Houses Will Cost Less Than Food

[Methodius]

I will now explain why we will shortly have asset price hyper-deflation as well as consumable price hyper-inflation.

The global financial system, even that subset of which claims to have rejected usury, is built on debt. Almost all of the money in existence in the world today is backed only by a vague promise of repayment by home debtors, nothing more. That debt is stacked layer upon layer like geological strata in sedimentary rocks. Unlike rock however, a failure in any layer removes support for the layers above and below. The four hundred thousand dollar condominium with luxury fittings is paid for by money borrowed from elsewhere and the proceeds from the sale are, in turn, used to buy other assets. No more than a giant Ponzi scheme. Think about this one, that’s enough money at current prices for most people, including those in the worlds richest economy, to eat well for a decade. A decade’s food for 1000 square feet of floor space, not even of land. Does that sound sustainable? At each point in this chain, the margin for safety required of the lenders is, after hundreds of years of scheming and plotting, wafer thin and, in the case of loan securitisation, zero. The world’s combined mortgage debt is between 50 and 100 trillion dollars. A loss of only around 1% of that amount has brought the world’s greatest financial institutions to their knees. How do you think they will withstand the hammer blows of further losses? Alt-a, 1%, credit cards 1%, leveraged buyout 1% and so on. Don’t believe me? In that case, believe the villains that created this unholy shambles in the first place: the cost of buying a credit default swap on any of the world’s largest banks – an invention of the usurers which pays money in the event of one of their organisations being unable to repay its debts – tells a different story. Even they know that the game is up.

Now consider this question: how much could anyone spend on a house without leverage? How much could you spend for example? Be honest with yourselves and most of you will know that it is not much. Remember the 5000 dollar car you had to get finance on? Remember the new plasma screen television you bought with your credit card? The average first time buyer of housing is leveraged 10-20 times, this is greater leverage than is available to most hedge funds.

Next consider this question: what is the most important thing in your life? Maybe you think it’s your family? Maybe it’s your house? Maybe it’s that car or plasma screen television? Well, it isn’t: it’s food. Without your family, you will live. Without your house you will live. Without your temporaries you will live. Without food, you will die.

Finally, consider this: what will you give in order not to die?

We are at a tipping point. There are now more people living than have lived and died in the whole of human history, the world’s resources are being depleted at a rate that is growing exponentially and the ability of people to feed themselves without the existence of the whole gamut of modern agricultural technology has faded into folk memory. As the demand line and the supply lines for food cross in the twilight of western civilisation, the ownership of housing will become irrelevant, the only thing of value will be food. How hungry will you be before you will gladly trade all of your assets for one solid meal? That is the relative hyper-inflation of the only consumable that truly matters – food – and hyper-deflation of non-consumable assets. It may be that this manifests itself as baskets full of fiat paper currency required to buy a single loaf of bread or it may be that the price of bread stays the same whilst the value of your house and the size of your income – if you are one of the very few lucky enough to still have an income - reduces one thousand fold. Either way the result is the same.

I do, however, see a glimmer of hope. In the short window of time between the total annihilation of the corrupt web of lies some call a financial ‘system’ and the physical destruction of the world spawned by it, there is a chance for something new to arise. The technology created by the ersatz economy of the usurers may, if harnessed before it too is only a distant memory, be used to build a new, sustainable, world where the relative values of consumables and assets reflect the natural order rather than one which benefits only those who created and continue to manipulate the current parasitic monster which feeds only off human misery and enslavement.

[AteMoose]

can you explain why in Zimbabwe the only country in the world that already has hyperinflation in commodities, hyperinflation also exists in housing and wages (if you have a job)? Houses are alot more expensive than bread in zim, and people still buy houses, and are more inclined to buy a house if they have the money...

Edited March 7, 2008 by moosetea

[Blue Peter]

can you explain why in Zimbabwe the only country in the world that already has hyperinflation in commodities, hyperinflation also exists in housing and wages (if you have a job)? Houses are still alot more expensive than bread in zim, and people still buy houses, and are more inclined to buy a house if they have the money...

