Scavengings From the Oil Age

Who Is Most Subversive?

2007-09-27T22:30:00.000-07:00

"The American Way of Life is not negotiable."

Dick Cheney

Imagine that you have x-ray vision and you are at the airport watching people go through security. Unfortunately none of the women featured on Winter's blog are there. Before you leave to find greener pastures you notice five individuals and decide to rate their threat to "The American Way of Life."

Person #1 "The Terrorist"

Middle-eastern male in his 20s. Under his shirt is a belt of explosives, reading material - The Islamic Cave

Person #2 "The Socialite"

Fake'n Baked female, mid 30s. Has 3 cell phones, one against her ear, another ringing in her purse, and the other 'on vibrate', reading material - Fashion in the Bathroom

Person #3 "The Non-Conformist"

Male, late teens. Wears all black. Wearing an Ipod and passing the time with a handheld gameplayer. No reading material

Person #4 "The Professor"

Female, late 40s. Sweater, long skirt made of natural fibers. Reading material - 100 Puzzles

Person #5 "The Grandma"

Female, 70s. You didn't at her clothing long enough. Reading material - Reader's Digest

In the comments rank each of these individuals according to their threat to the US Government, the organization responsible for providing "The American Way of Life". A future post will list my picks and explanations.

Sunshine and Sauerkraut

2007-09-22T11:00:00.000-07:00

Another Sunny Day
C'mon get out
Abandoned Pools

Sunshine and Sauerkraut

The human condition has been defined by our diet. Our primate cousins ate cellulose (gorillas) and fruit (chimpanzees). Chimpanzees hunt cooperatively; and, capture the occasional monkey, which they give to the females in exchange for sex. Not much has changed over the eons; yet, humans are fundamentally different than even animals whose DNA is 99% similar. It’s the culture… in the food.

The traditional diets of non-human primates are problematic for us. Our digestive system cannot digest wood and as gorillas do. Even though we can digest fruit quite readily, the high sugar content causes insulin resistance, diabetes and a shorter lifespan. In addition, fruit lacks the energy density necessary for human development. One of the homo erectus variants ate mostly nuts and legumes; but, this subspecies did not survive. The consumption of meat appears to be a vital element in the advancement of human society – complex vocal communication may have originated with the hunt. Meat consumption brings its own problems. The human digestive tract does not process meat quickly enough to prevent it from going rancid, leaching toxins into the bloodstream. Also, meat is a seasonal food. Herbivores follow the rain, requiring predators to expend extra energy to stay close to their food.

For the past 2 million years, an ice age has oscillated in the Northern Hemisphere. Until 10,000 years ago, human population had been stable even during the warm intervals. This stability was unlikely the result of an intentional birth control program; but, through periodic ‘die-offs’ of groups from starvation and possibly disease.

Due to the universality of cultured foods, it is likely that the survivors who walked into agriculture had mastered food preservation through lactic acid fermentation. This is not about beer and wine – they are produced through yeast alcohol fermentation. Lactic acid fermentation does produce trace amounts of alcohol; but, not enough for one to become intoxicated. LAF has been a part of human evolution such that this method of food preservation increases the nutritional value and digestibility of foods.

Modern society has removed naturally fermented foods from our plate. The sauerkraut preserved with benzoic acid bears little resemblance to sauerkraut allowed to ferment in a crock pot for six weeks. Anti-dairy zealots claim that cow’s milk is not a part of traditional human diets. This is a half-truth. Raw milk is far too valuable to be consumed unprocessed. Milk can be processed into butter, cheese, yogurt, kefir, buttermilk, and whey. All of these fermented products expand the nutritional capacity of milk and have an extended shelf life without refrigeration. No wonder the older textbooks put dairy into its own food group.

Eating LAF foods also repopulates the digestive tract, enabling resistance to pathogenic/opportunistic bacteria. The sterilized and antibiotic enriched food provided by the corporate factory farms causes digestive and food allergy problem; and, makes the body more susceptible to disease. No one finds this a problem as our taste buds have been fooled by additives and industry advertises a pharmaceutical cure for every aliment.
In 2005 researchers in South Korea fed chickens with avian influenza kimchi (spicy fermented cabbage). 11 of 12 birds fully recovered. The pharmaceutical industry downplayed the results, realizing that it would be impossible to patent a food that has been consumed for thousands of years.

http://news.bbc.co.uk/2/hi/asia-pacific/4347443.stm

Even though industry provides vitamin D in the liquid that they label as milk, it is widely known that this form of vitamin is not biologically active. Vitamin D is quite rare in food, even LAF cannot change that; it must be obtained from exposure to sunlight. Most people believe that the only function of vitamin D is calcium absorption. Research suggests that vitamin D serves an important function in immune function, mediating cytokine action. One of the mysteries of the 1918 Spanish Flu was that it affected nominally healthy individuals far more than the vulnerable. It is possible that the H5N1 serotype causes the immune system to 'go into overdrive' and kill the host. Sufficient amounts of vitamin D and proper function of its receptor may prevent this from happening.

http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=1852118

For this year's upcoming flu season, I'm going to make my own sauerkraut, forgo the flu shot and spend at least 2 hours/day outside. I've always felt better after a long walk anyway.

War Against Iran?

2007-09-10T13:00:00.000-07:00

"War is the continuation of policy (politics) by other means."

Karl von Clausewitz

"Not gold, but steel redeems the native land,"

Camillus

Six months ago, the Main Stream Media reported that housing would be sluggish through 2007; but rebound in 2008. Three months ago, the MSM stated that, in select areas, the large amount of ARM resets would hamper housing regionally. One month ago it was disclosed the no one knew the true value of the various CDOs that previously held a AAA rating. This last week, while the Federal Reserve’s beige book stated that the housing slump would have only a limited effect on the general economy, the payroll report spooked the Dow into a 250 point drop. Oil settled above $76/barrel. Now, prominent economists are calling on the Fed to abandon its inflation targets and cut the Federal Funds Rate by 50 or even 100 basis points. The US Dollar sits at 35 year support (since the end of Bretton Woods).

Wages in the US have been stagnant for the past seven years despite rising per-capita GDP. Where has this extra "economic growth" come from? Rising home values have allowed American households to recognize extra income. If the housing market sinks back to the secondary activity it held before the suburban expansion, the world will be plunged into World Depression II.

The Federal Reserve sits at a crossroads. To save the economy it must cut its key interest rate - disemboweling the bond market in the process. In the old days, bonds were held by the upper classes as a source of additional rental income. TPTB would have been hard pressed to sell out the market in that situation. Today most US bonds are held by institutional investors (pension plans, 401(k)s, and mutual funds) and foreigners. Yes, the wealthy hold bonds in hedge fund accounts; but, those are in the tank already.

The big variable is the Chinese Central Bank. They have previously indicated that they will not tolerate a US Dollar devaluation. What if they had no choice? The Chinese have been increasing their oil imports faster than their economy has been expanding. To maintain civil order they must have oil, which they get from Iran.

The Casus Belli against Iran has been building for years. First they were part of the Axis of Evil, then they refused to stop their nuclear program, and now they are accused of providing material support to Iraq's insurgency. At recent town hall meeting even Sen. Ron Wyden (D-OR), who voted against military action in 2002, stated that Iran was responsible for killing US soldiers. The US Naval flotilla in the Arabian Sea includes 3 Nimitz class aircraft carriers and 1,200 cruise missiles.

17 million barrels of oil transit the Strait of Hormuz everyday. If the Chinese make an unfavorable response to a interest rate cut on Sept 18, news may leak out that 'Iran attacked US forces' and the Casus Belli would be complete. Iran has little capability to be victorious in a pitched battle against US forces. However, they can easily close the Strait of Hormuz and launch their Silkworm missiles against Saudi Arabian oil facilities. Some may be shot down or diverted but enough would reach their mark to halve Saudi oil production.

All remaining oil leaving the Persian Gulf would have to do so under the protection of the US Navy, holding the bill of lading for much of the world's oil. In this event the Chinese would have little choice but to continue their purchases of US Treasuries.

Relocalization

2007-09-07T08:38:00.001-07:00

Movin to the country, Gonna eat a lot of peaches
Presidents Of The United States Of America

Or at least millions of blackberries, millions of blackberries for free. Relocalization brings up images of a large scale migration into the rural regions of the country. While this may occur to some extent, relocalization does not require such a dramatic effort. The average meal in the United States travels 1,500 miles from farm/ranch/fishery to plate. Relocalization is either people moving closer to their food production; or, bringing their food production closer to them. Given that Peak Oil is an energy crisis, it would follow that people would make adjustments that would conserve the most energy. Generally that would entail people staying in their current location.

The most important attribute of any location would be the presence of a supportive community. A good community could make almost any region sustainable; the lack of one, no area would be sufficiently sustainable. This is due to the exponential increase of human capital present in a community. There is no way an individual homo economicus can navigate Peak Oil by himself. There is too much to learn, and unlearn. Only in a group can anyone of us survive.

If there is no community in one’s current location, then it may be a good idea to relocate. While it would be beneficial to puruse growing season and rainfall maps to find the best areas, many other factors enter into play. As a rule the suburbs would not fare well in a post Peak Oil world. This isn’t due to any physical attribute, but their psychology. The allure of the suburbs is that everyone can be a sovereign with their fiefdom. This has created a sense of hyperindividualism in American culture and will be difficult to undo without a lot of discord. It will be very difficult to find a community in the suburbs.

There is a notable exception. The Rust Belt has been hemmoraging wealth and population for a generation; and, an enterprising group could recolonize a subdivision at little expense. Some of the homes can be retrofitted for multi-family occupancy; and, the others used as a source of raw materials (glass for greenhouses, pipes for wells, etc.). The local authorities would be more willing to rescind many regulations that have contributed to the uniformity of the suburbs. Gardens can replace front lawns. Herbivores instead of lawnmowers, and free-roaming chickens instead of Roundup. The Rust Belt has two big advantages: The Great Lakes and associated rivers/canals, and a dormant rail network. Both of these will permit inexpensive (non-oil based) transportation and increase commerce in the region.

Though it would be easier to maintain a community in an urban region, virtually all urban areas with a population greater than 250,000 will be shedding population. Rooftop gardens with chicken coops and rain barrels will be standard fare. The size of the city will be determined by the quality of its agricultural hinterlands; and, its residents will have to produce something of value in exchange for food and raw materials - no longer will canned entertainment and finance serve as primary industries.

It may appear that relocation to rural regions would be the easiest; however, there are obstacles. The first is not obvious. Communities in rural regions are already established and are not overly friendly to newcomers. Also land prices are escalating rapidly due to the ethanol scam and rising food prices. The best way to acquire land is to rent it from an aging farmer (the average age is 60+) and then swap labor for equity. This would require most of us to abandon our city jobs and their inflated paychecks, so eliminating debt is critical for this tactic to work.

There is a gradient of relocalization activities to perform. Some of the simplest, such as starting a backyard or balcony garden can be done concurrently with an energy intensive lifestyle. Composting and vermiculture requires more commitment – the TV might not be on as frequently. Once complete relocalization has been achieved, one may have little desire to interract with the legacy economy denominated in soulless paper money.

Comfort or Efficiency

2007-09-02T22:30:00.000-07:00

Devil and the deep blue sea behind me

Vanish in the air you'll never find me

I will turn your flesh to alabaster

Then you will find your servant is your master

The Police

Many people aware of the impending energy crisis believe that all they have to do is buy a hybrid, use CFLs, convince everyone else to do the same; and, the party can go on until technology bails us out. This will not occur. Technology gives a false impression of higher efficiency. In the case of hybrids, the cost of production offsets years of fossil fuel savings. A 1968 Malibu will consume less energy than a Prius on an assembly line. It doesn't stop there. A Prius owner is likely some goody two shoe environmentalist who will embark on weekly 500 mile road trips to show off the vehicle. The owner of the Malibu probably spent his meager paycheck on Keystone Light and back issues of Guns and Ammo, resulting in an inability to fill his car's gas tank. There is a downside to CFLs. They contain mercury and should be handled as hazardous waste should they break or burn out. What is the most carbon neutral source of lighting? Candles made from beeswax or animal fat. The CO2 they release had been previously taken out of today's atmosphere, not some atmosphere from the Jurassic.

If convenience and comfort is the goal of product of technology it is almost always less energy efficient than its predecessor. And anything for sale today is marketed emphasizing convenience and comfort. A clothesline is far more efficient than any gas or electric dryer. It may not be convenient or comfortable; but, it requires only the minimum of energy in having the wet clothing hung. A notable exception to this is the Franklin Stove. This was a true miracle of 18th century technology. A homestead at the time burned 70 cords of wood in the winter. The Franklin Stove reduced wood consumption by 90%. A rare example of efficiency, convenience and comfort increasing at the same time. Perhaps it was due to Benjamin Franklin's motivations. He wasn't as interested in making money as he was in impressing the ladies.

Hybrids, electric lighting options, and wood stoves together don't make a significant impact on our lifestyles; but, our food does. And nowhere else has technology performed a greater 'switcheroo' than how our food is produced. From the endless ads on public television, one would think that Cargill, ADM, and ConAgra have increased the efficiency of agriculture to make farm labor a thing of the past, or something that Amish people do. All they have done is dump oil and natural gas on the fields of the world. Every calorie of food that we obtain through normal channels requires ten calories of energy to get it to your plate. Economically, food is not very elastic. Yes, we can switch from chicken to Ramen noodles (chicken flavored oil); but, the math is the same. This is the basis of the ethanol gimmick. The energy distilled from corn is less than that required to produce it, without considering the loss of land devoted to food production.

As Peak Oil exerts itself, food will become increasingly expensive and lower in quality. Without fossil fuels, the U.S. (with 300 million people) can feed itself using 50 million farm workers. Despite the obvious social ramifications of this, we should count ourselves blessed. The 2.5 billion Chinese and Indians are 'up the creek.' Because of our blind obsession with comfort and convenience, technology has ceased being our servant and has become our master.

The Train Wreck Ahead

2007-08-29T17:08:00.000-07:00

You don't wonder where we're going
Or remember where we've been
We've got to keep this traffic Flowing
and accept a little spin
So this long line of cars will never have an end
Cake

The once brisk highway traffic is slowing. It isn’t rush hour; nor, are there any obvious obstructions. There must be a lane closure ahead, out of sight. It could be the result of an accident, construction work, or – worst case – a complete closure due to a chemical spill or other disaster. At this point most of us would look for one of those highway condition signs or submit to listening to a commercial radio station for some information. Though these mainstream sources are generally inaccurate, they provide assurance if the congestion is short-lived.

If the traffic reaches a virtual standstill, we are confronted with a choice – to stay on the highway or seek an alternate route. The advantage to staying on the highway is that the amount of future delay would be less than the inherent delay of the alternate route. If the delay is longer than expected, then taking a known alternate route is the better choice. Due to the higher carrying capacity of the highway, once a small number of motorists decide to take the alternate route, both routes become congested. Because of this, if there is any significant uncertainty to the length of a traffic delay, it is better to take the alternate route in lieu of waiting for additional information.

The bumpy plateau of Peak Oil is not unlike the traffic situation described above. No one knows the extent of the delay, whether it is temporary (technology saves us) or permanent (the laws of thermodynamics remain in effect); and, official information appears to downplay its significance. Most people are conditioned to stay on the highway. In any case their roadmaps provide little information about any alternate travel routes. They are stuck.

Eventually everyone will know that the highway is blocked and will make a collective rush for the alternate routes. It would be too late for anyone ‘still on the highway’ to make effective lifestyle changes, even if they had correct information.

Each of us considering preparing for Peak Oil must evaluate the information available, consider its bias, and make a decision. Considering our collective dependence on the current system, preparing for Peak Oil involves a considerable leap of faith. While some preparations may be expensive (buying land); most actually save money (getting out of debt, growing and/or processing food). The problem is that as more people view Peak Oil as imminent (or as a past event), preparations become more difficult to undertake. Arable land becomes more expensive, inflation reduces income used to pay debts, Monsanto patents all of the heirloom seeds and pulls them off the market, etc.

The most realistic preparations that most of us can make are those that allow us to continue in the present economy. This may relegate many preps to hobby status. The earlier that we learn skills valuable in the post oil age, the greater the allowance for mistakes. Another item to consider – given the inevitability of inflation, virtually everything available in the market today will only get more expensive as time progresses.

The Incredible Journey of Oil

2007-08-24T11:34:00.000-07:00

There are a number of Peak Oil documentaries available; however, they cost money. This link brings a free 3 part series produced by the Australian Broadcasting Corporation. It is a total of 1 1/2 hours of high quality reporting.

http://abc.net.au/science/crude/

We Must Get Off The Mountain!

2007-08-21T08:53:00.000-07:00

“Moria. You fear to go into those mines, don't you?
The dwarves delved too greedily and too deep. You know what they awoke in, the darkness of Khazad-dum. Shadow and flame.
Let the ringbearer decide.
Frodo?
We will go through the mines.
So be it.”
The Fellowship of the Ring embarks for Moria

It’s a new week. TPTB are patting each other on the back for avoiding a bank run at Countrywide and resolving the credit crunch. Meanwhile, Hurricane Dean is making mincemeat of Mexico’s oil export capability and Countrywide issues pink slips for one of its lending divisions. The futures market has placed the probability of a Federal Funds rate cut at 100% on or before the September 18 meeting.

How far must interest rates be cut to resuscitate the housing market? How far can interest rates be cut before the Asian Central Banks run for the door? Considering the game of musical chairs in the bond market, one would assume that the former would precipitate the latter. If the financiers in New York have their way, rates would be cut to give a pretext of help. They may have to fire their dog’s maid or fly first class on a public airline on their next trip to Switzerland. But all they have done is exchange a current financial crisis into a future political crisis.

No matter what Cindy Sheehan may think, California voters with their $500,000 mortgages and 50 mile daily commutes, are not likely to give a rat’s ass about Iraq. Considering the likely incapacitation of the Cantarell Oil Field, many may cover up the “No Blood for Oil” bumper sticker with a “Kick Their Ass, Take Their Gas” sticker on their Suburbans. They will be looking for a way to offload their mcmansions without going bankrupt.

By the way, if the bank agrees to repossess a home for less than the loan value, the IRS considers the debt forgiveness as taxable income to the former homeowner. This is a likely situation in California, as many nominally moderate income individuals will have to choose between indentured servitude to a bank (Chapter 13) or to the IRS (taxes, late fees, and penalties). In neither case does the hapless homeowner get to stay in the house.

The Democratic candidates will compete with each other to promise California’s voters a bailout. Principle will fly out the window, even those candidates with New York money. If a principled Democrat wins the nomination, California will turn red in November and the White House, out of reach. Besides, it has been done before. In the 1920s low farm commodity prices induced farmers to increase production, causing more price reductions. The Agricultural Adjustment Act bulldozed cornfields, which became suburbs. The irony is irresistible – tract houses turned back into cornfields – all to make ethanol to keep the cars going.

At the first whiff of this, the Asian Central Banks will unload their USD reserves. As I’ve alluded in previous posts, they may take the initiative and purchase US housing stock at a modest premium. Of course they are only interested in the choice properties along the coast. Riverside and Palmdale are unlikely to interest them.

I’ve picked on the Democrats, not because the Republicans are more principled; but, because California is likely to be the swing state next year. The real estate debt bubble was nowhere more pronounced than in California. In addition, as a desert state, California benefited greatly from cheap oil; and, will suffer a monumental write-down in wealth when Peak Oil can no longer be disguised. Even though the Republicans are extremely weak, their certain chance at victory is if the Democrats don’t placate the Californians.

FKN News 08 17 07

2007-08-19T10:49:00.001-07:00

A Weekly Podcast

Katrina Redux

2007-08-17T22:35:00.000-07:00

"Do the gods exist? I do not know; but, they sure act as if they did."

"Be careful of what you wish for - you might just get it," goes the saying. Amidst the turmoil in the financial markets, I wouldn't doubt that TPTB may have been hoping for a strong North Atlantic hurricane season to explain a plummeting Dow and to justify an emergency rate cut. Conditions were so bad that the Federal Reserve cut its discount rate by 1/2 point earlier today - well in advance of the September 18 meeting. The $11 billion credit line drawn by Countrywide was likely consumed entirely by its depositors - leaving Countrywide with less liquidity and more debt. Only 1% of Countrywide's mortgage assets are in default.

It appears that Hurricane Dean will distract the public enough to prevent this financial crisis from morphing into a political one. As with most wishes, the recipient will get more than what was bargained for. The 'best case' scenario is that Hurricane Dean continues west, skirting the Yucatan peninsula and dissipating over Mexico and the Pacific. If this happens, Mexico's Cantarell oil field will suffer the wrath of a category 4 storm. Given its 15% decline rate, any damage will result in permanently shut-in production. Mexico, the U.S.'s third highest oil exporter, will no longer be exporting oil. In addition, the Mexican Government derives 50% of its revenues from oil exports. Without this revenue, the Mexican Government could collapse and send 1/4 of Mexico's population north.

If high pressure builds in the western Gulf, then Dean will drive north into the oil and gas fields off the Texas-Louisiana coast. This would be an unprecedented disaster. Given the low state of gasoline inventories and the necessity of diverting more refining capacity into heating oil, the price of gasoline would have to be jacked up to $5 - $6/gallon to sufficiently reduce demand. Many service workers cannot afford to pay this and maintain their commutes. A wage/price spiral would result. The only silver lining to this is that the ethanol shell game would be fully exposed. Natural gas is the primary feed stock for fertilizer; and production would have to be halted to ensure that there is enough natural gas to maintain pressure in the pipelines in the winter.

-This is absolutely critical and goes beyond people shivering in their McMansions. Eventually pressure would be restored; but, few would know how or when to reignite their pilot light -

For awhile it appeared that the summer would be calm and the festivities would occur until harvest season. Nature has other plans. I'm keeping my gas tank full.

The Trigger Effect

2007-08-13T09:35:00.001-07:00

Part 1 of 5 of the first "Connections" episode, hosted by James Burke. This episode is nearly 30 years old; yet, is more applicable today despite the leisure suits.

