Forget saving - be an American and borrow! borrow! borrow!

The Fed is comparing their experiment with quantitative easing to the (subjectively unsuccessful) actions of Japan for the past 20 years. But Japan had a positive trade balance and a positive savings rate when it began its zero-interest-rate journey. It managed to maintain social stability and a viable currency in a zero-return, zero-growth environment for the past two decades because its easy lending was qualified with a people who didn’t have much appetite for debt and who chose to save their money anyway. It’s also a people that still produce lots of valuable hard and soft goods for export and that a wide variety of societies can use regardless of their stage of development (machine tools, furniture, etc).

America is trying this with none of these safeguards in place. What’s the likely effect of free borrowing on a currency backed by a society addicted to debt, with no savings (negative savings after netting out borrowing) and an economy that exports mostly intellectual property geared toward petroleum-dependent industrial economies that has been importing almost all its durable goods for over a decade?

Two scenarios: hyperinflation or massive, persistent reductions in living standards. Either one will force us, one way or another, into what is in my opinion a better future: more savings, less debt, more domestically produced goods and a ’shop local’ perspective, combined with a less energy-intensive growth outlook, where we save more than we consume and consume more of what we produce ourselves.

But the harder the Fed tries to reinflate the economy to somehow resemble the failed bubble model of the Dubya years, the harder the and more abrupt the transition will be.

I’m reminded of just how silly the bubble economy and our energy-intensive lifestyles are as I walk though Hills Plaza and see them meticulously tending to the flower pots, pulling dead leaves and replanting weak plants every chilly winter morning. It feels like the latter days of Silvanesti, and it makes the flowers seem ugly.

Hmmm…

… It’s going to be a long, cold winter for poor families, I fear…

It took me exactly 8 minutes and 46 seconds to walk from the gates of Embarcadero Station to Folsom & Spear (where I work) this morning…

If you are able to, regardless of your gender or the gender you prefer to fuck, call in gay. Don’t put your job on the line for it, unless that’s what you want to do. I admit I won’t be doing it, and not just because that’s the day before my Xmas vacation plans start, but because I’m privileged to work at a company with a CEO who has a gay brother and who is a deputized minister who recently officiated the wedding of our lead web developer to his long-time boyfriend. I feel a certain duty to support this employer to a significant degree and not just coz they pay my bills.

If you don’t participate in this particular piece of mild silliness, but you like your job and your coworkers and they like you, I encourage you to consider the idea of ending the practice of “straightening up” for your employer when you go to the office every day. Sex doesn’t have to be a part of the workplace, and there is surely no reason to make your personal life a part of your job, but if you’re ever asked about your personal life by a kind boss or associate, answer honestly. Work closets are the easiest ones to bust open, because there is absolutely no reason for a good manager to care less about your personal life than that of a coworker just because of the genitals of the individuals in it. If shooting the shit is part of your work culture, you might find that this sort of openness actually enhances your networking and team cohesiveness.

This is all of course my opinion, and quite a skewed one, I’m sure, considering I’ve worked in the above-mentioned environment for most of my professional life. I support this concept because I like the idea of honesty in the workplace, not because I think employers should be punished for the sins of religious bigots; and I admit that the employers most likely to tolerate or support this effort are the least of our worries. Do here as you would in all situations of social protest, and carry a large dose of self-serving logic along with you.

Keep in mind that employers in 30 states can fire you for calling yourself ‘gay’.

One has to wonder: is this an investment in our industrial and financial stock, or a fleecing? Executive pay has never been higher, while individual wealth has hardly been lower for decades. We are definitely wasting our national wealth.

This is not a short-term blip on the economic screen. Every pundit and most administration and government officials acknowledge this now. It’s just the start of a long readjustment to more sustainable levels of debt and the remonetization of global commerce and asset prices.

In such an environment, reinflating debt leverage is not going to result in any long- (or even medium-) term retrenchment or recovery - this wealth will be destroyed or simply expatriated into sealed Swiss vaults for the filthy rich that are still heading these companies.