Yes, I'd also like to ask about the 'hyper' prefix. I can see deflation in asset prices and I can see inflation in commodity prices, but I'm unclear why either should go 'hyper'. Also, to what extent is the inflation in commodity prices due to the loose credit of the past few years deserting houses (and everything associated with that mania) and moving into commodities? If it is to a large extent, is all that money going to remain in commodities or is it going to drain away as the credit bubble bursts? In general, I'm rather unclear as to what happens with all the previous money created as the credit bubble bursts. Does it continue to exist or does it expire after some period?

Peter.

[Moo]

Hmm, lots of references to fiat currency. Sounds like gold ramping to me. Food, sorry, food. Mustn't forget the food.

For what it's worth, you'll pop off a lot quicker if you're sans drinkable water than if you're sans food.

[cartimandua51]

Well, it isn’t: it’s food. Without your family, you will live. Without your house you will live. Without your temporaries you will live. Without food, you will die.

In winter you'll died faster without shelter than without food.

[cartimandua51]

There are now more people living than have lived and died in the whole of human history

Would you care to give a RELIABLE source for this ( & NOT wikipedia, please!) This is a hoary old chestnut!

[tinecu]

I will now explain why we will shortly have asset price hyper-deflation as well as consumable price hyper-inflation.

The global financial system, even that subset of which claims to have rejected usury, is built on debt. Almost all of the money in existence in the world today is backed only by a vague promise of repayment by home debtors, nothing more. That debt is stacked layer upon layer like geological strata in sedimentary rocks. Unlike rock however, a failure in any layer removes support for the layers above and below. The four hundred thousand dollar condominium with luxury fittings is paid for by money borrowed from elsewhere and the proceeds from the sale are, in turn, used to buy other assets. No more than a giant Ponzi scheme. Think about this one, that's enough money at current prices for most people, including those in the worlds richest economy, to eat well for a decade. A decade's food for 1000 square feet of floor space, not even of land. Does that sound sustainable? At each point in this chain, the margin for safety required of the lenders is, after hundreds of years of scheming and plotting, wafer thin and, in the case of loan securitisation, zero. The world's combined mortgage debt is between 50 and 100 trillion dollars. A loss of only around 1% of that amount has brought the world's greatest financial institutions to their knees. How do you think they will withstand the hammer blows of further losses? Alt-a, 1%, credit cards 1%, leveraged buyout 1% and so on. Don't believe me? In that case, believe the villains that created this unholy shambles in the first place: the cost of buying a credit default swap on any of the world's largest banks – an invention of the usurers which pays money in the event of one of their organisations being unable to repay its debts – tells a different story. Even they know that the game is up.

Now consider this question: how much could anyone spend on a house without leverage? How much could you spend for example? Be honest with yourselves and most of you will know that it is not much. Remember the 5000 dollar car you had to get finance on? Remember the new plasma screen television you bought with your credit card? The average first time buyer of housing is leveraged 10-20 times, this is greater leverage than is available to most hedge funds.

Next consider this question: what is the most important thing in your life? Maybe you think it's your family? Maybe it's your house? Maybe it's that car or plasma screen television? Well, it isn't: it's food. Without your family, you will live. Without your house you will live. Without your temporaries you will live. Without food, you will die.

Finally, consider this: what will you give in order not to die?

We are at a tipping point. There are now more people living than have lived and died in the whole of human history, the world's resources are being depleted at a rate that is growing exponentially and the ability of people to feed themselves without the existence of the whole gamut of modern agricultural technology has faded into folk memory. As the demand line and the supply lines for food cross in the twilight of western civilisation, the ownership of housing will become irrelevant, the only thing of value will be food. How hungry will you be before you will gladly trade all of your assets for one solid meal? That is the relative hyper-inflation of the only consumable that truly matters – food – and hyper-deflation of non-consumable assets. It may be that this manifests itself as baskets full of fiat paper currency required to buy a single loaf of bread or it may be that the price of bread stays the same whilst the value of your house and the size of your income – if you are one of the very few lucky enough to still have an income - reduces one thousand fold. Either way the result is the same.

