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Blog by Dave McArthur 28 July 2008

This week the New Zealand Reserve Bank Governor declared war. In doing so he joined Central banks around the planet that are setting the stage for a catastrophic global war within a decade. Are we in 1933?

The declaration came in the form of the announcement of a rates cut though even a rates rise would have increased the risk of war. I say a catastrophic war because the bulk of our 6.6 billion human beings are urbanised now where as in 1933 there existed only about 2.1 billion humans in all. Our food and health systems are far more vulnerable to catastrophic collapse with many of the ecosystems that we depend on stretched beyond their capacity to support us. If war suddenly plunged us back to the pre Cheap Oil/Gas Age (1900-2000) then over 6 billion people could well perish.

Here are a few facts supporting my suggestion that the Reserve Bank Governor’s action is a declaration of war and that prompt reminiscences of the 1931-33 period immediately prior to World War 11.

The Conservation Principle of Energy is the nearest to a natural law as humanity has and is the repository of great wisdom. We ignore it at our peril.

Mineral oil/gas is not energy. It is just one of myriad forms of energy and is strictly limited in quantity.

 Carbon neutrality does not exist. Mineral oil/gas takes profound amounts of energy to form and took eons to form. When you and I burn it we destroy the resource. It no longer exists for our children or for eons of children.

Human beings have a great capacity to deny the reality of the Conservation Principle. We can develop very sophisticated systems to deny our mortality and our roles as stewards of finite resources.

Our culture makes the fatal flaw of calling mineral oil “energy” and consumes it as though it is as bounteous as energy. Fact: it is not energy!

Fact: one greedy, greedy group of a generation of human beings has squandered most of the cheaply accessed mineral oil in a brief 40 year binge.

This group, a minority of about 15% of humanity, including most New Zealanders, has done and is doing the bulk of the squandering (we destroy about 38 barrels of mineral oil daily per 1000 people compared to the bulk of humanity which destroys maybe 3 barrels daily per 1000 people.

This minority group, especially we of the Anglo-American culture, denies our roles as stewards of the resource and place a personal value of zero on mineral oil, leaving it to an abstract psychotic structure we have created called The Market to determine its value. (The much-hyped Emissions Trading Strategy is simply a classic extension of this psychotic behaviour.)

Thus during the 1980s and 1990s this group rejected the lessons of World War I and World War 11 and dismantled many of the mechanisms put in place to avoid another such catastrophe. Thus they destroyed on scale the mechanisms put in place to conserve our electrical, carbon and solar potential. New Zealand experienced this destruction as the Economic Reforms in which our rail, community electrical grids, Civil Defence and social structures were demolished for the benefit of a few while devices designed to promote waste such cars, trucks and jets were given huge subsidies. Our nation’s carbon emissions effectively rose 39% subsequent to 1990.

 In 1999 nearly all the US Congress backed the repeal of the Glass Steagall Act and President Clinton effectively created a credit system based on mineral oil being about $US9.98 a barrel, which The Market at that time dictated was its value. New Zealand is now effectively ruled by the same merchant bankers who promoted the Glass Steagall repeal and adopted this mineral oil =zero value = unlimited credit facility.

 The fact is mineral oil is worth thousands of dollars a barrel and, for instance, currently provides about 5 out of every 6 calories required to put a calorie of food on the plate of every one of the 6.6 billion humans on Earth. It also underpins our health systems now. It is so integral to the food chain that, because of the callous vagaries of The Market structure, every time so one starts a car they cause people to starve for days and every time some one climbs on a jet they cause a village of people to starve for many days.

The fact is people don’t like starving and some become very aggressive, even murderous. They even put car tyres around the necks of their neighbours and set fire to them – the ultimate metaphor for our culture?

However the people who commit these atrocities are not generally the groups that trigger world wars. In fact the people that most trigger world wars do not tend to ever touch a gun’s trigger or to slaughter miles of homeless refugees in case they contain “the enemy” or to push bayonets through children or to kick the food bowls of babies away though some of them do actually press key board buttons that set off rains of bombs on people, food supplies, water supplies, electrical support resources etc.