I say let them go bust. Let the economy shrink by half. Let the dollar crash. We will have to inflate our way out of this once it does anyway. Let the time that’s left before we become Zimbabwe be used to shovel money into schools, technical training, health care, and intellectual property documentation, preservation and protection. I’m not opposed to ballooning the public debt for the sake of trains, schools and a new green grid. But the current use of the Federal credit card is the equivalent of foregoing a trip to the doctor in favor of buying a new cathode-ray tube analog TV at twice the MSRP. What a waste this country’s enormous potential is becoming. We need to reeducate ourselves as a society with new, useful skills in the “other third” of the economy that is not dependent on ever higher levels of consumer spending and debt.

I actually started out as a fan of the idea of buying distressed mortgage-backed assets from banks (the original purpose of the bailout, and something which really was never actually done) because it would stabilize the market and eventually we could re-sell them a few decades from now when they were worth something again. But the administration is now using that cash like confetti at a wedding, tossing it about with no real plan or rationale or long-term idea of how to get it back. It’s mostly just landing in firm’s bank accounts and allowing them to throw out fat bonuses and continue to burn money and delay the inevitable crash (whilst turning it into a super-crash for the Treasury).

I’m not necessarily in favor of mortgage rescues for the ‘little guy’ or handouts for the newly destitute. I’m not against it, either. But I think the best stimulus we can give this economy is a solid investment in the productivity of the next generation: education, green infrastructure, and geopolitical retrenchment. It’s sad when I find myself agreeing with my odious home congresswoman, but these unending bailouts are a bad deal for America, and for the world economy.

What is especially destructive about the shenanigans in Washington is that they are rewarding the fuckups and punishing prudence, quite splendidly and candidly. I really wish that those who were still working hard to keep up and managing to stay above water would get a bone here and there.

Since we’re already nationalizing risk and converting ourselves into a command economy, maybe we could do a few small things to encourage still-employed taxpayers to keep going to those jobs and funding the bailouts for the fuckup businessmen? Here’s a few things I’d propose:

• Cut a point off the interest rates of all mortgages that have been consistently paid on time.
• Bump up 6-month+ CD rates by a point to reward savers who are keeping the banks solvent with their miniscule savings.
• Give one cent tax credit for every dollar of cash worth an individual with zero debt and zero equity investment has (especially good for older savers from our more prudent Depression-era past).

He’s a fab guy, but he isn’t going to fix the horrible things we’ve done to our society and our species.

We have a lot of shit to do. Our nation’s balance sheet stands somewhere in the region of -$50 Trillion. With a ‘T’. That’s over $10 Trillion in federal debt, about $10 Trillion in state and local debts, $20 Trillion in cash borrowed from the Social Security and Medicare trusts to fund war and corporate subsidies, and well over $10 Trillion in consumer and commercial debt.

The point is, we owe a shitload of money. Our society has been living on its credit cards for a generation and the party is over. Asset-price bubbles can no longer support this fake wealth, exhausted Chinese and Russian workers can’t keep paying us to buy their cheap plastic junk and hydrocarbons, and now our parents want to retire, and they actually expect that they’ll be able to liquidate all that wealth they’ve tied up in stocks and houses by selling them to us kids who are weighed down with more student loan and investment debt than any other population in history.

Most of the debt our society is carrying was run up by those same parents who now want to spend a few decades spending even more money that they’ve accumulated by investing debt. And they taught us well: in a few short years, if we don’t change our ways, we’re going to have more invested debt and consumer debt than them, in about a quarter of the working lives. Now that’s what I call ‘leaving your kids well off’, assuming you mean ‘off’ the way mafia bosses do.

It’s time we grew up. We need to be adults. We’re in charge now. The ‘baby boom’ is about to voluntarily give up control of our society and we need to step up to the plate, and not only take the reigns, but turn around and be the disciplined, frugal, austere parents to them that they never were to us. It’s time to take this country to a great big debtor’s anonymous meeting.

We must be prepared to work our asses off. The log hours we work now will continue, and the workplaces we now enjoy will become slimmer and more austere. No more video games or climbing wall. Cubicles and used 15-inch monitors all around. And we won’t be working long, dedicated years to invest in Google shares and retire at 45. No, we’ll be working until we die at the desk. Because we let this world get this way.