I do, however, see a glimmer of hope. In the short window of time between the total annihilation of the corrupt web of lies some call a financial 'system' and the physical destruction of the world spawned by it, there is a chance for something new to arise. The technology created by the ersatz economy of the usurers may, if harnessed before it too is only a distant memory, be used to build a new, sustainable, world where the relative values of consumables and assets reflect the natural order rather than one which benefits only those who created and continue to manipulate the current parasitic monster which feeds only off human misery and enslavement.

Great post. Food for thought

[Methodius]

Yes, I'd also like to ask about the 'hyper' prefix. I can see deflation in asset prices and I can see inflation in commodity prices, but I'm unclear why either should go 'hyper'. Also, to what extent is the inflation in commodity prices due to the loose credit of the past few years deserting houses (and everything associated with that mania) and moving into commodities? If it is to a large extent, is all that money going to remain in commodities or is it going to drain away as the credit bubble bursts? In general, I'm rather unclear as to what happens with all the previous money created as the credit bubble bursts. Does it continue to exist or does it expire after some period?

If the value of a house today is 400000 dollars and a solid meal is 5 dollars, the ratio is 1 to 8000. When that ratio reverses the relative change will be four orders of magnitude to base 10. That's hyper by an meaningful definition.

Money created by debt will dissappear from whence it came – nowhere. It is the same as an elastic band stretched tight snapping back to its original length. It does not need to expire, rather it shatters and the creators find themselves showered with its razor sharp poisoned shards.

In Zimbabwe, people are fed with food given the authorities of the West. Who will do that for the West in turn? No-one. We are in an entirely different situation.

[Blue Peter]

Money created by debt will dissappear from whence it came – nowhere. It is the same as an elastic band stretched tight snapping back to its original length. It does not need to expire, rather it shatters and the creators find themselves showered with its razor sharp poisoned shards.

I still need a bit of help on this. I buy a house for 100K, and I borrow the lot, so the bank lends me 100K against the security of the house. I go bankrupt, the housing market tanks, the bank can only sell the house for 50K. It writes off the other 50K. So, now, there is 50K of money/credit (which I initially gave to the seller of the house) flying around loose in the economy unattached to 50K debt in the bank. I don't see (probably because I don't understand very well), how this means money has been destroyed. it looks like the opposite to my untutored eye.

On the general point, I take it that you are postulating that the credit contraction is so great that farmers won't be able to get credit to farm. Even though food will be valuable, banks won't be able to lend to farmers (and all the associated industries, I suppose). Can it get this bad?

Peter.

[mercenarul]

In Zimbabwe, people are fed with food given the authorities of the West. Who will do that for the West in turn? No-one. We are in an entirely different situation.

We dont need anyone to do it.

It will not happen because we have a very large skill base when it comes to farming and are very efficient at. Zimbabwe does not have this. All the people with the knowlege/ skills were foced to leave and the farms were put in the hands of people with no idea how to run them effectively. Western counties are not supid enough to mess up their own food supply by such short sightedness.

[stonethecrows]

We dont need anyone to do it.

It will not happen because we have a very large skill base when it comes to farming and are very efficient at. Zimbabwe does not have this. All the people with the knowlege/ skills were foced to leave and the farms were put in the hands of people with no idea how to run them effectively. Western counties are not supid enough to mess up their own food supply by such short sightedness.

You ARE joking right? So you think agriculture in the UK is in a 'healthy' state at the present time? Just ask any Welsh hill farmer at the moment and they'll tell you just how undervalued agriculture is-read this article as an example: http://www.fwi.co.uk/Articles/2008/03/05/1...es-plummet.html could or would you work for £1600 per annum? Makes a mockery of the minimum wage imo.

