shrieks of rage amount to anything like an ideology that holds together as something intellectually consistent and (at first sight) plausible.
Re: I’m seeing large highway projects and civic projects (civic center, hotel development, etc.) popping up in some places that can’t possibly every pay back the cost.
I don’t think anyone ever made any money on the Pyramids in old Egypt (that is, before toursism– Khufu was not looking to attract nosey foreign vistors to his tomb), but they did keep people busy working and fed and out of mischief during the Nile flood season when the peasants couldn’t work the land.
Re: Some number of the lost jobs won’t be coming back, either.
That’s true of every recession. In fact it’s true even in good times: some jobs are gone for good. No matter if the economy booms like crazy, no one will ever be a sales clerk at Circuit City again.
But that’s not that there will forever and ever be fewer jobs in this country overall than in 2007.

Mdavid, The book “The Power of Gold” is a good book on the history of gold as money, and it’s not as sure a bet as you think. For example during the Great Depression the government banned private ownership of gold. You had to trade it in for paper money at an exchange rate determined by the government. In theory the US was on a Gold Standard, but like every other major currency the dollar eventually left the gold standard. So gold as a store of value went poof and was replaced by paper.
The Chinese Government did the same thing during the Song Dynasty around the 10th century. Although notes were in theory exchangeable for gold, conversion was never allowed in practice. So this isn’t something unique in US history.

MH Mdavid, The book “The Power of Gold” is a good book on the history of gold as money, and it’s not as sure a bet as you think.
First, gold is not a wealth-creating asset. But it is indeed a very steady money commodity that all other currencies peg against throughout time. If you doubt this, ask why the US still hoards the most gold of any nation. I doubt it’s for fun .
The most comprehensive scholarly tomb I’ve read on gold (and is generally considered by others to be so as well) is “The Golden Constant, 1560-2007″ by Jastram out of Berkeley. The title merely relates what the data shows. Sure, there are ups and downs over the short term, but it’s dang constant over time in the free market.
Re: the US banning of gold, research has shown that very few in the US even turned in their gold; they merely moved it offshore or buried it for another day. Remember, the reason the US banned gold at all is to corner the market on gold for the entire world, as we were running a massive trade surplus at the time and could pull it off, and then force a currency backed by this vaulted gold. But today, we are running a massive deficit, not a surplus, so it’s quite unlikely the US will ban gold again. China might, but that’s their lookout.
And while gold is pretty safe and stable over the long haul (a bbl of oil was about 7% an oz in 1950 and is 7% an oz today, for example), I think the US dollar will do better over the short term as deflation rips the economy apart. So I’m mainly in the US dollar right now, even though I doubt it will last the decade in one piece (see: Europe). But it’s a light dance, because hyperinflation will follow deflation as sure as night follows day.

Re: But it’s a light dance, because hyperinflation will follow deflation as sure as night follows day.
There’s no history of hyperinflation following upon or being caused by deflation so I’m not sure where you get the sureness here. The worst deflation in US history, in the 1930s, was not followed by an inflationary period. Also, why the prefix “hyper-”. Is ordinary “inflation” too humdrum a word so we have to zoop it up with extra verbage, much as it is no longer possible these days to call a celebrity a “star” but they must be “superstars”?

Mdavid, nations have gold reserves and reserves of other currencies so they can support their currencies. It keeps speculators at bay.
I read that the US banned gold to force people to spend money. Basically they expect inflation with paper money and deflation with gold money. In a scenario where a government has outlawed gold, its use as money is limited and the economy would tend towards inflation.
I can understand deflation with a gold standard as the money supply is constrained by the ability to locate the metal. If productivity increases faster than gold supply prices would fall.
What I don’t get is deflation with fiat currency. Paper money can be created out of nothing, so currency supply should always exceed the production of goods.
Inflation and hyperinflation are perfectly understandable with fiat currencies.

Jon, There’s no history of hyperinflation following upon or being caused by deflation so I’m not sure where you get the sureness here.
Keep in mind that we are in uncharted waters – the FED was created in 1913, and we have only got off the gold standard completely in the ’70s, with every nation “piggy-backing” on the US dollar as the world’s reserve currency. So what we are seeing is brand new, and it’s taken some time to unfold. But zero hour has arrived.
Hyperinflation is different than inflation; the former is what we’ve generally seen over he last century due to debt creation, and the latter is what is seen whenever a government cannot control the printing press and the currency goes exponential. Look at the developed nation’s debt curves and there is really no way out except some sort of hyperinflation…hence the sureness. Also, it’s how ever single fiat currency goes out – they hyperinflate and are worthless. Heck, they are just paper. But of course events are what drive things, and I agree that anything is possible over the short term. But we know for fact that every fiat currency hyperinflates in the end and becomes worthless.
MH, What I don’t get is deflation with fiat currency. Paper money can be created out of nothing, so currency supply should always exceed the production of goods.Inflation and hyperinflation are perfectly understandable with fiat currencies.
Debt deflation is caused by fractional-reserve lending, which is only made possible via some sort of fiat currency.
What happens is that for every dollar printed, many times more are created out of thin air by being “loaned into existence”. This is the “money multipler”. So when econmic growth is going well, money via credit is being expanded by the banks (this is not by the government per se). However, when the economy contracts, credit is then tightened in the free market and the debt bubble begins to collapse. This is the deflation we are seeing now in house prices, etc. It’s just the beginning.
The reason hyperinflation will follow debt deflation is that the public cannot tolerate deflation, and demands the spending of money we don’t have to “grow” the economy. Soon enough, though, our creditors will pull the plug on short term loans and prevent more credit, and then we will toss in the towel and print our way out of the mess. It’s how it’s always happened in the past. Just look at Obama/Congress/Public over the last few years if you have any doubt about how all this ends.
Having said all this gloom-and-doom, I must say these are exciting times to be alive, and there is lots of money to be made from 2007-2017. This is a once-in-a-century speculation opportunity, and a guy is a fool not to cash in.

Sorry, have a typo above, it should read: Hyperinflation is different than inflation; the latter is what we’ve generally seen over he last century due to debt creation, and the former is what is seen whenever a government cannot control the printing press and the currency goes exponential.