Higgenbotham's Dark Age Hovel

[Higgenbotham]

Another view of where we are. I believe Barbara Tuchman had a similar view. There was a poster on this forum early on (approximately 2008 or 2009) who stated this view also.

The historian Arnold Toynbee, whose study of the rise and fall of civilizations is the most detailed and cogent for our purpose, has traced a recurring rhythm in this process. Falling civilizations oscillate between periods of intense crisis and periods of relative calm, each such period lasting anywhere from a few decades to a century or more—the pace is set by the speed of the underlying decline, which varies somewhat from case to case. Most civilizations, he found, go through three and a half cycles of crisis and stabilization—the half being, of course, the final crisis from which there is no recovery.

That’s basically the model that I’m applying to our future. One wrinkle many people miss is that we’re not waiting for the first of the three and a half rounds of crisis and recovery to hit; we’re waiting for the second. The first began in 1914 and ended around 1954, driven by the downfall of the British Empire and the collapse of European domination of the globe. During the forty years between Sarajevo and Dien Bien Phu, the industrial world was hammered by the First World War, the Spanish Flu pandemic, the Great Depression, millions of political murders by the Nazi and Soviet governments, the Second World War, and the overthrow of European colonial empires around the planet.

That was the first era of crisis in the decline and fall of industrial civilization. The period from 1945 to the present was the first interval of stability and recovery, made more prosperous and expansive than most examples of the species by the breakneck exploitation of petroleum and other fossil fuels, and a corresponding boom in technology. At this point, as fossil fuel reserves deplete, the planet’s capacity to absorb carbon dioxide and other pollutants runs up against hard limits, and a galaxy of other measures of impending crisis move toward the red line, it’s likely that the next round of crisis is not far off.

What will actually trigger that next round, though, is anyone’s guess. In the years leading up to 1914, plenty of people sensed that an explosion was coming, some guessed that a general European war would set it off, but nobody knew that the trigger would be the assassination of an Austrian archduke on the streets of Sarajevo. The Russian Revolution, the March on Rome, the crash of ‘29, Stalin, Hitler, Pearl Harbor, Auschwitz, Hiroshima? No one saw those coming, and only a few people even guessed that something resembling one or another of these things might be in the offing.

Thus trying to foresee the future of industrial society in detail is an impossible task. Sketching out the sort of future that we could get is considerably less challenging. History has plenty to say about the things that happen when a civilization begins its long descent into chaos and barbarism, and it’s not too difficult to generalize from that evidence.

https://thearchdruidreport-archive.2006 ... fairy.html

432 years sounds like what I've been calling the MegaSaeculum, as noted by Toynbee et. al. I notice this precisely matches the time (on the Anglo-American timeline) from the Battle of Bosworth to World War I, which I've always said was a Cultural MegaCrisis, since the world thereafter would not be recognizable to either an Elizabethan nor a Victorian. So this period is the life of Western Civilization, or at least, Western Civilization 1.0

Thanks for the kind words, folks.

And that is amazing stuff on the Florentine/Bardi panic, Higgenbotham. I've gotta look into that one.

"A Distant Mirror" by Barbara Tuchman might be a good place to start.

[Higgenbotham]

> I agree. Thank you Matt for a great post. A voice of reason in
> the wilderness. The part about this affecting us "potentially 80
> years down the line"--everyone is remembering back to 1929, but
> this situation may be shaping up like the 1340s collapse of the
> Florentine banks (Peruzzi, Bardi, etc.). It seems to me that the
> ignorance that is engulfing our civilization needs to be stopped
> soon in order to avoid a larger disaster than the 1930s.

It seems counterintuitive that any previous collapse could be worse
than the one we're about to have. How would the 1340s collapse be
worse?

Sincerely,

John

The potentially common feature of the 1340s collapse is that the entire European banking system collapsed, as the Bardi and other large Florentine banks had offices across mainland Europe and even in London. My recollection is that the larger banks had swallowed up smaller banks with sound balance sheets in the 1330s (as happened in the 1990s) to expand the bubble, then swallowed up bankrupt competitiors, as is happening at the moment, until the entire banking system collapsed, with the Bardi collapsing last in 1346.

Once this occurred, the political order began to break down. At the Siege of Kaffa the successors to the Mongol hordes had been stricken with the Black Plague and apparently catapulted plague stricken corpses over the walls of Kaffa in 1346. From there, the worst episode of the Black Plague took hold sometime around 1348, culminating the loss of about 30% of the European population by 1351. And if I remember right, this collapse was global in nature, affecting areas beyond Europe.

It's difficult to find much information on this history from a purely economic standpoint, but I created a folder with references which link to google books and other sources and can dig them up if anyone was interested. I found the readings dense and difficult to interpret in today's context, but did note many similarities. There's also a book by Barbara Tuchmann (Guns of August author), A Distant Mirror, which describes the Fourteenth Century collapse generally and which I have not read but would appreciate any insight from anyone who has.

