The revenge of the material economy

BY PGF
1 year, 9 months ago

Don’t confuse “material economy” with the Materials Sector of the market.

Source:

America’s narrow escape last week from a major rail-worker strike brought home an important truth: people who make and ship real things – let’s call them material workers – now hold the whip hand over our supposedly ‘post-industrial’ economy. Firms trading non-tangibles – currency, bits and bots – may still hoard the most cash. But when it comes to eating, staying warm and, for many, making a living, the material economy is what matters most.

Necessities always lag in the boom times as people consider that hard years may never come again, but when things get tight, suddenly everybody wants to eat and stay warm in the winter. FYI, that rail strike may not be totally averted yet. The workers are a brotherhood; if one company strikes, they all likely will.

Yet the material economy has been hugely constrained in recent years – and deliberately so. This has become all too apparent since the war in Ukraine. Back in the pandemic era, thanks to the recurring lockdowns, the biggest winners were the tech giants and their supporters in Wall Street. Now Silicon Valley, suffering from the worst IPO market in 20 years, resembles something akin to a psychiatric ward, while Goldman Sachs is contemplating mass layoffs. Today, many green-energy projects and ESG funds (that is, funds rated as environmentally sustainable) are languishing, despite benefitting from massive government subsidies and relentless public-relations campaigns in recent years. Meanwhile, oil companies, once demonised by climate-obsessed politicians and activists, are now enjoying bumper profits, as are some commodity firms.

Massive subsidies and relentless propaganda don’t change physics or any reality.

The conflict between the material economy and the economy based in ephemera – such as the creative industries, tech and financial services – is likely to define the coming political conflicts both within countries and between them.

Economic wars can be devastating. Outside of the OPEC embargoes of the 1970s, America has only faced internal economic conflict allowed or initiated by its own government. There may be other instances; let us know. We’re not sure how the author is using the term conflicts. Also, consider ‘politics by other means’ in the same vein.

All wars have an economic component at least, and most, at their root, are a struggle for resources. Note carefully how the term “limited resources” was purposefully omitted from that statement. The US has no lack of resources and needs nothing from Ukraine or Eastern Europe.

The US first offered allied status with Ukraine. Then Russia offered a better deal, but Ukraine told the world they would like to stay independent. Oops, global bankers don’t like that. So, the US facilitated a coup in ’14. That was the start of the current trouble. Readers here at TCJ probably have more details to fill in about that bit of history.

Some investors look for disconnects between the broader stock market and certain sectors that should be bucking the trend. Despite the growing war, wall street does not appear to be gobbling up defense stocks. The three main Defense ETFs shot up in July ’21 but have since languished, giving back all or nearly all of their gains. XAR, run by State Street, has more midcaps and smaller defense firms, making it more volatile (stock price rises and sells off faster) than the largest by total assets, ITA, which is run by Fink’s Blackrock. PPA is the second largest by assets and is managed by Invesco. Wall Street doesn’t think Ukraine will amount to much for US Defense stocks, apparently. That may be true, but we consider that the war will likely spread into a regional conflict or possibly a situation involving much of the northern hemisphere. This is not investment advice. Keep reading.

The biggest threat to the material economy is likely to be the green agenda. Even before Russia’s invasion of Ukraine and the global energy crisis, problems with often unreliable and expensive renewable energy were accelerating the deindustrialisation of the UK and much of the EU – including Germany, which had long been an industrial powerhouse. Energy rationing could be on the horizon in Europe this winter. Globally, energy-price inflation threatens to drive far more bankruptcies than the 2008 financial crisis. And food inflation, which in some countries has been driven by green agricultural policies, has led the percentage of people worldwide experiencing food insecurity to double since 2019.

Speaking of Clausewitz:

Clausewitz’s most famous saying about war, that it is the continuation of politics (policy) by other means.

Here is the passage in full:

24. WAR IS A MERE CONTINUATION OF POLICY BY OTHER MEANS.

We see, therefore, that War is not merely a political act, but also a real political instrument, a continuation of political commerce, a carrying out of the same by other means. All beyond this which is strictly peculiar to War relates merely to the peculiar nature of the means which it uses. That the tendencies and views of policy shall not be incompatible with these means, the Art of War in general and the Commander in each particular case may demand, and this claim is truly not a trifling one. But however powerfully this may react on political views in particular cases, still it must always be regarded as only a modification of them; for the political view is the object, War is the means, and the means must always include the object in our conception.


Comments

  1. On October 12, 2022 at 9:20 pm, George 1 said:

    ” War is a mere continuation of policy by other means.”

    The policy of the Western elites is depopulation. This is why they are destroying economies and infrastructure to include energy and food production, introducing viruses and deadly “vaccines” for the viruses they released intentionally and promoting war where they can. Their propaganda campaigns are integral to their goals of depopulation.

    Their depopulation agenda encompasses many fronts and many of the methods are not generally understood by most. Some are multiple decades old.

  2. On October 13, 2022 at 5:25 am, Joe Blow said:

    I laughed when reading about that clipped brainiac mumbling in Schwabs ear, Yuval something? These people are too funny. Just eliminate most of the worlds people, and the few 100k we leave alive, will farm our food, pump our oil, sail our yachts, ferment our wine.
    Sure.
    Yep, you bet.
    Totally.
    LOL… Wait until the lights go out in the cities. Wanna see the country come apart real quick? Those interstate transmission towers just sit there out in the country all alone, nobody guards them. Those big oil filled transformers could be drained from 1000 yds away, been done once already… each city only has a few lines running in and out. Powers everything. Be a shame if something happened, and it couldn’t be fixed because the parts are in China.

  3. On October 13, 2022 at 10:26 am, George 1 said:

    @Joe Blow,

    One funny thing about the elites is many of them seem to think that if things go very sideways that they will still be in charge. I guess they feel that the small armies they hire to protect them will always be loyal. Someone should explain human behavior to them.

    By the time they emerge from their bunkers they will no longer be in charge if they are even alive.

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You are currently reading "The revenge of the material economy", entry #32416 on The Captain's Journal.

This article is filed under the category(s) Survival,Ukraine,War & Warfare and was published October 12th, 2022 by PGF.

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