Credit/Debt fuelled economic growth is what is causing the prevailing chronic mal-investment, hence overproduction, through out the world. If there were no banks to create phony money (via debt) there wouldn’t be phony pricings and phony growth facilitating the ongoing destruction of our biosphere. February 2016 is already the hottest month on record (globally)! Amidst all these, the stupid global economic order doesn’t even stop to think/ask where this trend is taking us. Don’t count on the ‘highly educated’ to inquire about such basics as; ‘is economic growth more important than our own very survival’? To what end are we accelerating our demise? The sheeple (human mass) is hardly inclined to investigate such matters and continues to do what the destructive psychopathic masters prescribe. Unless this lunacy is stopped, the world is not going to be a livable place!
Overproduction is one symptom of the prevailing destructive system. We will cite some current examples: there is half a billion tons of excess steel production (per annum) in China. As a result, reinforcement bars are priced at less than $300 per ton. Such low pricings are encouraging countries to impose high tariff on Chinese goods. The productions of cement, aluminum, glass, ceramics, etc. are way beyond what markets can absorb, inside or outside of China. To highlight the immensity of the problem; only the excess annual productions of the above construction materials are enough to satisfy the whole of the African market for years. But the global economy is configured in such a way that new plants producing the above construction inputs are being erected all over the world, without due consideration to efficient utilization of natural resources at the global level. To the perceptive, such growing irrationalities indicate the increasing incompatibility of the old nation-state setup with the fledging economic/corporate globalization. Consumer goods do not fare any better. From garment production (clothing) to electronic gizmos, from automobiles to furniture, etc. the world is flooded with products that are having difficulties finding viable markets. Even with massive credit creation, thanks to the generous printing of phony money by the commercial/central banks, there is still chronic shortage of effective aggregate demand for all and sundry across the world. From the look of things, situations don’t seem to get better.
When such absurdities confound the prevailing human experience, what is demanded/expected from the movers and shakers of the world is honest admission of mistakes made and crimes committed! Instead, what we are witnessing is superficial (and we might add, stupid) descriptions of problems and even more stupefying (remedial) prescriptions. In this regard and amongst many other supposedly curative measures, we are now saddled with ZIRP/NIRP (Zero/Negative Interest Rate Policy). Such proposals are emanating from the same ivy educated morons who are/were almost always the first to initiate severely dislocating economic policies! Let us revisit some of the obvious ones. In 1971 the US government abandoned the gold standard on which the post war global economic regime was founded. This move allowed nation states to print money as if there is no tomorrow. In other words, ‘fiat currency’ (without any material backing) became the corner stone of the post 1971 world economic order. Not surprisingly, inflation soon became the new economic malaise. Unfettered credit expansion, (money backed with nothing) became the engine of economic growth, so to speak. Amongst the consequences of these irresponsible measures, we can easily mention; mal-investment, which has given rise to over/excess production, imprudent exploitation of nonrenewable resources and the clogging of the global sink systems (climate change, ocean acidification, air pollution, species extinction, etc. etc.)
Instead of squarely facing the real and protracted problems of our world, the learned idiots, on behalf of the globally entrenched wicked oligarchs, keep on concocting stupid and unreasonable initiatives/options that have no chance of success, except to postpone the days of reckoning! For instance, resource shortages are here to stay and the most we can do is; manage them peacefully, equitably and somewhat sustainably! If this cannot be done, chaos will inevitably ensue. We are already witnessing such a scenario in MENA (Middle East and North Africa). But such obvious facts seem to elude our global governing institutions/elites (IMF, WB, WTO, EC, ECB, FRB, UN etc.) Global dominant interests want to avoid even defeat reality by preaching false narratives, with a view to subdue the global sheeple into blind submission. Here is a simplified description/comment by an American blogger on the overproduction problematic.
‘Capitalism overproduces–what a problem to have! But then crushes its own profits and collapses, along with wages. So let me ask, if so, why didn’t we have overproduction of goods in the Middle Ages? They weren’t modern capitalists, but similar enough on this point. Why didn’t we find some Belgian making 10,000 shields he couldn’t sell? Because people aren’t stupid! They don’t make goods they can’t sell. They need to be tricked into it with a plausible story of lies. In Modern Capitalism–and what makes it “modern”– is the over-extension of finance creating false signals, whether it be easier private loans or lower central bank rates. This causes the bidding war and transparent overproduction, as the economy is tricked into moving too fast, faster than the real, underlying supply and demand would otherwise allow, leading to unhealthy growth and mal-investment. Then, as it can’t be sustained, loans are called and producers fight like fish in a puddle to survive the contraction that was engineered by the boom. Who profits? He who issues more loans and repossesses the capital. This happens in modern capitalism, but is a function of financiers and unsound money, not “Capitalism” itself. Nor do we need to go to war over it, just enforce honesty in weights and measures, fraud, and bribery. China, with its finance similarly over-stimulated and centrally-planned, is a parallel example. What are they going to do about no circuit breakers? Rig the market from behind in secret, just like we do. Lie about unemployment and layoff like we do. Rig and bailout bad loans, like we do. Save cronies and bankrupt outsiders, like we do. They only learn from the best. ’Hallelujah! It seems even the archetypical institutions of the prevailing global economic structures are finally willing/beginning to understand the crux of the matter. Here is an utterance from, arguably, the largest bank in the world. “Oversupply destroys capitalism in a natural way.” Deutsche Bank. Good Day!