As far as the scale of collapse, it sems to me that perhaps the 1930s would qualify as being in a certain class, with the 14th Century collapse being in the next most severe category, then perhaps the Dark Ages being in a category beyond that. In the 14th Century nation-states did not exist in the sense that they do today and we have now gone so far as to use the financial resources of the nation-states to backstop the financial system. If that fails, it would seem to me that we will have impoverished the citizenry to a greater extent than would have been possible in the 14th Century. However, my understanding is that general conditions in the decades leading up to the collapse were much worse than they are today, with weather problems, sporadic famines and economic depressions.

I'm not an expert on this history but, like I said, have noticed many eerie parallels from an economic standpoint in casual reading. Any comments appreciated, pro or con, from those who might know better.

With regard to the subject of inflation and deflation, if we are entering something one degree greater in magnitude than the 1930s it may be a waste of time to debate this subject. My best recollection is that the prices of gold and silver fluctuated severely in the 1340s with no definite trend, as seems to be happening today, while the economy more or less imploded.

[Tom Mazanec]

When I say we're near the end of the maintenance phase and close to the decline, in my mind, it looks about like this, which represents a high level of current complexity which will soon ratchet down to lower levels of complexity. I suppose the horizontal line could be pointing downward a bit.

Why is there a second horizontal phase?

[Higgenbotham]

Why is there a second horizontal phase?

It's acknowledging that the decline won't be uniform. There will likely be periods of intense crisis followed by periods of slow decline, stability or improvement. The picture should show more than one such cycle.

[aeden]

https://ourworldindata.org/grapher/ener ... per-capita
Discussed was calories per acre outputs. Inputs for the bish nuts who are simp locusts thinking its different this time.
Its not.
One US average farmer was 166 people per Farmer.
That is going to change and has.
We are in what H noted as a local maintenance phase from 2019 for more than one reason.
Water, Wheat, Weather is currently effecting more than reported for now.
Some weeks ago we said check your outputs unders stress.
The maps will mesh into the topic sooner than later is our view.

[aeden]

https://www.youtube.com/watch?v=gNFzE2pu31M H your graph in the context of lower price signals.
We had this discussion since the tobin q before the romer papers. We will position into August for the premuim.
We said know you stock better than your wife and the market will stay irrational longer then will be solvent.

[Tom Mazanec]

Why is there a second horizontal phase?

It's acknowledging that the decline won't be uniform. There will likely be periods of intense crisis followed by periods of slow decline, stability or improvement. The picture should show more than one such cycle.

IIRC the Archdruid Report once postulated there are normally three such cycles.

[Higgenbotham]

The Archdruid discusses the future role of money as complexity ratchets down.

WEDNESDAY, NOVEMBER 12, 2014

Dark Age America: The Hoard of the Nibelungs

Of all the differences that separate the feudal economy sketched out in last week’s post from the market economy most of us inhabit today, the one that tends to throw people for a loop most effectively is the near-total absence of money in everyday medieval life. Money is so central to current notions of economics that getting by without it is all but unthinkable these days. The fact—and of course it is a fact—that the vast majority of human societies, complex civilizations among them, have gotten by just fine without money of any kind barely registers in our collective imagination.

And what gold will do for you.

The contemporary fixation on abstract value isn’t limited to economists and those who believe them, nor is its potential for catastrophic consequences. I’m thinking here specifically of those people who have grasped the fact that industrial civilization is picking up speed on the downslope of its decline, but whose main response to it consists of trying to find some way to stash away as much abstract value as possible now, so that it will be available to them in some prospective postcollapse society. Far more often than not, gold plays a central role in that strategy, though there are a variety of less popular vehicles that play starring roles the same sort of plan.

Now of course it was probably inevitable in a consumer society like ours that even the downfall of industrial civilization would be turned promptly into yet another reason to go shopping. Still, there’s another difficulty here, and that’s that the same strategy has been tried before, many times, in the last years of other civilizations. There’s an ample body of historical evidence that can be used to see just how well it works. The short form? Don’t go there.

It so happens, for example, that in there among the sagas and songs of early medieval Europe are a handful that deal with historical events in the years right after the fall of Rome: the Nibelungenlied, Beowulf, the oldest strata of Norse saga, and some others. Now of course all these started out as oral traditions, and finally found their way into written form centuries after the events they chronicle, when their compilers had no way to check their facts; they also include plenty of folktale and myth, as oral traditions generally do. Still, they describe events and social customs that have been confirmed by surviving records and archeological evidence, and offer one of the best glimpses we’ve got into the lived experience of descent into a dark age.