We have for far too long relied on cheap imports which has depressed prices far below sensible or for that matter 'sustainable' (yes I know it's a buzzword thats been politically hijacked but there are still some very salient points) levels. Agriculture in this country has been decimated by labour government too short-sighted and utterly ignorant to see beyond the next election, who harbour a deep and misguided resentment of rural life since most of them wouldnt have the first clue about it and see it as some kind of 'class war'. You say farming land was taken from farmers in Zim but isnt' the exact same thing happening here with 'townies' buying up agri-land as a speculation who have not the first clue about farming while real farmers are forced into finding some other way to make a living wage?

This country could and should be almost 100% self-sufficient in terms of producing food if absolutely necessary-obviously the land is still there but the skills, investment and political will required evaporating fast.

Forget money, banking crises etc this is the real crisis and challenge we face in the coming decades.

Edited March 7, 2008 by stonethecrows

[frozen_out]

Western counties are not supid enough to mess up their own food supply by such short sightedness.

You think that flying beef to the UK from Uruguay whilst seeing UK farmers record a loss is sustainable? The food supply IS messed up. The whole supply chain is so precarious and so little food is grown at home that it would only take a relatively minor shock to have the Uk on the verge of starvation.

[Methinkshe]

You ARE joking right? So you think agriculture in the UK is in a 'healthy' state at the present time? Just ask any Welsh hill farmer at the moment and they'll tell you just how undervalued agriculture is-read this article as an example: http://www.fwi.co.uk/Articles/2008/03/05/1...es-plummet.html could or would you work for £1600 per annum? Makes a mockery of the minimum wage imo.

We have for far too long relied on cheap imports which has depressed prices far below sensible or for that matter 'sustainable' (yes I know it's a buzzword thats been politically hijacked but there are still some very salient points) levels. Agriculture in this country has been decimated by labour government too short-sighted and utterly ignorant to see beyond the next election, who harbour a deep and misguided resentment of rural life since most of them wouldnt have the first clue about it and see it as some kind of 'class war'. You say farming land was taken from farmers in Zim but isnt' the exact same thing happening here with 'townies' buying up agri-land as a speculation who have not the first clue about farming while real farmers are forced into finding some other way to make a living wage?

This country could and should be almost 100% self-sufficient in terms of producing food if absolutely necessary-obviously the land is still there but the skills, investment and political will required evaporating fast.

Forget money, banking crises etc this is the real crisis and challenge we face in the coming decades.

I agree 100% with the OP and with this post, StC.

Agriculture is in a parlous state in this country. Moreover, consider for a moment how much knowledge is lost when a farmer, who has farmed his land for generations, sells up instead of handing the farm down to his children. Specialist knowledge about that particular parcel of land is lost, and general knowledge of farming techniques are lost. It takes only one generation to drop out of a trade or occupation where skills are traditionally handed down from father to son, for that skill set to be lost. Furthermore, reliance on technology and other people's labour has meant we have lost many basic skills that would have been available to the average man and/or woman just 100 years ago. How many people would know how to raise a sheep, butcher for meat, and turn the wool into usable clothing, for instance? I mean, most kids don't even know how to boil an egg these days, never mind cook a wholesome meal, spin, weave, knit, sew etc. And how many could build a shelter with their own hands? I live in a 300+ year old cob-walled, slate-roofed Cornish farmhouse that would have been built by the original farmers of the surrounding land, with a bit of help from neighbours, maybe. Our over-dependence on the work of others has robbed most of us of the ability to be self-sufficient, even if we wanted to and had the means.

[Guest Steve Cook]

I agree with much of the argument at the beginning of this thread, with the following qualification:

I can well see the value of houses and other (non productive) real estate in the urban areas dropping through the floor as fossil based energy runs out. However, I can also see an opposite process happening to arable land. Since food, fuel and water truly are the fundamental commodites, all of these things are derived from arable land. In a world that lacks non renewable energy, land will be the mark wealth. Just as it always was throughout human history until very recently. And so we have come full circle.

