SEPTEMBER 2011
NOT A RE-CESSION, BUT A RE-SETTING?
It’s been a crazy summer in our world today, the exception being right here where I live. Our garden had its rains in time, our three apple trees were loaded with fruit: an early one with a delicious species, good for eating and processing, a later one to provide us with “An (organic) apple per day to keep the doctor away”, and even my Northern Spy variety has a few dozen. A friend gave me a different kind of raspberries, which bore abundantly, so we ate hundreds of them, and froze even more; also carrots galore, and red beets, tomatoes, potatoes, cabbages and kale, of course. Each day we thank the Lord for his bounties.
However, these ideal conditions did not extend to the economy. Last month The Wall Street Journal reported that “Forty years ago today, US President Richard Nixon closed the gold window and ushered in, for the first time in human history, a global system of unconstrained paper money under full control of the state.”
Now four decades later this is no longer true. Yes, there still is an unconstrained supply of money, but the states, Germany, France, the USA, have lost control over the Euro and the dollar, and trying, in vain, to regain that authority. Gold has gone hyperbolic.
It’s a crazy world out there. I wonder how many of the devout Christians who back the Republican Party, for example, realize that its current approach to social welfare issues is identical to the one presented by Anton Szandor LaVey in The Satanic Bible. It may seem odd that believers in a faith where Christ told one of his followers to give all he had to the poor, now by and large support a party that’s telling America to give all it has to the rich. That’s what you get when most people who claim they believe in the Bible have never actually read more than a verse here and there.
When you read this column, Obama has given an important speech on the economy. Just as the Canadian Finance Minister talked about rekindling economic growth, so, I am sure, the US president will sing that same tune: that’s the only song politicians know. The false note in all this is that perpetual growth is impossible. Yet this faith persists because people in general are deaf to any truth that will harm their political or financial fortune or religious comfort.
Here’s an example: all signs point to the dawning of a new era, one of ‘no growth’ which also might spell the end of The Age of Money, but nobody is admitting this. Already perilous instability is the norm, with the market up and down like a yoyo, and gold soaring.
Reality is that money has become to us as the potato was to Ireland in the 1840s. Then blight caused starvation. Now lack of jobs, deflation, the weather, does the same. Greed is the cause. It has always been the great destroyer. Columbus sucked a thousand years of gold from the Caribbean in two or three years, and then extinguished all its human life. Jesus was a victim of greed. Now all the large land and sea animals of the earth, and most of its birds, are under the sentence of extinction. They are being killed not by the rifle, but by a more lethal invention, money and its insatiable quest for more.
The Bible tells us that greed is the root of all evil. In my youth there was a song Money is the root of all evil, take it away. That’s exactly what’s happening. Money is melting away like the Arctic. Each time a home owner goes bankrupt, (there are millions of households with mortgages larger than their value) money evaporates, vanishes like a puff of smoke. Bank shares in the US and Europe have dropped by more than 80% in the last few years. This plummeting represents the dwindling into nothingness of the so-called fiat money created when Nixon went off the gold standard. Now all those virtual money entries, fashioned by a flick of the finger on a computer screen, are being deleted. The current financial system needs growth, and without economic growth it will collapse from debt defaults.
I believe what we are facing is not another economic recession, but a re-setting of the economy. Just as in a few weeks we will re-set the clock to Daylight Saving Time, in the next few years the economy will re-set itself. Too long we have been in an overdraft position, both environmentally and economically. It’s pay-back time, both principal and interest. This means that we will subjected to the most drastic adjustment humanity has ever faced. Brace yourself for bad times.
Bert Hielema, as a commercial real estate appraiser, wrote long narrative valuation reports which always included a section on future economic conditions. His territory covered an area from Picton to the Algonquin, from Peterborough to Perth.