The Sack of Rome

2007-08-12T10:45:00.000-07:00

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

Thomas Jefferson

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings."China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar."
He Fan (An official at the Chinese Academy of Social Sciences

In 410 A.D., for the first time in 800 years, Rome was sacked by an outside force. The empire had been in decline for centuries, having outsourced every productive activity. Even the Roman Army was composed mostly of members of the Teutonic tribes, whose loyalty consistently in doubt. In the late fourth century dry conditions in Central Asia reduced the amount of fodder available for the livestock of the nomadic people living there. They moved west.

The Huns were skilled horsemen. Undoubtedly both General Patton and Field Marshall Rommel must have envied their speed and mobility. They displaced the Teutons from just beyond the Roman frontier into the provinces. There, they encountered the usual torments of an immigrant group: exorbitant taxation, prejudice, and overcrowding. Alaric of the Visigoths sought redress and gathered his troops and marched into Italy.

Prior to the sack of a key city there has always existed a protocol. It comes down to the fact that destroying a city is a negative-sum activity even for the victor. The amount of booty that can be obtained after a protracted siege and assault is always less than what could be obtained through negotiation. More importantly for the attacking general, all of the booty that is obtained through a disorderly sack is subject to pilferage and despoilment by his own troops. Alaric was promised tribute by the Roman Senate; however, the emperor refused to pay so the city was sacked. Even though the sack was considered relatively non-violent, 410 A.D. has been considered the end of the Western Empire because now the Empire only existed at the consent of the various barbarian tribes.

Today, the fodder for industrial civilization lies deep beneath the earth in a finite quality. The U.S. Dollar, the reserve currency of the industrialized world, depends upon inexpensive fossil fuel for its value. Within a year a U.S. Presidential Candidate lagging in the polls will drop the Peak Oil bomb. The value of the dollar will plummet, as would the $2 trillion held in reserve by the Central Banks of China and Japan. Naturally these countries want to redeem their USD reserves before they are rendered worthless. Japan has elected to slowly deplete their reserves by using them to buy oil. China's reserves are much larger and their economy depends upon its ability to accept USDs as payment to a larger extent than Japan. As long as the Federal Reserve does not cut interest rates or Peak Oil becomes accepted they are willing to maintain the siege.

Unfortunately, the American public is chaffing behind the walls of high interest rates. It is more difficult to bring provisions into 'the city'. Worse, what little defense has been mustered has amounted to about $200 billion in reserves from the European Central Bank and the Fed. Obliviously, the Chinese Central Bank is not on the same side of the wall.

The mortgage meltdown has been attributed to a regrading of the quality of the Collateralized Debt Obligations. This causes the banks and mortgage companies to keep in reserve a larger portion of their loans - even though they securitized and sold these loans, they are liable in the cause of default. The Federal Reserve could lower the reserve requirements; but, it appears that no one wants to man the wall and be without a chair when the music stops.

What sort of booty do the Chinese expect to receive for all of their trouble? Given that most productive activity has been exported in the past generation and the state of the infrastructure, the last asset in US hands is real estate. As the Chinese buy up the suburban clapboard shacks filled with their trinkets, America will be turned into a nation of renters; but, at least the Fed will then be free to lower the discount rate.

Shaking the Tree

2007-08-05T08:20:00.000-07:00

A pecan tree is a species of hickory that grows especially in regions with hot and humid summers; and, produces a nut that is known for its rich buttery flavor. It can grow to a majestic 40 meters, which does little to complicate harvest as a tree shaker is used. Not all of the pecans succumb to the tree shaker. Some remain attached, yet enough fall to make the investment in the equipment more profitable than human labor climbing ladders.

The current mortgage meltdown is akin to the banking industry shaking the tree, before another harvester takes the crop the banks feel is theirs. The record foreclosure rate could be stemmed by the historic buyer of last resort, The US Federal Reserve. Despite the spillover in the US stock market the Fed remains silent, allowing the mortgage tree a ruthless shaking.

http://www.cnbc.com/id/15840232?video=452808336&play=1

Why would the banks destroy their most lucrative business - increased mortgage lending leads to higher housing prices which give individuals that sense of security that ultimately leads them to max out their credit cards with most of the payments devoted to fees and interest. To sacrifice a long term revenue stream in favor of a short term gain appears irrational.

Unless another buyer of last resort appeared on the western horizon. Asian central banks hold $2 trillion in reserves. They must be nervous given any number of reasons: unfunded Social Security/Medicare liabilities, persistently high trade deficit, high budget deficit, economic growth dependent on increases in oil consumption, and a faltering war for oil in Iraq. They know that they cannot sell their reserves or it will spark a panic and the door will shut before anyone gets entirely through.

They can buy US real estate with a portion of their reserves and then dump the rest on the market. They are waiting. They are waiting. Waiting until the tree is shaken and all the weak nuts are down. This does two things: insures that prices will not fall further and increases the number of potential buyers of their newly bought property. When is the bottom of the market? When the Fed decides to cut interest rates.

Peak Oil debunked in 4 minutes

2007-08-03T18:43:00.001-07:00

Out of fairness I felt the need to allow an opposing viewpoint an appearance on this blog. If you have 4 minutes to waste, feel free to watch the video. Personally I remain curious as to why their Boy Wonder, who currently occupies the Oval Office, is compelled to expend an exhorbitant effort in Iraq if a limitless supply of abiotic (pronounced a-bionic in the video) oil existed in the U.S.

No Detour Around Physical Laws

2007-07-26T09:00:00.000-07:00

For an ideal fluid (low speed air is a good approximation), with no work being performed on the fluid, an increase in velocity occurs simultaneously with decrease in pressure or a change in the fluid's gravitational potential energy.

Bernoulli's Principle

A common proposal to reduce gasoline consumption in the U.S is reinstitution of the 55mph speed limit. Some more draconian measures propose a maximum speed limit of 45 mph – the most fuel efficient speed. Any proposal to reduce the maximum allowable speed will result in increased gasoline consumption. Highway traffic behaves as a fluid. Increased velocity reduces congestion (pressure) and increases the capacity of the highway.

The 55mph speed limit was first implemented in the 1970s and contributed to a reduction in U.S. gasoline consumption. Unfortunately we cannot extrapolate the experience of the 1970s to conditions today. Thirty years ago, traffic congestion was decidedly tame by today’s standards. For example, it was possible to make the transit from Orange County to the San Fernando Valley (50 miles) in about an hour at any time except rush hour.

The Oil Age has spun of web of irony; and, one strand is that the very fuel production and efficiency measures enacted in the late 1970s caused the cheap oil conditions of the following two decades, turbo-charging suburbia. Now it is too late to re-enact the simple measures of times past.

The interstate beltways surrounding U.S. metropolitan areas were intended as low-congestion bypasses of the old industrial cities. Suburbs sprung up along the spurs emanating from the beltway. As these ‘edge cities’ matured with their office parks, fry pits, and fake ‘n bake salons, the spurs extended outward. This outward extension increased the congestion dramatically, and transportation planners had one option in the face of a tax-weary electorate, elimination of speed limits on urban/suburban interstates.
To receive a speeding ticket in a congestion zone today, one must be in the left lane or weaving through 60mph traffic at 90mph. Of course, rural police remain ever-diligent in their pursuit of the 3mph over the limit offender.

Reinstitution of the 55mph limit would reduce highway capacity causing massive gridlock, wasting even more fuel and time. The only way that the 55mph limit would work would be a huge expansion of mass transit or an even more ridiculous expansion of road capacity. Either of these options would require a huge expenditure of energy, probably more than maintaining the status quo. Suburbia is too dispersed for mass transit to operate economically.

The 55mph speed limit is typical of many proposals that fail to acknowledge the existence of physical laws. Biodiesel/ethanol is another one. The U.S. motor vehicle fleet can be powered through these renewable resources only if every available acre of farmland was devoted to fuel production.

Where Are We?

2007-07-18T09:00:00.000-07:00

My father rode a camel.

I drive a Rolls Royce.

My son flies a jet airplane.

His son will ride a camel.

Arabian proverb

Peak Oil is also known as WTSHTF and TEOTWAWKI and people posting on Peak Oil sites either want to know when it will occur; or, offers some opinion about its occurrence. Virtually everyone agrees that Peak Oil will only be seen in the rear view mirror; and, that oil production at peak will resemble a 'bumpy plateau' for a few years before its inexorable decline.

Just a few months ago, there remained a wide variation of opinion among retired petroleum engineers that Peak Oil would occur between 2005 and 2010. Recently a consensus has emerged, supported by production data, that production of conventional light, sweet crude had peaked in the first half of 2005. Light, sweet crude is the most desirable grade of petroleum; it is low in sulfur and is easy to refine. When Peak Oil made an uninvited splash in the mainstream media in 2006, Saudi Arabia claimed to have 1 million barrels/day of unwanted production. This production was heavy, sour crude which fetches a lower price on the world oil market. It is likely that U.S refineries are forced to accept this lower grade of oil for processing, resulting in higher maintenance requirements and longer downtimes.

Due to primitive refining infrastructure developing countries cannot use the heavier grades of oil. They are priced out of the light, sweet market and a brutal demand destruction occurs. The Post Fossil Age has already arrived in Senegal. While the inability of poor countries to purchase oil may increase the amount of oil available to the industrialized countries, any surpluses are consumed by increasing oil consumption within oil exporting countries. Virtually all oil exporting countries have exploding populations - OK, Norway is an exception - that must be kept happy through oil-based bread and circuses. This reduces the oil available for export. Once a typical OPEC country reaches its production peak, exports drop much faster than production. Population is greater and becomes more restive.

It is unlikely that the typical Saudi Arabian or Mexican citizen is kept abreast of the latest oil production data. As the proverb suggests, citizens of oil exporting countries have an innate understanding that the oil bonanza is short-lived. Mexico has avoided 'third-world' status on its possession of the Cantarell oil field, which suffered a 20% cut in production last year. Rising corn prices - due to diversion to ethanol production - spurred riots in Mexico City earlier this year. Over 50% of the Mexican government's revenues come from oil exports. The trickle across the US/Mexico border is about to become a flood.

The latest answer to declining production is that production from unconventional sources (deep sea, polar, and tar sands) would fill the gap. There are two major problems with unconventional petroleum sources: time and money. There is not enough time to bring these sources into production to offset current depletion rate. It will be a decade before the tar sands of Alberta reach peak production of 5 mbd. Deep sea and polar sources suffer from a shortage of suitable drilling rigs. Oil from these sources is also far more expensive. Even if the supply were adequate, most developing countries would not be able to afford this oil.

A 5% depletion rate may not seem so onerous. Just trade in that Yukon for a hybrid; or, go to a farmers market in the summer, etc. Unfortunately those choices, if made en mass, would lead to economic depression in today's debt-laden consumer economy. The primary benefit of oil from non-conventional sources is that it allows the population of the industrialized countries a few more years of denial.

Polyculture vs. Monoculture

2007-07-13T08:18:00.000-07:00

"There is no process that, operating in a cycle, produces no other effect than the subtraction of a positive amount of heat from a reservoir and the production of an equal amount of work."

The Second Law of Thermodynamics

The age of oil can also be called the age of specialization. Every entity (individual, farm, factory, or store) specialized or faced marginalization. Public spaces have been subsumed for corporate (the ultimate specialist) use. In the last 50 years some window dressing has been applied to the monoculturization of our society. A few murals have appeared in urban-renewal areas. A native shrub or two borders a soybean field. School textbooks preach diversity while the test-prep curriculum squashes any free-thinking.

Specialization is expensive. It would not occur unless the energy expended to maintain this high state of order is less than any marginal benefit obtained from the ordered state. The crisis that exists today is that the benefits are subject to diminishing returns while the energy expended becomes more expensive. We may have already passed the threshold where subsequent investment is producing a negative return. The government trumpets GDP growth; yet it is obvious that the numbers have been heavily massaged. And life is not just money or its paper/virtual impostor.

The mass privatisation of public spaces and increase in public costs (taxes, fees, inflation and social alienation) has reduced the quality of life of all but a few. Whether Peak Oil occurs this year, occurred last year or won't occur for another decade is irrelevant. Our specialist society is already on the downslope.

Societies and entities based on polycultures/generalists are more stable and require fewer inputs. A polyculture farm with a large variety of crops and livestock coexisting with their wild co-habitats is inherently stable - no inputs required and lower yields of a wider variety of crops implies less susceptibility to exogenous events. A monoculture farm requires energy and mineral inputs to maintain yield. In addition a large crop subjects the farmer to diminishing returns as the farmer is forced to accept a lower price for his produce.

The suburbs represent the pinnacle of specialization and are a web of monocultures. There are places to live, places to work, and places to shop. Shopping is a necessary activity of specialists because they are trained to do little besides their chosen field. Even the transportation system is specialized. The environment and distance between activity hubs require motor vehicle transportation. Unlike general (dry goods) stores and farmers markets, big box stores require huge turnovers of merchandise due to perishability or obsolescence. This requires large trucks - railroads are not practical due to the dispersed nature of suburbia. All of this must be staffed by specialists who can earn enough to buy this infrastructure by taking on huge debts. This house of cards is underwritten by cheap energy.

The peril of specialization is exemplified by the specialist. A specialist requires large amounts of education to obtain their credentials - and the right to practice. Unfortunately the law of diminishing returns is not unlike burning a candle at both ends for the specialist. Due to today's free flow of information a specialist's relative monopoly (and his ability to earn a profit on his expenditure) is short-lived. News of high-profit specialties travels fast. This creates a bolus in the pipeline, depressing wages and increasing credentialing costs.

Unfortunately most of us are locked into the specialist economy; and, those lucky few that can make the transition must pay a fee that may make the proverbial pound of flesh appear as chump-change.

The New Goal of Suburbia

2007-07-01T22:10:00.000-07:00

"We are grateful to the Washington Post, the New York Times, Time magazine and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto determination practiced in past centuries"
David Rockefeller in an address to a Trilateral Commission meeting in June of 1991

At one time the suburbs afforded country living with an easy commute to the city. Today many suburbs have urban problems and a congested commute to the city. Yet cultural inertia instills 'a house on a 1/4 acre in the suburbs' as the American Dream.

The recent housing boom and unfolding bust is laying out a more disturbing consequence of suburbia. It resulted in the transfer of wealth from the American middle class to the world banking corporations. The first to go were the most credit unworthy homeowners who obtained adjustable rate mortgages at the behest of Alan Greenspan and numerous Ditech commercials. The banks obtained the property and (with the new bankruptcy law) an indentured servant. It is irrelevant that the property may be worthless. All the better for the bank, as it reduces the supply of available housing, making existing housing more expensive. Additionally it does not matter is the lending institution went bankrupt. This allows the parent corporation to take a loss, and reduce taxes while keeping all of the assets.

The sub-prime debacle could be solved if the US Treasury assumed the subprime mortgages and gave the homeowners a 30 year fixed rate. Unfortunately, the US Federal Reserve controlled the US Treasury pursestrings; and, the Fed, being a privately-held corporation will not allow that to happen.

This tide of insolvency will continue to rise. Many prosperous baby-boomers traded-up to high end housing in the last decade. They maxed out their credit cards to outfit these McMansions with granite coutertops, home theaters, 'water-features' in the backyard, and an SUV that requires a double-car garage just for its front end.

The average 401(k) balance of a 60 year-old boomer is $65,000.

What will happen when all of those McMansions go up for sale at $500,000 each at the same time? Who will buy these homes? Frycooks and baristas? It would take 20 low wage workers to get a mortgage for one of these homes. And that isn't even considering the commuting costs with gasoline over $3/gallon.

The world banking establishments are allowing an inflation of real assets, while financial assets deflate. The typical American house is a financial asset. Most of its value is derived from its speculative potential. Hogwash you might say, "Its location, location, location." Then ask yourself this question: Would you have bought your current home if the agent (or other competent person) told you that your new home will not appreciate in value?

Look forward to having millions of 60 something indentured servants in the near future. They will liquidate their 401(k)s, depressing stock prices, accept lower salaries for your job - and claim age discrimination if they don't get yours, and complain about health care and prescription drug prices.

The banks will have won and a New World Order will be established at the demand of the enslaved.

And that is only finance. The suburban dream has turned into a nightmare. High home prices have encouraged dual-income families. This has caused numerous social/health problems. Columbine would not have occured if one of the parents had noticed that their garage was an armory. But they must have been too busy working to pay the mortgage.

Obesity and lethargy is an epidemic. What else is there is do in the suburbs other than go to the mall and lust over a plasma TV and eat toxic fat in the food court?

In an ironic twist of events, Peak Oil may save us from universal enslavement; but, from now until our salvation a desparate struggle will occur....

Technological Rumination

2007-06-21T21:00:00.000-07:00

A summation of the human experience would be an ongoing struggle against nature. Dessication of African forests millions of years ago forced us onto our feet, scavenging or stealing the kills of more dedicated carnivores. We used the mobility of bipedalism to spread throughout the Eastern Hemisphere. Nature then attempted to freeze us. No doubt some attrition occurred; but, the ice age and the commensurate drop in sea levels permitted humanity to spread to the Western Hemisphere. Possibly in act of desperation she then subjected us to floods.

All life forms have one defense against nature's vicissitudes, evolution. Its major drawback is that evolution works over generations, a nature disaster occurs over a much shorter time frame. Evolution is so slow that humanity appears to have stopped evolving around 50,000 years ago. That is nonsense. Something else has been pinch hitting for human evolution since then. Many animals have used tools in their daily lives. Vocal communication also is not a human monopoly.

tech·nol·o·gy - noun
1.
the branch of knowledge that deals with the creation and use of technical means and their interrelation with life, society, and the environment, drawing upon such subjects as industrial arts, engineering, applied science, and pure science

??????????????????????? Such a useless definition

Technology has replaced evolution as the key for human survival. My definition of technology is the leverage of tools with the expenditure of energy to create or destroy another object. The first product of technology was cooked food. The first written description of a product of technology is Noah's Ark.

Modern society has relegated the Biblical flood story to that of myth. Even so, recent Russian exploration of the Black Sea floor has found evidence of a neolithic civilization next to a fresh water lake. It is speculated that as the sea levels rose with the retreat of the glaciers, an earthquake ruptured the Bosporus and let in the salty Mediterranean Sea flood the area. The Caspian and Aral Seas' owe their origins to the ice age. In North America both the Great Lakes and the giant Ogallala aquifer are the result of glacial melt. The topography of the Pacific Northwest was carved by repeated floods of the Columbia River and is described in Native American oral histories.

Perhaps Mother Nature realized that the repeated calamities only built a resilience in humanity. For the last 10,000 years she has accommodated us. From Greenland ice core samples dating to 150,000 years, no period has experienced as much climatic stability has this recent 10,000 year period. Maybe it was her plan all along - to get us fat, lazy and happy and then to cook us.

We have an interesting relationship with technology and the energy required to discover, develop and utilize it. At first our energy sources were directly derived from one's physical labor. Even the gathering of firewood required physical labor. Societies were very egalitarian. Virtually every male that survived to adulthood was of the same physical strength. The nerds of the day smoked weed and claimed to commune with the gods; but, even they could wield a rock if it came to that. The generally mild climate permitted humans to settle down, domesticate wild grasses, animals, and set stuff on fire.

Much was discovered by burning random things. Burning clay yielded pottery, allowing the storage of large amounts of alcoholic beverages. Burning other rocks liquefied them and metalworking was born. No longer did an individual have to rely on his own energy expenditure to accomplish tasks. The horse could pull a plow or carry a warrior into battle with the end result better for the individual controlling the horse. Metal swords and plowshares are superior to wooden ones. But they require a much higher expenditure of energy in their fabrication. Societies with their increasing complexity became markedly unequal. The charismatic nerds became the high priests, while the typical antisocial nerd aspired to a career in metalworking.

Money became necessary because the warriors (the jocks of the day) needed metal weapons and armor from the nerds. Since its inception, a unit of a money's value has been directly related to the energy expenditure required to create it. Whenever this relationship has been severed, the society implodes when a balance is reimposed. Gold, silver and copper were obvious choices because of their varying scarcity and that energy was required to mine and smelt the metal and mint the coins. These ratios have been constant; the energy required to obtain one ounce of gold is 16 times greater than that of silver and 1280 times greater than copper.

For the first thousands of years of civilization, most energy was derived from the physical labor of people and animals. The only major contribution of chemically derived energy was the combustion of firewood - and that required substantial physical input. With a few minor exceptions societies were unequal because not everyone had access to horses and metal weapons. A peasant rebellion could only temporarily alter the balance of power; it took years of training for an individual to learn the art of fighting from horseback. Any rebellion that succeeded in overthrowing the local lord would be susceptible to invasion from outside. Gunpowder was revolutionary in that the energy released was the result of a chemical reaction. Physical stamina and dexterity were not required to operate a firearm to the degree that was required of a mounted knight. Societies became more equal within those that had access to chemically derived energy; and, became far wealthier than those reliant on physically derived energy.

Today we stand near the apex of the chemically driven economy. After several generations of increasing dependence on chemically derived energy we have forgotten the reason chemically derived energy has more punch than physically derived energy - chemically derived energy represents stored energy. This stored energy has been depleted much faster than any replenishment. The United States was the leading producer of petroleum until 1970. Until that time, American society became increasingly equal. Inequality dramatically increased after the U.S. passed its oil production peak. Unequal societies require more authoritarian governments to maintain size and stability.

The value of the U.S. Dollar since 1970 has acted as a barometer of Western ability to supply their energy needs. Rampant inflation in the 1970s was the result of a sudden dependence on Middle Eastern oil. Low inflation and interest rates throughout the 1980s and 1990s were due to the peak production of the Alaskan and North Sea oil fields - the last oil fields of any significance under Western control. Northern Alaska peaked in the mid-80s, about the time the U.S. Dollar peaked in value in the post Bretton-Woods world. The major oil fields in the North Sea began its decline in 2001 - the last year that $1/gallon gas was seen in the U.S.

While humanity has relied on technology for thousands of years, only recently has there been an awareness of our dependence on technology. Our dependence has metastasized into an expectation that technology will solve our problems while turning a blind eye to its diminishing returns.