As an addition, there will still be commodites that are not food, fuel, water or land that will have value. These will be all of the tertiary commodities/services that support the supply chain of those primary commodities. Metal processing will still have value. We will still need tools to work the land. Thus, there will be traders of such goods.

Steve

Edited March 7, 2008 by Steve Cook

[Guest Fedup]

We are at a tipping point. There are now more people living than have lived and died in the whole of human history, the world’s resources are being depleted at a rate that is growing exponentially and the ability of people to feed themselves without the existence of the whole gamut of modern agricultural technology has faded into folk memory. As the demand line and the supply lines for food cross in the twilight of western civilisation, the ownership of housing will become irrelevant, the only thing of value will be food. How hungry will you be before you will gladly trade all of your assets for one solid meal? That is the relative hyper-inflation of the only consumable that truly matters – food – and hyper-deflation of non-consumable assets.

People are still the same. They'll do anything to get what they need. And they need SOYLENT GREEN

[algobet]

There are now more people living than have lived and died in the whole of human history

surely this has always been the case since adam & eve? not sure why you have the 'now' in there?

[Methodius]

I still need a bit of help on this. I buy a house for 100K, and I borrow the lot, so the bank lends me 100K against the security of the house. I go bankrupt, the housing market tanks, the bank can only sell the house for 50K. It writes off the other 50K. So, now, there is 50K of money/credit (which I initially gave to the seller of the house) flying around loose in the economy unattached to 50K debt in the bank. I don't see (probably because I don't understand very well), how this means money has been destroyed. it looks like the opposite to my untutored eye.

The bank borrows 100 K from somewhere. It lends you 100K. You lose your job, your friends, your family, all those things that define your very being and, finally, you default. The bank sells the house for 50K to the vultures of capitalism. Now, the bank still owes the person that lent it the money 100K when they ask it for their money back so it pays the person 50K from its own money - also called shareholder capital - and 50K from the sale of the house. This leaves its tier 1 capital depleted by 50K. Most banks have tier 1 capital of between 4-8% of their liabilities. When the bank finally faces the truth and admits that it can't pay back its lenders it fails. After that, the veil is lifted from people's eyes and they realize that a bank statement which tells them they have 100K in their account means that the bank owes them 100K, not that is has 100K of their money in its vault. The illusion shatters and the money disappears back to whence it came. Nowhere.

On the general point, I take it that you are postulating that the credit contraction is so great that farmers won't be able to get credit to farm. Even though food will be valuable, banks won't be able to lend to farmers (and all the associated industries, I suppose). Can it get this bad?

Yes, it can get this bad. A farmer can only farm if his fields are not overrun by hordes of city dwellers attempting to fill their starving bellies and those of their children.

[AteMoose]

http://thesietch.org/mysietch/greenspree/2...lf-sufficiency/

you need less land than you think...

[Blue Peter]

The bank borrows 100 K from somewhere. It lends you 100K. You lose your job, your friends, your family, all those things that define your very being and, finally, you default. The bank sells the house for 50K to the vultures of capitalism. Now, the bank still owes the person that lent it the money 100K when they ask it for their money back so it pays the person 50K from its own money - also called shareholder capital - and 50K from the sale of the house. This leaves its tier 1 capital depleted by 50K. Most banks have tier 1 capital of between 4-8% of their liabilities. When the bank finally faces the truth and admits that it can't pay back its lenders it fails. After that, the veil is lifted from people's eyes and they realize that a bank statement which tells them they have 100K in their account means that the bank owes them 100K, not that is has 100K of their money in its vault. The illusion shatters and the money disappears back to whence it came. Nowhere.

I think that I get that.

Yes, it can get this bad. A farmer can only farm if his fields are not overrun by hordes of city dwellers attempting to fill their starving bellies and those of their children.

