Stagflation Coming

Abraham de Moivre, the probability theorist (and I'm sure that that phrase is often on the tip of your tongue) is widely celebrated as a man who predicted his own death. Rouse Ball tells the tale in his 1908 History of Mathematics;
The manner of his death has a certain interest for psychologists. Shortly before it he declared that it was necessary for him to sleep some ten minutes or a quarter of an hour longer each day than the preceding one. The day after he had thus reached a total of something over twenty-three hours he slept up to the limit of twenty-four hours, and then died in his sleep.
I quite like the sound of deMoivre. He is more famous for his ideas on complex numbers and trigonometry, and his association with Newton, Halley, and the Royal Society, but as probabilists go, he was right on the button. Or Charon's two pennies, if you will. There's a proper lover of his subject for you, and unlike his predecessor Girolamo Cardano he does not appear to have achieved his feat of prediction by simply topping himself on the nominated day. Nostradamus also predicted his death of course, but then he was a nutter.

It's painfully obvious that the political-media class of Britain and America are in denial (an overused phrase) about what is obviously coming. We've poured electronic money backed by nothing into banks. We've opened up a version of a carry trade in the Balkans through which China can pour surplus dollars to turn into Euros, and stoke monetary inflation; and we have hobbled the basic, underpinning, small and medium businesses of the west with taxes and regulations until they can't do anything more than pass the monetary parcel. The west is committed to mad environmental schemes that will reduce our energy budget and increase costs, and no party wishes to acknowledge that spending cuts and tax rises now cannot be stopped. Stagflation, about which I have been going on for some time, is heading our way fast.

Just in case this was not enough, peak oil and gas--in the sense of a lack of energy at viable prices that is available without expensive technology--is manifesting itself. Both this (because of the energy and oil-based fertiliser cost of food) and demand stoked by the determination of the east to get rid of surplus dollars covertly are stoking food inflation. This is a very basic sort of price inflation which very few people alive can escape. In addition, monetary inflation is a consequence of vast American spending outside the borders of that republic. Every hour, more and more dollars are being poured into conflicts along the intersection of the arcs of instability with oil pipelines, satrapies like Afghanistan and Iraq, and war in general, across the world.

This moment--this month--may be the one where people began to notice that the economic crisis was functioning like one of Paracelsus' illnesses, which were fractal. Larger things mirrored smaller ones, so to Paracelsus, illness meant that something was wrong with the wider universe. I know what's wrong with the wider universe. Most of us are screwed is what is wrong with it.

One indicator of what's going on can be found in shops, in the behaviour of customers at the tills. It used to be unusual to hear cards declined for payment; now, and not just at the start or ends of the month, I note at least one and usually three each time I visit my local store. I feel bad for the people to whom it happens, but in chatting to the people on the tills and in watching reactions, I realise that it is now normal. Sainsburys even seem to have a simple form of words to deal with the whole embarrassment, akin to those one hears impotent people receiving in films. They smoothly store the bags of unbought shopping whilst people are given a chance to go outside and 'check the cash machine' which is a euphemism for skedaddling. 'Don't worry, it happens, it's probably just a temporary fault', that sort of thing. North American readers will note the attitude implied by that common name for ATMs, by the way.

Credit card meat and potatoes is shocking but not surprising. Prices are through the roof in London for basic goods, and families are using up their debit debt first. Since the old dodge of writing a cheque for money which will clear next week is long gone, credit cards are a logical alternative for many; but just think about the implications of that logic. People are using one of the worst forms of debt to pay for food, and in many cases they are unable even to do that.

Perhaps the burghers where I live, in Putney, which is not poor and which is only multicultural in that some people do not take Country Life Magazine or listen to Radio 4, have worked out an essential truth. When you get to a point where people are using credit cards to pay for basic shopping, the game is nearly up and credit card banks are going under with it. It may well be that a debt with them won't matter as much in five years time after inflation and business destruction get a grip. Those sneaky little English minds may be onto something. More often these days, though, they are as desperate as the wider picture would suggest that they ought to be.

This recession began as a middle class recession. People were encouraged to believe that the lifestyles of the very rich could be copied on eternal credit, and the aspirational and bourgeois classes jumped at the chance to embrace that delusion. Any sense of limits went out the window, and a parallel culture of narcissism, aided and abetted by technology and cheap oil, seemed to suggest to people that this was all perfectly acceptable. We have all lived through times where good sense was old hat.


Now, what happens when the West notices that it is, well, sleeping a lot more each night? Do we pray? Work harder? Return to God, or at least to some form of traditional wisdom? As far as I can tell, we allow ourselves to be fed rubbish about athletes and celebrities and the private lives of people who expose torture and murder, and whack a little more on the plastic.

Descent is quickening, with at least the consolation that those at the bottom or who have the love of family and friends, and a little access to food and land, are going to be better off than all but the super-rich this time. As in Africa, so in the west's very own third world. It's Paracelsian; those who thought that they could cheat debt and reverse truth are going down worst, and first. Those at the bottom may experience some respite before they go.

Sleep well. Guy Fawkes has the following video up on his site, and I thought it appropriate, though I am not sure who citizens against government waste are. I suspect they are not citizens against the waste embodied in the Bush tax cuts or the wars associated with that administration; I also notice that half that audience does not look Chinese. Did someone wave a few bucks around a student diner somewhere north of Broadway in LA?

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