Vanity thought #1182. Meet the fan

Something is not well with the world, the picture perfect image of the western civilization conquering time and space and imagination of our devotees is showing some cracks. So far they might be just harmless hairline fractures but they could also turn out to be signs of unsustainable stress fatigue and everything is about to snap.

I have no access to any reliable data, nor do I have the capacity to analyze it, but we all can look at secondary sources and make educated guesses about what is going on outside our view. I mean that there are two contradictory lines of discourse being pushed out to the public and they both look compelling, which means that at least one side is getting it terribly wrong, but which one?

Earlier this month Republicans swept mid-term elections in the US. Why? Most commentators agree that it was a message of dissatisfaction with Obama. It is true that all presidents in their second term face hostile Congress but that is not the whole picture – Republican message of slow recovery and loss of leadership hit the chord with the people. Just about enough to galvanize its supporters and keep Democrat voters on the back foot.

It could be blamed on complacent Democrat voters being too lazy to go out and vote for no particular reason while Republicans genuinely wanted to make themselves heard but, perhaps, recovery is really not felt across the country, jobs are back on paper but they don’t pay enough, and life is getting worse all around. People do not vote for raising minimum wage when times are good, everybody feels the pain and need for protection even though they might not be personally affected.

Perhaps the most telling number is that one in six Americans depends on food stamps to sustain himself. It’s not a third world poverty but it’s a bad sign nevertheless.

The other message is that everything is great, better than ever. Massive QE did its job, economy is back on track, perfectly primed for boundless expansion. Dollar is getting stronger every day, oil is cheap, and so is gold, and days of doom and gloom are finally over, and the whole world is looking to America for leadership.

This message looks to me to be the most worrying. I’m not a fan of doomsday scenarios and people trying to predict the next big crisis every couple of weeks in hope that one day they’d be able to say “I told you so”. Still, the arguments they raise deserve attention.

I’m not sure what to make of dollar getting stronger on the back of the biggest devaluation in modern history, aka QE, perhaps it’s simply returning to its actual value, but cheap oil is very suspicious. Its price just does not reflect its market value, it looks manipulated.

Lots of OPEC countries are struggling with production, lots of them calculate their annual budgets on the prices above current, the demand hasn’t dropped as much as the price would suggest, so something smells fishy here. The drive for cheap oil is led by Saudis, and they are the guys involved in another major hotspot – the war on ISIS.

Of course it’s all planned by Americans, Saudis are just playing along (or so they say), but Americans themselves seem to be acting against their own interests. Their celebrated energy independence depends on high oil prices, not low. Saudis are able to extract it at 30 dollars a barrel but American shale oil needs the price to stay about 100, not below 80 as it is now. Don’t quote me on numbers, I’m talking ballpark figures only.

So why would Americans push oil price down when it threatens their own massive investments and energy independence they fought so hard for? They were just about to walk away from the Middle East, not needing their oil anymore. One word answer – Russia.

Pesky Putin must be punished and made to toe the line. While Americans have an understanding with the Chinese, Putin has gone completely off the rails, he is off the leash.

Russian currency is under attack, draining their Central Bank resources to support it. Russia can’t make any profit at oil prices below 80, and without income they are bound to swallow their pride and stop making troubles for Americans. Ukraine, it is argued in this line of thought, is one of the methods to draw them into unwinnable war. They’ve already committed themselves to Crimea, now they will have to shoulder Donbass, which was an economic sinkhole even before it was totally ruined by bombings. Well, Donbass is heavy industrialized and the most profitable region in Ukraine but it needs massive modernization to simply survive, it’s still a Soviet era economy depending on Soviet era business connections.

The heart of the problem, however, is Putin’s insolence and boldly stated desire to live by his own rules in his own kingdom. He openly rejects US role as the world’s sole leader and guardian, he wants a “multipolar” world instead, the one where Indians, Chinese, Brazilians and the like are free to follow their own agendas instead of cooperating for the sake of US prosperity.

Russia might be a small fry but these other countries make up half the world population, so the lesson must be taught, no one should be able to publicly challenge the US and get away with it.

Russians have far reaching plans, they want an alternative world currency, for example. Their trade with the US is minimal but it’s all conducted in US dollars, and they have no control over US dollar value. They are also bound to invest these US dollars in the US itself, mostly in the form of government bonds, there’s also significant rent to be exacted on dollar denominated trade, it might be a very small percentage but it adds up.

The US is not going to give up on “petrodollar” and they are not letting any alternative currency to succeed. That explains the sudden drop in gold price. Publicly, gold is called just another precious metal compared to the real thing – dollar, but Alan Greenspan recently dropped the bomb by saying that gold IS currency, something his successors at US Federal Reserve would vehemently deny.

US, of course, is the world’s largest holder of gold. IMF, the bastion of dollar domination, also managed to become the third placed gold holder. Germans are in second place, afaik, but they do not actually possess their gold, it’s locked in the US for “safe keeping”, and when they asked for it be transferred back into their custody the US told them it would take decades to repatriate it, so it’s better for this gold to stay where it is – in America.

So, manipulation of market prices of these three most important instruments – dollar, oil, and gold, would mean that something is definitely wrong with the world. It means that someone is making a serious political commitment and is prepared to bear high risk and high price associated with such market interventions. Russians are not going to back down either so confrontation is unavoidable.

There is no good way out of this, we can’t have Russians waving their nukes and banging shoes on UN tables, and we can’t go against market prices indefinitely, and the upcoming karma for QE is not going to dissolve itself.

The US is fighting hard to preserve its status and fight means serious, serious losses. It’s also a fight they can’t win because their time of ruling the world is over. China is in a state of inflating their own bubble, too, their karma is just around the corner, they have to pay for their overconfidence and dreams of perpetual 10% growth. Russians will probably lock themselves in, go into hibernation and survive on potatoes, they are of no help to anybody.

Major economic crises come about once in every decade, we are seven years away from the last one, and two-three years look like a reasonable time for the above mentioned karma to bear fruit. And we haven’t fully recovered from 2008 yet.

So, the proverbial unmentionable substance – meet the fan, you are going to spend a lot of time together.

Why am I talking about this? Mostly, because it’s on my mind and it refuses to go away. Maybe by typing this up I’ll feel myself relieved. I also hope that I’ll relieve myself from the persisting illusion that there is life outside Kṛṣṇa, that there’s another way, and that a relatively good life of the past half a century is here to stay.

Maybe it’s not spiritual knowledge per se but knowledge of nescience is useful and necessary for spiritual progress, too.


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