The Third World War

The Bomb

  Why is it inevitable? One would say that it is due to the horrific reactions to ideological differences in the World today. The Human Rights violations the spread of Terrorism and other such ungodly acts by people. The more plausible and not so surprising reason when you think of it is right there staring everyone in the face. It is plain and simple Economics and the maintenance of the Balance Of Power in the World. If nothing is done the Control of the Developed Nations the World over will collapse and disappear. Would the Governments and Powerful people in this First World allow that to happen? You decide.

The whole point of the economic collapse they are talking about was inevitable and I have said as much in a couple of my blogs. However much the complexity of the dealings and the transactions it all started in the 50 s when the Gold standard was replaced with the GDP to evaluate money. This paved the way of the “Credit Capitalism” which essentially needs to keep the market expanding forever OR to be realistic and curb production to match the Malthusian rule of Demand and Supply. We can say the Malthusian theory is Spiritual in Nature as it recognizes and includes Natural Laws in the Economic Theory. But knowing Human Nature it was inevitable that the credit system gets over extended and it would collapse when at some point in the future it would be time to make good the extended credit. If we take an individual with a credit card it will be simple to see why it is going to collapse. One card fully extended and a second one to manage life and also pay off the EMI s of the first card which would only prevent it from being marked for full recovery and then as the credit value is still kept feasible a third card to service the first and second card and on the other hand the accumulation of Goods seeming worth the cost value, and it goes on until the first round of defaults where this guy even with the last credit card he can manage to obtain finds himself falling short to just keep the servicing of the extended credit going. Even if proceedings to repossess the Goods acquired through the extension of credit is undertaken there has to be a demand for them in the market so that at least the principle is recovered and things can go on as usual for there will be a loss only in the possible profit to be earned but the capital will still be good. Now if we imagine all of the people in the same situation of this credit card holder then we can see that there will be no market for the goods repossessed which actually have no value and no way of recovering the initial capital outlay even, leave alone the profits. The whole problem is that the value of the goods that has been manufactured and sold are Consumer Goods and their value lies in their value to be of use to a consumer and have no intrinsic value as in Gold or Silver or Land. And even these intrinsically valuable acquisitions will be valuable only after the basic needs of Food and Clothing are met. The only way the Credit Economy could function was a steady inflation so that the accumulating cost (in interests) of servicing the debt could be met. So debt rises, quantum of interests become more without a change in the rates, so rates of goods are inflated and sales are forced upon the people even without there being a demand by making them available on credit and this inflation has a cascading effect on wages which will have to be increased and then it gets caught in a vicious cycle each one fueling the increase in the other, and it goes on as long as there is a Market for the vast amount of consumer goods being produced and it goes on until the market stagnates. That will happen because the production capacity has far outpaced the consumption of these goods and all possible avenues of finding new markets have been exhausted. The stage will be set where the production will have to continue to keep the credit-ability of the industry still viable, and credits will have to be extended to keep the banks viable and inflation has to be kept going (goods have to cost more each year) and wages have to match the inflation but the cycle will get broken at a crucial link, NO MARKET. The consumers have over extended themselves not just on their earning capacity of the next year but for the next ten years which would have been okay if he would be able to service his loans but he will have to live a Spartan life, and once this attempt is made then the industries will have a zero market which will not be able to survive and this will delete the earning capacity of the consumer for he will lose the job he is holding in the very industry he is indebted to. If it was just one Industry then it can be absorbed like the Auto Industry a few years back and to Real Estate business recently, but if it happens to all of the industries then the run will start. They ignored the Auto Industry because it did not affect too many people, and for the real estate business they had to prop it up for quite a number of Banks and the Industries that were depending on these banks would have collapsed. But that has resulted in a collective debt increasing to such an extent that it has become impossible for any given debtor, be the individual, the industries as a whole, the banks indebted to their bigger brothers right up to the federal bank (which can keep the money supply only if there is an increase in GDP) or the Govt itself. The whole of the Economic System in the World depends on the circulation of money, meaning that it is available when and where there is a demand for it as in when debts are called in. But when all the debts are called in simultaneously the situation is such now that it cannot be met because without the actual money being printed (as there is no actual GDP) as the trade has taken place on the supposed GDP that would have been there ten years from now, all on credit. There will have to be defaults and it will start very slowly and in very small volumes. But it will gain incredible speeds as it will have a domino effect and within weeks industries will have collapsed and paper money will be valueless as the value is directly in proportion to the GDP which will have become nil. And once the remaining available goods have been taken off the shelves, there will be no more goods to buy and even the little available in isolated pockets will not be traded for paper money which will have nil value. The only scenario will be anarchy and chaos and rioting. Would the Consortium of Developed Countries allow this to happen? And this is where I differ from some of the economists who are predicting a lame fizzling out with hardly a whimper. They say the Governments will be unable to do anything and so will do nothing, but they are either not wanting to state a very frightening scenario or are unaware of it. There is a way out of this impasse; there is a way out of this collapse of the industries as a whole. The Third World War. All the Governments in cahoots with the appropriate rhetoric to bamboozle¬†their own people will have to chart out a long extending – say around 3 to 4 years of WAR dividing themselves into two camps on empty ideological grounds. By the time the war is over, the population will have been reduced to manageable limits, all the goods that had been produced before the War will have become useless and there will be fresh frenzy of demand in the rebuilding process and the Industry which will have boomed in the war effort will keep booming in the aftermath. Back to Business as Usual. The scenario I foresee is much more likely than the going out with a whimper.

The reason that it is not happening right now is because of a couple of glitches. One is that with the kind of weapons that countries possess it is a bit difficult to ensure that they will be left with nothing more than a charred bone to chew on. Secondly the wild card entries demanding a share of the spoils are creating hurdles. But don’t you worry, the powers that be are seriously at work burning the diplomatic midnight oil to iron out the minor wrinkles in the application of the Ultimate “Win-WIn” solution. Its a matter of a few more months and after a period of 3 to 4 years of refreshing World War it will be back to Business as Usual.