The Evolution of Money

2007-06-19T20:52:00.000-07:00

Money, get away.
Get a good job with good pay and you're okay.
Money, its a gas.
Grab that cash with both hands and make a stash.
New car, caviar, four star daydream,
Think Ill buy me a football team.

Pink Floyd

mon·ey
1.
any circulating medium of exchange, including coins, paper money, and demand deposits.
2.
gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value.
3.
any article or substance used as a medium of exchange, measure of wealth, or means of payment, as checks on demand deposit or cowrie.

My definition of money - A claim to usable energy.

Humanity has had access to money - in its common definition - in the presence of civilization; yet, one of the definitions of humanity is to make claims on usable energy. So money as I define it has been around for possibly millions of years.

What are the more ancient forms of money?

The first form of money was expressed as social credit. It remains the most common form of money. It is simply people providing goods and services for each other. For example, an individual may need a section of land rototilled and offers a wood-burning stove along with storage space. While the monetary society would provide a different valuation for the items in this exchange, this exchange is completely equal to the involved individuals. It is not communism because the exchange is completely voluntary.

The above transaction sounds a lot like barter; but, there is a key difference. Social credit is an ongoing transaction between individuals; and, usually leads to subsequent transactions. Barter is a one time transaction. Previous and future transactions have no effect on the current transaction. Barter can also be conducted between individuals unfamiliar with each other. The focus is on the goods or services exchanged.

Barter can be very cumbersome, especially in a specialist society. Specialists produce too much to barter their goods and services (energy invested) effectively. A commodity-based money was developed to contend with the specialist problem that arose with civilization. The most common CBMs are coins. Until the early 20th century the money of stable societies was based on metals of recognized value: gold, silver and copper. Paper money existed; but, was redeemable in metal. This is very similar to barter except that one party used money to complete the transaction.

Fiat money, or money by decree, is what most people in modern society believe is money. The US Dollar is decreed to have a value. Its value is a relationship between the IRS's ability to extract resources from US taxpayers, short-term interest rates set by the Federal Reserve, and the willingness of various entities to lend the US Government money. Unlike coinage, fiat money has value only if the issuing entity can project power. A Roman aureus is worth its gold content/face value even though the issuing entity dissolved over 1500 years ago.

It wasn't long ago that gambling was considered a tolerable vice on the other side of the railroad tracks. In today's post-industrial, bad customer service society gambling is mandatory. Derivatives, options, and insurance are all forms of gambling and we are forced to participate. Pension plans, defined contribution retirement plans, and mutual funds invest in derivatives to boost gains and pay management fees. Options and insurance are equivalent. Payout occurs when pre-defined conditions are met. Homeowners and medical insurance are not unlike a casino. The plans are written by statisticians so that the house comes out ahead. This form of money is nearly opposite of social credit in that participation is virtually mandatory and that the parties to the transaction do not know each other. Home mortgages are bundled into securities that are sold to retirement plans and hedge funds - who then use them as collateral for subsequent bets. If one piece of straws blows too hard in the wind......

The last form of money is the lack thereof - state property. The state is defined as the ruling elite. Everyone else is either a worker or a drone in the great hive. Usually the rulers do not need to bring about state property by force. They merely sow distrust among the masses such that no one wants to conduct business with their neighbor and appeal to the government for all of their perceived needs. Totalitarian governments do not rule by force; but, by dependence.

The Fusion Fantasy

2006-11-25T11:11:00.000-08:00

I've got a job waiting for my graduation
Fifty thou a year -- buys a lot of beer
Things are going great, and they're only getting better
I'm doing all right, getting good grades
The future's so bright, I gotta wear shades
Timbuk 3

There is a major problem with renewable energy sources (solar, wind, biomass) in that they are renewable. A big advantage with fossil fuels has been that our civilization has been using them as if we have been withdrawing the principal from passbook savings account. Renewables allow only interest withdrawals. What amount is this interest? One ounce of gasoline contains the energy equivalent of ten years of a prehistoric tree fern's photosynthesis. A few hundred million years may have passed; but, the laws of thermodynamics are quite durable. Even with a high-mileage 'supercar', one ounce of gasoline doesn't last very long.

Another underappreciated advantage of fossil fuels is their ease of extraction and minimal processing. In the largest oil fields in the world (and all gas fields), the fuel arises of its own pressure and refining and distribution do not exert significant drains on the energy return of the product. Biomass, solar and wind do not have nearly as favorable an energy return for energy invested ratio as any of the fossil fuels. Solar and wind suffer from an additional disadvantage of dependence on a fossil fuel economy for their large scale operation.

Fusion appears to be the perfect solution. It is nonrenewable; but, given the amount of seawater it has acquired renewable characteristics. Its depletion is not considered; though, energy is very much like money and memory - people have always figured out how to turn an abundance into scarcity. Unfortunately, of all the potential solutions to depletion of economically recoverable fossil fuels, fusion depends most on a vibrant fossil fuel economy.

Developing fusion would require the dedicated work of millions of specialists. Not just nuclear scientists, but every other specialist that can be mustered. Individuals specialize in a given field not due to any inborn advantage; but, for its benefits. There may not be enough beer (its production also requires specialists) available to satisfy these specialists - or too much beer for any meaningful work to be done.

An irony of our technological world is that the satisfaction of the specialists (and the economy) requires a heavy input of cheap labor. Whether in the fields of California or Mexico, the factories in China or Vietnam, and the housing developments in suburban America, cheap labor is underwritten by cheap oil. When oil becomes expensive, the gee-gaws and trinkets from China will rise in price. Tomatoes from Mexico and pears from Chile will also rise in price. The nuclear scientists and their buddies may still be able to buy microbrews to drink while watching the game on their plasma TV; but, the barrista won't. The barrista may decide that working for minimum wage plus tips doesn't cover the cost of commuting. Even if the barrista decides to move to an apartment within walking distance of work, the economy will unravel quickly. Because driving is no longer an option for the barrista (and millions of other low-wage specialists), they will no longer vote for road maintenance. Even the toll roads would have to increase their tolls (fewer drivers to cover fixed costs). The last remnants of American manufacturing (automobiles and airplanes) will disappear. This will cause an inflation of real assets and a deflation of financial assets - the very products that middle-class America depends upon for wealth. With the withering of financial assets and the disappearance of the middle class, the resources to develop fusion will disappear also. A high proportion of Americans - no matter their chosen career and student loan balance -will assume an occupation that their great-grandparents forsake - farm laborer.

Peak Oil, Global Warming and Wiping Out

2006-11-21T19:59:00.000-08:00

If world oil production from conventional sources did peak within the last year, it would be expected to take 3 years for this to become commonly known. The reason for this is that the production peak will appear as a bumpy plateau, as there are numerous oil producing entities and each one individually may have a fluctuating production pattern. Weather events (Hurricane Katrina), maintenance issues (BP's Alaskan pipeline), and geopolitical instability (Nigeria) all cause fluctuations in production. Cumulatively these events and factors prolong the world's conventional oil supply - the market reacts by increasing the spot price of oil, decreasing demand. While U.S. domestic demand is relatively inelastic - the U.S. military has the Federal Reserve print more FRNs; the professional class works a part-time job or brings a sack lunch once a week; the poor make more meth - you get the idea. In developing countries demand is far more elastic. With last spring's runup in oil prices poor countries just didn't buy any oil. Purchasers in the industrialized countries hoarded oil supplies in anticipation of $100 oil.

The market performed as expected. Enough demand was destroyed such that a temporary oversupply resulted. Prices at the pump fell throughout the summer and early fall. With the arrival of the winter heating season and depletion of the hoarded stocks, prices have bounced back up. By early next year retail gasoline prices are likely to never again venture below $3/gallon and Peak Oil will become an accepted theory.

There is no longer any credible denial of the existence of Global Warming. Whether it is human caused is irrelevant. Even if every country in the world adhered to the Kyoto Treaty, it would not stop the progress of global warming anymore than deciding not to pedal a bicycle with disabled brakes downhill - and expecting to stop. The only way to stop global warming is the same way one would stop the runaway bike - wipe out and take the road rash. At the global scale this would require a 'downsizing' of population back to 1950s levels - the probable start of global warming. Unfortunately there are not enough suicide bombers to make this a 'voluntary' project.

How does Peak Oil fit in the Global Warming debate? During the California power crisis in 2001, the solution was the construction of more natural gas power plants for electrical generation. Because the environmentalists like track lighting in their suburban McMansions, there was no opposition to these power plants. Recently, electric utilities have requested permits to build power plants that use coal. The environmentalists are up in arms over this. Coal is very plentiful domestically; but, is extremely dirty.

Natural gas production has followed oil production, except that while oil fields tend to decline gradually, natural gas declines precipitously because it cannot be pumped. Once the pressure is gone, the field is depleted.

The electric utilities are aware of this and have decided to go with coal despite the public relations problem. At PUC meetings next year, expect Peak Oil/Gas to be used as the reason for coal plants instead of gas.

What about wind or solar? Electricity is very expensive to store; and has its own environmental problems. Lead acid batteries must be used and it is unlikely anyone wants to live near a lead smelter.

Denial Works for 3 Years

2006-08-08T10:10:00.000-07:00

“The good news is that OPEC can no longer dictate world oil market prices. The bad news is that no one can.”
Kenneth Deffeyes

In 1970 the Texas Railroad Commission posted a legal notice in a Dallas newspaper, removing all production restrictions from oil producers. Up to that time Texas was the Western World’s swing oil producer. Throughout the 1960s OPEC made repeated attempts to use the oil weapon against the West, and failed each time, due to excess capacity in Texas. In 1973 OPEC played its oil card again in retaliation for U.S. support of Israel. This time, the U.S. was an oil importer and had no excess production capacity. The effects were catastrophic.

1973 was the high-water mark for the average American worker. Real wages for factory workers peaked that year. Subsequently, the only way for an American worker to get ahead was to acquire an increasing amount of expensive college education. Government statistics began to emphasize household income more than per-capita income, disguising the decline in real wages.

Even though U.S. oil production has been declining since then, (other than a brief spike in the early 1980s from Alaskan oil) the economic effects have been relatively benign. This is due to the petrodollar standard in which Saudi oil profits are used to purchase U.S. Government debt and the interest paid is recycled back into U.S. engineering and construction firms. Other countries that have always been oil exporters such as Mexico and Venezuela have seen dramatic erosion of their middle classes once their oil production peaks have passed.

Russia, formerly the Soviet Union, has always been awash in oil such that Russian apartments did not have thermostats, they regulated interior temperatures by opening windows, even in the winter. Even so, Russia’s peak occurred in 1986. Within 3 years, declining revenues from oil exports could not continue to pay for its military, communist party perks, and a world class hockey team to keep the masses pacified. We all know what happened to the former Soviet Union and its dominions.

Since 1974, Saudi Arabia has been the world’s swing oil producer, and every time a crisis in oil production occurred, such as the Iranian Revolution and Gulf War I, they have been able to increase production. Starting with the escalation of oil prices in 2004; however, Saudi Arabia has been able to increase oil production only by using enhanced recovery techniques such as pumping salt water into the oil fields to repressurize them. After Hurricane Katrina, Saudi Arabian oil production did not cover the shortfall from the loss of production from the Gulf of Mexico. Instead the swing producer was a combination of withdrawals from both the U.S. and European strategic petroleum reserves. It appears that Saudi Arabian oil production has peaked.

While two examples will not stand up to any statistical sampling standard, it is noteworthy that 3 years passed between the U.S. oil production peak in 1970 and the oil shock of 1973; and, the Soviet Union’s peak in 1986 and the fall of the Berlin Wall in 1989. If worldwide oil production truly did peak in 2005, 2008 could be a very interesting year.

Something of note…

In 1979, the Iranian Revolution caused a temporary 5% reduction in worldwide oil production, and oil prices tripled. What would a permanent 5% reduction do?

I'm Back!

2006-06-23T22:24:00.000-07:00

If I had my time again
I would do it all the same
And not change a single thing
Even when I was to blame

Big Audio Dynamite

I haven't performed a statistical analysis but I believe that the more that it rains, the more I blog. The greatest number of posts were in January and the Rose City received 11 inches of rain that month. Laurel Mountain, west of Salem, OR in the Coast Range received an astounding 55 inches of rain that month. La Nina drenches the Pacific Northwest. Since then it has been comparatively dry, so I have spent more time away from the computer - and blogging.

I realize that I dropped out abruptly, promising parts 2 and 3 on the consequences of specialization. I haven't forgotten. In fact, the two major issues in the upcoming 2006 and 2008 elections - healthcare and immigration - are aggravated by specialization. Another relevant blog topic is related to Al Gore's foray into muckraking. In fact if I didn't have to work for someone else (or a corporation) I would have plenty of material to blog about. Back in January I 'showed up at work' an average of 35 hours per week. Now I have to make a presence of 40 hours a week - at a time when I could be scaring scores of people while riding about town wearing spandex! Life is so unfair when you have a mortgage.

Anyway I currently work to survive but for a day next month I get to earn a living wage....

http://www.portland-beerfest.com/Index2%20PIB.htm

(Click on the volunteer tab on the left)

Even though a heat wave is anticipated in the area for the next few days, I promise to have a substantial post by Wednesday (6/28/06).

The King of Roads

2006-05-16T16:11:00.000-07:00

"Undoubtedly the greatest monument to the road building industry in the West.”
Excavating Engineer, 1920

The Columbia River Highway served as a link between Portland and Eastern Oregon prior to the construction of Bonneville Dam and Interstate 84 many years later. Today the Historic Columbia River Highway serves very little commercial; but, is known as one of America's greatest scenic drives. Its a nice leisurely drive; though, built for vehicles that didn't exceed 30mph. For bicycles, its exceptional. Here are some pictures from today's 78 mile bike ride.

Oregon Countryside

Horsetail Falls

The Historic Columbia River Highway

A Place for Lunch

The Sandy River

I left out two of the more recognizable pictures from this blog. They got washed out by the sun; but, they are posted on Radio Paradise's Forum thread: Photography Forum (Photos you have taken yourself).

The Game of Chicken Approaches its End

2006-05-09T13:09:00.000-07:00

The Federal Reserve, the central bank of the United States, was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.
Mission Statement of the U.S. Federal Reserve

A dangerous enterprise can easily be found when comparing its published mission statement with its real one. The real mission statement of the U.S. Federal Reserve can be summarized as, "Playing chicken with world's financial markets." The Fed sets a short term lending rate and expects the world's financial markets to cooperate by setting their rates based on the Fed's decision. The higher the short-term rate, the greater likelihood that foreign central banks and investors are willing to subsidize the U.S. federal budget and trade deficit. Unfortunately raising this rate too high tends to decrease domestic borrowing, which at this stage forms a critical component in the economy. Most of the the private sector jobs generated in the U.S. since 2000 have been in real estate. Virtually all of the remaining 'good jobs' generated have been in government, education, and healthcare. These 'industries', while vital to our society do not produce anything that can be exported. Even the private sector real estate jobs are supported by transaction costs. No new wealth is generated. Worse, many individuals acquired home equity debt to finance consumption. This decreases the wealth of a society.

Why would I claim that the game of chicken is approaching its end? Tomorrow's interest rate decision is well known. The Fed knows that surprises undermine confidence, a market's most valuable asset, more than anything else. Despite this widespread knowledge, the U.S. Dollar is trading lower today and the price of gold is making a 26-year high just a hair under $700/oz. It seems that the world markets are no longer paying any attention to the Fed's interest rate decisions. The Fed is now increasingly 'pushing on a string'.

Just because the game of chicken is almost over, doesn't imply that a repeat of Weimar Germany's 1923 hyperinflation is iminent. The U.S. Government has many more tools to use before taking that road. Once foreign governments lose confidence in the U.S. Dollar, capital controls will be implemented. No longer will individuals be able to invest in stocks and/or mutual funds composed of international equity issues. This will provide support to the U.S. stock market and keep it above 10,000. The ultra-wealthy have already deserted the U.S. stock market. Fully 80% of domestic stock is institutionally owned - mutual funds, IRAs, and pension funds. If there is an immediate crisis in the U.S. Dollar, caused by the Chinese dumping their U.S. Treasury Bonds, it would be easy for the banking system to shut down the credit/debit card system, including all ATMs. That would provide a temporary amount of scarcity of cash in the domestic economy, supporting its value. Its not a bad idea to keep $1000 in cash at home. What are you forfeiting, $10 in taxable annual interest? Cheap insurance if you ask me.

In 1915, the year this 100 Corona coin containing nearly one ounce of gold was minted, a $20 bill issued by the U.S. Treasury would have had equivalent value to this gold coin. The irony of this is that while the coin's issuing nation, The Autro-Hungarian Empire, no longer exists; this coin has retained all of its purchasing power. The $20 bill, despite being issued by a country that has increased in power throughout the 20th century, has seen a nearly 99% decline in purchasing power.

The Unrestrained Arrogance of Empire

2006-04-26T09:11:00.000-07:00

"I just hope your president doesn't do anything rash."
Sadegh Ghotbzadeh, Iranian Foreign Minister 1980

Twenty-six years ago on Monday, the attempt to free 53 U.S. citizens held hostage by Iran went up in a fireball in the Iranian desert, taking 8 American lives with it. The U.S. Army's newly formed Delta Force abjectly failed in its first mission - they even left their dead. The mission would have been completely unnecessary if not for the hypocrisy of the Carter Administration.

During the first part of his administration, Jimmy Carter had gained international recognition for his promotion of human rights and was instrumental in the Helsinki Accords. Shortly before the Iranian Revolution in 1979, Jimmy Carter made a state visit to the Shah of Iran, fully supporting the Shah's dictatorial regime - even though the Shah's draconian practices of maintaining control were widely known. Even so, most of the Iranian population - including the revolutionaries - held a deep respect for the United States. This respect was shattered when the Shah fled Iran under the pretenses of requiring medical treatment, and was protected by the Carter Administration.

There are a series of unwritten rules that all dictators must follow. At the top is that once a certain discontent threshold is passed, the dictator faces the gallows at the pleasure of the mob. No exceptions and his family is usually subject to this also. Any foreign intervention that attempts to circumvent (or accelerate) this rule is rightfully met with resistance and disdain. Iran, more appropriately called Persia, is an advanced country with a long history. There was sufficient medical expertise for Shah domestically; though, the people's actions likely would have eliminated the need for any medical care. If Jimmy Carter had sent the Shah back to Iran and unfrozen all Iranian assets, there would have been no hostage crisis; and, a friendly Iran would have provided much needed stability in the region.

There has been much speculation regarding the release of the hostages upon Reagan's election to the U.S. Presidency. I view it as a good-faith attempt by the Iranian Government to start anew. Unfortunately, the arrogance of empire had long taken hold; and, despite a new political party in power, no substantial change in policy towards Iran was made.

Since 1979, Iran has been on the United States's short list, though the list can no longer be considered as short, of enemies. More ominously, many of these enemies are rising powers. Great Britain's fall from empire was softened greatly by cultivating a friendship with one of her worst enemies, the United States. The greatest benefit of this friendship wasn't military cooperation in two worlds wars, but financial. The decline of empire is economically devastating and Great Britain's relatively prosperous position in the world today is owed to her friendship to the successor power. Today's successor powers are China, India, Brazil, and a likely OPEC confederacy. With none of these countries does there exist a close cultural relationship.

It isn't that Iran has not made any attempts to reestablish diplomatic and economic relations with the United States. After 9-11 Iran offered substantial logistical assistance to the U.S. military forces in Afganistan. This olive branch was spurned when President Bush placed Iran into an Axis of Evil. The unwritten reason for this was Iran's practice of selling its oil in Euros, undermining support for the U.S. Dollar. Further hypocrisy by a U.S. Administration. One of the basic tenets of a free market is that a seller of a commodity should be permitted to sell his commodity at any price denominated in any form.

After more than a generation of hostility from the U.S. it should be no surprise that Mahmoud Ahmadinejad, Iran's democratically elected leader, can get away with his rhetoric. It is now inevitable that Iran will develop nuclear weapons. Even without nuclear weapons Iran has the ability to prevent any supertankers from transitting the Strait of Hormuz. The Persian Gulf is mostly shallow water with many navigational restrictions. Any U.S. Naval response would have to originate from the Indian Ocean - as related everyday in the media, U.S. land-based forces in Iraq already have their hands full. Stationing the predominately blue-water naval forces (aircraft carriers, cruisers, and destroyers) in the Persian Gulf could bring a similar result as the Wehrmacht's Sixth Army assault on Stalingrad.

Much has been made of the Bush Administration's pre-emptive strategy. It's not pre-emptive at all, but reactive. His administration is reacting to a changing balance of power in the world accelerated by overconsumption domestically and a world's increasing dependence on oil, which at best is available in a fixed amount - about 80 million barrels/day. A truly pre-emptive strategy would be to pay $100/barrel to any country that accedes to our demands such as: truly cracking down on terrorism, promoting democratic reforms, and refraining from nuclear weapons development. Paying a $100/barrel would undoubtedly bring the price of a gallon of gas to $4. This will reduce demand for oil, limiting the amount of oil that would be purchased at $100/barrel. This would increase the supply of oil on the world market so non-participating oil exporters would receive less income from their oil.

What about the effect on U.S. consumers 'forced' to pay $4/gallon for gas. We'll manage. As a country we spend $100 billion annually for bottled water. Most of this water is obtained from the tap and bottled by Pepsi (Aquafina) and Coke (Dasani). Most reduction in spending will be on imported products. This will further reduce the demand for oil by China and India.

This is mostly head-in-the-clouds talk. Events this summer will likely push oil to $100/barrel anyway (hurricanes, further Iranian nuclear development, civil war in Iraq). And we mustn't forget the mid-term elections. If the Democrats manage to reclaim either the House or the Senate then a who mess of investigations can be launched. Something rash is likely to happen.

I haven't forgotten about Part II.

The Consequences of Specialization Part I

2006-04-24T01:54:00.000-07:00

Many of us are familiar with the Old Testament stories of an angry and demanding God insisting on human sacrifice until the last minute, turning people into pillars of salt for a wandering look, and allowing an entire nation to fall into ruin for lack of faith. What is frequently overlooked is the formation of the Hebrew Commonwealth. The books of Exodus, Leviticus, and Deuteronomy contain a detailed blueprint of this agricultural commonwealth. These books would be of interest even to those of no religious beliefs because the formation of the Hebrew Commonwealth represents the transition of a group of people directly from a nomadic hunting and gathering economy into a settled agricultural economy.