 In your mind I may seem to have digressed, for I was explaining how we have created a credit system based on mineral oil at $US10 a barrel. It is important to be clear of how wars start though.
Here are a few more quick facts:

 Mineral oil is a unique and extraordinary resource. Estimates vary but it is possible that each 42-gallon of mineral oil contains the equivalent of 25000 man-hours of labour. Assuming about 672 cups in a barrel, that is about 37 man-hours of labour per cup. And don’t forget a barrel can provide us with a fantastic array of plastic and precious fertilisers.

 Probable fact- you find these statistics stultifying, even very inconvenient. You are not alone. Our education system and our media go to great lengths to avoid confronting and communicating this awesome truth. Here’s a quick reality check:

In 1999 many of us gave ourselves, via the seeming benevolence of this thing called The Market, the equivalent of tens of thousands of servants a year at $US10/25000/man-hour of labour to do almost all our lifting (keeping jets aloft is a very arduous job) push and pulling (try pushing your car by yourself – or better – try pushing a large tractor with a plough on it across a field by yourself). Then you will understand the facts I speak of and the nature of our current credit system.

(Just in case you find this exercise exhausting, here is a pick-me-up funny thought. Imagine if the world’s Reserve Bank Governors had to push their cars to work in front of all the media on the days they pronounced on the state of their nation’s resources. Most would be gasping their profound utterances from cardiac resuscitators.

Better still. Imagine if at every meeting of the G8 the whole assembly had to gather and lift one of their jetliners aloft above them – and the wheels are withdrawn in a symbolic gesture of how dependent their economies are on mineral oil.  It would be the ultimate team bonding exercise, a huge media rating hit and we might even catch glimpses of the humanity behind their fixed smiles. Human labourers might even become our heroes.)

Fact - this construct called The Market does not care whether you or your children live or die for it is only the reflection of your and my denial of our role as stewards of the finite resources on this planet. The Conservation Principle of Energy means nothing to The Market. The fact is, despites the insane attempts of our media to deny it, the Market has no sense of meaning.

 So now imagine that because of the vagaries of The Market that 90% of those so very cheap servants suddenly are burnt out and die between 2000–2008, as manifest in a new cost ratio of $US120/25000/man-hour of labour. Suddenly the fight is on for the ownership of the remainder of those servants with the most power-crazed people effectively working to retain the hundreds of thousands of servants they are each accustomed to so they can continue to fly and drive cars, run huge estates etc.

 Where do those cheap servants come from? The middle class – both directly and indirectly. It becomes the direct source of cheap servants and adds to the pool already used in the so-called Third World Countries. How do they become cheap? The process is very simple even if a trite indirect: increase their taxes directly through consumption and compliance taxes and indirectly through student loans schemes, larger house mortgages, Kiwisaver superannuation schemes and car/jet/speculation subsidy schemes plus the sale of quality state owned assets plus a good does of inflation. The asset sales are easy to organise – just reduce general taxes a few cents and the resulting “national budget deficit” makes the sale imperative “to balance the books”. That is a sure “out” on any election promise to retain the public’s assets. 

So where are we now? The credit system based on servants at $US10/25000/man-hour of labour is imploding as I write as they cost $US120/25000 i.e. 12 times as much. That still works out at only at half a cent an hour of man-labour against the previous 0.04 cents an hour. However because the 0.04 cents an hour school-food-job-entertainment-communication-etc structures are so vastly inefficient suddenly even the middle class cannot afford their servants anymore. These folk are now desperately attempting to retain them to push their cars and lift their jets by increasing their debt levels.  

The Governor of New Zealand’s Reserve Bank responds to their plight by reducing interest rates as he did this week. However this does not alter the situation in the slightest and the Principle of the Conservation of Energy remains inviolate – the huge masses of cheap mineral oil servants are no more. They are burned/destroyed/gone phut! The mineral oil is an ex-resource! (More synonyms for dead can be found in the Monty Python Dead Parrot sketch.