Precious metals played an important part in the political economy of that age—no surprises there, as the Roman world had a precious-metal currency, and since banks had not been invented yet, portable objects of gold and silver were the most common way that the Roman world’s well-off classes stashed their personal wealth. As the western empire foundered in the fifth century CE and its market economy came apart, hoarding precious metals became standard practice, and rural villas, the doomsteads of the day, popped up all over. When archeologists excavate those villas, they routinely find evidence that they were looted and burnt when the empire fell, and tolerably often the archeologists or a hobbyist with a metal detector has located the buried stash of precious metals somewhere nearby, an expressive reminder of just how much benefit that store of abstract wealth actually provided to its owner.

That’s the same story you get from all the old legends: when treasure turns up, a lot of people are about to die. The Volsunga saga and the Nibelungenlied, for example, are versions of the same story, based on dim memories of events in the Rhine valley in the century or so after Rome’s fall. The primary plot engine of those events is a hoard of the usual late Roman kind, which passes from hand to hand by way of murder, torture, treachery, vengeance, and the extermination of entire dynasties. For that matter, when Beowulf dies after slaying his dragon, and his people discover that the dragon was guarding a treasure, do they rejoice? Not at all; they take it for granted that the kings and warriors of every neighboring kingdom are going to come and slaughter them to get it—and in fact that’s what happens. That’s business as usual in a dark age society.

The problem with stockpiling gold on the brink of a dark age is thus simply another dimension, if a more extreme one, of the broader problem with intermediation. It bears remembering that gold is not wealth; it’s simply a durable form of money, and thus, like every other form of money, an arbitrary token embodying a claim to real wealth—that is, goods and services—that other people produce. If the goods and services aren’t available, a basement safe full of gold coins won’t change that fact, and if the people who have the goods and services need them more than they want gold, the same is true. Even if the goods and services are to be had, if everyone with gold is bidding for the same diminished supply, that gold isn’t going to buy anything close to what it does today. What’s more, tokens of abstract value have another disadvantage in a society where the rule of law has broken down: they attract violence the way a dead rat draws flies.

The fetish for stockpiling gold has always struck me, in fact, as the best possible proof that most of the people who think they are preparing for total social collapse haven’t actually thought the matter through, and considered the conditions that will obtain after the rubble stops bouncing. Let’s say industrial civilization comes apart, quickly or slowly, and you have gold. In that case, either you spend it to purchase goods and services after the collapse, or you don’t. If you do, everyone in your vicinity will soon know that you have gold, the rule of law no longer discourages people from killing you and taking it in the best Nibelungenlied fashion, and sooner or later you’ll run out of ammo. If you don’t, what good will the gold do you?

The era when Nibelungenlied conditions apply—when, for example, armed gangs move from one doomstead to another, annihilating the people holed up there, living for a while on what they find, and then moving on to the next, or when local governments round up the families of those believed to have gold and torture them to death, starting with the children, until someone breaks—is a common stage of dark ages. It’s a self-terminating one, since sooner or later the available supply of precious metals or other carriers of abstract wealth are spread thin across the available supply of warlords. This can take anything up to a century or two before we reach the stage commemorated in the Anglo-Saxon poem “The Seafarer:” Nearon nú cyningas ne cáseras, ne goldgiefan swylce iú wáeron (No more are there kings or caesars or gold-givers as once there were).

That’s when things begin settling down and the sort of feudal arrangement sketched out in last week’s post begins to emerge, when money and the market play little role in most people’s lives and labor and land become the foundation of a new, impoverished, but relatively stable society where the rule of law again becomes a reality. None of us living today will see that period arrive, but it’s good to know where the process is headed. We’ll discuss the practical implications of that knowledge in a future post.

https://thearchdruidreport-archive.2006 ... lungs.html

I posted the opposite view on gold from Hugo Salinas Price.

I think that we're going to see eventually a series of bankruptcies. And I think that the rise in the interest rate is probably the fatal sign which is going to ignite a derivatives crisis that is going to bring down the derivatives system. There is something like a quadrillion of derivatives and most of them are interest rate derivatives. The spiking of the interest rate in the United States may set that off. And I think that what is going to happen in the world is that eventually we're going to come to a moment where there's going to be massive bankruptcies around the world and what is going to be left when the dust settles is gold and some people are going to have it and some people are not. And then the problem will be to hold onto what you've got. Because it's not going to be a very pleasant world. That's what I see coming, my friend.

--Hugo Salinas Price (transcribed from the link above)

"In 1987 Ricardo succeeded his father Hugo Salinas Price as CEO of Grupo Elektra. He is the fourth richest person in Mexico behind Carlos Slim Helu and the 34th richest person in the world with a wealth of around US $17.4 billion in 2012."

http://en.wikipedia.org/wiki/Ricardo_Salinas_Pliego

I agree with the Archdruid. I sold all my gold and silver in 2011 and no longer own any to speak of or plan to. The reason is that it was in 2011 that I came to the conclusion that the future will likely more resemble the one that is described in his November 12, 2014 post. Having gold and trying to hold onto it is a fool's errand, in my opinion.

