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When Institutions Fail, Fragmentation and Decentralization Become Solutions

June 4, 2020

That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history.

The chapter titles of Michael Grant's excellent account of The Fall of the Roman Empire identify the core dynamics of decline:

The Gulfs Between the Classes

The Credibility Gap

The Partnerships That Failed

The Groups That Opted Out

The Undermining of Effort

Every one of these is a manifestation of institutional failure. The Gulfs Between the Classes (see chart of soaring inequality below) manifests a completely broken economic and social order, and the abject failure of core institutions (for example, the source of wealth inequality, the Federal Reserve).

The Gulfs Between the Classes also reflects our pay-to-play political system, in which wealth buys political power and everyone else gets to watch a pantomime of democracy.

The Credibility Gap is as wide as the Grand Canyon, as unaccountable insiders comfortably secure in institutions do what serves their interests, which can be summarized as: Truth Is What We Hide, Cover Stories Are What We Sell.

Government agencies widen The Credibility Gap with bogus, rigged statistics and complexity thickets ("We have to pass the bill so that you can find out what is in it.") designed to make accountability and transparency effectively impossible.

The Partnerships That Failed include the alliances of various warring elites and the pantomime partnerships of elites and constituencies ("We pretend to obey and you pretend to listen to us.")

The Groups That Opted Out are as yet largely invisible because all the small business owners who closed down and stopped being Tax Donkeys are under the radar, and all the debt-serfs who have renounced their debts are carefully hidden by the appropriate bureaucracies, lest the enormity of the debt-serf opt-outs becomes visible.

The Groups That Opted Out include those who have lost trust in the corporate media, the government's statistical claims and the leadership of failing institutions.

The Undermining of Effort manifests as the impossibility of reforming the institutions that have lost their legitimacy due to self-serving looting, incompetence and the disavowal of accountability, a topic I addressed in my books Why Things Are Falling Apart and Why Our Status Quo Failed and Is Beyond Reform.

When institutions have lost public trust and thus their legitimacy, the solution is fragmentation and decentralization so the unit size is reduced to the point where accountability and transparency can be enforced by the citizenry and/or members.

Management author Peter Drucker (Post-Capitalist Society) noted that in the transition to a post-capital economy, legacy institutions in everything from higher education to healthcare are the wrong unit size, meaning that they are too large to be effective, accountable and transparent, as their sheer mass encourages processes and thickets insiders can use to avoid accountability and transparency.

When fiat currencies fail, fragmentation and competition between transparently priced currencies will be the solution. The ideal solution is a spectrum of currencies ranging from bitcoin and other mined cryptocurrencies to privately issued gold-backed currencies, state-issued gold-backed currencies, local currencies intended for use in local economies, and my proposed labor-backed currency which I outlined in my book A Radically Beneficial World.

Politically, city-states on the model of the Hanseatic League may prove to be the appropriate unit size, a topic Mark, Jesse and I discuss in our latest podcast AxisOfEasy Salon #6: The Hanseatic League of Decentralized Crypto-States (55:44).

That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history. The current travesty of a mockery of a sham system will fragment no matter how desperate the looters, parasites and predators are to maintain their swag.

Recent Podcasts:

Meeting the Challenges of the "New Normal" World -- FRA podcast (44:21)

AxisOfEasy Salon #6: The Hanseatic League of Decentralized Crypto-States (55:44)

The Pandemic Has Revealed The Structural Fragilities Of America -- X22 Spotlight (31:55)

My COVID-19 Pandemic Posts


My recent books:

Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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(Kindle $6.95, print $12.95)

Will you be richer or poorer? What does the future hold for you--and for the world?

Supposedly we're all getting richer, but many of us feel we’re becoming poorer. Why?

This book tackles three critical questions:

What if everything we don’t measure is worth more than financial wealth? Our obsession with financial capital is blinding us to a traumatizing global decline in other forms of wealth.

Will artificial intelligence (A.I.) make us all richer? What if A.I. will only enrich the few who own the platforms and technology?