As you can see from the quote below, even NZ SCOOP, who more than any other media organization in New Zealand has consistently presented the above facts, is missing the plot.

Sludge Report #183: Sunshine On A Cloudy Day

By Alastair Thompson in the Reserve Bank Lockup

The Reserve Bank has this morning cut interest rates for the first time since July 2003, and alongside recent petrol price falls, brought some much needed good news to NZ household bank accounts . 

Alastair has repeated shown himself to be streets ahead of our other mainstream journalists and I have very considerable respect for him. The truth however is that the NZ Reserve Bank’s announcement is very bad news for the average household. In fact it is probably the death sentence for many as it is effectively a declaration of war and hastens that war. In that it is no different to other central banks around the world. This is because Reserve Bank Governor’s decision effectively reinforces our unsustainable use of mineral oil/gas and the credit structure based on it.

If you check back you will see that it is the rising price of mineral oil that has consistently taken inflation through the mandatory 3% upper barrier since 2003. The resulting higher interest rates effectively meant the transfer of tens of billions of dollars of wealth out of NZ’s 1.4 million households for the benefit of a few merchant bankers and those that make the most extravagant wasteful uses of mineral oil.

The fact is our middle class has been shrinking this century as a whole new generation failed to get a foothold in it, thus becoming some of the new cheap servants I spoke of. The truth of their situation is only now dawning on them as they find themselves debt ridden and home ownership now unattainable.

Why the Reserve Bank Governor’s decision is so dangerous is that he fails to identify the real problem and encourage us to confront the reality: the Age of Cheap Mineral Oil/Gas for 6.6 billion people is over. He failed to confront reality, tell the New Zealand people the truth and say, “ I am powerless within the Reserve Bank Act to stop inflation and the erosion of your wealth while you insist on investing in wasteful uses of mineral oil/gas.”

Instead of confronting reality and presenting the facts he has decided to let inflation surge. Effectively he is saying the status quo is OK – the undervaluing and wasteful use of mineral oil/gas can continue even if it means depleting the wealth of the average citizen so a few people can temporarily retain their customary equivalent of hundreds of thousands of servants.

There is however a problem with this gigantic transformation. As their sense of wealth and power dissipates history suggests that the middle class tend to do one of two things:

(1)            Attempt to implement legislative structures such as occurred in the 1930s to prevent excess usury, wealth extremes and wastage


(2)            Go rabid and attack those in weaker positions than themselves.

Meanwhile the very rich are in a position to benefit from inflation because they can gut remaining pension funds and investment vehicles in general as well as ensure they benefit from massive hidden state subsidies. They oppose the pressure for legislative reform (1) and exploit the fear response (2).

It seems perfectly natural to them that their vast power is retained and they shrug off the probable death of billions as just one of “nature’s acts”. They are The Market incarnate and in their minds “The Market is a heartless place and a human life has no value” and “When the going gets tough the tough get going.” Note how their recent decision to convert food resources to transport fuel on scale has devastated the lives of hundreds of millions of people.

Hence it is easy to predict that if current policies continue then, as access to cheap mineral oil/gas reserves dwindles, the credit system based on 25000/US10 will implode in an explosion of inflation as the price of our “mineral oil servants” rises. As we saw very clearly in 1930s Germany, inflation is war and the more it impacts the middle classes the sooner the war. Check out history for (1) and (2) –these were the twin pressures about 1933 as the German middle class perceived their wealth and power similarly evaporating. 

Of course it is very possible to avoid catastrophic war but that requires all individuals to personally place a high value on mineral oil. The above rough sums indicate that rich countries like New Zealand need to value the resource at least the equivalent of a thousand dollars a barrel. In the USA terms that is $US1000/25000 = 4 cents a man-hour of labour. That is still unsustainably cheap for such a superb and non-replaceable resource.

Avoiding catastrophic war depends on nations promoting the intelligent uses of their solar and electrical potential and alternative uses of their carbon potential.

