She named the boy Ichabod, saying, ÒThe Glory has
departed from IsraelÓ—because of the capture of the ark of God and the
deaths of her father-in-law and her husband.
— 1 Samuel
4:21, Daughter-in-law of Eli, IsraelÕs
High Priest
The
glory has departed – the whole world.
ÒWhatÕs up Doc?Ó said Bugs Bunny.
ÒBugs, sad to say, things
ainÕt that peachy keen, all over the globe, it has simply become IchabodÕs
world!Ó replied Elmer Fudd.
Again sadly, we are forced to
live in a real world. The cartoon financial fantasies of the twentieth century
have forced us to look at the twenty-first; there to take off the rose colored
glasses and not only look at a real three dimensional world, but for the first
time, in a very long time, to question some of the assumptions that have guided
our make-believe world of our past epoch.
I realize that this is rather a
stark way to look at the world and the country, especially this week when the
nation celebrates its Thanksgiving Holiday. But when you seriously look at what
is happening, Ichabod seems like a just description. This week besides
tomorrowÕs thanksgiving feast, we are marketed the hype that this will be
ÒTurkey and Professional Football Day,Ó the nationÕs pseudo religion. That
followed by Black Friday when we practice feeding the god of consumer gluttony.
Lest we forget today was also
the day when the American Congress, Democrats and Republicans, were supposed to
begin to act like adults and make a true token gesture in beginning to reign in
some of the federal governmentÕs excessive spending, in a somewhat controlled
environment.
The $1.2 trillion in savings
over a decade however was really way less than a token, the real work would
have been to make those savings on an annual basis. A true functioning republic
would have seen it within reason, to make those annual cuts to one percent of
GDP, so that we could have seriously begun to restructure and rethink the role
of government, so that it represented the vast majority of our people; not
those just on the conservative and liberal extremes of their political parties.
Thanksgiving this year means,
thus far my move to Reardan has gone very smoothly. Monday was supposed to be
my tenants last day, and when I came by to check out what was happening Sunday
afternoon I found the place vacated and cleaned to a satisfactory level.
So begins the task of doing some
upgrades and repairs, which are required in this century old house after thirty
years of being a rental. I recently found out it has been in my parentÕs
extended family since 1943. Considering the bones are still in pretty good
shape and the place has never been seriously Òremuddled,Ó some time and money
will make a good home for a prairie kid.
Reardan is a small town,
population 571 (2010 census), where I went to elementary school and my dad was
my school principal. After I got my driverÕs license in high school, I stayed
in this old house with my grandparents when I bucked bales and drove truck in
wheat harvest during the rest of my high school and three summers while going
to college. So other than the time I spent in Seattle, I am coming back to family
roots on my dadÕs side. Reardan is where my dad spent many of his early years,
as well as his mother. The German family homestead was patented not that far
away in 1890; a year after Washington became a state.
About fifty to sixty miles to
the west, were the Washington Territory roots of my motherÕs-motherÕs family,
arriving in 1883 after ten years in Oregon proper, moving there from the east,
where we can trace ancestry to the Carolinas to before the American Revolution.
On her dadÕs side, this summer my cousin was able to go back to Denmark and
trace back that vintage to about that same period.
So after shampooing the carpets
and a fresh coat of paint, by the first of December my stuff that has mostly
been in storage for my time at the mouth of Big Boulder Creek at its confluence
with the Kettle River, will be piled in rooms and the process of changing a
house into a home will begin.
Revisiting Ichabod, and contrary
to most of the worldÕs politicians and a lot of economists and financial gurus,
by taking a realistic look at where we are, it sure seems to a somewhat honest
observer that Ichabod was born about the turn of this century; but Uncle Sam
was hoping to have a more traditional son to carry on his heritage a lot
longer.
Staying with the Bible
narrative, it is rumored that Uncle Sam has not died, but has decided to exile
himself until the American people begin to look at their historic roots for
their substance; rather than some utopian scheme to rebuild the tower of Babel.
So in a real world, created by God, a time of serious angst, brought on by
totally human folly, looks indeed like a Sabbath rest for the glory of God,
while Ichabod grows and he matures to the point where he decides to change his
name.
The two political extremes
around the world, to whom each camp contends the other is at fault for this
debt extravaganza, seem to think the defect either lies with too much
government and taxes, or capitalism and not enough social justice. But what if,
these are just superficial results of a much deeper and older problem?
My formal economics training
came as I pursued an MBA; the rest I have picked up through reading and video
seminars, really since 2008 when the official Great Recession began. My
financial training came through about thirty years of being a not overly
successful entrepreneur and what I picked up putting a wife through a similar
program at the University of Washington and her later adventures into
international banking, during one of those all too common Latin American debt crises.
