Omega Point Now Pt. I

By Justin Langley
Contributing Writer

Highly disruptive change is coming. With the current headlines of unemployment, wealth disparity, market volatility, resource shortage, military posturing, ecological devastation, the list goes on and on…there should be no illusions about that. Many people know it intuitively and few would fully dispute it. The problem is that fewer still appreciate the intricacies of the current goat rodeo. Most of the confusion is caused by propagandist disinformation made possible by the political fallout that would occur by publicly addressing our most pressing threat to National Security. That is: Oil. Not terrorism, but inextricably entwined with it. I’ll attempt to explain why it’s political poison to directly confront neo-conservative misinformation and how that will change. It involves a lot of math, but if you follow the money, it paints a pretty clear picture.

The most important thing overlooked by many is the behavior of a compounding function. Many things we take for granted such as the global population, money supply, even progress itself are compounding functions. That is to say that they are exponentially increasing, or growth is speeding up. Any historian would tell you that the general arc of human progress is always up, or compounding. The economy evolved throughout the last century to deal with a technological rate of change that has always been exponential, but really started skyrocketing in the last hundred years. Cheap energy (a.k.a oil) is what has allowed rich, complex, and interconnected societies and caused the world to shrink. In order to fully utilize a seemingly limitless economic feedstock, a monetary system allowing for exponential growth was required.

Thus, throughout the last century we acquired a fiat system in which money, being a claim on human labor, is loaned into existence as required by the economy or political necessity, a.k.a War. That leaves future generations the bill and implies the American Dream of future generations is better off than previous ones. It also implies perpetual growth and inherit risk in both the manipulation of markets and the creation of a faith based economy. The basis of value of the dollar is an artifact of our leap into the world stage and emergence as a super power after WWII. It came from the faith of Americans and the rest of the world on our roaring economic engine. Because of that faith, the dollar became the global reserve currency which means a number of important things. Most importantly, it means that the US alone has the power to create debt to pay for its imports, those being chiefly but far from solely, oil or economic fuel. Also, because all international trade is based on the global reserve currency, all nations that trade internationally must keep stockpiles of US currency, which prevents inflation in the money supply. This all works just fine until there are shortages in oil to fuel the great American economic engine and things start to get dicey.

For many decades we’ve known of this inherent risk, and both our domestic and foreign policies have addressed it. After 9/11, things changed dramatically, though. One change, among many brought on by the Patriot Act, was the crackdown on US dollars being used to fund global terror, forcing the shift of an estimated multi-trillion dollar black market from US dollars to Euros, and affecting global economies proportionately. It also became apparent to the US and the rest of the world that military intervention alone could not bring about price stability. In this same time frame, we also saw the burst of the dot com bubble, as well as the beginnings of the unraveling of the housing bubble. It’s true that bubbles are an inherent piece of a fiat or faith based economic system and that financial tools are readily available to just as easily manage as mismanage the situation.

However, it’s a very unique situation in that two bubbles came so close to each other, which is actually to be expected with an increasing rate of disruptive change. Also unique was that the housing bubble was packaged and resold in a way that created systemic risk to global financial institutions that may be “too big to fix.” To make a bad situation worse, the United States entered into two concurrent incredibly expensive wars while simultaneously lowering taxes to historically and globally all-time low rates. The effect of all of these things caused the debt to grow by $16 trillion, mostly of the non-self-liquidating variety, in a five year span and it’s still compounding. We have now entered into the Great Recession with many previously unprecedented financial complexities that can only be compared with but are in reality much larger than the Great Depression.

[Editor’s Note: Langley is the Founder and President of Blue Skies Computing LLC. Follow Omega Point Now next week when Justin Langley delves into solutions for our frustrated world]

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