Diverging Oscillations

As children, we learned to use the swing at the playground. The way it works is that we add a little energy to the swing by moving our body back or forth at the moment when the swing is at its maximum. With just a little bit of energy at the right moments, we make the swing move farther and farther.

This is a lot of fun until we reach a point in which the swing starts to drop violently at each extreme. At that point, things no longer work as they should. If we ignore this and keep going, we risk crashing to the ground as we have pushed the system to its breaking point.

The lesson from this is that a push at the right time can have an out-sized effect on a system, and if not controlled correctly, it can crash the system. This was bitterly experienced in 1940 when Tacoma Narrows Bridge collapsed due to a a fairly moderate but persistent wind.

Tacoma Narrows Bridge collapsing - Public Domain, Link

This situation, in which energy is fed into a system so that its oscillations become greater and greater, yields a divergent wedge pattern if plotted on a graph. Such patterns indicate that something is about to break. They indicate that someone or something is giving the system a push towards greater extremes at points where the opposite should be taking place. Instead of dampening the oscillations, energy is added to stoke them.

It is therefore worrying that this pattern has been forming in the stock market over the last two years. The S&P index has started to swing between diverging extremes. With every drop, the FED has reacted with policies to push the index up to new extremes. Monetary "energy" has been added at the bottom. Like a parent pushing too hard on the swing, the stock market has been sent higher after every major drop.

We are currently entering a new extreme from which I expect either a violent melt up or a dramatic fall. There is strong resistance upwards at this point. A sudden drop is likely. However, if the FED comes in with a monetary push, things may go through the roof before coming crashing down. Either way, the end result is likely to be a crash.

On a longer time scale we can see a diverging wedge developing in the S&P from about 1998 until today. A similar wedge can be seen from 1964 to 1976, after which we got a period of very high inflation, sending stocks crashing down relative to gold. The flat stretch from 1976 to 1980 is in fact a crash with the Dow Gold ratio going from more than 20 to a little over 1.

S&P 500 from 1950 to 2016
By Overjive - Own work, CC BY-SA 4.0, Link

On a still longer timescale, we have the Dow Gold ratio which has developed a diverging pattern ever since the establishment of the FED in 1913. Here too, there is active management by the FED that pushes things to ever greater extremes.

The 5th Empire - Conclusion

Society is endlessly complex. It can neither be fully described nor fully controlled. Any book on the topic is therefore incomplete, and any attempt at total control by a ruling class is futile. There will always be elements of society residing in the 5th Empire. Enclaves have always existed and will continue to exist in the future.

There are no practical reasons why the 5th Empire can't be the dominant form of social organization. There is nothing inherently impossible about voluntary society. But as long as people prefer to be ruled, the empire will remain a marginal and largely mythical place.

However, this does not mean that we must wait patiently for things to change. While lone individuals have no choice but to act within the framework of the state, even small communities can implement large swaths of the alternative. There is nothing to stop us from doing this wherever the state holds little or no sway.

We are all free to join the empire if we so wish. All it takes is a vow of allegiance to the principles of liberty. This requires no registration, no announcement and no ritual. It is a completely private act. No-one needs to know that we are citizens of the empire. The 5th Empire is not a movement or a revolution. It is a spiritual awakening.

Dawn - By Carlos Perez Couto - Own work, CC BY-SA 3.0, Link

The 5th Empire - Revolution

It is hard to imagine a system of rulers and subjects in which the subjects benefit at the expense of the ruling class. At best, the system is neutral with rulers refraining from taking advantage of their powers. However, no state has ever existed where the ruling class has not been corrupted by their powers over others. No state has ever remained limited in size.

Revolts and revolutions have been required in order to reign in the state. This has sometimes been relatively peaceful, like the many smaller revolts we have seen in England. Other times, revolts have been violent, like the French revolution.

The logic of these revolts have always been that the state has become corrupted by bad rulers, and that it must therefore be furnished with new and less corrupt rulers. Never are these revolts targeted against the state itself. The revolutionaries see themselves as the good guys. They have solutions that will end corruption. Their rulers will benefit the subjects at the expense of the ruling class.

However, 5th Empire citizens know that it is the state itself that is the problem, and that a big state is worse than a small state. It has nothing to do with the rulers. Citizens are largely unimpressed by revolutions. While they may applaud some of the actions taken by revolutionaries to limit the size of government, they do not believe that revolution is a lasting solution.

Furthermore, revolutions are high risk ventures. There is no way of knowing their outcomes. Communists won a revolution in Russia, but lost in Finland. A very large number of Finnish communists were executed at the end of their failed revolution.

There is also no way of knowing what a revolution may bring. It may just as well bring tyranny as liberty. The French revolution ended in a blood bath. The Russian revolution ended in tears, with millions starving to death.