Ecology, both terrestrial and
aquatic, as well as a smattering of chemistry and engineering, is my true
formal higher learning. That historic jack of all trades master of none, or in
its more formal understanding of a generalist rather than a specialist, forces
you to look beyond the trees to see if you can describe the forest, or even
more broadly the forest ecosystem.
Since we humans are still
somewhat alive, an ecosystem model also fits the current enterprise structure
we tried to build during the last century. In the eco-squeak sense it is
unsustainable, but really the eco-squeak solutions, such as proposed by Al
Gore, only attempt to shift the ecological equilibrium from laissez faire
capitalism, a method they oppose in religious belief, to their faith in
ÒprogressiveÓ collective elitism. That human religion is as old as the fall of
man, and first illustrated in historic literature as the Tower of Babel.
Western civilization however,
through the dark ages, the Renaissance, the Reformation and the Enlightenment,
followed by evolutionary progress, has not really been built on a money
foundation, in any sort of historic sense. We have had hard money, soft money,
until now we have totally intangible electronic fiat money, supplemented by
paper and some base metal coins. The ecological forest beyond the trees, the
grasses and the birds and the bees however rests totally on the assumption, and
it is an assumptive religious and material paradigm, of compound interest as a
true, definable and measurable worldview to manage economic growth.
The search for ÒCompound
InterestÓ is what drove the Age of Discovery, the Industrial Age and the
building of our modern global enterprise. Throughout human history, money has
always been the end, but compound interest has always been the means.
When you look at the current
global debt endgame, the problem is not so much with the bits and bytes of
electronic money and banking, but the problem is that the lender system wants
compound interest from the Òborrowers,Ó but recipients donÕt have the means to
repay. The straight reality is both sides of the contract expected essentially
a free lunch. In the real ecologically sustainable world, there are no free
lunches.
If we put it at the levels of
human totally positive morals; both sides honestly believed that the compound
interest process would work. It wasnÕt a failure to communicate, it was the
reality that compound interest in our Ichabod world canÕt adequately measure
the risk associated with any human endeavor.
All the various insurance,
reinsurance, credit default swaps, and the universe of other ways to hedge
monetary investments are really just a mechanism to control risk. Yet we
continually look at the money and in Ichabod fashion, think we are smart enough
in a collective laissez faire world to determine risk properly and use it as a
means to allow money to manage human enterprise.
To control and manage risk
properly, we need to understand the measurement of risk as an asset class,
rather than a debit class. What that means in ecological terms is the return on
investment must be measured as a component of growth. In other words as growth
occurs our return is not fixed but variable with the growth itself. That is
totally the antithesis of compound interest, which essentially states that
growth will be managed by equal, measurable means, and will return enough
ÒprofitsÓ via that mechanism to make the Òcompound interestÓ payments.
Austerity alone is not going to
make Greece work, or any of the other countries burdened with excessive debt.
Just debt and measurable debt service doesnÕt work in a variable operational
world. Even Ichabod will grow to understand that simple fact of life. The world
doesnÕt work based on the models of mathematical constants and this is not
going to change.
The problem really isnÕt with
the people, the bankers, the politicians, the common man, the problem with our
enterprise model; solely, exclusively, at least for the last generation, is
based upon a false assumption of an operative invisible hand, which we really
donÕt believe truly exists. Hence the true Invisible Hand is letting us learn
an Ichabod lesson.
True wealth is based upon
growth, and bluntly Industrial Age specialization is too simplistic to
comprehend these complex diverse growth dynamics. Common sense tells us that;
yet we have reduced men and women to a credit score, nations to their GDP,
where in reality GDP only can track the movement of money within a culture that
is willing to play by the GDP-compound interest paradigm.
The reason that human
civilizations have always been, except for part of the last century, based upon
agriculture is because agriculture, its good years and its bad, doesnÕt work
through compound interest, but compound agricultural returns that include a
tangible risk-reward premium. That return is not measurable on the front end,
except through the dreams and hopes of the planter, the rancher, the
agriculturalist. The returns are truly only known and can be counted once the
harvest occurs.
Ichabod has returned. His
endgame is playing out. You canÕt eat compound interest and the risks of
IchabodÕs world currently do not acknowledge that reality. Since noble readers,
if you didnÕt have an inkling of that reality, you would not be reading this
unconventional column; hence you have something to be thankful for that most
living IchabodÕs world do not.
Happy Thanksgiving! God willing
by next week we will be reporting from Reardan, Washington, population 571
(2010 Census).
©
2011: All rights reserved.
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