Unlike other transitions into an agricultural economy, all males were equal in the most important attribute, military effectiveness. The forty years of wandering in the desert had an equalizing effect on the nomadic, yet literate population. This permitted a formation of a truly equalitarian economy once the resident Canaanites were displaced – an easy task given that many of them were enslaved and as a result offered little military resistance.

The first laws guiding the Hebrew economy concerned debt and remained with us in the form of bankruptcy laws until recently. Deuteronomy 15:1-2 states – At the end of every seven-year period you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned to his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the Lord has been proclaimed.

Leviticus 25:10-16 states – This fiftieth year you shall make sacred by proclaiming liberty in the land for all inhabitants. It shall be a jubilee for you for you, when every one of you shall return to his own property, every one to his own family estate. In this fiftieth year, your year of jubilee, you shall not sow, nor shall you reap the aftergrowth or pick the grapes from the untrimmed vines. Since this is the jubilee, which shall be sacred for you, you may not eat of its produce, except as taken directly from the field. In this year of jubilee, then, every one of you shall return to his own property. Therefore, when you sell any land to your neighbor or buy any from him, do not deal unfairly. On the basis of the number of years since the last jubilee shall you purchase the land from him; and so also, on the basis of the number of years for crops, shall he sell it to you. When the years are many, the price shall be so much the more; when the years are few, the price shall be so much the less. For it is really the number of crops that he sells you.

The result of these laws created a large percentage of independent freeholders unencumbered by long-term debt. A society with a high proportion of independent freeholders sustains a vital public good, stability. As written in a previous post, independent freeholders are a most potent defense force. This protects the society from outside threats. A high percentage of freeholders tend to utilize land and capital most efficiently. When wealth (in the form of land and/or capital) becomes concentrated in a society, conspicuous consumption arises. For most of us this involves buying a more expensive car or a pair of shoes. For the super-wealthy with political connections – I know, no such thing as wealth without political connections – this means public works projects. These inevitably lead to waste. If the independent freeholders thought the public works necessary they wouldn’t require the sponsorship of the super wealthy.

Public works are a disguise for tribute. The Egyptian Pyramids were merely expensive burial chambers. The ultimate cost of today’s military-industrial complex has yet to be determined. Public works lead to internal instability. First, taxes must be raised to pay for these works; taxes which the politically connected tend to avoid. Secondly, the misuse of resources for public works causes undue stress on the environment and the resource base of the society. While public works are not necessary for environmental depletion, the Hebrew commonwealth addressed this problem by setting all land aside, or fallow, every Sabbath year. Public works projects inherently make setting land fallow uneconomic for the independent freeholder. Property taxes must still be paid on fallow land and the tax burden on non-Sabbath years prevents the necessary storage of resources.

Most historical examples of societal collapse have been due to public works. When the Polynesians found Easter Island, it was heavily forested. Over the generations wealth became concentrated and the elite competed with each other in the construction of the famous statues. Construction of these statues required a massive diversion of labor from more useful tasks and lumber. It wasn’t long until the island lost all of its trees and the society literally imploded. The Viking settlements in Greenland subsisted in much harsher conditions; yet, they were required to send tribute to Rome in the form of ivory from walrus tusks. This required summer expeditions to northern Greenland, depleting labor and resources, such as iron and lumber, from more useful tasks.

The Hebrew Commonwealth did not last. As with all Empires, the moment of supreme greatness is quickly followed by decline and ruin. King Solomon, renowned for his wisdom and wealth, was unable to see how the expenses of his lavish court had enslaved the population and sowed the seeds of internal dissent. After his death the Kingdom of Israel split into two and quickly succumbed to external threats.

Sorry, No Post Until Monday 5AM EDT

2006-04-23T12:05:00.000-07:00

I realize that I promised a new post today; but, spending excess time on the computer would be a violation of a higher law.

Whenever it reaches 70F (20C) in the Pacific Northwest between February and May, it is mandated that ALL nonessential tasks/work be postponed in favor of worshipping the golden orb in the sky - which may not have had a presence since October. Nonessential tasks are defined as ANYTHING that is not directly responsible for critical services in the industrial world. That means students are EXPECTED to skip school and employees of soulless companies are to call in sick. Blogging must be kept to a minimum - only to inform outsiders of this unique regulation.

Still Here!

2006-04-21T10:55:00.000-07:00

I've been quite busy. I haven't forgotton. Sunday morning, I'll post.

The Impact of our Food Choice

2006-04-14T08:19:00.000-07:00

“My wife and I live in an old whaling town on the eastern end of Long Island, New York, where we tend a home garden and orchard. For much of the year, we don’t have to buy produce. In the winter, we eat what we’ve canned, pickled, dried, and otherwise put up. We get eggs from a neighbor, trading him vegetables. We rake our own oysters and clams. We have a few local bakers who turn out warm, crusty loaves each day, and a cheese shop that offers dozens of American farmstead cheeses – including a few made from the milk of cows grazing a few miles away.”
Brian Halweil

Fringes are the most productive parts of ecosystems. In human societies, the fringe is represented by groups shunned by the mainstream. An obvious irony, given that throughout history, group survival has depended upon the actions of fringe elements. Most informed people today realize that global warming and fossil fuel depletion are indicative that the current Westernized lifestyle is unsustainable. The problem isn’t in recognizing the problem; its in realizing a solution. Food is central to human survival and culture. Those who operate in the fringes of food production and distribution are showing us solutions to the problem of dependence on inexpensive fossil fuel for food production and distribution.

The current food production models in much of the Western World are large scale monocultures located in low-cost production regions. These regions are currently low-cost due to cheap labor, few or no regulations, and long growing seasons. None of them would be low-cost without subsidized fossil fuel.

Food crops grown for export; such as asparagus from Mexico, act as cash crops in the region grown. While a small amount of cash crops can increase the prosperity of a region, an emphasis on them decreases a jurisdiction’s need to maintain middle income farmers. Without middle income farmers, land ownership passes to the government, corporations and wealthy individuals creating a large class of tenant farmers. As will be explained in a future post, regions that grow cash crops at the expense of food crops suffer poverty, instability, and autocratic governments since the population is rendered dependent on commodity markets instead of themselves.

When food crops for export are grown in regions with few regulations, the producer enjoys a competitive advantage over producers in regions with more strict regulations. Ultimately this drives most production to the low regulation regions, concentrating the production which increases the chance of crop failure.

At first glance, concentrating a nation’s food production in regions with long growing seasons appears to be a good idea. The problem lies in that this drives up land values, making it more difficult for non-corporate producers to make a living. What is the problem with corporations? Limited liability, in the common tongue – no responsibility. The corporate structure has been an invaluable method for financing and protecting optional improvements. When the corporate structure invades basic human necessities such as food and healthcare, the chain of responsibility is broken and can leave a population vulnerable. Because of this lack of responsibility, corporations rarely act as stewards of the land. When the chemical load becomes too high, when constant irrigation makes the land too saline, when the tenant labor force unionizes; the corporation impairs the land, gaining a tax deduction and moves somewhere else. What’s left are unemployed people with depleted resources.

Subsidized fossil fuel makes remote monoculture farming a paying proposition for governments and corporations, while providing a temporary kickback to middle income consumers. Monoculture production methods lose the benefits of a balanced ecosystem that is achievable with small scale farming. Insect infestation and soil depletion are common ailments affecting the monoculture farm. Huge inputs of petrochemicals become necessary to boost yields. This increases the chemical load of the food, while decreasing its nutritional value. The alteration of the food has just begun. The average American meal travels more than 1,500 miles from farm to dinner table. This requires extensive preservation and packaging, both requiring more energy inputs. Transportation costs must also be added. By the time the average processed food product is purchased by the final customer, the original producer would be fortunate to receive a penny for every dollar of retail price.

Individuals working in the fringes such as Brain Halweil are showing that there is another way. This other way emphasizes obtaining local food produced at the small scale. Small-scale food production is better suited to take advantage of the natural balance of life present in ecosystems. Herbivore manure can be used in ‘hot beds’- an easy method to extend the growing season. Small acreage farming units can also utilize ponds and drip irrigation techniques that provide adequate water during dry periods without excessive energy requirements. Mixing food crops with native plants provides havens for beneficial insects and free range chickens convert slugs and other undesirable critters into usable protein. The benefits extend beyond having a supply of fresh and nutritious food free of chemical preservatives. Obtaining local food implies community involvement and cooperation. It means talking to local chefs about preference for locally obtained food. Farmers markets may need assistance in organization and CSA farms may benefit from extra labor during peak times.

The economic benefits of local food are immense. Consider farmers markets. The food is local – low transportation costs. The food is fresh – no preservation costs. The food is minimally packaged – again low costs. Virtually all of the money spent at farmers markets stays in the local economy. This supports middle income farmers, who are responsive to the needs of their customers. These middle income farmers also have more disposable income that finds its way back into the local urban area as they purchase goods and services locally, enhancing everyone’s prosperity.

Virtually anyone can become a middle income (yeoman) farmer. All that is required is to start a garden. Even 2 X 10ft flower bed is sufficient to grow enough tomatoes for sauce, salsa, and BLTs for a few months. While the cost savings and food quality boost from a garden is sufficient in of itself; the coat-tail benefits are better. Having a garden encourages us to get back into the kitchen and take back the food preparation tasks that we had relinquished to the food processing corporations. Compare a home-cooked meal to a frozen store-bought meal and you will know that the corporations have performed an expensive disservice.

Every one of us has the power to make a difference. Merely asking your grocery store’s manager to place country of origin labels on meat and produce products is an important step. The food industry has successfully lobbied against this type of labeling; but, they can’t prevent individuals from asking and making the implication that their food dollars will only be spent on ‘known’ products.

To Attain the Fullness of Life

2006-04-07T08:49:00.000-07:00

“Gratitude unlocks the fullness of life. It turns what we have into enough, and even more. It turns denial into acceptance, chaos to order, and confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend. Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow.”
Melody Beattie

The propaganda of speed and acquisition infiltrate every moment of our waking lives. We are rushed out of our slumber into a sardine can commute; all to repeat a daily mantra of productivity maximization. No wonder we return home depleted and unwilling to provide the effort necessary to heal ourselves and our families; an effort that we so willingly gave to our employers. This cycle creates a sense of scarcity in our lives. We feel that there is never enough time. Never enough money. Never enough love. Scarcity leads to self obsession, which restricts our ability to love unconditionally and causes resentment in our family and community.

Gratitude allows us to reverse this process and the self-doubt generated by the negativity of our self-obsession. It frees our mind and permits us to develop self respect, clarity of intent, and a commitment to growth. Coincidently, these three aspects are critical for maintaining a mutually fulfilling relationship with our significant other. It is no accident that those most preoccupied with our fast-food society have the greatest difficulty in interpersonal relationships.

It is much easier to write about forfeiting one’s preoccupation with the material world than it is to act upon it. We have to start with small steps. Because a premium is placed on our time in today’s society it initially appears wasteful to engage in activities that demand more time than what the industrial replacement uses. For example, few of us believe that we have time to cook meals when take-out is available. The key is to turn everyday routines into healing experiences.

One everyday routine is the shower. It certainly is an important task to clean ourselves and the shower does provide a sense of well-being; but, not as much as a bath. Unfortunately baths are underrated today. Even the Greens will tell you to take a shower instead of a bath – to save water. One only needs to study one of many traditional cultures to realize that the bath was used for both the cleansing and the healing of the body. The healing properties of a bath are amplified when aromatherapy is practiced. Essential oils are inhaled stimulating the olfactory nerve, sending messages to the limbic system in the brain. This ultimately stimulates physiological responses throughout the body by way of the nervous, endocrine, and immune systems.

Lavender is one of the most popular essential oils and is one of the few that can be applied undiluted to the skin. Lavender’s anti-inflammatory and cell-regenerating properties manifest themselves by reducing tension and aiding sleep. Add several drops of lavender to an evening bath and the quality of one’s sleep is likely to increase.

Massage aromatherapy is another way to gain the benefit of essential oils. Common essential oils used to ease pain include: Rosemary (Rosmarinus officinalis), Peppermint (Mentha piperita), Eucalyptus (Eucalyptus globules), Thyme (Thymus vulgaris), Chamomile (Matricaria chamomilla), Clove (Eugenia caryophyllata),
Ginger (Zingiber officinale), and Marjoram (Origanum marjorana).

Pain-Ease Essential Oil Recipe

5 drops of Chamomile
5 drops of Lavender
5 drops of Lemon
5 drops of Peppermint
10 drops of Rosemary

Blend the oils together and combine into 2 tablespoons of olive oil. Softly massage the mix into painful muscles.

A quick check of my profile shows that I do not have any certification to dispense medical advice. While the recipe above has been used to good effect, it may be beneficial to consult with an aromatherapist before any extensive experimentation.

By giving ourselves time and the methods to heal ourselves, we are better able to adopt a perspective that allows us to give to others in our community. Giving in this way increases the well-being of the community leads to greater expressions of gratitude.

Sleep Comes Like a Drug in God's Country

2006-04-04T19:31:00.000-07:00

“There are two contradictory ways of approaching issues of land use and development, and most of what we humans do falls somewhere in between. One is to modify the land to suit our particular needs or wants. The other is to modify our needs and wants to suit the limitations of the land and the environment.”
John Vernon, in the forward to The Arid Lands, by John Wesley Powell

During the last half of the nineteenth century, the American West was settled. Most of the new settlers were family farmers who were granted 160 acres of land for free, provided they built a structure and lived on it for five years. One of my great-grandfathers emigrated from Germany and homesteaded in North Dakota. He must have been successful, as he was able to parlay his acreage into a site on the shore of Lake Coeur D Alene, Idaho; where he built a brewery. While his story takes a different trajectory, most farmers of the era relied on one of two schools of thought.

Major John Wesley Powell, who lost an arm at Shiloh, was the first explorer of the Colorado River into the Grand Canyon. He travelled widely throughout the Great Basin and the Colorado Plateau; and, in 1876 arrived at the conclusion that the region's rivers could irrigate only 1 - 3 percent of the land. Back in Washington D.C., he used his position as Director of the United States Geographical and Geological Survey of the Rocky Mountains to promote his findings. He stated that the Homestead Act should be amended to provide 40 acres of land in irrigable river valleys or 2,560 acres for dryland farming and ranching. Powell also suggested that the West's political boundries should follow the natural boundries of the river basins and that unused water rights revert to the government.

The other theorist was Ferdinand Vandiveer Hayden, an employee of the U.S. Geological Survey. Without scientific evidence he proclaimed that "rain follows the plow". This is based on a hypothesis that tilled land absorbs more rainwater, promoting more evaporation, leading to more rainfall. This theory was easier to accept and gained credence with the occasional wet cycles that occured in the West. Powell's theories were thoroughly opposed by the timber, cattle and mining industries. By the early twentieth century, millions of farmers in the West were hoping that rain would follow the plow.

Wind, not rain, followed the plow. Drought conditions in the 1930s emptied the Midwest of its marginal farmers and sent them to California. Perhaps this explains some of the peculiarity of that state; but, I digress. The farmers in the three western states: California, Oregon, and Washington lobbied the U.S. Government for hydroelectric projects that would provide cheap electricity; but most importantly, irrigation for the vast dry lands of those three states.

The farmers got their water and electricity; but, the emerging military-industrial complex were the real winners. The availability of 'cheap' electricity spawned several aluminium smelting plants and one nuclear weapons production facility. Initially it seemed the only losers were the Native American tribes that depended upon the abundant salmon runs for their living. The dams impeded the passage of salmon both downstream and upstream. More ominiously, most salmon spawning grounds silted over due to the conversion of the Columbia River into a series of interlocking lakes.

The flush of prosperity after World War II stimulated the growth of the suburbs, especially in the American West. These suburbs were made possible by abundant petroleum and fresh water. The explosive growth of Southern California was irrigated by water from the Colorado River and Mono Lake. By the 1980s cracks appeared in the system. Domestic U.S. oil production had been declining since 1971, population growth throughout the region placed huge demands for hydroelectric power. Until this time, the Bonneville Power Administration (BPA) spilled sufficient water over the dams to allow the young salmon to bypass the turbines, that the runs were not completely deciminated. After this time, demands for cheap power induced the BPA to restrict the spills, dramatically reducing the salmon runs. Also by this time, agribusiness supplanted the small producers throughout the region, especially in California's San Joaquin Valley. Irrigation equipment is a huge capital investment and only corporations with access to the money markets could make the investment. The result: the centralization of food production in the United States.

The periodic droughts in the West have already caused incidents of civil unrest and ecological/economic disasters at the regional level. In 2001 farmers in the dry Klamath Valley forcibly opened access to Klamath Lake. The federal government was powerless to resist the farmers and allowed them water in subsequent drought years. In 2003 50,000 returning adult chinook salmon died spontaneously in the warm, stagnant Klamath River. Currently salmon fishing has been closed for the Southern Oregon Coast, causing ripples in this region dependent on fishing and tourism. Even in the moist region of the Pacfic Northwest, west of the Cascade Range, April 1 is a pivotal date. It is the day that the snowpack in the region's mountains reaches its peak, and the melt begins. An above average snowpack means less conflict among the users of the water: farmers, ranchers, fishermen, residential electricity users (no one wants to pay for power), and the most powerful user - the industrial user. Without cheap electricity, the aluminium plants don't operate and they lay off workers. Without aluminium the country's largest exporter cannot compete with its Euro-government subsidized competitor, Airbus, and more workers may be let go. When the snowpack is low, conflict among these groups ensues.

It may be easy to dismiss this as a regional problem; but, it is only the continuing availability of cheap petroleum that prevents this from becoming a national problem. The fastest growing region in the country is the Desert Southwest: Southern California, Nevada, Arizona, Utah, New Mexico, and Colorado. Millions of baby boomers plan to spend their golden years basking in the sun on the deck of their 'oasis in the desert' home. Few probably have seen where the Colorado River discharges into the Gulf of California. Because it doesn't. All of its water gets diverted before it crosses the Mexican border. Cheap petroleum makes it economical to tap underground water sources; and, to purify contaminated ground water. What will happen when petroleum is no longer cheap?

Water in the West would have to be obtained from above-ground sources. In California there are blueprints for nuclear-powered desalinization plants; a non-starter in the earthquake prone region. Recently a proposal was floated to place a huge bladder in the Columbia River estuary, collect the fresh water, and drag the sack 1,000 miles down the coast. Not considered was the turbulent nature of the mouth of the Columbia. Its river pilots do not wear life jackets, as they know once you fall in, there is no coming back up.

But the voters of the Southwest only have to look to their northeast for 20% of the world's above ground fresh water, The Great Lakes. These bodies of water really are inland seas, as they create their own weather, and tend to be more hazardous than mere lakes. The premiers of Quebec, Ontario, and eight governors of the states bordering The Great Lakes must have felt the thirsty gaze from the Southwest. In mid-December they signed a pact that will ban all largescale water diversions from the Great Lakes. One wonders if a democratic election at the national level could void this pact or that the citizens of these provinces and states would enforce their pact on a different level if that happened.

The population of the Pacific Northwest appears to outsiders to be made of widely conflicting individuals. Some say both Oregon and Washington could split at the Cascade spine. True enough we agrue, like siblings; but, there is an unspoken unity among the residents of the Pacific Northwest. We have long felt more affinity to our province to the north than to the remainder of the lower 48. When Quebec decides to secede from Canada, each of the remaining provinces are unlikely to assume Canada's debt and will go their own way. Canada is also a major exporter of fossil fuel products to the United States. Individual provinces are unlikely to subsidize their southern neighbor with plentiful supplies. This will put pressure on the social welfare system, causing some states to question the viability of the Union.

My next post will continue the water theme, from a different perspective.

Another Interim Post

2006-04-02T18:03:00.000-07:00

Later this week, possibly Tuesday I will have a post on a commodity more precious than petroleum; yet, its availability is largely dependent on inexpensive oil. Lifestyle changes are iminent.

Subsequent posts will review some articles from Well Being Journal. Topics will include: How Chlorine is Detrimental in Our Water, Emotional Freedom from Stress, Benefit of EFAs (Essential Fatty Acids) and Fish Oils, The Art of Cooking Green Gourmet Foods, Easing Pain Aiding Sleep with Aromatherapy, and possibly a few others. For those consumed with money and morons I am thinking of posting a Contrarian Investing Market Update (the gold/silver ratio has dropped to 50 - interesting times ahead).

I know that I never achieved that ideal of 3 historical posts and 1 current period post per week. Its that I didn't realize the time required to make quality posts. My blog plan has now evolved into reading a obsure periodical of interest and posting personal reviews. Interspersed will be posts concerning the financial securitization of our society, as events occur. I may even make a few personal predictions - if I'm wrong I can always edit the post and claim that I was right all along (just kidding). Oh... I haven't forgotten about the bikes. Once there are some nice days I will make a few long rides - I'm training for STP - such as to Timberline Lodge, Columbia River Gorge, and the Oregon Coast. Don't worry I will include pictures, especially for these posts! Whenever I walk or ride my bicycle, I make it a point to carry along a digital camera. Some pictures you may see on this blog, the others on Radio Paradise's D.R.E.C.K. Forum. Portland prides itself on its weirdness; I will take full advantage of that.

I will also consider reader ideas for future posts. Just be aware that just because you, the reader, provides an idea; I may not necessarily agree with you and that my post may take an unexpected direction.

The First Day of Spring... and then the Flu

2006-03-29T12:35:00.000-08:00

It's a beautiful day, Sky falls, you feel like
It's a beautiful day, Don't let it get away
You're on the road, But you've got no destination
You're in the mud, In the maze of her imagination
You love this town, Even if that doesn't ring true
You've been all over, And it's been all over you
U2

The day before my double bout with the flu was the first day of spring; and, Portland displayed all of the promise of that day and I did not waste it. I had two errands to run and a free morning. That translates into a bike ride. Riding a bicycle through Portland is quite easy as the extensive residential neighborhoods provide a safe, yet quick route to almost anywhere in the city. After completing my first errand at the credit union I rode to the grocery store for sustenance. Many assume that a car is necessary for transport of anything bigger than a cell phone. These pictures should disprove that notion - and its uphill back to my house!