Revolutions require centralized leaderships. Their organizational form are those of government. Add to this that most people believe that a ruling class must exist in order for people to be safe,  and it is clear why revolutions end in a replacement rather than an abolishment of government.

The 5th Empire will not become dominant through revolution. Rather, it will grow organically. The 5th Empire thrives and grows where the state has no say. There are enclaves everywhere. When the state fails to deliver on its promises, the 5th Empire expands to fill the vacuum. Wherever people do what they find expedient without consulting state laws, the 5th Empire is in operation.

Revolution - By Jean-Pierre Houël - Bibliothèque nationale de France, Public Domain, Link

The 5th Empire - Equality

A popular myth among rulers and their subjects is that taxation is necessary for equality. Without taxation, some people will end up owning everything while others will be slaves to these masters. We must therefore have rulers who tax us so that equality is ensured. However, this ignores the fact that it is the corporate structure of state run society that is behind the most glaring inequalities. The state favours large corporations over small entrepreneurs. It also favours capital over labour. The poor and the middle class are put at a disadvantage relative to established industry owners.

Subsidies, which are financed by taxation, is funnelled more readily to established companies than to up and coming ones. This makes taxation a bigger burden on the less well connected than it is on the politically well connected. When taxes are increased, subsidies tend to increase too, thus cancelling out the effect on the rich. This makes taxing the rich a hollow slogan. The added tax burden never hits the politically connected elite. They are protected by subsidies and corporate law.

Central banking, also a creation of the state, erodes the purchasing power of state sanctioned currencies. This hits the lower classes the hardest because it erodes the value of their labour and bank savings while simultaneously inflating the value of capital and financial assets.

Credit expansion through fractional reserve banking benefits the rich in that they get cheaper loans than others. The more credit issued, the better off the rich are relative to the poor.
Yet, rarely do we hear politicians suggest that we should abolish central banks, fractional reserve banking, subsidies and corporate law.

In contrast, the 5th Empire have no corporate laws, no subsidies, very little credit expansion and virtually no inflation. The four biggest engines for inequality are not present.

Inequality - By Evstafiev - Own work, CC BY 3.0, Link

The 5th Empire - Banks

Modern banking derives most of its power from government. Banks are privileged institutions, allowed to extend credit through fractional reserve banking. They are also protected from insolvency by central banks.

None of this is possible without government. Fractional reserve banking, unless advertised to the depositors, will be treated as fraud in the 5th Empire.

There will be a separation between merchant banking that use deposits to invest in business ventures, and deposit banking that restrict themselves to safer investments. Depositors will be told up front what sort of risk they are taking. There will be no bank guarantees, but also no shady risk taking. Bankers that abuse the trust people put in them will be prosecuted. There will be no government intervention or bail outs to protect them.

Banking in the 5th Empire will be a small but respectable industry involved in investments and the facilitation of loans. There will be very little credit expansion. The economy will not be artificially stimulated. Economic growth will therefore be steady, with fewer and less severe booms and busts. Putting money in a savings account will again be seen as a sensible investment strategy.

However, as long as state run society is dominant, and banks are aggressively expanding credit, people are best advised to stay away from banks. Extra money should be saved in physical gold and silver, stocks and real estate. Cash holdings should be kept low relative to other savings.

Bank - By John Bradley - Own work, CC BY-SA 3.0, Link

The 5th Empire - Money

Without the state to dictate what constitutes money, people will be free to choose whatever money they prefer. The 5th Empire have no rules for this. It is up to its citizens to choose. Gold has been used as money for millennia, and is therefore the most likely candidate. For small purchases, there will be privately issued coins and bank notes. There will also be electronic transactions. Everything will be as it is today. The only difference will be that currency will be redeemable in specie from currency providers.

This is the system we had during the classical gold standard, and it still exists as a private alternative to the current system. There are companies offering gold backed currencies, complete with electronic transfer protocols.

In addition to gold, there are crypto-currencies. There is nothing to stop a 5th Empire citizens from using crypto. However, crypto is technology, and as such a bad store of value. Technology rarely survive more than a few decades before being replaced. Furthermore, crypto derives much of its appeal from its supposed ability to circumvent government regulations. We can therefore expect crypto to loose value should government power decline.

Gold on the other hand is a luxury metal used for jewellery. This has been its function since the dawn of civilization. It is so widely recognized as valuable that the words gold and golden are synonymous with wealth and prosperity. Gold is hardly likely to suddenly loose all its value.

The gold standard of the 5th Empire is most likely going to be based on metric weights. Ten milligrams of gold will typically buy us a cup of coffee. A gram of gold gets us a pair of trousers. Two kilogram of gold buys us a flat. A tonne of gold buys us a large share of a major company.