Alas the Reserve Bank Governor does not understand this and never has. Nor does our parliament. Nor do our so-called business leaders. And not does New Zealand’s Retirement Commissioner who I will devote a blog too soon. Her promotion of investments like the KiwiSaver scheme is a sure fire way of ensuring people do not even live to a retirement age. The scheme basically uses taxpayer’s often hard-earned money to promote wastage and military investment while destroying the capital required to create the intelligent structures I spoke of.

If I heard the Retirement Commissioner correctly over the shrill whine of the industrial vacuum cleaner on my back this week she claimed on NZ Radio National that New Zealand has “an excellent education system”. She also talked of her office promoting “economics ” in our schools. She did not explain: “What is so excellent about our schools”. 

I suggest she would be lest confident if she applied the ultimate test and ask, “Do New Zealand schools produce sustainable human beings?” One test is to ask: “How many planet Earths does it take to sustain the typical individual that an education system produces?”

Less than one planet = excellent education system.

One planet = education system gets a pass but just as already humans have demolished vast resources.

Two planets = a chronic under performing education system

Three planets = a dangerous education system that puts humanity at great risk

Four planets = a lethal education system that produces a murderous society.

Check out the for a sample of the thinking behind this evaluation.

According to this real rating system NZ is off the scale because even conservative estimates rate us at 5 planets. In other words our education system rates as a massive liability to global humanity. The Commissioner, clearly a product of such an education system, rates it excellent.

Using real measures such as this it is apparent our education system produces a population seriously lacking science and remarkably ignorant of the geopolitics of mineral oil/gas.

And hence, also, the poor quality of our journalists. This is not just my opinion. Polls consistently indicate the general public holds them in very low esteem. One journalist on NZ Radio National recently sniffed and dismissed one such poll indicting her profession thus by saying journalist’s are not esteemed because they tell unpleasant truths. This is denial of the first order.

Fact: We may deny truths within ourselves but deep in our psyche we experience disrespect for others who fail to tell the truth – especially those who are paid lots of money to tell the truth and pride themselves for telling the truth. Proof? Without that inner sense of the value of the truth the human species would have died out millennia ago.

Thus my own bullshit detector went up last week when I heard a Radio NZ National panel of our top journalists tut-tutting righteously recently and asking how household could have been so ignorant into being conned into investing in the now collapsing credit companies. The truth is the panellist’s own lifestyles are excessively based on a much more gigantic lie which is that mineral oil/gas = energy. Living that lie enables them to place almost zero value on the several barrels they burn each year.

On the same programme we heard, for instance, that some people can travel from New Zealand to London on Air New Zealand flights for fares that are even less that the $NZ3000 price of the fuel destroyed by the fare holder. Let us be generous and assume the jet burns fuel at the rate of 50 miles per gallon per person. Then each person destroys about 250 gallons of mineral oil. (Source of $NZ3000 statistic: Air New Zealand on NZ Radio National- over vacuum cleaner).

 What sort of education system produces journalists who cannot ask questions and calculate that a passenger on a jet flight New Zealand to Britain to London destroys a minimum of one gallon of mineral oil every 50 miles of the 12000 mile trip i.e. about 5.7 barrels of oil i.e. uses the equivalent of upwards of 140,000 man-hours of labour. That’s a powerful amount of food potential. Our children will be the main inheritors of the bulk of the 140,000 man-hours of labour debt caused by the jet traveller.

Why is not such gross wastage the stuff of constant headlines? Why don’t airline ads come with health warnings?

It is this inner sense of truth that I spoke of that triggered in me a sense of respect for Jane Clifton on NZ Radio National this week. Jane is described as one of the most respected and influential of our doyen of "political journalists". Jane admitted that New Zealand journalists had been “blindsided” * by the seeming public swell of support for the truckers who briefly blockaded our streets protesting against the removal of some of their subsidies and the rising price of diesel. At least she was honest about their failure.

Jane also argued that journalists do not have time to be engaged in conspiracies. Of course they do. We all live conspiracies.

Conspire means to share the breath (com =together + spirare = breathe) and it would seem our journalists are part of a conspiracy formed from sharing the confined atmosphere of an education/media system in which mineral oil is given zero value and the air is so fetid with combustion engine fumes that they cannot see the danger of their lifestyles. It has addled their souls.