Obviously I survived work last night, and I gained sufficient sympathy from a daytime staff member that she assumed the task of informing the supervisor that I would not be able to work tonight. I have a week off. Johnb is correct; much of this is mental. I arrived home this morning bummed out by surprise second installment of this flu; now I am enjoying coffee and dark chocolate - two potent antioxidants.

Everytime this year in the past, I had intended on starting my garden from seed using peat pots placed in my kitchen nook. Good intentions always got lost in the activities of the time. I always ended up buying starts in mid-May. This year I am proud to say that its different. Despite a full plate studying for the CPA exam, work and family I started my garden from seed this year. I will be growing two varieties of tomatos, sweet corn, pole beans, beats, spinach, sunflowers, and basil. I am well aware of the learning curve and know that I may end up buying starts for half of these food crops in May. The work has just begun. Last year I had a battle with blackberry bushes in my backyard. The chemical weapons worked perfectly; but, when I went to clear the dead debris, the blackberry plant's sentinels arrived in force. Even James Longmire, original homesteader of Longmire, Mt. Rainier National Park conflicted with these vile beasts. He was able to burn down a few acres of forest to rid himself of the problem. I am not permitted to use fire within Portland's city limits. I had to use poison. The instructions on this aerosol container are as follows: 1) Wait until dusk when insect activity is low. 2) Locate in ground nest 3) Spray entire contents of can into nest. 4) Run away

Some of the blackberry bushes have grown back; however, they are of manageable size. Its mostly the winter weeds that I must contend with. In about six weeks time I will update the status of my garden and show pictures of the newly transplanted crops.

Intermission

2006-03-23T10:21:00.000-08:00

I've been ill; so no posts of a substantial nature. Maybe one in a day or two.

Check out the movie preview for America: From Freedom to Fascism
http://www.freedomtofascism.com

Source Material

2006-03-18T09:47:00.000-08:00

Burn down the disco, hang the blessed DJ
Because the music that they constantly play
It says nothing to me about my life
The Smiths

The last television show that I watched at my house was the 2004 election returns. I’m always up for a spectacle in which no one gets hurt. 2008 should be even better; however, even that one may appear quite civilized compared to 2016. I do read some parts of the newspaper (for entertainment) everyday: the comics, the collection of stupid opinions, and the weather. Only if I am particularly bored at work do I actually read any ‘news’. Usually its local news that I read since any national or international news tends to be quite repetitious. Everyday in Iraq there is a car bomb explosion. The biggest difference is the make of the vehicle used in the nefarious deed. Everyday there is another corporation outsourcing its production overseas. And every time the Vice President makes an appearance he makes an ass of himself. The economic data disseminated by the government always paints a rosy picture while most of us are stuck in the thorns.

I do a lot of reading and I only read for fun. I have always found history interesting; but, do not read many strictly history books. The history books that I enjoy are those that attempt to discern the future by looking at the past. “The Sovereign Individual” is a good example of such a book and is listed in my favorites. A book that I recently obtained, “Elliot Wave Principle” is another such book; though it concentrates on market behavior. When I finish reading it, I will review it in this blog. For current events I subscribe to a few newsletters. “The Daily Reckoning” and “Whiskey and Gunpowder” are free; though, if you give them your email address you’ll get many ads with this banner “Turn 2 Cruddy Outhouses into $5 Million of Real Estate in 2 Weeks”. The authors even make fun of these ads on occasion. I also read two paid newsletters, “Strategic Investment” and “The Moneychanger”. SI is published monthly and deals with macro-economic events. “The Moneychanger” is a private monthly newspaper that includes precious metal markets, Christianity, alternative medicine, and family farm operations in its subject matter.

Within the past few years, I have become more interested in leading a self-sufficient rural life. When I mention self-sufficient, I don't imply isolation; but, independence from the nation model of dependency. There is no reason why any community large enough to have a traffic light shouldn't be self-sufficient. Our ancestors easily accomplished this. Technology should make things easier, not harder. If tasks are more difficult because of technology, then the technology is flawed and should be discarded.

The point of this post is contained in the quote above. The conventional media does nothing for me, so I receive most of my information from less visible sources.

A Long Post for a Long Awaited Topic

2006-03-17T09:35:00.000-08:00

Now you're a good surveyor, Dixon But I swear you'll make me madThe West will kill us both You gullible Geordie ladYou talk of liberty, How can America be free?A Geordie and a baker's boyIn the forests of the Iroquois...Now hold your head up, Mason, See America lies thereThe morning tide has raisedt the capes of DelawareCome up and feel the sun, A new morning has begunAnother day will make it clear; why your stars should guide us here...
Mark Knopfler and James Taylor

Throughout the history of human civilization, there have been only three different types of governments: proprietorships, customer-controlled governments, and employee-controlled governments.

Governments operated as proprietorships are the oldest of the three forms of government and tend to be dictatorships. The sovereign operates the government as a business, with the intention of making a profit. Government expenditures are lower than the revenues received in the form of taxes and/or tribute. Public works are confined to those that would increase the revenues of the state; and, wars conducted with the sole purpose of profit. Individual liberties are permitted in inverse proportion of the sovereign’s ability to control the population at a minimum expense. Because of this, proprietorships actually allow a high degree of individual/community autonomy. Examples include the various absolute monarchies throughout history.

Customer-controlled governments are the rarest form of government and arise in economically vibrant areas in which the sovereign is unable to control the population; usually as a result of the citizenry’s ability to arm themselves effectively. Government revenues and expenses tend to match each other as there is no profit motive in government operations. Taxes are voluntary as they are derived from the ownership of real property and tariffs on imported goods. The low taxes fund a minimum of essential public goods such as transportation infrastructure, courts, and a defense-oriented military. Individual liberties are the highest of the three government types as the taxpayers are generally unwilling to tax themselves to regulate other people’s behavior. The Greek and Roman city-states were originally customer-controlled governments.

The dominant form of government in the developed world today is the employee-controlled government. Unlike the co-ops found in the hippie section of town, employee-controlled governments do not have to compete with other entities for revenues within their jurisdiction. As a result these governments embark on a policy of continued expansion in the interests of both working and non-working employees. These governments have bloated bureaucracies and military units that employ a substantial number of workers; however, the greatest number of employees are non-working and receive transfer payments. Even though the taxes are the highest of the three government types, the excess of expenses over revenues require two other forms of taxation: inflation and debt. The inflation serves two purposes. It provides an initial flush of prosperity and it reduces the value of the debt. For this trick to work, the employee-controlled government must control the nation’s monetary system, usually through a central bank. Taxes are sufficiently high that everyone considers themselves important stakeholders in government policy and operations. This allows special interests to proliferate and gives impetus to an employee-controlled government its most important tool in controlling the population, prohibition.

Governments throughout history have regulated the personal behavior of its subjects because of the presence of incentive traps or ‘the tragedy of the commons’. Employee-controlled governments are not concerned about incentive traps; but, use prohibition for four reasons. The first reason is to increase the number of government employees; the added regulations justify adding new bureaus (and bureaucrats). The second reason is to gain the votes of non-government employees. The sum of both working and non-working government employees is generally not enough to guarantee continuance of the regime if all non-government employees vote uniformly in the periodic electoral events. Prohibition divides these individuals and gives plurality to the loyal employee electorate. A subtle consequence of prohibition provides the third and perhaps most important reason for prohibition’s existence – the ability to turn virtually anyone into a criminal. Operate a motor vehicle at night with a license plate light out and a police officer has probable cause to pull you over and search your vehicle. Prohibition affects middle class professional workers the most. Much of the work that doctors, lawyers, accountants, architects, etc. perform is involved in compliance. This not only increases the cost of the professional’s time (raising his/her income tax bracket); but, provides an easy means to provide administrative punishment - without due process, possibly ending a career, for minor infractions. The fourth justification for prohibition is the collection of fees and fines. This is a relatively minor concern for a nation-state with a central bank and a fiat currency; but, is used widely by minor jurisdictions to collect sin taxes and more ominously, confiscate private property.

A subtle difference exists between proprietorships and customer-controlled governments, the extension of the franchise. In proprietorships the right to vote is limited to the sovereign and possibly members of a small aristocracy. Customer-controlled governments allow those who pay the bills, usually through property taxes, the right to vote. Thus, governments that permit the most individual liberty are those that allow for popular representation on a limited basis. Universal suffrage, the right to vote without consideration to one’s payment of taxes, is a characteristic of employee-controlled governments.

Initially the first American colonies were proprietorships, owned through a charter or directly by the English King. The moist temperate climate of the Atlantic seaboard along with relatively literate immigrants provided sufficient economic viability that the estimated 3% tax (extremely low by today’s standards) was considered high enough to warrant rebellion. The early American Republic was a customer-controlled government with low expenses and taxation. Government debt was to be used only in times of war or outstanding opportunity. The $15 million borrowed to purchase the Louisiana Territory was paid off in fifteen years – less than one generation – much unlike today’s government borrowing.

As American settlement extended into the desert west and a greater portion of the population became specialists, there were popular outcries for the government to ‘do something’. Farmers in the west wanted government assistance in obtaining sufficient water, eastern factory workers did not have to common sense to not buy rancid meat and everyone else in between complained about that demon drink, whiskey. As previously noted; 1913 saw the introduction of the income tax, Federal Reserve and popularly elected U.S. Senators. The pieces of the puzzle were on the table; but, it took an economic boom and bust for the image to materialize. Prohibition as a constitutional amendment appeared to be a failure; however, the newly emerging interpretation of the American Republic learned mightily from this ‘failure’. At the same time as the repeal of Prohibition and FDR’s remark, “What America needs is a drink.”; originated the most sweeping of ‘prohibitionist’ legislation in the United States to date. The already powerful and bumbling Federal Reserve gained a stranglehold on the nation’s money with FDR’s executive order prohibiting American citizens from owning gold, along with an abrogation of all contracts requiring gold as payment. To regulate the financial industry the SEC was formed with Joseph P. Kennedy, who had become wealthy flouting prohibition and playing the stock market, as its first chairman. The waterless west was irrigated and electrified with cheap hydroelectric power. Its cost would become apparent in the years ahead.

Today, though the Constitution remains as it was written, the American government continues to change. I consider it to be a hybrid proprietorship – employee controlled entity. While the current system includes universal suffrage, a hallmark of an employee-controlled government, the securitization of society has given the banking establishment proprietary control over much of our lives. In the last popularity contest in 2004, the two major candidates came from the same social class, went to the same college, belonged to the same secret society, received similar grades and ultimately chose the same career. Their biggest difference were the bicycles that each of them ride. John Kerry rides a $3,000 road bike and George W. Bush rides a $3,000 mountain bike. As time passes most property in this country will be owned by the government or corporations, an ownership structure not unlike that of the late Soviet Union.

Because this is my blog, I have the right to stick my foot in my mouth and risk getting my head handed to me on a platter. I believe that customer-controlled governments are the best. They stick to the basics such as a minimal defense, a fair legal system and an efficient postal service. Taxes are low and the monetary system is backed by an intrinsically valuable commodity. Most importantly, the government stays out of the citizen's private lives. The franchise is also limited. It may be politically correct but allowing those who don’t have a financial interest (through paying taxes) to vote, permits an unbridled expansion of government. While the rich claim that they pay the most taxes on income received, what is conveniently forgotten is that they are able to build wealth without realizing income. As a result the middle class pays the highest tax rates, which diverts income that would go to employ poor people. The rich get richer; the poor get poorer; and the middle class fights among itself over issues that should be maintained in the private realm. A limited franchise that required ownership (either sole or joint) of real property would insure that those who voted had a stake in a stable society and currently would allow more than 60% of all households the vote.

A Rambling Post

2006-03-13T14:56:00.000-08:00

I've been siftin' through the layers
Of dusty books and faded papers...

Now I find myself on the moutainside
Where the rivers change direction
Across the Great Divide
Nanci Griffith

Don’t worry about the varzi … the Prohibition post is in development!

Last November I was drinking a latte at Stumptown Coffee (I was considering ditching Comcast and using to saved funds to buy coffee.) and wanted to make a smartass comment on someone’s blog. I needed a user name and my blog was born. The blog title, “Ramblings from the Post-Fossil Fuel Age”, came to me after about five seconds of thought. I think all of us occasionally like to believe that we are living at the vanguard of history; I had ridden my bicycle to the café and thought the name appropriate. Most people who have linked my blog have kept the name; though, Johnb changed it slightly to the more scholarly, “Essays from the Post-Fossil Fuel Age.” My favorite change, by far, is Stephanie Tourette’s, “Renaissance Man”; I can only hope to continue to write “Renaissance Man” quality work. Upon assessment of my previous posts, I will continue with the current title.

I consider this blog to be about ideas and only generally accurate. While I strive to provide correct information, I have found that an overemphasis on raw data draws attention from the ideas presented. Another problem with over-reliance on data is that it is very easy to draw the wrong conclusions as all data is biased to some degree.

One of the themes of this blog is the relationship of money and morons. Throughout history there has never been a shortage concerning this theme; however, today one could write a textbook everyday about money and morons and not run out of material until The Second Coming. Why? The securitization of virtually everything in our society will turn all of us into morons. A mere generation ago, people bought homes for their shelter value. They strove to pay off the mortgage - usually a fixed rate with a 20% down payment; and, threw a kegger when their deed was lien-free. Today people buy houses for speculative purposes - they throw the kegger at closing, and have no intention of ever paying off the mortgage. With all of the 'nontraditional' mortgage products available, the fixed rate with 20% down is considered '20th Century. Houses in America have ceased to be real assets and are now financial assets.

Financial assets do not derive their value from such quaint terms as 'store of value' or 'future earnings'. Instead they derive their value from demand, which is a combination of ability and willingness to pay a given price. Stocks are financial assets which have increased in price far beyond they would cost if the price was based on future earnings. With most P/E ratios above 20, most stocks yield about the same as 'risk-free' U.S. Treasuries.

Risk-free, that's another misnomer. A large proportion of U.S. sovereign debt is held by foreign countries, some not friendly. China holds more than $500 billion in U.S. Treasury Bonds. They can take Taiwan anytime they want, without firing a shot. All they have to do is threaten to dump those bonds on the market. Once the Chinese start selling, everyone else will get in the act, causing a torschlusspanik (door-shut-panic). The U.S. Dollar will quickly find its intrinsic value. The members of the Chinese Politburo are better capitalists than the current occupants of The White House. They won't throw away $500 billion for a small island of malcontents. Instead they are likely to gradually exchange their U.S. Dollar reserves for real assets such as gold, oil concessions, and single-malt scotch.

One must remember; though, everything is connected. With or without the Chinese, the United States is likely to suffer a currency crisis. The probability of this event occuring increases with every election year. By the time the 78 million baby boomers starting using their Social Security and Medicare benefits, the pressure on the system will require the Federal Reserve to raise interest rates to exhorbitant levels; or, to let the presses run causing hyperinflation. In either case the result would be the same, a deflationary depression.

The solution to this problem lies in people becoming more active in their communities, looking for ways to preserve and add wealth to their communities. This is why food, energy and other necessities should be locally derived when possible.

Despite this relatively downcast post and that it contains many subjects for subsequent posts, I am optimistic about the future. I believe that as more people become aware of the consequences of the securitization of our society, they will cross the Great Divide and lead more fulfilling lives.

Confidence Games

2006-03-08T11:55:00.000-08:00

"We are living on a bluff."
General Sir Aylmer Haldane,
Commander, British forces in Mesopotamia, August 1920

For 500 years prior to World War I, the Ottoman Empire maintained peace in the Middle East. Each religious group was permitted to follow their traditions and laws and interfered little in the affairs of other groups. As with all empires, the Ottoman Empire had a peak and a subsequent decline; with its participation on the side of the Central Powers its death knell. Modern Turkey was permitted to keep Asia Minor; but, England and France seized her Middle Eastern possessions: Palestine, Jordan, Syria, and Iraq. The delicate balance successfully maintained by the Ottoman Empire was upset as the various indigenous religious groups lobbied England and France for favors at the expense of the other groups.

Inevitably the tribes of the Middle East gave up political posturing and resorted to rebellion against their colonial masters. This raised the cost of occupation significantly. The annual cost to the British for policing the Persian Gulf was 25 million pounds (2 billion 2005 U.S. Dollars), a sum Winston Churchill considered exhorbitant. Such expenditures by an "Empire on which the sun never set" were making it difficult for the British Pound to maintain its convertibility to gold.

Because the English government did not wish to trade either guns or butter to maintain the value of their currency; Montagu Norman of the Bank of England proposed a meeting at Ogden Mills's, U.S. Secretary of the Treasury, home in Long Island. The individuals at this meeting, including the two listed above, were Benjamin Strong, Chairman of the Federal Reserve, Hjalmar Horace Greeley Schacht of the Reichsbank, and Charles Rist, assistant to Emile Moreau, head of the Bank of France. The solution proposed was that everyone would increase credit together. The recalcitrant French refused to play along and threatened to redeem their credits with the Bank of England and draw down its stock of gold. Ben Strong came to the 'rescue' by lowering U.S. interest rates.

The U.S. stock market had already doubled since 1924 and the additional easy money only goosed the market further upward. Attempts by the Fed to undo their handiwork by raising rates in 1928 did nothing to cure the markets of their irrational exhuberance; though, the rate increase in August 1929 pricked the bubble. Unlike previous stock market bubbles, the 1920s bubble was financed by money borrowed at low rates. As stock values dropped, individuals who had purchased stock on margin rushed to sell; causing prices to drop even further. This loss of confidence in financial assets induced individuals to exchange their bank account balances for gold. The banks, to replenish their reserves, called in outstanding loans, forcing widespread foreclosures and bankruptcies. The economy contracted, unemployment rose and the prosperity of the 1920s gave way to the destitution of the 1930s.

Contrarian Investing

2006-03-04T09:25:00.000-08:00

“Recognize the trend whose premise is false, ride that trend and step off before it is discredited.” George Soros

My recent posts have delved deeply into new age mysticism; such that, I have been called a ‘hippie’; I have yet to determine if this is a good thing. Anyway, this post should reverse that trend and resume the discussion on money and morons. This post is definitely about money; and, the personal investment advice that I will dispense may eventually prove that I am a moron. That is your warning.

The financial industry and government economic statistics generators like to deal in absolute numbers. It is easy to hide fraud and separate the investing public from their funds with absolute numbers.

Currently they will spew statistics about the Dow Industrials being above 11,000, GDP increasing by a given percentage, and unemployment falling to new lows. These statistics are virtually meaningless to us. Part of the reason that the Dow is near its all-time high are the energy and resource components such as Exxon and Alcoa. The GDP statistic is composed of consumer spending, government spending, business investment, and the balance of trade. The GDP does not take in account indebtedness. As a result consumer and government borrowing increases the GDP even though the nation is losing its wealth to overseas producers. Unemployment statistics count only those who are actively looking for work and there is little mention of downward mobility.

I prefer to look at ratios. They are more difficult to manipulate and combined with demographics can provide more reliable information than a collection of absolute numbers. In addition, if one assumes that ‘regression to the mean’ eventually occurs, then it becomes easier to make investment choices. Because this blog is supposed to be concerned with fossil fuels, the first ratio that I will discuss is the gold/crude oil ratio.

Historically the mean value has been above 15. Even if oil remains at $60/barrel (figure the odds), regression to the mean would put gold in at $900/oz, more than $300/oz more than Friday’s close.

While gold retains much of its monetary character, silver has been gradually demonetized over the last 500 years and regarded as an ‘industrial metal’ throughout the 20th century. Reference a CRC Handbook of Chemistry and Physics and one would find that silver is about 16 – 17 times more abundant than gold in the earth’s crust. Since antiquity when gold and silver were used as money; a stable silver/gold ratio of 16:1 existed. In 1492 an ounce of silver was estimated to have the purchasing power of $500 today. This equates well with a day laborer’s wage of one denarius (about 1/6 ounce of silver or 1 pre-1964 U.S. Quarter). Today the ratio stands at 55:1.

Silver has reasserted its monetary character in the 20th century during times of economic distress; in 1980, silver momentarily achieved the 16:1 ratio. It took a federal funds rate of 18% and U.S Government intervention in the silver market; causing the bankruptcy of the Hunt brothers – but that’s story for a later post, to restore silver’s status as a lowly industrial metal.

Silver may actually overshoot the 16:1 ratio this time around. While virtually all of the gold that has been mined in history either sits in a central bank’s vault, exists as coinage, or as jewelry; silver’s fate could not have been more different. Due to the myriad of industrial uses for silver and its manipulated low price, most silver that has been mined is gone forever. When Warren Buffett acquired 130 million ounces of silver in 1998, its price nearly doubled. Another opportunity for a dramatic increase in silver’s price is imminent. The SEC is expected to approve a Silver ETF (Exchange Traded Fund) that is expected to remove 150 million ounces of silver from the market. Silver is likely to lose its industrial tarnish and outperform gold in the years ahead.

Take another look at the Dow 30 chart above and compare it to this chart, the Dow in Gold Dollars.
An individual who held on to his Vanguard 500 index fund over the last six years may be thinking that he is ‘breaking even’. If this individual had exchanged his stock fund for gold in 1999, he would have more than doubled the value of his portfolio. The Dow in Gold Dollars (Dow 30 Index/Price of Gold*$20.67) shows that the bear market in stocks remains in force. Historically the Dow 30 has fallen (and/or gold has risen) until one or two ounces of gold (20 – 40 Gold Dollars) could buy a ‘share’ of the Dow 30.

All of this information may be considered useful except for one constraint. Most of us do our investing through tax-deferred retirement plans that do not allow for sufficient asset allocation. In my case I have repeatedly asked the plan administrator to offer the high performing Dogbert Vice Fund to no avail. I have been forced to settle for international equity funds. These funds tend to move opposite to the U.S. Dollar and that is where 90% of my tax-deferred retirement is placed. If there is interest in obtaining gold or silver, DO NOT CALL the precious metal dealers that put advertisements in the newspaper. They will never stop calling you to pressure you to buy overpriced coins. You will have to change your phone number. If there is sufficient interest I may post a few links on this blog or provide them in the comments.