Money

By Eucratides I / BnF - This image comes from Gallica Digital Library and is available under the digital ID btv1b8510709q, Public Domain, Link

The 5th Empire - Wildlife

We are in the middle of a wildlife extinction event, and humans are almost certainly to blame. Large animals are hunted to extinction and smaller animals are disappearing due to a lack of bio-diversity. Chemical spraying may also play an important role.

Many conclude from this that government must act to save the planet. However, this ignores the fact that government is largely to blame for these problems, and that private solutions have proven effective in stopping and even reversing much of this.

The most effective way to stop large animals from being hunted to extinction is to make the ownership and management of them profitable. If large animals are seen as worthless nuisance, local farmers and hunters will take pot shots at them whenever the opportunity arises. However, if the animals are seen as valuable property and a source of revenues, people will make sure the animals are properly taken care of.

Privately run wildlife reserves attract business by offering safaris and limited hunting rights. The owners, seeking to maximize their profits, will make sure the animals are safe and that the number of specimens shot is within a sustainable quota. As long as the owners feel confident that they will continue to own the land and animals for the foreseeable future, they will refrain from excessive hunting.

This type of arrangements have been successful wherever they has been tried. The stronger the property rights, the better they work. Owners do not want to run down their capital to make a quick profit if it means no profits in the future.

The 5th Empire has strong property rights, and is therefore likely to take good care of large animals. There will be all sorts of wildlife reserves. Some run privately for profit and others run by charities. There will be interactions between charities, private businesses and the local communities. There will be hotels and privately organized safaris, all designed and operated in ways that maximize return and sustainability.

The 5th Empire will also have greater bio-diversity than what we see in state run society. This is because the corporate structure applied to modern farming is a creation of the state. Large corporations are easier to tax and regulate than smaller ones. State run society is therefore full of large scale businesses. All sorts of taxes and regulations exist for the sole purpose of keeping smaller businesses down. This results in large farms with endless fields of single crops, and hardly a wild flower or fruit tree in sight. Needless to say, this is not good for bio-diversity.

Safari - By Muhammad Mahdi Karim - Own work, GFDL 1.2, Link

The 5th Empire - Certification

Business owners care about reputation. It is in their interest that customers are well taken care of. However, business owners do sometimes elect to take on more risk than they should. Accidents due to irresponsible risk taking do happen, sometimes with catastrophic consequences. This is a problem that the 5th Empire deals with through certification.

Most business owners carry insurance against liability. Restaurant owners, for example, insure their establishments against accidents. They also like to inform customers that their services are of the highest standard. They will gladly let a reputable certification company inspect their premises if this leads to cheaper insurance and a certificate they can put on display.

Restaurant owners will want as high a ranking as possible. The certification company on the other hand must be careful not to certify businesses incorrectly. If they are too generous with their ratings, no insurance company will take them seriously. Their certificates are only worth as much as their reputation. If they get sloppy, or too generous, they loose business.

Wherever insurance companies are involved, certification businesses can provide a service. Where no insurance is required certification becomes redundant. It is hard to imagine hairdressers in the 5th Empire having to certify their businesses. People do not run any risk going to a hairdresser. Only businesses that can seriously hurt their clients will require certification in order to get insurance. The same goes for people operating dangerous equipment. They will not obtain insurance without a certificate.

Case in point are cars and their owners. Insurance companies will not insure car salesmen who sell cars to uninsured individuals, and no-one will get insurance for driving a car without a certificate. The 5th Empire will not be full of uninsured drivers who do not know their traffic rules. Enforcement of this will be carried out by security companies working for road companies. Uninsured drivers pose a risk to road companies which may be sued for allowing such people onto their roads. They will therefore be interested in keeping such people off their roads.

The 5th Empire will be no less safe than state run society. The differences between the two types of societies lie in how things are organized, not in the actual problems being dealt with. In the sphere of personal safety, the 5th Empire uses insurance and certification where state run society uses mandate and licensing.

Certified team member - By Seeris - Own work, CC BY-SA 4.0, Link

The 5th Empire - Roads

Private roads are rare, but where they are found they are generally well maintained. This illustrates that infrastructure is not dependent on the state for proper operation. An unwind of the state will not lead to roads and infrastructure falling into disrepair. Abandoned infrastructure will be picked up and put back in order by private actors. Unless the state actively tries to prevent this, the transition from state management to private operation will be smooth.

This happened with great success to the European telecom industry. What had been mired in bureaucratic mismanagement for decades was transformed into dynamic, profitable and innovative enterprises almost over night. A similar transformation will happen to other state run infrastructure, such as roads, sewage, fresh water, postal services, railroads, metros, etc. There is no reason to believe that the 5th Empire will deliver inferior services to those currently provided by the state.

Road - By Gharouni - Own work, CC BY-SA 4.0, Link

The 5th Empire - Schools

The 5th Empire has no central government. Hence, there are no laws related to education and learning. It is entirely up to parents to choose what kind of education they want to give their children. Home schooling, internet learning and no schooling at all are all allowed. This means that schools have to provide attractive learning programs that parents want their children to attend.

