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In Denial: We Pursue Endless Growth At Our Peril

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http://www.peakprosperity.com/blog/92776/denial-we-pursue-endless-growth-our-peril

As we've been discussing of late here at PeakProsperity.com, humans desperately need a new story to live by. The old one is increasingly dysfunctional and rather obviously headed for either a quite dismal or possibly disastrous future. One of the chief impediments to recognizing the dysfunction of the old story and adopting a new one is the most powerful of all human emotional states: Denial.

I used to think that Desire was the most powerful human emotion because people are prone to risking everything in their lives – careers, marriages, relationships with their family and close friends - pursuing lust or accumulating 10,000 times more money and possessions than they need in their desire for “more.”

Perhaps it was my own blind spot(s) that prevented me from really appreciating just how powerful human denial really is. But here we are, 40 years after the Club of Rome and 7 years after the Great Financial Accident of 2008, collectively pretending that neither was a sign warning of the dangers we face -- as a global society -- if we continue our unsustainable policies and practices that assume perpetual growth.

Economic Denial

In the realm of economics, the level of collective denial gripping the earth’s power centers is extraordinary. Perhaps that should be of little surprise, as we're now at the height of the largest set of nested financial bubbles ever blown in world history.

The bigger the bubble(s) the bigger the levels of denial required to sustain their expansion. These bubbles are doozies, and that explains the massive and ongoing efforts to prevent any sort of reality from creeping into the national and global dialog.

To understand this pattern of avoidance of unpleasant realities, consider the behavior of cities -- even entire nations -- which cannot bring themselves to talk openly about their state of insolvency, let alone do something about it.

Chicago has amassed debt and underfunded liabilities totaling $63 billion, or more than $61,000 per household. Illinois already ‘enjoys’ the second highest property tax rate in the nation at 2.28 percent of a property’s value, which means the average property tax bill for the median home is $5,200 per year. On top of that, Illinois' income tax is a flat 5% and brings in a total of $18 billion from 4.7 million households, or $3,800 per household. Combined, that's $9,000 in taxes per year per average household (which earns $38,625).

Here's the brutal math: the current city deficit is 675% of current tax receipts. How exactly does Chicago plan to scrape another $61,000 out of each household on top of the existing tax bills?

It doesn’t. It has no plan. The plan is to simply remain in denial and ignore everything until it all breaks down. Which it has indeed started to do, with the ever-late, after-the-horse-has-already-left-the-barn downgrade of the city’s debt to junk status by Moodys.

Or perhaps we could note that of the six mayoral candidates seeking election to run the city of Philadelphia, not one has even talked about its massive $5.7 billion pension shortfall during the campaign, even as they promise expanded pre-kindergarten programs and tax cuts. Not one. Do you think that any of them has an actual plan to address that budget gap's dream-crushing burden?

They don’t. The only ‘plan’ they have is to remain in denial and ignore everything until it all breaks down. And then, we might guess, blame the prior administrations.

Japan has the most debt per person of any nation in the world, standing at nearly $100,000 per resident. And that burden is growing every year. Yet in 2005, Japan passed an important milestone as its population peaked at 128 million. It's been declining ever since. Japan lost 244,000 net residents in 2013, and is now trundling on a downwards population trajectory for the next 50-60 years. And at the same time, it is growing older -- Japan has the second highest median age in the world.

Clearly that demographic profile is a recipe for economic shrinkage, not growth. And yet the Japanese central bankers and politicians are hell-bent on creating rapid economic growth via the twin cattle prods of reckless money printing and excessive government borrowing. How is it that the leaders of Japan have convinced themselves that rapid economic growth is what they need (instead of the more rational and opposite case of managed economic shrinkage)? What’s their plan, exactly?

They have no plan. The plan is to simply remain in denial and ignore everything until it all breaks down.

The same story is written everywhere, with every example sharing the same common element of presumed perpetual growth. Everybody plans on growing steadily, forever into the future, amen.

The United States is no different. It's own entitlement shortfalls, pegged at anywhere from $60 trillion to $220 trillion, are themselves still derived with the assumption of future growth.

More of Chris Martenson at the link.

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maybe, like the banks, there will be a couple of sacrificed cities

you know, let Lehman go skint and then bail out the rest

maybe that becomes let ... insert name of significant but not massive city here ... go skint and then bail out the rest

With a QE of such magnitude (with the aim of creating inflation to inflate away the debt) that it makes all previous QE programmes look like someone dropping a few coppers in the street

I tend to think that there is no long term plan, just find a way to kick the can that little bit further along the street. Trouble is, the street is going uphill just now and getting a bit steeper!

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UK government: They have no plan. The plan is to simply remain in denial and ignore everything until it all breaks down.

Also, most councils throughout the UK : They have no plan. The plan is to simply remain in denial and ignore everything until it all breaks down.

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and it is easy to see why 'a plan' is so unpalatable isn't it

take the Chicago example

what plan that involved increasing the tax take to cover deficit (675% of current tax receipts), or reducing public services to reduce costs sufficiently to eliminate the deficit, or cutting pension entitlements sufficiently to eliminate the deficit is going to garner enough votes to even get the person with the plan into a position where that plan could be implemented?

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We've got to get growth or end unfunded State retirement, including eye watering health costs. Obviously the latter is politically unacceptable, so growth it is then by whatever means are available most especially immigration.

Edited by crashmonitor

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Japan has the most debt per person of any nation in the world,..

The UK must be pretty close.

hunt+2.png

http://

www.thisismoney.co.uk/money/news/article-2089295/The-horrifying-graph-shows-UKs-households-businesses-Government-hold-debt-nation-bar-Japan.html

Edited by billybong

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