Beware of the Coming Economic Era

Thank you Robb.

For this gift, and for putting so much energy and effort in
the real-ization of the Integral Vision.

I hope the best for you and your people,

take care.

Federico 

 Nice overview, Robb.  IMO, the world is sailing in uncharted waters.  Governments' abilities to financially act to stabilize further large perturbations look basically tapped.  This suggests that, on a world scale, we have shot our flare and have little option but to stand by and watch developments as they unfold.  

My deeper feeling for the medium term is we'll see material instabilities in what unfolds in the next several years.  Averaging across these instabilities, and barring a highly destabilizing event, developed economies will likely return to at best tepid growth (2%) while developing economies will double or triple that depending on the country.  One bright light on this particular horizon is that countries like China have in the last many years slowly, but materially, delinked from US and European consumption to drive economic growth.  China, for instance, recently reported its first trade deficit.

This likely (almost certain IMO) difference between developed and developing economic performance will draw money to developing economy assets, including to stock of companies active in developing economies, to developing economy stock and to commodities required to feed development.  Because money is gushing into the monetary base at a never before seen rate, each of these target assets look to me ripe for bubble formation.  Market increases over the last several months are already the second largest in history; they will become the largest with only a small further run.

God knows what will happen when interest rates rise.

Then consider that oil production looks to be peaking, with realistic estimates showing a peak in the next four years (conventional production has already peaked).  We currently are facing $85 oil near the trough of the worst recession since the 1930s.  With a small uptick in consumption, that price will reach triple digits.

I feel we're in a birth canal with pressure building.

This was a refreshingly real post. Glad to see that Integral folks of macro-level trends, dangers, and future scenarios, and are thinking about them.

Now the key question: how do we respond to the coming reality, assuming that scenario 3 is real? In my opinion we need not only personal financial strategy, but also international financial strategy. That means that nationally we have a strategy to grow our money, rather than just tax, spend, and print it. We need a regulatory system that makes sense (again, look to Australia), and we need need a core group of exceptionally smart AND moral people that basically put their heads together, forecast future scenarios as you have here, and then begin creating future scenarios that will secure future stability, prosperity, and well-being for Americans for generations to come.

Internationally we build institutions that credibly decrease global anarchy, create conditions conducive for developing countries to adequately capitalize on global markets, disincentivize dictatorships, coordinate international regulatory, fiscal, and monetary policy, democratize the World Bank and especially IMF voting structures, ensure that the IMF has the capacity to provide global liquidity, and correct or at least disincentivize global BOP imbalances.

All easier said than done. "Doing" will entail long political battles, many hard lessons, and of course a search for what works. Maybe the silver lining is that in the long run resources will be reallocated more efficiently, democratically, and morally (we can only hope). Perhaps we are seeing shifting economic tectonics that will finally create a global political and economic order that is stable, wealth-creating, and fair (not to mention clean -- AGH!). But adjustment is always painful, and it is those who will lose their jobs, see their wealth, security, let alone happiness be destroyed in this process. If the doomsday scenario 3 is true, we will see this in the US and around the world. I think part of being "integral" or whatever means using skillful means, and making targeted efforts. So if we are going to act integrally on this global stage, we would do well to keep those most hurt by such adjustment well in mind as we create the future we want for ourselves, families, country, and world.

Just some ramblings. Thanks again for the post!

Robb, thanks for the post it was informative. I like the tripart nature of your post... But, I think sadly the indicators point more towards the latter over the former of the three options you are presenting here. To give you a few reasons why...

1) The actual bailout is not 800 billion it is in fact over 28 trillion (when you add this fact to our present inflation this is a real blow to the dollars power). [this post shows 23.7 trillion, but is an old link... I can't find the link showing that it is in fact presently at 28 trillion].

2) The fact that many are calling again for another similar bailout in the near future. Such as helping to bailout Greece and other 1st world countries.

3) The apparent fact (from reading books like "The Creature From Jeckyll Island) that indeed bailout is predesigned into the very fabric of the fractional reserve system. That although America has never suffered this fate, the predesigened nature of these bailouts has hit really a majority of the worlds countries and only now the hen is coming home to roost (as it is America that is the worlds central reserve currency) and they have not yet seen hyperinflation in their dollar. 

 Oh, and it may be laughable but I am in fact taking up the whole farming thing by moving (potentially permanently) to Ecuador to take up permaculture in the Amazonian Forest in just three days!! So blessings to you good sir and I really do hope that Integral Life thrives, God knows it's needed ;)

Hi Robb:

Thanks for that excellent post. As a long time integral follower/member who has been out of the loop for the last year or so, I'm thrilled to see this kind of post. Just a glance at the responses makes me quite excited to see the equally engaged thinking of various members here.

Integral theory literally changed my life and gave me some powerful operating and organizing principles. And now I am quite hungry for practical applications of that theory in my personal life and in community. This article is a great example of that for me.