There is no single curriculum that children have to learn. Each school is free to draft their own. This is typically done by the teachers themselves, in cooperation with the school's owners and with input from parents. The aim for every school is to attract students, and the only way this can be done is through the development of good learning programs. Schools that provide good quality education at reasonable prices will win, forcing other schools to improve their programs.

There will be very little bullying, because bullying will lead to a loss of students and therefore a loss of revenues. If a school fails to deal with inappropriate behaviour from students, it will loose against alternatives.

Without a central government to dictate a single curriculum for all schools, every school will be different from every other school. There will be schools offering practical hands on programs, and other schools focusing on theoretical work. Some schools may offer nothing but specialized learning.
Parents can pick and choose. They may choose different schools for different children. They may change schools as they go along. They may choose to give one or more of their children extra lessons to deal with special needs. The process will be fluid and flexible.

Everything in the 5th Empire will be of this fluid, flexible nature. Without a central government to set up a single set of rules, everyone has the opportunity to pick and choose what's right for them. Schooling, health care, pensions, old people care. Everything can be chosen freely.

Poor people will not be restricted to a single centralized welfare office. They will have a host of charities to choose from. There will be basic education, health care, and old people care provided privately through charity. No-one will starve or become illiterate due to lack of resources.

School - By Blackcatuk at English Wikipedia, CC BY-SA 3.0, Link

The 5th Empire - Charity

Private charity has always been a cornerstone of civilized society. It is private charity that takes care of the truly downtrodden. The state is too bureaucratic to take care of such people. The destitute do not fill in forms. They do not go to social security offices. They do not seek help. By and large, they distrust the state. Their experience with it is mostly bad. Police officers raiding their childhood homes. Social services separating them from their parents. Orphanages leaving them unattended. None of this has foster an atmosphere of trust.

The demise of the state will be of no great concern to the destitute. The little help they are getting is provided by private charity which will only grow in importance. Private charities already provide soup kitchens and shelter. With the fall of the state, they will provide basic education and health care as well. There will be legal services and emergency insurance too. People caught up in extremely unfortunate situations will be able to seek help at the local charity.

We know this from relatively recent history. People were not left to die in the streets of America back in the days before the state started meddling in the health insurance business. Doctors treated the poor for free or at greatly reduced rates. They saw it as part of their duty to the community. There was no lack of soup kitchens and shelters either. People were more caring and engaged in community work back then than they are now. State interference has not improved anything.

Rather than helping the downtrodden, the state has a tendency to turn against them. Case in point being eugenics which enjoyed widespread support in its time. It was introduced with a wide margin of approval.

This may lead some to conclude that the 5th Empire will be no better at protecting minorities than the state. If the general public found it reasonable and even desirable that children were separated from their parents for no other reason than their eccentricity, then what is to stop an evil charity from doing the same? Why wouldn't such a charity gain the popular support that the state was able to procure?
The key difference here lies in the way the state suppresses details of individual cases and the total cost of their programs. Evil charities cannot hide the horrors of their programs in the same way, nor the cost of their implementations.

There will always be opposition to such programs, especially among targeted minorities. There will be lawsuits and bad press. To hide this requires centralized propaganda which is harder to produce in a decentralized society than in a centralized one. Furthermore, the costs associated with such programs will be carried entirely by charity donors. The costs are not hidden inside taxes but directly exposed. The combination of bad press and high costs will force evil charities to moderate their programs or go out of business all together.

James Brown, student nurse at Jacksonville University School of Nursing takes the blood pressure of a homeless veteran during the annual Stand Down for Homelessness activity in Savannah, Georgia.

By Spc. Patience Okhuofu, 260 QM, 3rd CAB Public Affairs - United States Army, Public Domain, Link

The 5th Empire - Welfare

A society can be judged by the way it treats its poor and weak. In this respect, state run society has a horrible track record. Millions of vulnerable people have been swept aside over the past century. Even supposedly moderate and civilized states have engaged in terrible acts. Norway implemented and upheld eugenic laws from the 1930s to the 1970s. Thousands of people were forcefully sterilized. Lobotomies were performed. Separation of children from parents also happened, all in the name of eugenics. The victims were almost exclusively poor people with minority backgrounds. Eccentrics of various kinds were common targets.

Separation of children from parents is still happening, overwhelmingly targeting people at the fringes of society. Another targeted group are drug addicts. People are put in jail for no other reason than the possession of substances deemed inappropriate by the ruling class.

Once trapped in the web of welfare agents it is hard to escape. They should therefore be avoided as much as possible. We must consider help from friends, family and private charities before seeking help from the state. Legitimate concerns should be expressed directly with those in question. It is only when all other options have been exhausted, that state agents may be called upon. Reflexively calling such agents at the mere suspicion of something not being quite right is not only wrong, but highly immoral as it spreads fear among people, especially those that the state has a history of harassing.