Concerning the quote above, in 1992 the Bank of England stated that they were willing to borrow $15 billion to defend the Pound. George Soros replied, “What are you going to do after ½ an hour?” Sure enough the $15 billion was exhausted after 30 minutes of Forex trading; the British Pound declined and Mr. Soros earned $1.1 billion – in one day. That wasn’t the first time the Bank of England set out to defend the Pound; my next post will concern a clandestine meeting on Hilton Head - South Carolina not Paris - to defend the pound which ultimately produced dramatic and dire consequences.

Food Snobbishness and Refutations of Vegetarianism

2006-02-27T07:10:00.000-08:00

"You know that you're an NCNM (National College of Naturopathic Medicine) student when you buy chickens (for fresh eggs)."
NCNM professor

I am a food snob. I consider the food that I eat as medicine. Most foods that I eat now are either local, organic, free-range, minimally processed, non-GMO, or a combination of these. What I don't keep track of are the amounts of calories, protein, carbohydrates, or fat in these foods. I drink whole milk, eat meat for most meals, and use butter. I have also lost weight in the time that I have adopted this diet. Even so, I believe that everyone has a right to making their own food decisions; unlike many vegetarians, who embark on a crusade to convert the rest of us to their way of thinking.

The vegetarian mantra is composed of three fallacies that hide under a veneer of truth.

Eating Meat is Unhealthy

To prove this, vegetarians will point to a study that shows rats being feed a non-meat, low calorie diet living 40% longer than the control group. There is nothing wrong with this study. If a person adhers to the non-meat low calorie diet, he will live longer; but, will also be cold, hungry and not have the energy to do anything, including having sex. For this person it is good that there is low motivation for activities as the chance of injury is much higher. The reason for the extended potential life-span is not any inherent superiority of the vegetarian diet; but, the body's reaction to it. The metabolism drops slowing all body processes, including aging.

Vegetarians will also point to the proliferation of chronic diseases such as heart disease, obesity, cancer that are caused by the meat-based American diet. While there is little doubt that there is a dietary connection to these chronic diseases, it isn't the presence of meat in the diet; but, the means of production of the meat that contributes to these diseases. Animals that are able to eat their natural foods without chemical intervention produce meat that is lower in fat and higher in nutrients than meat from factory-raised animals.

Eating Meat is Wasteful of Resources

"It takes 1,000 gallons of water to produce a pound of beef." This statement is true for 95% of the beef produced in the United States, which comes from grain fed cattle raised in feedlots. The grain is grown as a monoculture in marginally productive regions, requiring extensive fertilizer and irrigation. Then the grain is harvested using mechanical equipment and shipped to a processing facility where it is blended with chemical additives before being shipped again to a feedlot containing thousands of head of cattle. The huge density of cattle in a small area requires water to be piped in and the manure shipped out as a waste product. This energy intensive dynamic is present in all mass-produced animals, and is the major reason for the corporatism of food production in this country.

It may be counter-intuitive; but, herbivores are a critical component of a self-sustaining farm. Farmers of commodity crops (corn, wheat, and soybeans) earn so little on each unit of production that they must go heavily into debt to buy equipment to farm huge tracts of monoculture crops. These monoculture crops deplete the soil of nutrients and require huge inputs of petrochemical based fertilizers, which run off and contaminate local watersheds. In addition these monocultures provide an irresistable target for a variety of pests, requiring an escalating use of expensive and frequently toxic chemicals to maintain crop yields.

A farm with a variety of herbivores (cattle, pigs, sheep, chickens, and geese) is able to florish without any artificial resource inputs. Each of the animals makes an individual contribution to the management of pasture, woodland and ponds present on the farm and ultimately serves as a store of protein that can be consumed by the family or exchanged for goods and services provided outside the farm. Non-reliance on commodity crops also allows for the farmer to devote a small portion of the farm to cash crops. An acre of organic Oregon strawberries will net $40,000, permitting even a 10 acre homestead white-collar wages.

Eating Meat is Immoral

A vegetarian will cite the deplorable conditions present in today's feedlots, factory chicken houses, and pig pens to buttress this agrument. I do not dispute the inhumanity present in raising animals under these conditions. The animals are forced into crowded conditions which increase their stress and propensity to disease. There is another way...

Unless cremated, all plants and animals will get eaten by some organism. Undergoing death is the only obligation that all living things must fulfill. A low density farm allows its animals to live, eat, and interact naturally. This reduces their stress and lowers their susceptibility to disease and parasitic infections. All animals tend to reproduce such that only a small portion of their offspring can survive to adulthood without overloading the resources present. A farmer's practice of culling the herd allows the most fit animals to survive and reproduce, increasing the quality of life of both the animals and the farmer's family.

Making the Change

The average American meal has travelled over 1,000 miles from its origin to its presentation as a meal. It doesn't matter if this meal is composed of turkey or tofukery. The amount of resources used in transportation is both wasteful, unnecessary, and subsidized by our current way of life. Change is a gradual process that is best determined by our individual decisions. I will admit that half my freezer is filled with grain-fed Angus beef waiting for grill this summer. While I do have a source for a local grass-fed, yet grain-finished cow at $3.10/pound, I need to buy that chest freezer first. I wish all of you the best in your food-choice decisions and I would appreciate any constructive debate on this topic.

A Life's Blueprint

2006-02-22T08:45:00.000-08:00

Health and long life to you
Land without rent to you
A child every year to you
And may you die in Ireland
An Irish Blessing

Blessings throughout human history have provided a direction for people’s lives; if there was an officially condoned blessing for today’s American culture it would read something like this:

Health and long term care insurance to you
A mcmansion with extractable equity to you
A new SUV purchased with home equity every year to you
2.1 children seen but never heard to you
And may you die alone in a nursing home

The advantage of a blessing is that their truth or absurdity hits you in the face; you are forced to make a decision whether to accept it or not. The fact that the American blessing is not disseminated only means that the act of not making a decision implies acceptance of this blessing.

If we are to consider the American blessing absurd then we must make a decision to refute it and compose our own blessing. Before one can compose a blessing there must be a dream. Today’s society marginalizes dreams. Dreams take a lot of time. Time that can be spent earning money to buy the latest television, watching television to find out how to spend the money, and spending the money on stuff that you will eventually forget about. We are all indoctrinated that we must work and provide value to some other entity in order to be permitted to dream someone else’s dream. Our dreams are forgotten in the clutter of our material lives.

I could write that my dream has been nearly thirty-six years in the making because our dreams are products of what we perceive as an ideal life. However the real work lies in questioning our everyday lives and devoting time and effort to our dreams. In that case, I can say that I have been actively working on my dream since I decided to move back to Oregon from Maryland in 2000. This dream is a work-in-progress. I have yet to share my life with anyone else; and, part of my dream is to share in her dreams – so that part will be omitted for now.

LIFE

I want to live and long and healthy life. Long enough to see my grandchildren grow up; and, healthy enough to be willing to pass the torch to my children before they are too old. I don’t want to linger in vegetative animation greedily grasping to a slowly evaporating life.

To do this I need to create my days instead of responding to them. First thing in the morning I’ll watch the sunrise and fix a breakfast of home grown/raised food for my family and myself. The days will be spent in activities that blur the definitions of learning, working and playing. The days will be spent living. The food and drink will be plentiful and fulfilling as would be the family fellowship with good conversation, poetry and music. Every day’s celebration would be concluded with the sunset and the awakening of the nightly stars.

LIBERTY

In order to receive liberty, I need to learn to give it. Giving liberty to my family means recognizing each of them as free-thinking individuals. This does not mean that there would be an absence of discipline. Liberty is freedom with the knowledge that one is personally responsible for the consequences of one’s behavior.

Giving liberty to society means recognizing the consequences of the dealings that I have with my community. I cannot expect to receive liberty from society if I don’t pay a fair price for an individual’s good or service and show compassion for those less fortunate. To receive liberty from society I need to allow those that sell goods and services to me to receive payment that properly reflects the cost of the good or service in addition to a profit that reflects their individual initiative.

PROPERTY

Ownership of property is more than having a deed free of encumbrances. It implies stewardship. The Iroquois Nation originated the quote, “In every deliberation, we must consider the seventh generation.” Because the property that my family will own will be free of a mortgage, we will be free to manage it so that the livestock increases in health, the soil increases in fertility, the pasture increases in nutrients and the woodland increases in maturity with each passing year. Each component of the homestead will compliment each other in its ability to absorb and process the sun’s energy, providing sufficient surplus to support my family without depleting the outside environment.

My progress to this dream is composed of three parts. The easiest part, the financial means, is about 75% complete, thanks to a robust Portland real estate market that remains the most affordable on the west coast. The second part, emphasizing generalist skills, is also a work-in-progress. This year I plan on growing organic tomatoes, corn, beans, squash, and salad greens in my backyard. I hope to grow enough tomatoes to can which will permit me to not purchase any tomato based product again. I will neither confirm nor deny the presence of a woman in which to share our dreams as that would mean making assumptions that are not mine to make.

Quantum Physics Predicts the Future

2006-02-19T15:55:00.000-08:00

somethin's wrong cause my mind is fadin'
and everywhere I look there's a dead end waiting
Beck

Watching a child at play, one realizes that children see not dead ends but unending possibilities. As we grow older, most of what we learn about life is its limitations. By the time we reach adulthood these limitations create our reality and we become blinded to life’s possibilities, if we allow it.

Quantum physics informs us that at the most fundamental level; there are no limitations, only possibilities. The Heisenberg Uncertainty Principle of quantum mechanics tells us that both the position and momentum of a particle cannot be simultaneously known. This particle exists only as a set of probabilities or as a wave-function. This wave-particle duality is responsible for the interference patterns of particles that act as waves at the quantum level. If an observation is attempted the wavefunction collapses and only one reality exists. This is due to quantum entanglement; that the observer is also a fundamental component of the reality.

Quantum entanglement is the most exciting feature of quantum physics. It has been shown in experiments with particles that are entangled; when separated, even over a distance, continue to have an instantaneous effect on each other. Just prior to the Big Bang all matter in the universe was entangled and due to the timelessness at the quantum level, all matter remains entangled. None of us is alone. Feelings of separateness are the result of our voluntary choices to perceive the world in that way. Entanglement creates plausible explanations for the psychic abilities of clairvoyance, precognition, telepathy, and psycho kinesis. It also opens up the possibility of instantaneous intergalactic travel.

The financial industry is based on attempts at precognition and its most successful practitioners use Elliot-Wave Analysis. While there is no problem with EWA, most people’s brains are not wired to comprehend the theory. In addition, fear and greed cloud most financial decisions. While financial analysts are known for colossal mistakes such as declaring “The Death of Equities” in 1982 and persistent “New Era” thinking in 2000, those involved in music have been surprisingly prescient.

An investor in 1980 would have done well to have paid attention to The Vapors.

I’m turning Japanese
I think I’m turning Japanese
I really think so
Turning Japanese

If he needed confirmation it was received in 1983 from STYX, well before the peak of the Japanese bull market.

Machine or mannequin – secret
Secret – I’ve got a secret

With parts made in Japan – secret
Secret – I’ve got a secret

I am the Modern Man.

In 1989/1990 the financial press extolled the virtues of the Japanese system. Such rubbish persists today in cubicle culture with terms such as Total Quality Management, Executive Steering Committee, and motivational posters. It was a good time to sell Japan and buy America just in time for the largest equity bull market in history.

Even though S&P 500’s sell signal was embedded in a song from the late 1970s;

‘Cuz they say two thousand zero zero party over
Oops out of time
So tonight I’m gonna party like its 1999.

This song was played frequently enough in the run-up to 2000 that one would have had to have been asleep on a toilet to not hear it.

Musical precognition is not limited to the financial markets. In an upcoming post I will describe a growing crisis that was foretold nearly two decades ago by a song nestled between those depicting United States involvement in Latin American affairs.

Despite requests to return this blog to depictions of money and morons, my next post will be my most personal to date.

From Dreams to Reality

2006-02-15T11:27:00.000-08:00

Everything about you is how I wanna be
Your freedom comes naturally
Everything about you resonates happiness
Now I won't settle for less
Muse

Our mind interacts with particles to survive and waves to live our dreams. All matter at its fundamental level becomes a wave, as long as we are not looking. In order for our bodies to survive, the very act of observation collapses the waves of possibilities to one particle of reality. Is that why life's most dramatic moments are unexpected and occur when we are not looking?

Despite an overbearing commercial emphasis on maintaining an emotional addiction to particles, virtually all of us seek out wave expression in our lives. My first realization occurred during my Navy days aboard a ship. For hours I stood hypotized by the infinite variety of the waves that passed the ship. It was the closest activity that resembled the long walks taken I've taken since a child.

I had considered my backpacking trips as a quest for freedom from material society - the less you have - the more fulfilling the experience. Now I realize that I was also seeking an expression of symmetry that is frequently absent in our material lives. Yet all of us have the capability to experience the waves of possibility through poetry and its counterpart, music.

Response to wave stimuli is the major differentiation between humans and animals. Animals have fabricated tools, organized in groups, etc; yet, they only do so in furtherence of their instincts - automatic responses to the physically apparent world. Only humans have the ability to make decisions based on the expression of waves.

Waves of possibilities continually exist around us; ready to be noticed when we choose to leave our material prejudices and addictions behind. During these moments when we are most attuned to the reasonance of waves, we are opened to the reality of our dreams and able to give and receive unconditional love.

Developing the Gift of Intentionality

2006-02-11T09:50:00.000-08:00

“In this infinite sea of potentials that exist around us, how come we keep recreating the same realities?”
Dr. Joseph Dispenza

The January deluge gave way to February sunshine indicated by the crocuses in full bloom. I didn’t have much time. McMenamins’ winter seasonal ale, Sleepy Hollow Nut Brown, is their most superior brew and spring could not arrive until I savored my last chance until November. I undertook the leisurely stroll to the Bagdad Theatre and bought some pizza and a pint of the Nut Brown and found a seat in the Theatre. The pizza was mediocre. I have a favorite uncle who disparages the McMenamins’ menu as hopelessly generic. While I agree with him, I think he is just disappointed that their renovation of the White Eagle Saloon did not include restoring its original purpose.

If you have been here awhile you already know that this post isn’t about pizza, beer and movies in the sense of today’s popular culture. So there was no necessity in warning you. You should have already prepared a drink and taken a favorite seat because the ground supporting your reality is dissolving into the rabbit hole of consciousness.

What are we made of? Science tells us that we are composed of cells, peptides, molecules and atoms, depending on the scale of truth we wish to consider. Various religions tell us that we have a soul, a consciousness; that can only be redeemed if we chose the correct religion. This division of labor between the known and the unknown worked until the questions derived from mechanistically designed experiments gave the wrong answers. Atoms were discovered to be mostly an empty space surrounded by a probability cloud of electrons; but, the mystery did not end there. The supposedly dense, static nucleus was also found to migrate in and out of existence. What is the driving force of these infinite possibilities of existence at the most basic level? What about our thoughts? Could it be that our thoughts are the foundation of the superposition of matter and that our observation is a condensation of multiple possibilities into one? As an observer we chose which possibility is ‘real’, hence our reality.

The problem lies with our attachment to modern materialism. We are taught to view the unreal as real and discount the unreal as fantasy. Our consciousness maintains a permanent record; it is our bias to our physically manufactured world that allows us to forget what 8 was for. Of the 400 billion bits of information our brain receives every second, it is aware of only 2,000. We pick which 2,000 pieces of information to compose our reality. Because of this we are led to believe that we have no control over our situation, and this lack of control is leveraged by our emotions. Instead of deciding to observe a different set of information we become lazy and addicted to the biochemical stimulus provided by our emotions. As a result we feel powerless and continue to make the same choices every day, blind to the infinite possibilities that pop into existence every moment.

I am learning to enjoy my emotions. They make me who I am in this world and help me understand my fellow journeymen. I enjoy the feelings created by incrushuation and accept the consequences of mild attachment to these hormones. Our physical bodies age in direct proportion to our cells’ addiction to the biochemical products of our emotions. These neuropeptides stimulate our cells to replace the receptor sites used for absorbing nutrients, vitamins, and minerals; fluid exchange, and removal of waste products with more receptors sites for the addictive neuropeptides. A most esteemed commenter mentioned that President Wilson suffered a series of stokes, each one robbing his body. Could it be possible that his preoccupation with changing the physical world taxed his body’s ability to cope with the surge of neuropeptides, causing his strokes?

It is far easier and rewarding to change oneself instead of others. Everyday presents new possibilities; yet, we continue to observe only what we believe is possible. When Christopher Columbus’s ships were anchored in proximity to the Caribbean islands, the Native Americans saw only the ripples from the ships, not the ships themselves. The Shamans continued to question the existence of the ripples until the images of the ships materialized. They then were able to inform their communities of this new reality. A statistical analysis of any large sample tends to display anomalies at both ends of the curve, called fat tails. This is an example of the power of intentionality; all of our minds have the ability to alter reality beyond what would be considered normal. By recognizing events that have no explanation other than the power of our intentions, we can reinforce this behavior and alter our neural nets to become more accepting of the ability to select our realities.

The movie I saw on Wednesday was What the Bleep!? – Down the Rabbit Hole. This post refers to the original What the Bleep Do We Know!? My original plan was to see Down the Rabbit Hole again on Friday evening; but, I may have intended for a most pressing engagement that occured instead, detouring this blog on to a new tangent. These movies are attention-span hungry, necessitating another viewing of Down the Rabbit Hole Sunday evening. Monday’s post will introduce a few new and exciting concepts and extrapolations.

If you haven’t seen What the Bleep Do You Know!? , I can only say that it will change your life, if you are open to it. The question is – how far down the rabbit hole of mysteriousness do you want to go? You are 100% responsible for your answer.

Linear Expectations in a Nonlinear World

2006-02-09T07:41:00.000-08:00

"Mr. Wilson bores me with his fourteen points. Why God Almighty only has ten."
Georges Clemenceau

Perhaps I have been too hard on President Wilson; he was only an educated product of Western scientific triumph built upon Newtonian physics and its mechanistic view of the world. The 'New Era' thinking of the time led people to believe that for every action there was an equal and opposite reaction that was predictable. The English Generals believed their gunners that the artillery bombardment had decimated the German lines, such that crossing the Somme would be easier than crossing the Thames. They were right; but, in an unexpected way. Most of those who walked to the German lines did not have to deal with the rigors of a long life.

President Wilson, high on the drug of anglophilia, thought the tools wrought by the American Empire could change the world, making it 'safe for democracy'; yet, the very act of the American declaration of war on Germany set in motion the world's biggest example of bad government. The war had already claimed its first royal casualty in February 1917. The Russian Czar's successor, Alexander Karensky, may have quit while he was ahead and settled with the Germans; but, Woodrow Wilson extolled him as an example of 'self-determination' so Karensky decided to continue his game of Russian roulette. The Germans were so desperate that they deployed a biological agent by railroad that promised the Russians peace, land and bread. By October 1917 Karensky fled the Red Menace led by Vladimir Lenin and the Germans got their separate peace.

49,000 American families lost their father, son, brother, husband, or boyfriend and the Germans lost the war. Wilson thought that he won the right to dictate to the world his fourteen points and the western allies thought that they won a huge settlement from the Germans. As it happens so often, losses are enduring and victories fleeting. The newly fickle Senate refused to ratify Wilson's League of Nations; he suffered a stoke and died a broken man realizing that the one he deceived the most was himself.

The Roaring 20's brought bathtub gin, easy money, delusions in jackboots, and revelations in quantum physics - too heavy for a weekend, so my next post will reflect on the normalcy of pizza and beer at the movies.

Wilson's Quest for the Rubicon

2006-02-06T09:02:00.000-08:00

"Remember that God ordained that I should be the next President of the United States. Neither you nor any other mortal or mortals could have prevented this."
Woodrow Wilson (shortly after his 1912 election victory)

Woodrow Wilson ran for President as a New Freedom Progressive. This faction of the Progressive Party advocated an increase in direct democracy freeing the people from state governments, increasing their freedom. Little did the voters realize that the 'New Freedom' applied to a stronger central government, which would now have far more power than any individual state. In his first State of the Union Address in December 1913 President noted satisfaction with the three major domestic reforms of that year and looked to bring 'freedom' to those south of the border.

North American intervention in Latin America is as old as the Republic itself; however, starting with Teddy Roosevelt's administration, dramatically increased in intensity. Wilson justified T.R.'s gunboat diplomacy with a new imperative, spreading freedom and democracy, with Mexico's General Huerta as his first target. At first Wilson supported an opposition movement led by Venustiano Carranza; but, grew impatient. When a German ship loaded with armaments approached Veracruz, Wilson ordered the port city's bombardment and occupation. The fact that no one was at war with anyone in April of 1914 did not deter this blatant act of aggression. Carranza quickly ended his opposition movement and joined forces with the dictator. The Mexican government threatened to seize all North American assets and war seemed iminent. The crisis with Mexico paused in November as the war in Europe soaked up the attention of business and government interests on the western side of the Atlantic.

War is notoriously expensive and all the major belligerants depleted their financial reserves before mobilization completed. Germany and Italy resorted to the printing press while France financed the war with low denomination bonds. The English, feeling superior, stayed on the gold standard, due only to loans from her wealthy child. President Wilson talked up neutrality; however, let the Federal Reserve do their own walk. Without the $2.3 billion ($40 billion 2005 dollars), it is unlikely that the English would have been able to keep bleeding their army in France. As much as the French detested the English military presence, the bloodshed on the western front would have ended in a settlement - the German leadership did not fancy a two front war.

As the war progressed Wilson itched for greater involvement. He claimed the German U-Boat blockade was illegal, while not mentioning the more effective British naval blockade. He must have become frustrated with the results of his Latin American 'improvements'. After withdrawing from Veracruz, the President backed a new contender for bringing the Mexicans freedom and democracy, Francisco "Pancho" Villa. Pancho Villa loved fame more than power and when killing fellow Mexicans stopped making headlines in 1916, he gained enternal infamy when he sent his army in to New Mexico, killed 17 Americans, and burned Columbus, NM to the ground.

