The transnational capitalist class is pouring billions of dollars into the rapid digitalization of global capitalism as the latest outlet for its surplus accumulated capital and hedging its bets on new investment opportunities in a global police state. But will these ballooning sectors of the global economy allow the world capitalist system to avoid another catastrophic crisis? Reports from international agencies and international economic data indicate a resounding “no.”
The greatest wealth transfer in history has already begun and the next crisis will only accelerate the process. As the printing presses continue cranking out more and more money, looking forward to a time when the markets pause or another economic crisis consumes the world is an issue we all should think about.
How much wealth will escape the next large financial reset is very important because it will set the bar that determines the rate of inflation or deflation in coming years. If you believe we did not solve many of our financial problems after 2008 but merely masked them with a huge amount of newly printed money you are likely to embrace this concept.
Much like a shell game where wealth is transferred about, in our modern society wealth is always on the move. Wealth and how things are valued is far from constant, it is fungible and constantly changing. While we may try to deny it, wealth is in a constant state of flux and constantly moving.
Wealth comes in many forms, it can be held in the form of paper, promises, or as something more tangible and real such as property or goods. Some items such as a tool hold “utility value” and its value may be based on how much work it can perform or the revenue it can produce. Replacement cost, supply and demand, and factors such as whether something can spoil or might grow obsolete over time also help determine its value as a place wealth can be safely stored.
The term, safely stored in this case also includes placing it out of the reach of governments’ ability to tax it or make it illegal to own. Defining wealth is one thing but it is important to actually delve into its nature to truly understand just how elusive it can be. Wealth is defined as the abundance of valuable resources or valuable material possessions.
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An individual, community, region, or country that possesses an abundance of such possessions or resources to the benefit of the common good is known as wealthy. This means it might be preferable to live as a poor person in a very rich and wealthy society versus a rich person in a poor and wretched place. This notion underlines the idea wealth is also relevant and measured by how it compares to that of others.
Returning to the subject of various kinds of wealth, today Bitcoin and other crypto-currencies and other “digital assets” designed to work as a medium of exchange also fall into the category of wealth. They have joined pensions, annuities, and even investments in stocks and such as a store of wealth. Many assets fall into the area of paper promises that are often recorded somewhere far from sight or as a digital entry on a computer.
These intangible stores of wealth based on faith have grown at a massive rate during the last several decades and were relatively minor players until recently. Currencies, also known as fiat money, are also just IOUs or paper promises. The idea of a currency free-society in my mind tends to break the bonds that link us to wealth but that is for another post.
In the past I have written several pieces about subjects such as, writing off the rising amount of bad debt, how debt is like a mirage moving into the distance, how bad debt is resolved, and how precarious the vessels where we store our wealth can be, however, the crux of this article centers around what will or might be left after stress or war pushes the global economy to the brink or into total collapse. A great deal will depend on how such an event unfolds, this means what kind or type of value and wealth is the first to vanish.
I will be the first to admit the answer is unknown, still in this “exercise of the mind,” I am asking you to consider and think about such a scenario. The ugly truth is that there are many places your wealth could vanish into and multitudes of ways it could seep away. Remember, wealth zips across borders at the click of a button and just because you deposit it with a local institution does not mean it stays in your community.
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We witnessed how wealth could be “transferred away” decades ago during the savings and loan crisis when huge beautiful buildings were constructed in certain areas from wealth transferred in from other parts of the country. Needless to say when the dust settled the big winners were the areas with the new buildings and not those forced to pay for them when the loans used to build them went into default.
- Today some market watchers claim that the stock market is being held at lofty levels while the smart money is rushing to the exits.
- Today tens of trillions of dollars are sitting in offshore banking accounts in places such as the Cayman Islands.
- Today government and businesses are borrowing hundreds of billions of dollars each year by issuing bonds some that will not return investor’s money for decades.
- Today homes, apartments, and buildings are being built, some poorly constructed, with loans guaranteed more or less by the American people.
- Today America’s national debt stands at over 28 trillion dollars and is rising.
- Today currencies such as the euro and yen are even more fundamentally flawed than the dollar. I could do this a bit longer but I suspect I’ve made the point.
We have all heard about how the Caymans have become a popular tax haven among the American elite and large multinational corporations. This is because there is no corporate or income tax on money earned outside of its territory. This has made the Caymans especially popular among hedge fund managers.