This does not mean that 5th Empire citizens should be completely paranoid about the state. Many of us have no choice but to send our children to state run schools. The same holds true for state run health care. Nor is there any reason to decline a welfare check if handed out to us. Citizens of the empire deal with the state in a rational and pragmatic manner. What precise actions we take depend on circumstances. However, we must not rely too much on the state. Those of us who are dependent on state handouts must know where to go should the handouts suddenly stop.

Staying on good terms with family and friends is paramount. Making sure we are the best we can be in the way we interact with others is of great importance. Should things turn sour, the best behaved and most reasonable of us will be at an advantage. People care about how others treat them, and they will hand out rewards or punishments accordingly should there be a day of reckoning.

But the demise of the state does not necessarily lead to chaos. The transition from state control to private welfare can be smooth and orderly. Those who have little to no interaction with the state may hardly notice a difference. However, the state may cause problems by throwing legal hurdles into the transition. They may ban private hospitals and schools. They may force people to hold onto imploding currencies.

Present day Venezuela is an example of what happens when a state clings to power even after the collapse of its institutions. Venezuela is bogged down in violent crimes, corruption and immorality of all kinds. But things need not end this way. Communities that escape the grip of the state will fare relatively well. Where the state relinquishes power to the 5th Empire, things will stabilize. This will primarily happen in areas where the culture is already in tune with the empire. A sensible precaution is therefore to seek such communities. At a very minimum, we should know where they are.

Typical for such communities is self sufficiency. Inhabitants do not rely on state pensions or welfare to get by. There is a wide variety of stores and industries. There is also a wide variety of people with different skills and different social backgrounds. Above all, there is an air of civility. People respect each other's privacy and property. There is a high tolerance for eccentrics and loners. No-one is attacked or expelled merely for being different.

Such communities can be found wherever there is a general culture of self sufficiency and tolerance. Most towns have this type of neighbourhoods. Villages are often organized in this way. We do not have to become self sufficient farmers in order to fare well during times of upheaval.

Lebensborn eugenics program

By Bundesarchiv, Bild 146-1973-010-11 / CC-BY-SA 3.0, CC BY-SA 3.0 de, Link

The 5th Empire - Law

From an early age, we are introduced to rules and regulations. At home, we learn to behave. At school, there are all sorts of rules. Public spaces have their rules too. If we misbehave, we get reprimanded. We get kicked out or isolated. Resisting will generally make things worse.
Interestingly, these rules are rarely written down. They are based almost entirely on a general sense of what constitutes acceptable behaviour.

This is in stark contrast to the laws of the land which are so numerous and complicated that not even experts know them all. However, there is no reason to have more than a single overarching principle. Everything else can be dealt with through arbitration based on custom and culture. House rules are an example of this.

House rules are by far the most commonly encountered laws. They are based on property. Whoever controls a property sets the rules. For instance, a bus driver is free to kick out an unruly passenger. The driver may not own the bus. However, he controls it and is therefore the one setting the rules. If he deems a passenger distracting or in other ways undesirable, he is free to kick that passenger out.

The same goes for public spaces like malls, theatres and restaurants. It also applies to private spaces. We are free to expel guests from our home for whatever reason we please. If we dislike what they are doing or saying, we can show them the door. However, we are not free to do so in any arbitrary manner. We cannot break someone's arm or otherwise hurt people unless they puts up a fight. We have to be reasonable in our actions.

This is where arbitration comes in. It is not always clear what constitutes reasonable behaviour. A bus passenger may find himself unfairly treated by an overly bossy driver. The first place to go for grievances in this case is the bus company. The owners may agree with the passenger. The driver was unreasonable. Compensation will then be made to the wrongly treated passenger, and the driver may be reprimanded or fired. Otherwise, rumours will spread, hurting the bus company's reputation and business.

Other places to go with grievances are insurance companies. This is where we go when we find ourselves part in a car accident. It may not be clear who was at fault. Insurance companies will then investigate and arbitrate. If insurance companies are unable to settle a case, they elect a third party arbitrator. They argue their cases and settle on whatever the arbitrator finds reasonable.

Nowhere in any of this are state laws necessary. However, they are frequently used as bargaining chips. There is always the threat of state interference. But nothing would be lost if the state was completely removed from this. The 5th Empire is no more a place of lawlessness than any other place. The state is not required for law and order.

This holds for criminal law as well. It is very much in the interest of insurance companies that law and order is upheld. They are therefore willing to pay security companies to keep criminals at bay.
Security companies will arrest and incarcerate suspected criminals. However, the incarceration of suspects is a cost to these companies so it is in their interest to have criminal proceedings as soon as possible. Arbitrators are called upon to figure out what happened and suggest reasonable fines or punishments.