As smart as President Wilson was, he apparently didn't see how crossing even a river as piddly as the Rio Grande only brought more grief. If he did, he must have thought that this is what emperors do and he crossed the mightiest river of all, the Atlantic. America became an empire when she joined Lafayette's descendents in the trenches and proved instrumental in the Allied victory, which again had a perverse effect.

The Imperial Tax of the American Empire

2006-02-04T13:17:00.000-08:00

The United States enjoys an "exorbitant privilege" by simply printing extra dollars to cover whatever excess of desired imports over exports. Other countries have to worry about their balances of payments: they have to constrain demand or go through the distress of a devaluation in order to balance their trade.
Charles de Gaulle

U.S. gold reserves peaked a few years after World War II and began a slow decline as foreign governments began to exchange their excess dollars for gold at a fixed rate of $35/ounce. By the mid-1960s the trickle had grown to a flood with the French at the front of the line at Fort Knox. An empire distinguishes itself from other nation-states by its ability to tax other countries. Ancient Rome exacted commodities such as gold, wheat, and slaves from its tributary states. The British Empire used its monopolies to buy raw materials at a discount and sell its manufactured goods at a premium. After WWII the U.S. attempted to follow the British example; but, the trade surplus was never enough to pay the costs of bread and circuses at home and military intervention abroad.

On August 15, 1971 the link between the dollar and gold was severed igniting a decade of inflation, global instability and bad music. It may have been the end of the American Empire if not for an agreement with the House of Saud. In exchange for military protection of the Saudi monarchy, Saudi Arabia and OPEC were to accept only U.S. Dollars in exchange for oil. After the tumult of the 1970s ended, the world's economy recovered with declining inflation and interest rates and the dollar remained the world's reserve currency and the American Empire's imperial tax revenues increased.

The Petrodollar standard backs the U.S. Dollar with oil. Even with supply disruptions and rising oil prices, this increases the demand for dollars and partially finances the U.S. trade and budget deficits. In fact, the greater the U.S. demand for imported oil - raising its price - the greater the demand for U.S. Dollars among foreign countries. This increase in demand for the dollar allows the U.S. to export its inflation and maintain lower interest rates. The Petrodollar Standard is responsible for today's political and economic map. In the 1980s the United States was able to finance its military expansion through deficit spending - with no apparent limit. The Soviet Union, even with its massive oil reserves, could not keep up as they had to pay gold or U.S. Dollars (the ruble was worthless) for the foreign merchandise that the political elite, scientists, and hockey players demanded. East Asia owes its growth to the Petrodollar Standard. With over a billion skilled workers willing to work at less than 1/10 Western wages, these countries have become dominant manufacturers in a wide assortment of consumer products that are sold to the largest market and debtor in the world.

This party would go on as long as the industrialized world is addicted to oil and the OPEC power-brokers are satisfied with the toys bought with dollars. Unfortunately a party is not a party unless there are a few participants who make a spectacle of themselves. Enter Venezuela, Iraq, and Iran. Venezuela sells its oil in exchange for euros. Its popularly elected president, Hugo Chavez, has been subjected to attempted coups and strikes by the oil industry with suspected CIA backing. Fortunately, for Venezuela, the country doesn't produce enough oil for it to be subjected to the more drastic measures reserved for greater producers. In 2000 Saddam Hussain wanted also wanted euros for Iraq's oil. The 2003 American conquest of Iraq effectively neutralized this menace to the Petrodollar Standard even though Iraq may produce little or no oil - that increases the demand for oil from other countries that do cooperate.

Iran has also been selling their oil for euros for some time and has been subjected to a lot of sabre-rattling for its evasion of the imperial tax. This March Iran is going to raise the stakes by deploying a financial nuclear weapon, an oil exchange. Currently oil importers around the world have to obtain their oil from one of two places, the New York Mercantile Exchange (NYMEX) or London's International Petroleum Exchange (IPE). Both of these markets accept only U.S. Dollars. Iran's oil exchange will accept euros and gold but not American Express. Any country that has oil to sell and wants euros instead of dollars would be able to sell it through the Iranian oil exchange. This will decrease the demand for dollars among oil importers which will make it more difficult for the American Empire to export its inflation and keep interest rates low. This will transfer domestic inflation from politically correct assets such as stocks and housing into consumer necessities such as food, fuel and video games.Many of the countries on the U.N. Security Council are not fans of the Petrodollar Standard and are not likely to support any serious punishment of Iran. Unilateral military intervention by the United States or its proxy, Israel, would be a disaster. It is unlikely that the 150,000 American soldiers would be able to hold off the 15,000,000 militarily-fit men at Iran's disposal. The only option available would be deployment of a computer virus that could sabotage the exchange's operations. This may work for a few months until the exchange builds a sufficient information-security system. By the onset of hurricane season this summer Ben Bernanke may face a crucial decision, travel the arduous pass of Caradhras or to go through the mines with its ancient danger.

The Foundation of Pax Dollarium

2006-01-31T10:47:00.000-08:00

"The wealth of Moria was not in gold and jewels, the toys of the dwarves; nor in iron, their servant. Such things they found here, it is true, especially iron; but they did not need to delve for them: all things that they desired they could obtain in traffic. For here alone in the world was found Moria-silver: mithril is the Elvish name. But even as mithril was the foundation of their wealth, so also it was their destruction: they delved too greedily and too deep, and disturbed that from which they fled."
Gandalf

And because this is the least that he deserves on his last day....

"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said."
Alan Greenspan

As with the major countries of Western Europe, the United States maintained a gold standard throughout the latter part of the 19th century. The stable medium of exchange offered by gold was one of the primary reasons for industrialization in the West. Even so, gold had its drawbacks; particularly, for those who wanted something for nothing and the politicians who wanted their votes. Banks attempted to circumvent the rigid discipline of gold - gold is obtained by a laborious mining process; it cannot be run off a printing press - by lending more gold certificates than gold held in reserve. This created a flush of prosperity that inevitably ended when a major debtor would default and the depositors ran to the bank to get their gold back. Most of the time the depositors did not lose their money because a major bank, knowing that the banking institution's most important asset is confidence, would bail out the smaller bank by acting as a lender of last resort. After the Panic of 1907 J.P. Morgan and his cronies lobbied Congress to create a Central Bank that would act as a lender of last resort.

From the earliest days of the republic the citizenry distrusted the banking industry. The charters for the First and Second Banks of the United States were permitted to expire and the millions of acres of inexpensive fertile land provided a viable alternative to debt. By the early 1900s both sides of the political spectrum wanted to increase the liquidity(inflation) of the monetary system. The Federal Reserve Act was passed by Congress and signed into law by President Woodrow Wilson in 1913. The Federal Reserve is owned by the major commercial banks and its mission is to supervise and regulate banks, and control the amount of currency in circulation. The Fed is also responsible for implementing monetary policy through open market operations (buying and selling U.S. Government Debt), setting the discount rate (the short-term rate that the Fed charges banks) and setting the reserve ratio. The banks got what they wanted, a license to lend without consequence; and the national government received the means to fund its wars, bread, and circuses with inflation - a more convienent form of taxation. With the exception of the Civil War, when convertibility to gold was suspended, there was no inflation until 1913. Even though the Fed publicly states to be an "inflation fighter", the U.S. Dollar has lost more than 96% of its value since the Fed's formation. Most of this loss occurred after 1971 when foreigners lost the ability to convert their dollars for gold at the fixed rate of $35/ounce. At this point pax dollarium began with the greenback being backed by a commodity more liquid than gold.

The Centralization of Power

2006-01-30T10:05:00.000-08:00

"A constitutional republic, if you can keep it."
Benjamin Franklin
(when asked what type of government the constitutional convention formed)

Today only those in power are blind to the obvious, that the republic is lost. Today's democratic dictatorship wasn't formed overnight; but, in 1913 two amendments to the Constitution codified the transition. In 1912 the national government was limited in its scope due to a lack of taxation power. Its income was constitutionally limited to indirect sources such as tariffs, user fees and land sales. Indirect taxation is equivalent to voluntary taxation. No one was forced to pay for the operation of the national government. Only if an individual used its services; such as mailing a letter, buying foreign merchandise, or buying land from the national government did the individual contribute to the U.S. Treasury.

This was problematic for the executive branch that wanted to pursue a greater role in world affairs and create more agencies that were under its control. The solution was a direct tax on income, the 16th amendment, which was sold to the state legislatures as a tax on the rich. Initially the income tax rate was a mere 1% of income above $5,000, a princely sum at the time. Most people thought that they would be unaffected by this tax; however, the additional funds flowing into the government's coffers - without any strings attached - provided the teeth to government agencies that would impose regulations that would affect even those, such as my grandfather's family, who lived in the most remote parts of the Union. The income tax also permitted the national government to wage war without consent of the citizenry. Prior to 1913, wars were financed by selling bonds to the public, with an individual's purchase of a war bond implying support for the war. While bonds were continued to be sold throughout the wars of the 20th century, it was easier to raise the income tax rates.

The income tax may have provided the necessary funds for an expansion of executive branch power; but, the legislative branch maintained the authority to declare war and controlled the purse strings. Also members of the U.S. Senate represented the states and were appointed by the state legislatures of their respective states. This created a problem for a President who wanted to sell a war or a proposal to the public based on a 'mandate' of 51% of the vote. The 17th amendment, popular election of U.S. Senators, was an easy sell; but, virtually guaranteed that corporate sponsorship would then decide who would become a Senator. Even today it is possible for an individual to get elected to a state legislative office without corporate support and become a U.S. Senate elector - if it wasn't for the 16th amendment. Today it is all to easy for the executive branch to fan the flames of the transient passions of the voting public to propose new agencies to control the corporations. The corporations then payoff the U.S. Congress for exemptions and allowances from the very agencies that are supposed to regulate them.

The constitutional republic was quite robust and may have withstood these shocks if it were not for the formation of the world's most powerful cartel that also occured in 1913, and happens to undergo a change of leadership tomorrow.

Pax Brittania

2006-01-24T06:22:00.000-08:00

"It's grand to be an Englishman in 1910.
King Edward's on the throne, it's the age of men.
I'm the lord of my castle the sovereign, the liege."
Governor Banks from "Mary Poppins"

The financial stability provided by a gold-backed British Pound defeated Napoleon and ushered in nearly a century of peace in Western Europe. In the absence of armed conflict, Western Europe followed England in the Industrial Revolution, raising living standards for the citizens. The economic progress was soon followed by social progress. Europe in 1815 was mostly autocratic; by 1900 elected legislative assemblies were present in every major country, reducing the sovereigns to figure-heads.

This prosperity was based on substantial trade surpluses among the European Powers. They imported raw materials cheaply and exported value-added manufactured goods. The Pax Britannia was nearly disturbed in 1862, when England and France contemplated intervening on the side of The Confederacy to protect their cotton imports. President Lincoln's timely Emancipation Proclamation squelched such thoughts as too unpopular among the citizenry. While England continued to hold the #1 spot throughout the 19th century, France and Prussia had a minor spat over #2 in 1870. Victorious Prussia used to indemnity to bribe the remaining German states into a unified German Empire.

By 1900, however England's advantage had been nearly spent. Both The United States and Germany manufacturing output exceeded England's; yet, neither of these countries had to pay for the costs of an 'Empire, on which the sun never set'. As early as 1893 it looked as if the U.S. and England would have at it again over an insignificant country in South America. Public opinion on both sides of the Atlantic fanned the flames; but, the British Generals had second thoughts. Considering the North American railroad network and a large Irish population lusting for land in Canada, they considered war with the upstart eagle as suicidal and decided to concentrate on Germany.

'New Era' thinking among the Western Europeans contributed to a restlessness that was finally discharged by an Austrian aristocrat making a wrong turn into the sights of a Serbian anarchist with exceptionally good aim. Despite attempts at mediation among the heads of state among England, Germany and Russia - they were cousins - the armies mobilized at the behest of the newspapers and legislators. Such madness for war should have been dispelled after the first bloody battles of 1914; however, there remained an uninvolved individual who now had the tools to keep the British and French boys headed to their deaths on the Somme.

Surveillance Nation

2006-01-22T08:58:00.000-08:00

"Any society that would give up a little liberty to gain a little security will deserve neither and lose both. "
Benjamin Franklin

Two decades ago my cousins and I would roam the local townhouse complex getting into petty mischief. When the inevitable encounter with a 1980s version of a rent-a-cop occurred, we would yell ‘Security’ and run for our lives. When our liberty was restored by distance, we would resume our preadolescent pranks. We didn’t need any instruction. Perhaps it was the same instinct that drove our great-grandparents out of Europe into the then empty states of Idaho, Montana, Oregon and Washington. This quest for freedom and aversion to security has continued into our adult years. At least every other year my cousins and I pay homage to this inborn characteristic by undertaking backpacking trips along the Cascade Range.

The USA Patriot Act, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, is not new. President Wilson’s ill-fated crusade ‘to make the world safe for democracy’ in World War I introduced the Espionage Act of 1917. The Sedition Act of 1918 was an amendment to this act. The Sedition Act forbade an American to use "disloyal, profane, scurrilous, or abusive language" about the United States government, flag, or armed forces during war. The act also allowed the Postmaster General to deny mail delivery to dissenters of government policy during wartime. World War II saw the internment of American citizens of Japanese descent and a plethora of annoying controls varying from gasoline rationing to banning sliced bread. At the conclusion of these wars, the laws were rescinded. The ominous nature of the Patriot Act begins with the War on Terrorism. Unlike other wars, terrorism is not an enemy nation-state, people or a tangible item. Terrorism isn’t even an ideology or a human condition. Terrorism is a tactic. The War on Terrorism is akin to the French in 1940 declaring a ‘War on Combined Arms’ instead of on Nazi Germany. Not only is terrorism impossible to defeat (because it is a tactic), its definition is so broad that virtually anything defined as a crime against the state can be construed as terrorism.

The most frequently utilized part of the Patriot Act is: Title V - Removing Obstacles to Investigating Terrorism, Section 505 of the Patriot Act - "Miscellaneous National Security Authorities" This innocuously named section allows the Patriot Act to intrude into our daily lives and duplicates the supposedly disbanded program, Total Information Awareness. The U.S. Government is permitted to view, without a warrant or notification, all information that we generate in the public sphere. This includes financial and medical information from all non-cash transactions. Any activity conducted on the internet can be assumed to be cataloged for future review by the National Security Agency. Cell phones allow the recording of all conversations and locations visited by the user. The list of potentially monitored activities is limited only by the imagination of 50,000+ NSA employees.

The Patriot Act will remain on the books and expand in scope as long as the United States remains a political entity due to its high acceptance among the U.S. population. Even in Portland, aka ‘Little Beirut’ by the Republican Party, more than half the letters to the editor of the local newspaper support President Bush’s interpretation of the powers given to him by the Patriot Act. The statement, “You have nothing to fear if you have nothing to hide”, resonates through most of these letters; yet, the price paid among the unprepared innocent will be steep.

Identity theft is the fastest growing crime in this country because it is a non-confrontational robbery. The adoption of ‘smart’ driver’s licenses and increases in background checks, as required by the Patriot Act will raise the scale of identity theft and the consequences to its victims. Many criminals will resort to identity theft to provide a false trail that could lead investigators to believe that the identity theft victim is the actual criminal. Innocent until proven guilty no longer applies today.

Unlike the days of yesteryear we won’t be able to run from ‘security’; instead, we will have to learn how to hide in plain site. To hide we must develop legal techniques that increase our privacy (and liberty) to replace those activities that leave us vulnerable. Periodically, I will post privacy enhancement techniques on this blog.

Privacy Technique #1 – Use your driver’s license only as a license to drive, not as identification. Hide your driver’s license in your vehicle. In 2008 The Homeland Security Act will require states to issue driver’s licenses that will act as National ID Cards, with extensive personal information stored on them. For identification use a passport. The passport has less visible data on it – no SSN or home address. For casual ID purposes, such as buying alcoholic beverages, make a photocopy of your passport. If the merchant refuses to accept it, take your business elsewhere.

The Flow of Gold and Power

2006-01-20T12:09:00.000-08:00

"Banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale."
Thomas Jefferson

Spain was the first monarchy to consolidate at the conclusion of la Reconquista in 1492. Spain and Portugal were the only European countries that could amass the resources necessary to conquer the New World. The early bird does get the worm; and, in the early 1500s, the worm was a mountain of gold and silver. Just as a spoiled child with an inheritance, Spain squaundered her wealth on consumption. The huge influx of precious metals into the Spanish economy caused high inflation and inhibited the formation of 'cottage industries'. To feed the Spanish demand for low-cost consumer goods, other areas of Western Europe increased their cottage industries, built infrastructure, and organized capital markets, especially England and France.

In 1700 France was more populous; and, had more natural resources and developed industries than England. This advantage was utilized during the long reign of Louis XIV. His constant wars and public works projects, such as Versailles, had left the royal finances in shambles when he died in 1715. The Regent, Duc d'Orleans, was desparate for a solution as the French sovereign debt had achieved 'junk' status. What follows is a prime example why 'we should be careful what we wish for - we might just get it'. John Law, an exiled Scotsman, had gained the Regent's confidence due to his gambling and womanizing skills and presented the Regent with a plan. John Law's plan involved setting up a bank that issued paper money that was redeemable for a fixed amount of gold specie. The public, exhausted from Louis XIV's practice of 'clipping the coinage' and confiscation, readily accepted the paper and soon the paper was trading at a premium to the gold and silver. With the prestige gained from the paper money, John Law proposed a 'debt for equity' swap. Sovereign debt would be exchanged for shares in the Compagnie de Indes. The initial public offering of this security was oversubscribed by six times and an investment mania began. At the same time, his bank was printing an excess of paper money that initially fed the mania and the economy appeared to benefit from his Mississippi Scheme. More shares were issued and bid to astronomical heights even though virtually no one had been to the American colony and there were no profits. In 1720 one of John Law's political enemies, Prince de Conti, showed up at the bank with two carriages of paper money to be redeemed for gold. The Prince received his gold; but, confidence was lost and the mania turned into a panic. John Law was invited to leave France and the French economy would suffer bouts of hyperinflation and political instability until Napoleon.

In 1720, England also had an investment mania and panic called the South Sea Bubble. There were important differences between the two. While the South Sea Bubble also involved the government at the highest levels, there was no overissue of paper money so while many investors got duped, including Sir Issac Newton, the effect on the economy wasn't as dramatic.

The problems of government debt also plagued the English; however, the Bank of England turned a liability into an asset that would assure the stability of the government and the duration of the Empire. Because the Bank of England limited the issue of paper money to its gold reserves, the pound gained worldwide acceptance as a reserve currency. This allowed the British Government to issue far more debt at a lower interest rate than any of her contemporaries. This was the biggest factor in Napoleon's defeat and directly led to Pax Brittania. The stability after 1815 ushered in the Industrial Revolution, the free press and representative government; all of which, contributed to Europe's most costly war.

Back on the Bike!

2006-01-19T09:37:00.000-08:00

For the first time in nearly two months, I rode my bicycle to work. In a previous post I mentioned that rain was a lame excuse. It still is; but, one should be permitted some forebearance given the deluge the Rose City has received so far this year. If the wet weather persists, January's rainfall will exceed 11 inches, a monthly total normally found only in the rain forests forty miles to the west. Fortunately the rain should taper off in February, occuring only on the weekends and holidays until the start of summer (July 5). Nearly all Pacific Northwest residents, citizens of http://www.salmonnation.com/, appreciate the rain as it preserves our quality of life and minimizes interference from that ruined place 1,000 miles to the south.

To maintain the quality of the posts and allow the blog to evolve gradually, I will have three historical background posts during the week; and, on the weekend, have a post about something more relevant to the current time and its relationship to the Post Fossil-Fuel Age. Topics in the works include: The Patriot Act, the Iranian Oil Bourse, growing organic tomatoes, and details of some notable bicycle trips. Today's world is rapidly changing - new topics arise each day.

Tomorrow the nascent empires deal with 'easy money'.

A Brutal Winnowing

2006-01-18T10:11:00.000-08:00

"I am the State."
French King Louis XIV

Or so he thought. Louis XIV was less powerful than Napoleon Bonaparte; and had only a fraction of the power of Josef Stalin. Even so, in 1700 he was the most powerful monarch of a developing French state since Roman Times. Developing? Yes. France, as other 'nation-states' of that time did not have a common language, weights and measures, or even a national army. Every one of these developing nation-states were actually a consortium of various governmental entities that pledged some support (and troops) to the king. In 1500, the monarchs were mere representatives of the church, the authority of the time. With the aid of the printing press, numerous individuals questioned the authority of the church and plunged the continent into nearly 150 years of war.

Of the thousands of sovereignties present in 1500, only a few hundred remained after the Treaty of Westphalia in 1648. These owed their survival to one of two factors: access to gunpowder weapons or friendship with an entity that did. The larger entities or those located in lucrative trading areas had little difficulty financing battalions of musket infantry. All of the other entities had to pledge support to the monarchs, who could tax the emerging middle class sufficiently to fund the mercenary units.

By the time of Louis XIV, the nation-state had fully exerted control from the church; yet, the monarch remained hampered by the presence of a still-powerful nobility. This power was broken inadvertantly by the incompetance of the nation-states, with one exception.

The End of Feudalism

2006-01-16T09:49:00.000-08:00

"Quantity has a quality all its own."
Josef Stalin

Western Europe transformed herself from a barbaric backwater to the homeland of world empires in less than two generations, in one of the largest examples of artificial creative destruction known. At the time it seemed such an unlikely occurance. The rats accompanying the trade goods from the Orient carried Yersenia pestis, the bacterial organism responsible for 'The Black Death', which killed without discrimination, 1/3 of Europe's population in the 1300s. As the plague subsided the remaining working population found themselves in a unusual position, in short supply, allowing the more enterprising among them to gain their freedom to move to the towns and learn trades.