"Now of course it was probably inevitable in a consumer society like ours that even the downfall of industrial civilization would be turned promptly into yet another reason to go shopping."

Yes, that is exactly my thought when I see all the promoters for this or that magical money bullet out there.

There is no investment strategy that will preserve capital over a long time horizon, just strategies that allow it to go extinct more slowly. Wealth never survives more than a few generations no matter how much it is or who manages it. A lot of people point to gold. Gold costs roughly 1% per year to insure and store. If one chooses self storage, it will likely be lost or stolen when the crisis it is meant to protect against comes to pass.

Yeah. They knew that back in 30 C.E. "Where moth and rust doth corrupt and thieves break in and steal." Not to mention the guy whose wealth was secure, but apparently his health wasn't. "You fool! This night will your soul be demanded of you." Oops... or as is said when many a fat cat or member of the Powers That Be has a heart attack, "They examined his heart and found nothing"?

[Higgenbotham]

Looking at the scale of the raw numbers, the 1918 pandemic killed roughly 3% of the world population and WWII killed roughly 3% also. The bloody dictators in Europe and Asia killed a similar sized percentage of world population. This all happened over about a 50 year period. Despite this, world population continued to increase - there was no lasting reduction in population as occurred during the 14th Century.

The raw figures bring up an interesting observation, though. The longer lasting population reduction in 14th Century Europe (defining 14th Century Europe as a region relatively or completely unconnected from Asia and the Americas) was approximately 10 times the temporary world population reductions in the 20th Century.

A longer lasting reduction in population over some time scale of, say, a saeculum seems to be characteristic of a Dark Age as opposed to a normal crisis period. Naturally, this is a case of arbitrarily defining something as opposed to something else and giving it a name.

So how could a scale of population reduction that is 10 times that of the prior saeculum occur? My thesis is that a Dark Age scale population reduction can only come about through large scale individual moral and institutional failure. This is harder to quantify, but my previous post describes what that looks like as opposed to typical crisis period failure.

There were some bad choices of words here, so "permanent" has been replaced by "longer lasting" or something similar.

The question in my mind is whether the forces that support human life outweigh the forces that destroy human life. If the population is going up, then they do, approximately. There are time lags and geographical variations to consider.

"While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently."

"While life expectancy and population declines rather slowly on the periphery at first, life expectancy and population in the capital cities should collapse suddenly."

That's been my guess as to what will be seen. Under present conditions, a decline in life expectancy should lead a decline in population. As best as I can recall, life expectancy in the US first began declining on the periphery - for white women in rural counties across the South. Hundreds of counties. For these women, the forces that support human life were being overwhelmed by the forces that destroy human life. How long it takes for those forces to actually show up in the life expectancy numbers under those conditions is unknown to me. It might be 20 years, maybe longer. At the time, life expectancy in the country overall was still rising. Now it has fallen by a few years. For anyone wanting to do a deep dive, it would be my guess that life expectancy is still rising in the counties surrounding Washington, D.C., in Silicon Valley, and maybe a few other select places in the US, but not many. It would also be my guess that when the life expectancy in the cities does collapse suddenly, it will go below the worst areas on the periphery, then life expectancy on the periphery will actually stabilize or even rise for a time.

In any event, I think the forces that supported human life were still greater than the forces that destroyed human life in the first half of the 20th century and for many years beyond that virtually everywhere. That started to change a bit after the turn of the century in many places and has accelerated in the past 3 years.

[Higgenbotham]

Getting back to more mundane things, I was talking to a realtor today and brought up Zillow. I said that I'm vaguely aware that someone can browse Zillow, then call a phone number provided on Zillow to get in contact with a realtor. I asked the realtor what happens if someone does that. I thought perhaps Zillow might get a $100 referral fee, something like that. She said no, Zillow gets 35% of the commission that results from any referral. I thought she must be lying, so checked that and found that it is true, or at least mostly true (the percentage can be less than that).

So let's say someone buys a typical $400K house and the commission is the typical 6%. That's 24K for the commission and Zillow is going to take $8.4K of that $24K.

Intermediation gone wild. Or intermediation of intermediation gone wild. Really, it boggles the mind. Amazon does roughly the same thing when they insert themselves between a buyer and seller of goods. What I mean is the fee the seller pays Amazon is about 35% of the sale on average. I don't see how any of that is sustainable without the Fed continuing to pump the money supply. Or if someone prefers not to think of it in that way, they can consider how very sustainable it was for these kinds of companies when the Fed pumped up the money supply massively in 2020 and 2021.