I hate to blow a hole in the idea that you can safely tuck their money away in an offshore banking account, the reality is, we have no idea where all the money deposited in the Cayman Islands really is. Banks do not just sit on deposits and keep them safe, they loan them out. We must never forget the world is full of crooks, evil politicians, greedy bankers, and that we have judicial systems that make true justice a rare commodity. Returning to the focus of this article, the thing that is important is what or how much wealth survives an economic crisis and in what form. That is because when that wealth comes out of hibernation it will soak up all the tangible assets on the planet.
This will be the determining factor of whether we face inflation, deflation, or some crazy mix of the two. Remember, it is the nature of those in charge to throw the masses under the bus when things go sideways. The average person is foolish and silly if they expect to be protected when the next financial crisis hits.
Those counting on a stimulus check for survival will someday most likely find it will not buy them diddly-squat. The shelves will be empty, or the value of what they receive will simply not be enough. The economic landscape we face following such an event will without a doubt be shaped and depend on what wealth survives and how much vanishes following a tsunami of defaults and /or monetization of debt where government debt disappears and inflation takes its place. A word to the wise should be sufficient and cause any person prudent or interested in protecting their wealth to consider the many ways wealth can vanish and that it can without a doubt happen to you.
Overaccumulation: Capitalism’s Achilles Heel
The global economy remains plagued by the structural Achilles heel of capitalism – overaccumulation. The polarization of income and wealth is endemic to capitalism since the capitalist class owns the means of producing wealth and therefore appropriates as profits as much as possible of the wealth that society collectively produces. If capitalists cannot actually sell (or “unload”) the products of their plantations, factories, and offices then they cannot make a profit. Left unchecked, expanding social polarization results in crisis – stagnation, recessions, depressions, and social upheavals.
Digital Warfare and Global Police State
Digitalization made possible the creation of a global police state. As it brings about a concentration of capital and heightened polarization, dominant groups turn to apply the new technologies to mass social control in the face of resistance among the precariatized and the marginalized. The dual functions of accumulation and social control are played out in the militarization of civil society and the crossover between the military and the civilian application of advanced weapons, tracking, security, and surveillance systems. The result is permanent low-intensity warfare against communities in rebellion as theaters of conflict spread from active war zones to urban and rural localities around the world.
The new systems of warfare and repression made possible by more advanced digitalization include AI-powered automated weaponry such as unmanned attack and transportation vehicles, robot soldiers, a new generation of “super drones,” microwave guns that immobilize, cyber attack and info-warfare, biometric identification, state data mining, and global electronic surveillance that allows for the tracking and control of every movement. Militarized accumulation and accumulation by repression – already a centerpiece of global capitalism – may become ever more important as it fuses with new fourth industrial revolution technologies, not just as means of maintaining control but as expanding outlets for accumulated surplus that stave off economic collapse.
In this context, the rise of the digital economy appears to fuse three fractions of capital around a combined process of financial speculation and militarized accumulation into which the TCC is unloading billions of dollars in surplus accumulated capital as it hedges its bets on investment opportunities in a global police state.
Financial capital supplies the credit for investment in the tech sector and in the technologies of the global police state. Tech firms develop and provide the new digital technologies that are now of central importance to the global economy. Ever since NSA whistleblower Edward Snowden came forward in 2013 there has been a torrent of revelations on the collusion of the giant tech firms with the U.S. and other governments in the construction of a global police state. And the military-industrial-security complex applies this technology as it becomes an outlet for unloading surplus and making profit through the control and repression of rebellious populations.
The structural crisis of capitalism in the 1970s launched the world on the path of neoliberal globalization. The bursting of the dot-com bubble in 2000 then threw the world into recession. The bursting of the housing bubble in 2008 triggered the worst crisis since the 1930s. Everything indicates that the current tech boom is generating a new bubble that could bring another crisis when it bursts, perhaps in conjunction with debt defaults. The next Great Recession is likely to cement this fusion of digital economy and global police state, absent a change of course forced on the system by mass mobilization and popular struggle from below. And remember, it may be their crisis, but it’s our problem. We, the average people are going to suffer and starve to death.
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Sources for this article include:
Bruce Wilds/AdvancingTime Blog