The prevailing authorities of the time, the church and nobility, benefited from the increased number of literate artisans, masons, and smiths. The church used their labor to build magnificent cathedrals to promote the glory of God; and, the nobility was able to refine their methods of making war.

With the cathedrals and the monastic Scriptoria, the church appeared to have an invincible monopoly on the minds of Europe. At the same time, improved metallurgical techniques and animal husbandry had created a nearly invincible knight. His armor was able to withstand a crossbow bolt shot at short range; and, his warhouse was strong and fast enough to carry him to battle and make a hasty retreat. Whenever institutions reach the arrogance of success, incentives proliferate to hasten their destruction. A pair of curiosities from Asia in the hands of a skilled, yet, downtrodden population would knock the knight off his highhorse, and question the authority of the church.

Both gunpowder and the printing press originated in China and made their way west in the 1200s. Initially these inventions were too expensive to develop for any anticipated benefit. At that time there weren't enough literate people and longbowman/pikeman armies were sufficient to deter the knights from excess. Both the Scriptoria and the knight suffered a critical weakness when placed against the printing press and gunpowder weapons: development time. In the time it required a monk the reproduce the bible, thousands of copies could be run off the press. Gunpowder's advantage was more decisive. Even if a knight could overrun ten musketmen before getting killed, it would take years to train his replacement; while, any peasant with fifteen minutes of training could take the place of one of those musketmen.

No person or organization willingly gives up power without a fight. The wars that would follow would induce one group to strike a 'uniform' bargin.

'The Peace of God'

2006-01-13T19:04:00.000-08:00

The Catholic Church provided an important public good, other than the sacramental wine, in regulating the conduct of the knights through the code of chivalry. While violated more often than not, chivalry contained the violence to non-holy days. When the Byzantine Emperor, Alexius I, appealed for military assistance against the Muslim armies, Pope Urban II saw a golden opportunity. Not only could the Holy Land be 'liberated', the Crusades would provide an outlet for all of the knights looking for cities to sack and non-believers to kill; all while earning a ticket to heaven.

There must have been a breakdown in communication as much of the Crusader Army's strength was expended pillaging the last remaining Christian cities in Asia Minor. Given the depletion of the crusader army by the time they reached the Holy Land, their success must have depended upon the grace of a God weary from the internecine feuding of the emirs. It did not take long for the Muslims to unite and recapture Jerusalem and force the Western invaders to retreat to their fortresses, such as Krak des Chevaliers.

As the Crusaders retreated, they left behind trade networks that would introduce Europe to the luxuries of the East, and the seeds of their destruction.

More Background Info Tomorrow

2006-01-12T21:52:00.000-08:00

I have been busy with my 'specialist' duties the past two days. Here is a little nugget of what I am leading to in my posts:

Two party system = 1 socialist party + 1 corporate party = fascism

Global Warming in the First Millenium

2006-01-10T18:40:00.000-08:00

Societal upheavel occurs when a commodity that a society is dependent upon turns up in short supply. In prehistoric times, when this occured, the hunting/gathering band moved to greener pastures, making it a non-problem. Civilized communities do not have this option. The once abundant resource must now be rationed, and those with military power have always done the rationing. In the ancient hydraulic empires water was the critical resource. Once the population outgrew the water supply, the state had to obtain additional water from other states or rationing had to occur. The Roman Empire depended upon the legitimate security functions provided by the legions that facilitated the transfer of commodities throughout the empire. As discussed in previous posts, the legions conducted illegitimate security activities which undermined the empire and their own strength. The barbarian tribes simply picked up the pieces.

The critical resource that Western Europe depended upon up to the tenth century was warmer than average weather. A indication of the climate of the time comes from the Viking expeditions. The Vikings initially found Greenland to be green and wild grapes growing in Vinland, todays Newfoundland. Grapes are a subtropical plant. Today's Newfoundland is not subtropical.

When the climate turned cooler in 980, crops repeatedly failed and the rationing started. Unlike 500 years earlier when there was military equality between the infantry and the cavalry, the stirrup and the nailed iron horseshoe gave those on horseback a decisive advantage. A horseman could now transfer the kinetic energy of the horse to the peasant with the pitchfork without being thrown from the saddle.

Only a small portion of the male population could afford a horse, weapons and armor. This unruly individuals became a law unto themselves and placed the formerly freeman into serfdom. Little did they know that it would be another pair of Asian imports that would prove their undoing.

The Largest Tax Cut in History

2006-01-09T12:22:00.000-08:00

We don't need no education. We don't need no thought control.
Pink Floyd

Just as citizens will never vote to tax themselves, a government will never cut taxes. All tax cuts are actually tax transfers; someone else pays the tax or the currency is devalued. The only time a true tax cut occurs is when a government falls. When Rome fell, the land taxes were no longer collected. As a result the agri deserti from Roman times were brought back into production and new land was cleared. Individuals acquired land through a process called assarting; land was made suitable for agriculture and a portion of it would go to the church. For the remainder of the first millenium after the fall of Rome, about 2/3 of the population were freehold landowners. Freehold land ownership only occurs in societies that are substantially above the subsistence level, as the land owner takes full responsibility for his success or failure.

The biggest indicator of the general prosperity of the time, other than the land ownership records maintained by the church, was the outcome of the Battle of Tours in 732. In this battle a numerically superior cavalry army led by the able Emir Abd al Rahman was routed by an infantry force led by Charles Martel. Even though the Muslim cavalry had penetrated the Frankish lines several times, the infantry stood their ground. This is not indicative of an army composed of conscripted tenant farmers; but, of prosperous freeholders with sufficient motivation to repeatedly stand against cavalry charges.

The time was not without progress. Monks at the monasteries practiced viniculture to a high level bringing grape production to Northern Europe. The abundant wine at the church services played an important role in Christianizing the pagan Germanic tribes. The population expanded and the climate was congenial; yet, a pair of Asian imports awaited a catalyst that would upset the 'Dark Ages'.

The Edict of Diocletian

2006-01-06T22:00:00.000-08:00

'Am I to become a beggar?' 'Shall I take to flight?' 'Is my flight to be stopped?'
Common questions posed to an Egyptian Oracle in the fourth century

It is no accident that governments that issue an intrinsically valuable money, usually backed by a precious metal such as gold or silver, have fewer problems maintaining their monopoly of violence. High public confidence in the coinage and a fair legal system increases the incentive to build and maintain fixed assets that increase the wealth of the nation.

By the second half of the third century, the coinage of the Roman Empire was intrinsically worthless. Production declined and trade receded causing a downward spiral into destitution. It was time for the emperor to 'do something'. The Edict of Diocletian set maximum prices for over 1000 consumer items, from a loaf of bread, to a pound of purple silk, or a lion. Of course the mint continued issuing worthless copper coins; the penalty for violating the edict was a free meeting with one of the lions.

Within a decade the edict was widely ignored; there was a shortage of lions and the people had to eat and those that didn't grow their own food had to obtain the funds from somewhere. Those with something to sell resorted to barter and those with the ability to steal obtained a banditry license through bribery. Diocletian's successor, Constantine, recognized the futility of the edict, and promptly expanded it. Butcher and baker trades were made hereditary and tenant farming (serfdom) was encouraged.

The reforms of Diocletian and Constantine put the empire in an untenable position. The soldiers of the army, paid a worthless fixed income, spent most of their time pillaging the countryside as barbarian chieftains set up kingdoms throughout the western empire. It was a mere formality in AD476 when the last Roman Emperor (in the west) was deposed.

The people of Western Europe were now left to their own devices. How would they be able to live without government help?

Inflation Targets

2006-01-05T14:20:00.000-08:00

The U.S. Government has a technology, called a printing press, that allows it to produce as many U.S. Dollars as it wishes at essentially no cost.
Ben Bernanke

Inflation acts insidiously on an economy, harming all individuals without the means or the wits to store wealth in an alternative currency. Rome was no exception. In the first century of Pax Romana, the gold coinage was debased by 10% and the silver coinage by 25%. A modest devaluation, by modern standards, averaging less than 1% per year; yet the consequences were dramatic. Clipping the coinage was not the only tactic used to increase government revenues. Caligula routinely confiscated the property of leading Romans he accused of treason. Apparently the extravagances of That Guy prompted his guard to retire him early and provide 'healthcare' for the remainder of his life.

By AD80, for indivdual Romans the damage had been done; for the state, a task completed. Greater numbers packed the cities expecting to be fed and entertained, while the middle class fled to outlying provinces. The state demanded only loyalty to itself; the emperors, believing that they had absolute power, were really on their own, subject to the whims of the guard and the unruly mob.

Prices did not increase for all goods services. Some collapsed. Arbitrary taxation, forced coinage exchanges and outright confiscation increased the cost of value-added goods without increasing revenue. Italy's most valuable export, wine, could not compete with less-expensive wines from Gaul, accelerating the departure of middle income farmers and craftsmen.

The empire became addicted to inflation. The denarius, 100% silver at the time of Christ, maintained 75% purity after 150 years; yet, within another 100 years (AD244), was only 28%pure, and a hyperinflationary event in that year reduced the denarius's purity to 0.5%. Within another generation the 'silver' denarius contained only 0.02% silver. The empire managed to hang on for another two centuries not through having a 'dynamic economy'; but, the old-fashioned way; predatory violence.

Exporting Civilization

2006-01-04T14:41:00.000-08:00

It is an unfortunate fact that we can secure peace only by preparing for war.
John F. Kennedy

The Roman civilization maintained a positive trade balance until the time Christ. Under the Republic exports consisted of value-added luxuries such as wine and olive oil. The quality of these exports must have been quite high as Rome was 'visited' by the Celts a number of times. These 'tourists' did not leave empty-handed; and, led the Romans to develop the means to export Roman civilization.

The legion was the culmination of ancient world military technology, training and tactics. Male Roman citizens 'volunteered' (Given the prevelance of cheap slave labor, landless citizens had few options) to serve twenty year terms. If he survived (about a 50% chance), he received title to enough land to provide a measure of independent wealth. New recruits received a complement of training and equipment that wasn't exceeded in Europe until the 19th century. The legion operated as a single unit, unlike the armed mobs that were its common opponents.

The legions were busy after dispatching Carthage. They became Rome's most lucrative export. In exchange for 'security services' and 'Roman civilization', subject provinces provided tribute in the form of gold, slaves, and food products. Egypt was Rome's most significant conquest. The Nile River Valley was the most productive grain farm in the Mediterranean world with a docile population conditioned by millenia of servitude. Egyptian grain built Imperial Rome and impoverished the local farmers unable to uncut free grain.

For the Romans to maintain their lifestyle, constant conquest was a necessity; but, the inhabitants of Germania did not want to be civilized. Varus organized a force of three legions to punish the Germans and exact tribute. The 30,000 strong force entered Teutoburg Forest and no Romans lived to tell the tale.

The limits of the empire had been reached and the positive trade balance expended. In Britainnia the Scots proved equally recalcitrant; resisting imperial interference, allowing them to perfect the beverage for which they are famous. What was Augustus Caesar to do, after bemoaning the loss of his legions? He did what every politician has done throughout history: inflation.

Ancient World Prosperity

2006-01-02T21:45:00.000-08:00

Good wine is a necessity of life for me.

Thomas Jefferson

While people were killing each other in the Middle Eastern river valleys thousands of years ago, farming technology had spread throughout Europe and Asia without the development of empires. Ancient farmers in regions moist enough to support agriculture without irrigation did not have to 'invest' in infrastructure and had more freedom to relocate if the neighbors became hostile. The low or nonexistent taxes allowed these farmers to participate in higher value-added activities such as hunting local game, growing a greater variety of foods, and most importantly, fermenting their excess production.

When a farmer sells grain, he is filling the role of a price-taker, someone who takes the price that is offered. A farmer with the ability to ferment and distill his grain becomes a price-maker, someone who makes the price for a given product. You may be asking yourself, how a grain farmer would be a price-taker for a necessity, while a price-maker for a luxury product? In years of good production, the farmer has to compete with all the other farmers for buyers. If a farmer was fortunate enough to produce excess grain in a famine year, the buyers would likely 'make a democratic decision' to steal the farmer's grain. If our hypothetical farmer fermented and distilled his grain into whiskey instead, he would reduce the supply of grain on the market in good years, raising its price; and, in bad years hide himself, his family and his whiskey away from the democratic decision makers.

In regions in which transportion was inexpensive (access to the Mediterranean Sea), these independent farmers became comparatively wealthy selling their wine and olive oil to the elites in the river valley empires. This allowed them the funds to purchase metal weapons and armor, and the time required to be skilled in their use. In famine years, the democrats didn't bother the farmers.

Ultimately these city-state republics fell victim to their own greed and three military empires arose, Carthage, Greece, and Rome. Rome, with the best military technology, prevailed and transformed herself into an agricultural empire. The former yeoman farmers, indebted from years of war, deserted their farms for Rome, and held out their hands for the bread and circuses.

Agricultural Empires

2006-01-02T12:31:00.000-08:00

The rivers run but soon run dry. We need new dreams tonight.

U2

In large-scale human organization, there have been two types of empires, military and agricultural. The military empires throughout history have been relatively short-lived and either dissolve or become agricultural empires. Military empires owe their existence (and their short life) to a temporary advantage in weaponry. It is very costly and inefficient to control people by constantly threatening to kill them. Once the advantage in weaponry disappears, the empire dissolves. Examples from antiquity include the Hittites, Greeks, Romans, and Mongols. More recent examples are Nazi Germany and Soviet Russia.

Agricultural empires are more durable than their military counterparts because they are able to use their military almost exclusively for external threats, adventures, and distractions. An agricultural empire's ability to control its subject population is derived from its ability to starve them. Examples from history include Egypt, Assyria, Babylon, India, and China.

No group of individuals would voluntarily submit themselves to be ruled by others. As the ice sheets retreated, the Middle-eastern and African savannahs turned into desert, encouraging human settlement along the arid river valleys. Initially it appeared beneficial to relinguish development and control of the irrigation infrastructure to a central authority; however, as the population expanded, production had to be maximized as the scarcity of resources, land and fresh water, increased. This necessitated the employment of specialists: the soldier (to 'collect' and guard the grain), and priest (to 'explain' the variability of grain production). The increased employment of specialists enslaved both the specialists (required tax revenue for survival) and the farmers (paid taxes independent of production) and the world's first empires were born.

In regions where irrigation was not required for farming, the farmers created higher-valued added products with their excess, allowing them the time and resources to maintain a level of miliary competence that retarded the development of empires.

Specialists, We are

2005-12-30T19:49:00.000-08:00

- A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, and die gallantly. Specialization is for insects.
Robert Heinlein

There are only a few of us that can perform 1/2 of the tasks listed above. Why? We are encouraged to become specialists. All of us have been told that getting that college degree was the key to life, liberty and happiness. We just aren't told about two things that happen along with that parchment: opportunity cost and specialization. Unless the degree came from one of those popups on the net, a considerable amount of money and time has been consumed in the process. The time is lost forever and the debt never seems to go away. We might become experts in our chosen field but it is impossible to sell our expertise to our immediate family and friends. As a result a consequence of specialization, we must become 'price-takers' in order to show our friends that four years of toleration of idiotic professors was worth it.

Our society is geared to produce and employ specialists. Specialists are easier to control. Even if you are a self-employed specialist (physician, attorney, politician, accountant), you cannot decide to exercise your right to exit without substantial cost. Most specialists are employed and no one hires anyone unless they believe that adding staff would increase profitability. I am not against profits. The reason that most of us are unable to perform many of the tasks listed Robert Heinlein's quote is that we believe that delegating those tasks to others would be profitable to us.

If we were generalists we would know immediately that it would be necessary for our survival as a free people to know how to perform every one of those tasks. It is no accident that the world's first empires occured in agricultural societies that required extensive irrigation. The irrigation infrastructure required the employment of specialists, which required taxation (and slavery) of the previously independent peasantry. If the peasantry had maintained each of the above skills appropriate for the era, they would have been able to repel those who wished to enslave them. Of course, they would have had to do without the irrigation.

We should all strive to become generalists. If we specialize in a particular task we should be able to distribute our produce to family and friends in exchange for their limited production. Using a bicycle instead of a car fits the generalist mode. Its operation and maintainance requires no outside input.

Its too hot/cold/wet/dry to ride my bike

2005-12-01T19:33:00.000-08:00

The last time I've ridden my bike was for grocery shopping the day before Thanksgiving. I could have used a derivation of that excuse (eliminate the hot/dry), but everytime I drive I see other people riding their bikes - and they are subjected to the same weather conditons.

EAR = Energy of Ass Removal

Everyone's EAR value is unique and varies according to circumstances. Generally the lower the value, the easier it is to get on a bike and ride even when the weather is inclement. The most effective way to reduce EAR is to continually work at the margins of your comfort zone and to differentiate between needs and wants. For myself, I don't ride my bike to work in the rain; but won't mind riding home in the rain since a hot shower awaits.

Price Makers vs Price Takers.... Part 2

2005-11-30T13:54:00.000-08:00

In a normal economic system, the one who pays cash gets the best deal. Been to the doctor recently? They may offer a cash discount of 25%. This is a ripoff. One indication of how sick the healthcare system in this country is that those who pay cash pay the highest rates. 'Not-for-profit' hospitals and clinics prostitute themselves for the Medicare dollar and receive only $0.25 for all their trouble. In addition, facilities that get the Medicare quarter have to admit anyone, without regard to ability to pay. Does anyone believe that insurance companies are going to pay this subsidy? Those that are forced to pay cash pay the subsidy. Not-for-profit hospitals claim millions of dollars of 'charity care'. They're not-for-profit. The charity care comes from those who pay cash. These hospitals will force you to liquidate your home equity and declare bankruptcy before you get a dime of so-called charity care. At the hospital where I work at, the laboratory collects less than 40% of what is billed and even after that $3 million/year is allocated for admin expenses and utilities; there is still a profit! If everyone paid cash the lab would generate a 20% return even after cutting its prices 60%.

Healthcare is one of the factors that is turning all of us into Price-Takers. We are being forced into accepting the 'posted price' for an increasing array of goods and services. Because health insurance is only affordable through an employer, we are being turned into slaves becoming price-takers for our labor. The middle class is being deluded into thinking that a college degree is the ticket to success but that parchment actually increases the odds that one becomes a price-taker. How is this possible when all the statistics show that the average college degree holder earns 80% more than a high school graduate? Time, debt and the form of earnings are the three primary reasons that a college degree is not as financially rewarding as it appears to be. I am not cutting down on college; its the last place that most of us guys can get pussy like a rock star.

Time - it takes time to get a degree. This time can be used doing yard work in upper income neighborhoods for $20/hour cash. Additional benefits include getting in good shape and getting a lot of action from housewives while the kids are at school.

Debt - Student loan debt, more if grad/professional school is undertaken. Credit cards - those tables with the 'free' coffee mugs are everywhere. This debt must be repaid, cannot be discharged by bankruptcy and, most importantly, subtract from the funds needed for beer and women.

Form of Earnings - The government gets the first crack at our pay and we are double taxed on the 15.3% that goes to Social Insecurity and Mediscare. Did I make a typo? You say only pay 7.65%? You pay the other 7.65% (employer share) in the form of higher prices for the goods and services that you purchase. Then come the income taxes. You may be able to deduct some of this if you committed yourself to life of debt bondage.

Do you think that the 18y/o yard worker pays any of these taxes? He is too busy getting laid to worry about the paperwork. If any of you women are still reading this blog; congratulations. I saved the best for last. You can do yardwork too, for $30+/hour. You just have to do it in a bikini on BBQ weekends.

Tomorrow, back to the bikes.

Price Makers vs Price Takers

2005-11-28T16:24:00.000-08:00

When was the last time you bargined for a better price for a product or service? You probably paid cash at that time, since that is the most common discount. Credit costs both the buyer and the seller money. Money from credit is heavily taxed and leaves the community and returns in heavily diluted in the form of government aid. The costs do not end there. Credit deludes the consumer into thinking that one possesses more spending capacity than what is really there. The economy may be boosted in the short run, but there is an inevitable contraction subsequent to the boom as the debt must be paid with interest - lots of interest.

There is one advantage to the seller that credit possesses - it reduces the risk of theft by the staff. It is more difficult to short change a consumer from plastic transaction and; more importantly, impossible to 'fail to record' the transaction as is possible with cash. This is the real reason why you get a free small fry if not given a receipt. The advantage to the seller is a big disadvantage to society. It lowers the cost of labor. With the inherent internal controls of plastic transactions, sellers can accept the risk of hiring minimum wage flunkies instead of higher wage workers that receive that higher pay in exchange for the trust necessary in cash transactions.

I'm not finished.... more on this topic tomorrow.

The Advantages of Bicycling

2005-11-18T13:09:00.000-08:00

Conventional wisdom binds us to the automobile. It takes longer to ride a bike. Its too cold/hot/wet/dry to ride. The savings are not enough to justify riding a bike. Its too dangerous to ride a bike. Its too easy to make excuses to not change one's lifestyle.

Out of the previous six statements, only the first and the last are true. Over the course of this blog I will deconstruct them in addition to any other excuses that may come my way. Allow me to consider the first misnomer "It takes longer to ride a bike." In my case it takes me 10 minutes to drive to work if the traffic is agreeable and the stoplights are fair. In all but extreme conditions it takes me fifteen minutes to ride. So it takes an additional 5 minutes each way? Wrong, because I use my bicycle for commuting and in-city errands, I no longer have to budget time for exercise. All the drivers in the empire have to budget an additional hour each day of physical activity to stay in shape - much of it spent on a stationary bike.

Stagnant Air Signs

2005-11-17T15:04:00.000-08:00

As a 30something male I had to submit to my addiction to electronic equipment today by making a pilgrimage to Fry's. As I was driving there I could not miss the signs imploring drivers to limit driving due to air quality problems. What uselessness. I don't think anyone on the interstate decided to turn around and go home at that point. The very act of getting on the interstate involves an irrevocable decision - To drive a given distance to a place and return. The decision is irrevocable; if it wasn't traffic congestion would be a nonproblem as drivers would decide to chose a different route.

At Fry's I was able to purchase all that I thought that I needed for less than the price of 4 gold sovereigns, a not inconsiderable achievement.