In Gold we trust., page-17

“..what “capital” is? (Real wealth, not figments, wishes, bets, and hallucinations. . . hard things like good land, ore pockets, installed machinery, railroad tracks, and so on. . . .)”

• Twilight of the Blobs (Jim Kunstler)

[..] in all the ongoing debates about the wonders and dangers of A-I, and Bitcoin, and suffocating surveillance, nobody ever talks about the sketchy condition of the electric grid that all these worrisome phenomena utterly rely on. In our chatter over Peak Oil, there’s little awareness of oil production’s utter dependence on steady capital flows. In all the guff about centralized control emitted by Klaus Schwab and his World Economic Forum, there’s no mention of the centrifugal forces driving human affairs to re-localization, dis-aggregation of large states, and down-scaling of many activities. In our zeal to become Gods, we miss a lot. Imagine: Bitcoin shoots up to a million dollars. You’re a zillionaire! Uh Oh. . . somewhere outside Zaneseville, Ohio, a squirrel takes a final chaw through some old insulation on a wire coming out of a transformer. His head blows up in a blue arc flash, and in a few seconds all the electricity goes out from Chicago to Boston.

It turns out that seventeen substations in ten states have blown relays, transformers, and switchgear. Some of those components were forty years old and are now manufactured twelve thousand miles away in a country that doesn’t like us anymore. The replacement parts get held up in a Chinese port. The power doesn’t come back on for weeks. Nobody who lives in the eastern USA can get to his Bitcoin wallet, which is just a virtual entity made of computer code residing in a digital “cloud,” i.e., nowhere real. Of course, in an event that bad, a lot of other things would fail — really just about everything that comprises modern life — but for sure you could kiss your Bitcoin goodbye, perhaps forever, because by the time the juice comes back on (if it even does), nobody will ever again want to invest their wealth in digital “money” they can’t access, and Bitcoin will go back to whence it came: zero.

Likewise, the financial system we depend on is a gigantic apparatus grown extremely janky from over-elaboration and hyper-complexity — to the degree that all kinds of things denoted as having “moneyness” are simply hallucinations of the markets that trade them. How many quadrillions of dollars do “derivative” financial instruments represent on the landscape of “money” these days? Most of these things amount to little more than bets that some number — an interest rate, a currency, a revenue flow — will change either up or down. That is, they are figments.

Under Modern Monetary Theory (MMT), the evolution of figments can theoretically go on forever. Derivatives can be ever more abstracted from what they purport to represent, until they fly up the system’s cloacal vent. MMT has become popular economic dogma, but its theory remains to be substantiated. Since the formula relies on the unlimited “printing” of money by central bank proxies for governments, you might bet that something will go wrong with such a system — and it kind of looks like something is about to go wrong in the system we’ve built for regulating and distributing capital. And do we need to state what “capital” is? (Real wealth, not figments, wishes, bets, and hallucinations. . . hard things like good land, ore pockets, installed machinery, railroad tracks, and so on. . . .)

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