The same week of the New Zealand truckers blockade Chileans around the world celebrated the centenary of the birth of President Allende who died in 1973 in the Presidential Palace as it was being attacked by heavily armed Chileans – nominally the Chilean Defence Force. Many celebrated the centenary by watching a recent movie containing remarkable archival film of the period and recent interviews with witnesses who detailed how the truckers in that country were funded by powerful overseas corporations to strangle the Chilean economy with truck blockades.

As inflation soared the Chilean middle class went rabid and the slaughter began. There are many parallel examples of The Market in operation in other countries.

It should have been no surprise to our journalists that the NZ truckers blockaded our cities the week the NZ Government announced that it was buying back the national rail system in an attempt to prevent the country going completely broke as access to cheap mineral oil/gas disappears. The sight of people turning out to cheer the truckers is simply a reflection of the Cheap Oil is Forever ethos promoted by our schools and media these last few decades.

Our journalists are not even at 101 in the brutal geopolitics of our current use of mineral oil, which is pity because they could be useful in helping us avoid the collapse of humanity instead of promoting it.

And I reiterate the fact: this looming catastrophic war is still avoidable – even  we are at the equivalent of 1931-33 now. I live with much hope even as I sense the despair around me.  My own website provides wonderful insights into how this event can be avoided and most of the time it is simply a matter of reminding ourselves of the ancient wisdom that sustained humanity these past millennia. A grasp of the vital nature of democracy and science is essential too.

Footnote 1 Writing this I have been astonished and entertained by my own inability to confront the reality of my own use of mineral oil. In my original letter I consistently inverted the price per barrel per 25000 man-hours of labour. Finally I twigged to how I was fooling myself. Even then when I expanded the letter into this blog I still insisted on inverting this ratio so valuing a barrel at $US1000 valued each man-hour at $US25. It, of course, values it at 4 cents a man-hour of labour. I suffered similar problems understanding how the atmosphere works until I junked the "greenhouse" symbol and adopted the "trace gas" symbol. Part of my just does not want to understand my impact on the world!

Footnote 2. Do not be fooled as our Reserve Bank Governor and our journalists are by the current vagaries of The Market. The geopolitics of mineral oil suggest The Market price will now drop for a period, which will work to enhance the risk of a global war sooner.  The price drop does not mean the Conservation Principle has been breeched and humans can now suddenly “produce” mineral oil, rather than just extract it. The fact is the resource continues to shrink by over 80 million barrels a day. It is helpful to be aware that the US presidential election campaign is underway:

Oil price increases since 2003 - Wikipedia, the free encyclopedia  

After retreating for several months in late 2004 and early 2005, crude oil prices rose to new highs in March 2005.

 Footnote 3. The references to Radio NZ National may be inaccurate as they were heard over a backpack industrial vacuum cleaner. This article is provided free with all the research expenses and Internet costs paid from my wages as a school janitor. It receives no subsidies such as funding from the advertising tax on most of the commodities you buy.

 Footnote 4. The cartoon strip that accompanies this blog is the third of series created in 2001 as I sought to expose the destructive impact on our education system of the Genesis Energy (and the NZ Royal Society) Spin. Genesis Energy operates huge fossil fuel burning plant and naturally seeks to obscure the scale and impact of the corporation’s pollution.
The initial education module showed a coal burning Bulk-gen electricity plant with no stack or no air intake. Token illustrations of these were added after my objections to the NZ Royal Society, its advisor. The revised resource showed plant with a minimal emissions and still no atmosphere. 

Photo of Genesis Energy education module on my computer.

Defenders of the module said this was impossible to portray and so in this cartoon panel I show that its own education module proves Genesis Energy is very capable of showing cloud, sun and wind effects if it wishes to.

The module was removed about two years ago and I was informed by a Genesis Energy manager that it was because, “The module was not working”. Their new education module is even more destructive of science and democracy. Its flaws can be revealed in a future cartoon strip or Utube expose.


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