Get Ready! Change Is Upon Us -The 'Economic Peace' We've Enjoyed for Decades Is Over +Video

By Chris Martenson  /  PeakProsperity.com

“After four years of warfare that tore the world apart like never before, a peace was finally reached.  But it was a peace which one man in particular vociferously condemned — and that man was John Maynard Keynes.

In just two months, Keynes wrote the book that would make him a household name around the world — The Economic Consequences of the Peace.

In the book, Keynes was highly critical of the deal struck at Versailles, which he felt sure would lead to further conflict in Europe — describing the agreement as a “Carthaginian peace” — and with the passing of a surprisingly short period of time, he would be proven correct.”

  ~ Grant Williams in The Economic Consequences of Peace

After WWI, a particularly noxious set of treaties and economic reparations agreements were put in place that all but guaranteed a future WWII.   Mr. Keynes sniffed that out and, sadly, was proven correct.

The lesson from this is that, at certain times, it’s really not that hard to predict “what” is going to happen next after disastrously short-sighted and self-interested policies are enacted. Predicting the “when”, with precision, is much trickier. But obvious misguided economic policies are destined to have a limited period of apparent (but false) prosperity, after which they end with a nasty Bang!.

We have entered just such a time. This isn’t a Trump vs. Clinton thing; I’d make this claim regardless of who won this week’s presidential election — as our plight is much bigger than a single Administration. And my observation is that neither political party had much interest beyond some temporary election year lip-service to the economic plight of the middle class.

And by “middle class” I mean anybody not in the top 5% economic bracket. For those doing the math at home, that leaves the remaining 95% of us stuck in the meat grinder.

WTF Happened?

I know a lot of people who are suffering very raw emotional wounds from the harsh negativity and divisiveness of the seemingly never-ending election we just went through.  There will be a period of healing and adjustment for many, and I can fully empathize with how they feel.

For the Clinton supporters stunned that she didn’t experience the victory so many predicted, here’s a “what went wrong” post-mortem given by the brilliant British comedian Jonathan Pie that I think hits close to the mark (caution: it’s a pretty heated rant): 

(Source)

One thousand one hundred percent?!?!?  As in eleven times GDP??  You might as well say eleventy gajillionbecause there’s no sense in any of these numbers.

Yep.  No country has ever dug out from under such a load. None have even come close.  The “prediction,” which is so simple it’s not really a prediction at all, that flows from the above chart is this: Somebody is going to have to eat the losses.

Massive, fabulously enormous losses. 

Trillions and trillions of losses in current dollars. Even if the economic elites don’t try to force all of those losses on the ‘little people’, the pain is still going to be so extraordinary that serious political and social crises will erupt.

You can count on it.

You can already see that larger future predicament playing out painfully around us. One example is how pensions are cutting back benefits, lowering expectations, demanding higher funding payments by taxpayers, and otherwise displaying signs of distress.

And this is with equity markets perched at all-time highs (at the moment of this writing, the Dow is at a new record).

So our recent decades of economic peace must end, given the thousand percent indebtedness predicament revealed by the chart above.

We got into that thousand percent predicament the exact same way the DNC lost to Trump: by failing to address things that plainly needed to be dealt with.  We proved to ourselves, yet again, that pretending something uncomfortable doesn’t exist doesn’t make it go away.

“Well, we might just grow out from under those debts and obligations” some might be tempted to say. My response is to ask you to go back and look at that chart again and note that it has grown from 700% to 1,100% since 2001.  If GDP had been growing at the same pace, the ratio value wouldn’t have budged. It would have remained at 700%.

But it grew to 1,100%, which means the debts and obligations were growing much faster than GDP.

So for the past 15 years the “grow out of it” mantra — which has been echoed ad nauseum – has been a complete train wreck of a failure.  How many more years before we can all just admit the obvious?

Just as both the RNC and DNC opted to ignore the extreme damage their policies had been inflicting on the upper, middle and lower classes, sparing only the very tippy-top elites (but hand-feeding those elites peeled grapes it should be noted, because their lot improved wildly over the past decades), everybody in power has been steadfastly ignoring our massive debt and liability problems, too.

Those are going to shape the future, and that future is going to be plenty painful. The longer we wait, the more painful it will be. This has been our steady message at Peak Prosperity for a very long time, and we are actually hopeful that now, finally, we can speak about the unspeakable to those who had no willing ear for it just a short week ago.

Conclusion

The political upheaval of Donald Trump is best understood through the lens of economic erosion suffered by the vast majority of people.  If a democracy is measured in how well it serves the interests of the majority, the United States is not a democracy at all.

Of course, nearly everyone already knows this. But it’s been all but unspeakable in polite circles to say so.

Now, it is finally becoming okay to voice.

Which is, admittedly, a breath of fresh air for us at Peak Prosperity.  Because not only are massive, obvious economic issues going to unavoidably visit the US in the not-too-distant future, but they’ll be doing so at a time when many critical resources will be in decline.

Chief among those? Oil, of course.

To skirt the impact of a future oil supply crunch, we’ll need an incredible effort of joined forces and strict prioritization to assure that whatever transition we can effect will be a smooth as possible.  Even then, we’ll be lucky to evade painful disruption.

But if we don’t begin to view our future with clear eyes and a united sense of what the predicaments are, if we instead turn to another version of four more years of preservation of the status quo, then we will face a future of disruption so painful it will make the worst of post-election Wednesday for the most ardent liberal seem like a minor inconvenience (by comparison, I mean, of course). 

It will take an enormous amount of effort simply to stem the tide of economic erosion that now besets the land.  And that’s just as true for the US as it is for Japan, Europe and the UK.  The same forces are at play in all of these centers.

It will take another massive bowlful of effort to begin to address the debts and liabilities issues.  And yet another cauldron of effort to revamp our energy infrastructure in parallel with all the other challenges.  Put it all together and you can begin to understand why, if we’re going to deplore something from the recent election, it should be the running of an intentionally divisive set of campaigns that have driven as large a wedge between people in the US as has existed in a very long time.

We need to be working together on the common predicaments that care not if we are liberal or conservative, religious or not, male or female, or which race or sexual persuasion best applies to us. Declining global net energy per capita. Our massive fiscal over-indebtedness. The collapse of too many ecosystems we depend on for food and drinkable water. The list is sadly long…

It’s not just time to heal; it’s imperative that we do. So that we stand united to deal with these predicaments as they arrive in full force.

There’s really not a moment to spare.

And for those looking to get a jump on what’s coming, we need to better understand the implications of what just happened this week. The Trump upset has changed all of the probabilities that we track. I’ve been keeping a running update of the developing situation in OK, Here’s What We Think Is In Store After Trump’s Win (free executive summary, enrollment required for full access). We’ll be continuing to update that assessment as new information filters in over the next few days.

~ Chris Martenson

https://peakprosperity.com/blog/103343/get-ready-change-upon-us

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