And we must be prepared to work this hard for less money. Even if our pay doesn’t go down, I guarantee we will be paying more tax and spending more on food, clothes and transit. Deal. Our money isn’t worth much since we inflated our debt down as far as we could. Chinese plastic pumpkin makers are getting paid as much as us now, and Bengali weaver women are earning enough to feed their families. We can’t have $5.00 shirts anymore. The oil-intensive agriculture we practice is going to disappear as our oil runs out, so a lot more human labor will have to go into that food we eat. Be prepared to start paying minimum wage or better to the millions of humans that will be replacing the billions of hydrocarbon slaves that have been making our food for 75 years. We’re going to be so broke.

And yet we’ll still have to pay lots of taxes to get our governments out of this crushing debt. And we’ll still have our own credit cards and mortgages to pay off. And we’ll have to pay it off, because every time we pay them down a little, the banks will be lowering the credit limit, stranding us in max-out land until we give up the habit permanently.

And we will also have to start saving money, because we will no longer have access to much credit. Investment will be about putting your savings toward a hard good that retains its value, not about speculating on assets that have no realistic and rational way to hold wealth for decades.

Add all this up and it is clear: we must spend decades scaling back our standard of living. We will never have the quantity of ’stuff’ our parents had, and everything we have will be a store of our own, personal labor, and it will have to last.

We must be savers. We must consider wise taxation and prudent government regulation a form of saving. We must look to our local governments and local communities for many of the services and funds we currently rely on the feds for. We’ll be settling for a lot less from our government so that they can put a lot more of our (higher) taxes toward paying off our war debts and infrastructure debts and finally fixing the crumbling roads, bridges, and buildings we’ve ignored whilst we’ve been blowing up or expatriating our wealth.

We’ll have to localize our lives. We can become involved in our local communities and municipal governments and ease the fiscal burden of hordes of paid professional bureaucrats. We can ease our schools of bond servitude by home-schooling the youngest children and putting kids to work as soon as they are able, rather than coddling them through their mid-20s like our parents did. We can care about and invest in our public schools and universities rather than wasting our money on private schools and indebting the next generation with student loans.

We can become involved in our neighbors’ lives and ban the homeowners associations that destroy more communities than they create. We can support one another and care about one anothers’ lives. We will then expect less from local and municipal government and ease their need for federal transfers, keeping federal money dedicated to the federal debt. But we’ll also be paying much higher local taxes, due to the massive debts which will go unfunded by federal transfers as local governments try to cope with energy shortages and devaluing assets.

We’ll need to support local businesses, because large companies will stop moving to our cities. New factories and plants will not be enticed to move every few years as building materials become prohibitively expensive and municipal and state governments so strapped (and creditless) that the generous incentives they’ve ladled on corporations for decades will cease to exist. But those businesses that are already there will become cash cows because their existing scale will make them the most able to pay, and they won’t be able to move away anymore.

Basically, the shiny future your parents taught you about was the future they wanted, but were too spendthrift to make real in their own lifetimes. Now we need to clean up their mess and stop ourselves before we make one of our own that’s even worse. It’s gonna be hell.

The world won’t end. We won’t starve (provided we stop playing ostrich in time). But things will never be the same. We can’t ignore the signals being sent from every corner of the planet, whether coming from peak oil, empty mines or oceanic dead zones. Ignoring it will mean the end - the real end.

Charismatic and humble leaders will be a great asset in the journey ahead. But they are not the answer by themselves. If they think we aren’t up for the task, they’ll do their best to maintain the status quo until the total crash comes. Let’s rise to the challenge, clean up our lives, balance our books and learn to live lives that don’t have to be existentially threatened 100 years from now.

Forget the sob stories of our parents and grandparents. We’re the greatest generation. We can continue to be the innovators, provocateurs, and challengers to the status quo, but we have to act, and we have to take charge now, while we have time on our side, and leaders that can listen to us because they’re a part of us, finally.