Having seen pictures of the starving on tv, they tend not to look like they can overrun anything. But getting from here (Tesco's full of stuff) to people starving (whether sitting around or rampaging), I assume that you are thinking along the lines of credit seizing up so badly that farming does not get done. Or are you thinking more along the lines of how close our just-in-time delivery system came to succumbing during the fuel protests?

Peter.

[Methodius]

Having seen pictures of the starving on tv, they tend not to look like they can overrun anything. But getting from here (Tesco's full of stuff) to people starving (whether sitting around or rampaging), I assume that you are thinking along the lines of credit seizing up so badly that farming does not get done. Or are you thinking more along the lines of how close our just-in-time delivery system came to succumbing during the fuel protests?

In the advanced stages of starvation, you are correct. I am not familiar with your fuel protests but again, I think you are correct. How many meals would you have to miss before you would loot and burn? How many meals before you would walk to wherever you believed food to be? Not many. After the economy collapsed in Thailand in 1997, the people simply returned to the farms from which they came and resumed their previous life. You could not do that.

[Blue Peter]

In the advanced stages of starvation, you are correct. I am not familiar with your fuel protests but again, I think you are correct. How many meals would you have to miss before you would loot and burn? How many meals before you would walk to wherever you believed food to be? Not many. After the economy collapsed in Thailand in 1997, the people simply returned to the farms from which they came and resumed their previous life. You could not do that.

Yes, perhaps not many. What's the saying, we are only 3 or 4 square meals away from anarchy.

The fuel protests occurred round the turn of the century, when disgruntled farmers and truckers blockaded petrol refineries due to the high price of fuel. I believe that if the protest had continued for a few days longer there would have been serious problems in the UK. Such protests would now be dealt with vigorously by the army - new laws have been enacted,

Peter.

[Methodius]

The fuel protests occurred round the turn of the century, when disgruntled farmers and truckers blockaded petrol refineries due to the high price of fuel. I believe that if the protest had continued for a few days longer there would have been serious problems in the UK. Such protests would now be dealt with vigorously by the army - new laws have been enacted,

Thank you for that valuable information, I wasn't aware that had occurred, I will research this event further. Your army is small and much stretched fighting the usurers war I believe. How long could it keep 60 million starving souls at bay?

[macfarlan]

I think that I get that.

Not sure I do.

Aren't the bank insured against defaults, and did I hear that the money was created for your loan, not borrowed from somewhere?

[cartimandua51]

Thank you for that valuable information, I wasn't aware that had occurred, I will research this event further. Your army is small and much stretched fighting the usurers war I believe. How long could it keep 60 million starving souls at bay?

You don't say where you come from, but the Greek Arcadia & a slightly stilted writing style makes me think not the UK.The British are (mostly) unarmed, and used to queuing. I suspect that most of them would allow themselves to be herded to places like the Albert Hall / Millennium Dome and wait for their rations. Unless we are talking about a total catastrophe taking place over a couple of days, that is - in which case all bets are off. But the army would be brought back PDQ and most UK rioters would not be proof against machine-gun fire. And the British are quite good at admin - I bet some dusty civil servants somewhere have got all the records of how they organised rationing in WW2, all ready to go ( petrol rationing nearly got re-introduced in a previous crisis.)

But I think a slither is much more likely than a catastrophic fall; people will emigrate ( if they have connections) grumble (certainly), adapt (as best they can), die (in the case of the very sick, elderly & premature babies)

There will be a rip-roaring trade in anything you can make from abandoned cars!

Edited March 7, 2008 by cartimandua51

[microbe]

I think that the basic point is that any country which does not produce enough food to feed its own people is making a grave strategic mistake.

We produce 60% of our food requirements. We can probably increase that to 80% by learning not to waste so much of what we produce and it probably would not take that much to increase agricultural production to make up the other 20%. It would take several years to do, and we would need to address the challenge of moving away from expensive imported artificial fertilisers. We could do it and we should do it.