There is also the issue of reputation. A security company that acts in a needlessly heavy handed manner, or keeps people locked up for no good reason, will soon find itself up against all sorts of criticism. Insurance companies and private individuals will refrain from using such companies. Being reasonable in their actions is therefore of utmost importance.

The same goes for arbitration. Good arbitration produces rulings that are perceived as just by the majority of a population. This in turn is determined by culture, customs and tradition.

An arbitrator that goes against social norms will not stay in business for long. Arbitrators must be perceived as just by both parties. Insurance companies that disagree on a case have to agree on what arbitrator to use. An arbitrator that is known to have unconventional views will not be chosen. The same goes for arbitrators taking bribes to favour one side over another. Corrupt arbitrators will find themselves shunned and out of a job.

No-one can drag anyone to court without clear evidence of a crime. However, this does not mean that a plaintiff can get no ruling without the consent of the culprit. Arbitrators can look at a case presented by an individual and give their opinion. A security company can then be contacted for the purpose of executing the suggested line of actions.

This means that individuals who refuse to cooperate with arbitrators may nevertheless find themselves faced with security agents knocking at their door, or even breaking into their house in order to retrieve stolen goods or save a mistreated child.

The 5th Empire does not have laws and regulations in the thousands. It is ruled by private arbitration based on cultural norms. Most arbitrators will keep a record of prior cases. They may also condense cases into laws that people can read and study. But there is no obligation for anyone to follow any of these laws. It is entirely up to us to choose which rules to follow and which ones to ignore. However, this does not mean that we can do whatever we please. If we misbehave, others will seek retribution. If we act in a dangerous and unhinged manner, we'll be lock up. With no sympathy anywhere, we won't be able to get out before we change our ways.

London Court of International Arbitration

By Legis at English Wikipedia - Transferred from en.wikipedia to Commons by Kafuffle using CommonsHelper., Public Domain, Link

The 5th Empire - Insurance

The 5th Empire has no higher authority than its citizens. No-one is in a position to force a citizen to buy anything, including insurance. However, this does not mean that the empire is full of uninsured individuals. 5th Empire citizens are just as concerned about unfortunate eventualities as everybody else. In fact, insurance companies play a more important role in the empire than in state run society.

Insurance companies in the 5th Empire cannot rely on the state to take care of patrolling and criminal investigations. If a citizen with a life insurance is killed, it is up to insurance companies to investigate and find out if something criminal has taken place. If a neighbourhood finds itself plagued by robberies and break ins, affected insurance companies will pay for security guards to patrol the area so that losses can be reduced.

The typical 5th Empire citizen carry insurance against theft, fraud, violent attacks, loss of life and property. It is therefore in the interest of insurance companies to keep citizens safe. This means that insurance companies, in cooperation with security companies, take on the task of arresting and locking away criminal individuals.

However, locking up criminals is an expense that insurance companies would rather be without. They will gladly release criminals as soon as possible. If anyone can pay for damages and guarantee against future losses, insurance companies will let criminals go.

The only individuals permanently locked up will be those who are so dangerous that no-one wants to bail them out, and no insurance company will take the risk of letting them out. In all other cases, individuals will be released, either on bail or after a minimal time of imprisonment. The prison population of the 5th Empire will typically be smaller than in state run society.

While locking up truly dangerous individuals will be good PR for insurance companies, the same cannot be said about cases where individuals get locked up for minor offences, or wrongfully imprisoned all together. People will take note of this and buy insurance with companies they feel do a better job. Companies that mess up will loose customers.

However, no company will be perfect. There will be mistrials and wrongful imprisonments. There will also be disputes and conflicts. It is not always clear what actually happened. There may also be disagreements as to what does and does not constitute a crime. To work out such cases, we require laws and arbitration.

Accident - By Damnsoft 09 at English Wikipedia, CC BY 3.0, Link

The 5th Empire - Emergency

Rulers up through the ages have recognized the value of emergencies to cement support for themselves. War has been the emergency of choice. However, ever since World War 1, which resulted in conscripts being massacred in the millions, there has been a growing preference for other types of emergencies. It is therefore convenient for the ruling class that climate change is currently perceived as an existential threat.

From superficial analysis, it appears that the threat of global warming can only be countered through the introduction of draconian laws dictating every detail of our lives. However, this ignores the fact that the biggest hurdles to reduced waste and pollution are governments themselves. The entities with the largest global CO2 footprints are the armed forces, yet not a single ruler has suggested that we should dismantle the military to save the planet. Instead, rulers want to regulate the number of flights we can take, the size of engines in our cars, and all sorts of other aspects of private life.

In contrast, we have concerned 5th Empire citizens who will do anything possible to reduce their negative impact on the environment. Even the not-so-concerned citizen will gladly save on expenses by reducing fuel consumption and waste. We are all interested in reduced waste. There is no need for big governments to make this happen.