Is our economic model dooming us? We’re told we all benefit as the super-rich get even richer, but what if the status quo only benefits those in power at the expense of everyone else--and our planet?

Though we may not be politically powerful, we are far from powerless. This book will help you identify the things that truly matter, and accumulate capital that benefits you and your family--and our planet.

Read the first section for free in PDF format.

Will You Be Richer or Poorer?: Profit, Power and A.I. in a Traumatized World (15% discount in October, Kindle $5.95, print $10.95)



Recent entries:

When Institutions Fail, Fragmentation and Decentralization Become Solutions June 4, 2020

The Post-Covid Economy Will Be Very Different From the Pre-Pandemic Bubble Economy June 3, 2020

Truth Is What We Hide, Cover Stories Are What We Sell June 2, 2020

We're Living the Founding Fathers' Nightmare: America Is Corrupt to the Core June 1, 2020

This Is How Systems Collapse May 30, 2020

First the Deflationary Deluge of Assets Crashing, Then the Tsunami of Inflation May 29, 2020

Social Media's Plantation of the Mind May 28, 2020

Re-Opening the Economy Won't Fix What's Broken May 27, 2020

An Economy That Cannot Allow Stocks to Decline Is Too Fragile To Survive May 26, 2020

TINA's Orgy: Anything Goes, Winners Take All May 25, 2020


January 2020 entries     February 2020 entries     March 2020 entries     April 2020 entries     May 2020 entries    

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Extra-Special Bonus Aphorisms:

"There is no security on this earth; there is only opportunity."
(Douglas MacArthur)

"We are what we repeatedly do." (Aristotle)

"Do the thing and you shall have the power." (Ralph Waldo Emerson)

"Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction." (E.F. Schumacher, via Tom R.)

"He who will not risk cannot win." (John Paul Jones)

"When we drink coffee, ideas march in like the army." (Honore de Balzac)

"Progress is not possible without deviation." (Frank Zappa, via Richard Metzger)

"Victory favors those who take pains." (amat victoria curam)

"The man who has a garden and a library has everything." (Cicero, via Lee Bentley)

"A healthy homecooked family meal and a home garden are revolutionary acts." (CHS)

"Do you know what amazes me more than anything else? The impotence of force to organize anything." (Napoleon Bonaparte)

"The way of the Tao is reversal" Or "Reversal is the movement of Tao." (Lao Tzu)

"Chance favours the prepared mind." (Louis Pasteur)

"Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill)

"Where there is ruin, there is hope for treasures." (Rumi)

"The realm of gratitude is boundless." (CHS, 11/25/15)

"History doesn't have a reverse gear." (CHS, 12/22/15)

Smith's Law of Conservation of Risk: Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some consequences will be intended, some will not. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences. (July 8, 2014)(thanks to Lew G. for retitling the idea.)

Smith's Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

The Smith Corollary to Metcalfe's Law (The Network Effect): the value of the network is created not just by the number of connected devices/users but by the value of the information and knowledge shared by users in sub-networks and in the entire network. (CHS, 4/6/16)

My Credo of Liberation: I no longer care if the power centers of our society--the distant, fortified castles of our financial feudal system--are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests. (Thank you, Klaus-Peter L., for reminding me)

"We've become a culture of excuses rather than solutions: solutions always require sustained effort and discipline." (CHS 4/9/16)

"Fraud as a way of life caters an extravagant banquet of consequences." (CHS 4/14/16)

"Creativity = problem solving = value creation." (CHS 6/4/16)

"Truth is powerful because it is the core dynamic of solving problems." (CHS 7/21/17)

"We live in a system of human emotions that masquerades as a science (economics)." (CHS 1/1/18)

"Always remember, your focus determines your reality." (George Lucas)

"Diversity is for poor people. Sameness is for the successful." (GFB)

"When power dissipates suddenly, it dissipates completely." (CHS 7/14/19)

"Disobedience is the true foundation of liberty. The obedient must be slaves." (Henry David Thoreau)

"Markets cannot price in the value of non-monetized natural assets such as diverse ecosystems." (CHS 7/14/19)

click here for more Extra-Special Bonus Aphorisms.





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