After All

The false prosperity that the West has enjoyed since it began its rise to world dominance at the end of the medieval period was fueled initially by plunder. Think of the Spanish in Mexico and Peru. Think of the British in Bengal and North America.

            Once this dominance began to stabilize in the face of colonialism and the emergence of capitalism, the system ran on exploitation.  Think of the slave trade.  Think of Indian cotton, woven in Manchester and sold back to the Indians.

            Most recently, the system has been powered by unprecedented amounts of debt.

            Initially, this debt was relatively easy to come to terms with, partly by virtue of the fact that its relative size diminished in relation to that of the expanding economy, and partly through inflation, which reduced the significance of the actual amount of the debt in relation to the amount of money in circulation.

            The problem is, of course, that debt, even when created out of thin air, like a Treasury bill, is effectively a promise tied to some sort of resource.  It is based on the idea that something will eventually be produced and sold by someone in order to generate the capital required to pay the debt.

            Unfortunately there are now non-negotiable constraints on economic expansion.  Even the desperate optimism of the political and financial classes will not save the situation. After all, there is no law that the exceptional rise of the West and the asymmetrical distribution of global resources must continue.