On the other hand, big governments are often the very reason for rampant pollution. The interests of small communities are often ignored by bureaucrats. They let favoured parties mess around as they please. Was it up to local communities, big polluters would have to pay up or clean up. No free license to mess around will ever come from a community of 5th Empire citizens.

New Orleans flooded

By Commander Mark Moran, of the NOAA Aviation Weather Center, and Lt. Phil Eastman and Lt. Dave Demers, of the NOAA Aircraft Operations Center, all commissioned officers of the NOAA Corps, flew more than 100 hours surveying Katrina’s devastation. Eastman piloted NOAA’s Bell 212 Twin Huey Helicopter from August 31 to September 19. All three men took dozens of aerial photos from an altitude of several feet to 500 feet. - http://www.katrina.noaa.gov/helicopter/helicopter-2.html, Public Domain, Link

The 5th Empire - War

Citizens of the 5th Empire do not bear allegiances to rulers. Our loyalty is to our family and friends, not the ruling class. It follows from this that we stay away from the armed forces. We do not seek employment with them, and we resist conscription.

If a war breaks out, we act rationally to protect ourselves and our possessions. In doing this, it is important to judge the different possible outcomes. If a war is against a relatively benign power, no action needs to be taken. It may even be to our advantage if the perceived enemy wins. This was the case for Hong Kong which became one of the world's freest places under foreign occupation. The British ruling class gave more freedom to the people of Hong Kong than they did to their own subjects.

However, when Lithuania was taken over by Soviet communists at the end of World War 2, people with property were rounded up and transported to Siberia or shot on the spot. Sensing this outcome from the start, rational citizens would have taken early precautions. Joining a local militia, taking a boat to Sweden, laying low, or some combination of this would be the sensible thing to do.

Citizens of the 5th Empire need to resist the temptation to become emotionally attached to a nation. We must be prepared to leave our homelands when pragmatics demand this. We must also be as discrete as possible when it comes to our wealth. People who seek to rule do so for the ultimate goal of gaining direct control of our lives and properties. We should not make ourselves easy targets for such people. They have many followers who will gladly act as their executioners in times of upheaval and crisis.

However, as a society drifts more towards the 5th Empire, the threat of violence against citizens recedes. The police and armed forces unwind. Conscription is abandoned. Arbitrary laws are revoked. Taxation is reduced and property becomes better protected.

Citizens of the 5th Empire are protected by private security companies. They also have easy access to weapons. This means that an occupying force will find it difficult to extract taxes from them.
With no central authority, there is no parliament to take hold of. There is no police force, and no tax office. All of this will have to be re-established. For this reason, privately organized societies are hard to conquer. Armies find themselves bogged down, with citizens taking pot shots at soldiers whenever the chance arises.

With such a huge cost, and little prospect of  immediate revenues, tyrants think twice before invading a territory with little to no central government. During World War 2, Switzerland was in this position, and was therefore spared both the war and the occupation that other nations endured.

On the other hand, weak armies, coupled with strong centralized governments, make nations prime targets for war. Holland had a strong central government, but hardly any army at the outbreak of World War 2. Occupation happened virtually without resistance. The strong internal organization of the Dutch state made it an effective tool in the hands of the Nazis. People were rounded up and sent to concentration camps. Others found themselves trapped, without access to food. Many suffered starvation and death as a consequence.

When it comes to war, the most exposed territories are those with strong central governments and weak armies. Territories with strong armies are less exposed. However, the least exposed are those with little to no central government, coupled with well armed citizens and private security.

What makes an area safe for civilians is not the size of its standing army but its internal organization.

Snipers

By davric - collection personnelle, CC BY-SA 3.0, Link

The 5th Empire - Security

Declaring ourselves citizens of the 5th Empire has no practical implications. No steps are required. The only change is spiritual. We no longer accept the state as our master. We are no longer prepared to be ruled, nor do we desire to rule. We want to be left alone to take care of our own affairs through voluntary interactions.

This means that our personal security will be unchanged. To the extent that we rely on the state for our protection, nothing changes. The state is still there, even if we no longer see ourselves as its subjects.

However, most of us do not in fact rely on the state for safety. We overwhelmingly rely on the good will and love of our neighbours. To foster this, we behave politely towards people we meet. In certain cultures, it is customary to greet people with a friendly god morning, even if we do not know them. Walking down the streets of my neighbourhood in Portugal, I greet people this way, especially those living in my area. The result is a sense of community. We look out for each other. If something unusual happens, people take action. Hostility is met with resistance.