As a privileged middle-class Canadian, I have pretty much lived my life as if money would continually fall from the sky, without too much effort on my own part. And in a certain respect, that's kind of how things have gone. But my own advancing age, and the instability of the world have made me much more aware of a personal need to get my financial house in order. And more than that, to have some organizing principles with which to do it. I find your article really hits home on this level, and I welcome much more of this kind of nuts and bolts application of integral theory in the coming months and years.

Here in Canada it is looking reasonably likely that your second scenario may apply. Our banks were never terribly far into  sub-prime lending, and our deficit and debt levels have remained much more manageable, even through the crisis. But as the mouse living next-door to your elephant, we could easily get crushed by too much economic and social lurching south of the border. So we have an interesting balancing act to work out.

I don't have too much of value to add to the discussion, but want to express my appreciation for your points and the way they will be influencing my financial decisions as we move through these interesting times.

Rigzin

Robb,

I will join the chorus and say how much I enjoyed the post. Judging from the comments it looks to be a big hit. I think your three scenarios are right on for covering the gamut of possibilities when dealing with systems within systems within systems.

Just for fun, I would read the tea leaves as 30,60,10 percent for scenarios 1,2 and 3 respectively. Although I will disclose that I have recently tried to figure out what it would take to short Treasuries. Would love to hear what everyone else thinks.

I will also add that even though I was incredibly inspired by the post, I was also a little depressed about the current state of Integral Life/Institute and their prospects for scenario 3. I had no idea how severe the downturn in donations were over the past few years. I truly wish I could do more but I'm afraid I'm a decade or two away from offering anything meaningful (if all goes well :). However, I am going to upgrade my account to do a little more and encourage others to do the same if they have the capacity.

I have always had investing as a practice/hobby of mine and it has become part of my integral practice. I have to admit your recognition of it's importance really felt nice for me.

I would like to add a few items to your wonderful macro level vision.

One would be the importance to live below your means and, as you have implied, to use the leftovers to build wealth with purpose. I want to do more than my 7,000 people, much more, and it all starts with living below your means. There is also a  little side benefit to this. There is a tremendous amount of self-discipline and shadow work that comes along with it.

Second, if you understand Integral and the associated development models you can see value in corporations and leaders that others can not. After all, that really is how to excel in investing, to see value where others can not. You can appreciate the value of a lower left culture of a Google or Berkshire Hathaway. You can see the core values of a John Mackey vs. a Richard Fuld (Lehman Bro's) and how that translates into a better organization. You will be able to spot that new young integral CEO and ride along with her success. You will be first in line on the day Integral Life wants new investors!!

Disclosure: Berkshire Hathaway, Whole Foods, Google

--

Steve Redmond

That was very informative and helpful.

I would just like to add a Zen Buddhist perspective from Shunryu Suzuki. It may look to some as though he is suggesting some kind of spiritual bypassing, but I don't think that is what he is doing. I think, among other things, he is suggesting action beyond fear:

Thanks Robb. Very much appreciate your analyses ...  particularly good in noting that what direction the economy/ world scene takes on, will be deemed "good or bad" depending upon one's perspective/ level/ personal situation (i.e. whether you are an asset holder or a debtor; young or older; healthy or not; Chinese or American)...   I don't pretend to understand the machinations of the market... but I think it very interesting your post-script about the US Navy. It seems to me that the current situation is grounded in geopolitical power which at the end of the day is basically "might making right" -- a result of 1) the various military conquests in the New World and 2) the position of the US after the 2 WW's -- that is one overall pattern that IMO enfolds everything else in its wake, and is, as you point out, clearly indicated in the relationship between naval presence and the danger to the dollar. Would the future of the dollar qualify as "a clear and present danger?" - the idiomatic measure for US military force anywhere in the  world? I think so, yes, if you consider that "military presence" is already a very real "force."

Not that I am offering this up as a critique. I think this is a huge national "shadow" -- and that any analysis of the world situation must include this over-arching aspect, and the question of the role of the US (or US-included alliance) military power in a future we would like to see emerge. Is it possilbe, in other words, to de-couple financial security from forceful means? If not in THIS reality... it would be interesting to thought-experiment one in which this would be possible, and try to glean some interesting alternatives.

Bests,

Bonnie

Thanks Robb. Very much appreciate your analyses ...  particularly good in noting that what direction the economy/ world scene takes on, will be deemed "good or bad" depending upon one's perspective/ level/ personal situation (i.e. whether you are an asset holder or a debtor; young or older; healthy or not; Chinese or American)...   I don't pretend to understand the machinations of the market... but I think it very interesting your post-script about the US Navy. It seems to me that the current situation is grounded in geopolitical power which at the end of the day is basically "might making right" -- a result of 1) the various military conquests in the New World and 2) the position of the US after the 2 WW's -- that is one overall pattern that IMO enfolds everything else in its wake, and is, as you point out, clearly indicated in the relationship between naval presence and the danger to the dollar. Would the future of the dollar qualify as "a clear and present danger?" - the idiomatic measure for US military force anywhere in the  world? I think so, yes, if you consider that "military presence" is already a very real "force."

