I was thinking about posting something light but two weeks ago I was not in the mood. I woke Saturday night briefly to the news that USA / Israel had struck Iran and from then on it was missiles all over the Middle-East. I still do not know which all countries are participating, either willingly or dragged into it. I just think this is bad. And it is expanding.
The timing fits, though. Not going into this blood moon – planetary parade interpretation (solar maxima, maybe), the economic situation is very shaky and the release of the documents pertaining a large chunk of our (that is Western in general) elites, political, economical, cultural and even scientific ones, has pretty much removed what is left of their credibility, already in tatter due to decades of civic and economic mismanagement to the detriment of the masses. In short, the system is collapsing and usually the last thing the elites do in such situation is to start a patriotic / holy / justified war to drum up some support for the system, distract the masses (the shortages are due to The War, not the economic collapse, which is also due to The War), and to loot what is left of the treasury via military-industrial complex.
Dollar was already failing through inflation (too many dollars had been printed, not to match the amount of bread to buy with these dollars), which was evident as gold and silver prices shooting up last year, peaking in January before some big players put breaks on it by changing the rules on metal trading. It only helped for a short time, the prices were climbing up again by Friday before the attack on Iran. Whether this uptick was caused by the natural demand on metals (especially the East – West arbitrage and trade war between USA and China), the COMEX halt on technical issue (again) spooking investors, or by big institutions moving metals as cued in on incoming geopolitical instability is irrelevant. The metal prices would not be rocketing up if dollars were as valuable currency as before the massive money printing. Of course, the metals then went down again. Whether this was due to forced liquidation as the private credit system is collapsing (a couple more notable examples of credit failures being Blue Owl and Blackrock) or strengthening of dollar (???) or some other arcane reason is irrelevant. I think many asset classes will now behave in seemingly irrational manner as hordes of panicky investors, or rather, their trading algorithms trigger waves of stop loss sell orders in a cascading series of events. An economic blowback, if I may use such term.
Which brings to the second reason for the war in Middle East, namely oil prices. The chronic US debt requires buyers for US T-bills, but the main reason for anyone to buy T-bills is to buy dollar denominated oil. Gaddafi and Hussein tried to sell in other currencies. Iran, as an embargoed BRICS member, naturally sells in other currencies. United States has used dollar weapon and sanctions too often, reducing the natural demand for dollars, so petrodollar connection needed fortification. Not to mention the Strait of Hormuz being off limits during the exchange of missiles will drive the barrel prices up meaning a boost for T-bill demand. I believe that Iraq War II funded the Greenspan Moderation. I also think that increasing the price per barrel has a good chance of further hurt US economy, while helping Russian economy (remember the war in Ukraine?) But if the Western economies are already circling in a debt spiral down towards the sewer system, why not T-paper the mess with more treasuries? Besides, China will be in trouble, too, having lost Venezuela, and now Iran, and while EU regards Russia as their main opponent, USA is eyeballing The People’s Republic of China.
Meanwhile, some billionaire predicted the AI will increase economic output so that nobody needs to be poor. I doubt this prediction.
For the record, economy has been growing more or less steadily for the 20th century, what with occasional dip during recession or depression. The share of growth, however, stalled for the lower economic layers in early -70’s, meaning that the working class living standards have not increased with the economic productivity. We were promised shorter work weeks through technological advancement, what we got is a baroque bureaucracy plus private sector B*llsh!t Jobs (estimated to be about 40% of private sector work force), with chronic overwork for people struggling to survive on a diminishing share of a productivity pie, and mass unemployment for people who fell off the labor force or never bothered to join. Overworked people in the West are seething at NEETs, whereas the leaders in PRC is trying to discourage “Let It Rot” or Lying Flat mentality.
Considering this historical precedent, I do not expect the AI to increase the living standards of the masses in any meaningful manner, just change the mode of exploitation.
Provide entertainment and distractions, already happening. Control the population by algorithmic feed of ‘information’ (official newstainment and infoganda) and ‘opportunities’ (advertisements of sales and government grants, possibly even jobs, tailored for your planned role as a consumer and a cog in the system), sure. Has anyone else here had experienced the joys of ATS and modern job search? But actual empowerment of the people by allowing resource creation and utilization where the profits do not directly flow into the coffers of the 0.01% that own the AI models but benefit the individual people without creating dependencies? Unlikely.
Having written the above, I am nevertheless curious about utilizing AI as part of my design processes, and may subscribe to some such service this spring. Hypocritical? Maybe.
By Sunday, March 8th, the war against Iran had obviously become the sh!tshow that will define this century. In the Internet there are currently rumors that some official had admitted that the war may continue through September. Maybe, but I would not be so bold as to predict which year. Meanwhile, I think that the oil shock will be the last nail in the coffin of the Western economic hegemony (G7, OECD, World Bank, World Economic Forum, IMF, Basel, European Union, petrodollar, to mention some of the institutions which I expect to collapse or become irrelevant vestiges of bygone world, bit like British Imperial this and that after World War II). Maybe worse is the loss of large fraction of nitrogen fertilizer produced from cheap hydrocarbons with cheap energy in Middle-East. Even if the production is restored soon, the missing fertilizer production during the spring planting in Northern hemisphere is not good.
I fueled my little car and bought some canned fish and protein bars to restore what I had recently eaten. Based on above, I expect temporary food shortages due to economic chaos, and permanent food price hikes due to increasing input and transportation costs, but such developments are already the new normal this decade, so there is little that can be done except to prep more, tighten the belt and hope that incomes increase to match the rising expenses.