Not that I am offering this up as a critique. I think this is a huge national "shadow" -- and that any analysis of the world situation must include this over-arching aspect, and the question of the role of the US (or US-included alliance) military power in a future we would like to see emerge. Is it possilbe, in other words, to de-couple financial security from forceful means? If not in THIS reality... it would be interesting to thought-experiment one in which this would be possible, and try to glean some interesting alternatives.

Bests,

Bonnie

Hi Robb,

I would like to play friendly devils advocate (or is that positive deviant?) in reply.

Your opening line, “Your economic stability is critical to your personal development.” I am not sure about this. Critical? Many people learn the most by having an instability. They might learn things like creativity, ingenuity, entrepreneurialism, collaboration, humility, a deep understanding of value...True some people become paralyzed by instability, but others truly rise through this in the most remarkable and innovative ways.

If we look at the structure of our economic system which I do believe is in the process of unraveling, it is built on a platform of endless growth in the exterior...more stuff, more people, more weapons, more, more.... Some of us know that this is unsustainable. The growth that needs now to occur is in the interior. Not just the interior of the human, but in the interior of the very system. In community, in collaboration, in invisible aesthetics, like design.

What most people do not see is that the current economic model is also built on the principle of scarcity. This is so intrinsic to the design of our system, that like a fish can’t see water, we simply do not see the level to which we are embedded in this. In very simple words, in order for me to eat/survive (the coming economic collapse) someone else has to lose. This is our current model.

Take for example gold (and other precious metals), which many smart people cite as very important to stockpile in order to survive any coming collapse.

If we really are to practice integral, we must be mindful of the total cost of us stockpiling gold. For every 2 ounces of gold extracted, 20 tones is the norm of earth that needs to be mined. At what cost to the environment? At what cost to the communities that have made the mine areas their homes for hundreds of years? At what cost to their health and well being? And then what about all of the other costs? Like transport.. (For an article on the field effects of our every thought at action please see www.positive-deviant.com/field-effects.html)

I personally see that what is coming is a breakdown in the very system that you discuss in your portfolio building. We are moving towards a completely new economic model which makes all of the old obsolete. A model that is not built on endless exterior growth and scarcity, but on a higher consciousness of the field effects of everything we do.

To me building a portfolio such as you suggest simply sits right in to our current model. At its core it has scarcity. In order for me to survive, others cannot.

Now I am a mother and I can put my hand on my heart and say I would do anything to support the survival of my daughter. However, I know it is also time to ask a different set of questions, particularly if we even consider approaching “we are all one” as a truth.

Questions such as...

Is there a model that ensures the healthy emergence of all humanity? Surely that is the one we would be seeking?

Is there a new way of being in value exchange that honors all of life?

Are we integralist able to demonstrate now, a bridge that crosses from the very broken old model, to the new, yet to be born model? If so, what is that bridge? And I am specifically talking about a financial bridge. A way we do business together. Surely we need to be the leaders in this new model?

I am not anti having a strong financial foundation. However, I do believe that the future of a strong financial foundation is not the one you discuss. The fringe events that are likely to occur in the next few decades will catch almost all of us unprepared. The unforeseen like an attack on the computer cloud and a loss of ALL data (including the data about the amount of money in our bank accounts).

 What does that mean to us as individuals with families to feed? Well, for a start, we have to start to recognise that it is not OK for my child to survive when millions do not.

The skills that we need more than anything are creativity, flexibility, entrepreneurship, a deep understanding of value (the conversation on value is well beyond the scope of this reply), the ability to collaborate, build community, ask much better questions; these are the kinds of investments I am interested in. And  to invest my money in people who are living this way, who are building the models of the future. Those rare individuals who really get that the very system is breaking down and a new system is being born, and they are working their arses off to facilitate the transition. That is where my time, energy and money is going. And it is also what I am teaching my daughter as I develop her resilience and creativity.

I am an optimist. Where my knee jerk response is scarcity (and I have to fight this shadow element in me every day), I have to drag my fear of lack, fear of loss of security, fear of starving, fear of no money...what ever this fear is, and I have many..back to another place. A place where I truly believe in the creative ability of my fellow man, but only, and here is the rub, only, when they are pushed to the very edge.

We emerge through emergency.

All of our certainties...our investments in houses or stocks or bonds or precious metals..all of these things offer no security in the long run. History has shown this time and again. The greatest security is in our ability to rise through adversity and discover new and better pathways. This is the very principle of emergence. Couple this with a view that shifts from scarcity, to recognising where there is plenty (plenty of creativity, plenty of energy, plenty of talent, plenty of love..the very principle of positive deviance)..or even better, to discipline our thinking to seek the plenty rather than contract to the scarcity, this is where our healthy future lives.

 Christine McDougall, MCC

www.positive-deviant.com

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