Protection of our house and personal belongings is also ensured through simple measures. We lock the doors to our homes. We put valuables out of view. We keep a modest profile among strangers. For those with an impressive property, private security is available. An alarm can be installed. In an emergency, a guard will appear. This guard may be prevented by law from carrying a weapon, and must for this reason call the police to deal with armed intruders. However, as the 5th Empire expands, such laws will be revoked. As a society moves towards the 5th Empire, private security becomes more dominant until it completely replaces the police.

Private security guard

By Robbie Sproule from Montreal, Canada - Flickr.com - image description page, CC BY 2.0, Link

The 5th Empire - Citizens

The 5th Empire is a network of liberty minded people. It's not a landmass. It's not a nation. It cannot be accurately identified on a map. However, it's not entirely spiritual either. It is a real place with physical entities, including property and land.

Citizens of the 5th Empire have a strong desire to neither rule nor be ruled. They do not enter someone's realm without an invitation to do so. 5th Empire citizens make no distinction between rich and poor in this respect. Every interaction has to be voluntary. This includes charity which cannot be imposed on people against their will. The initiation of force is unacceptable, no matter how good or pure our intentions.

When we are in the company of people adhering to this mindset, we are inside the empire. It makes no difference if the people involved are aware of this or not. As long as they resist the desire to rule and other people's desire to rule over us, their realm can be considered an enclave of the 5th Empire.
Being liberal minded myself, I used to take it for granted that most people had a similar perspective. However, the desire to neither rule nor be ruled is rare. No more than 7% of the population has this inclination, and even fewer are truly committed to it.

This is based on personal observations as well as various studies related to politics and personality. Carl Jung came up with a method to judge a person's personality based on 16 types. When correlated with political preferences, it turns out that only 7% lean towards liberty. The remaining 93% prefer a system of rulers and subjects. It is therefore impossible for liberty to thrive in a pure democracy.

This can easily be verified by asking colleagues and friends a simple question. Are we the owners of our own bodies? The first time I put this question to a group of friends I was surprised to discover that no-one believed the answer to be a simple yes. The preferred view was that our bodies are not our own but belonging to a community which in turn is ruled by an elite.

This explains the myriads of laws related to drugs, prostitution and labour. By extension, it explains taxation and conscription. We are not the owners of our own bodies, nor are we the owners of our labour and property. It is owned by the community.

This view is constantly promoted by popular media which in their news casts focus on politics. The big topics always revolve around questions related to the state. Fair taxation, just wars and common sense rules are top talking points.

The average person can argue endlessly over politics without ever seeing the fundamental immorality in what they are saying. They see nothing wrong in the systematic use of coercion by the state.

The problem for 5th Empire citizens is that the majority do not content themselves with being ruled themselves. They want everyone else to be ruled as well. They tell us that we must contribute to the state through taxation. We must adherence to its rules. To do otherwise is evil.

With the population being overwhelmingly that of willing subjects to the state, it is easy to think that no alternative exists, that we must either rule or be ruled. While this is fine with most people, it is not fine with the liberty minded minority. They feel trapped and forced to live contrary to their character. This can lead to a feeling of despair, especially in highly conformist societies.

A way out of this mess is to declare ourselves citizens of the 5th Empire. The mere act of stating this privately to ourselves is liberating. It places us at the heart of an alternative society, and it opens all sorts of possibilities for growth and prosperity. It places the overwhelming majority of people at the sidelines. Rulers and their subjects are no longer legitimate arbitrators of right and wrong. They are foreigners, residing outside the empire. The laws of the land are no longer laws but regulations that we deal with in a pragmatic manner. With this new and refreshing view of the world, we can start the task of building something better and more in tune with who we are.

The lone citizen has no choice but to be pragmatic. There is no way to avoid the state, and there is little point in doing so. To isolate ourselves from the system would be like setting up a trading post in a foreign land with no intent to interact with the local population. It is pointless and counter-productive. Nor is there any point in making our declaration widely known. We do not want the population at large to know that we do not respect their authority. That would merely serve to anger them, making it all the more difficult to engage in productive cooperation and trade.

Declaring ourselves citizens of the 5th Empire serves a single purpose. It clarifies in our mind where we stand relative to the rest of the population. We want neither to rule nor to be ruled. We want voluntary interaction for ourselves and others alike.

This means that there are professions that we must avoid. We must not work for agencies that initiate coercion. We do not collect taxes. We do not enforce arbitrary rules. We do not lock people up for their own good.

We should also avoid political discussions centred around the presumed necessity of the state. Having declared ourselves citizens of the 5th Empire, we have no business discussing the right tax level, the just war, or the correct level of coercion against prostitutes and drug addicts. Party politics is for subjects, not for sovereign citizens. We may find some politicians more sympathetic than others. However, they are all rulers and aspiring rulers. They do not represent us. They represent the ruling class.

However, there is no sense in avoiding all aspects of the state. Certainly not in a society where many valuable tasks have been taken over by it. The typical welfare state is in charge of schools, hospitals, old people care and charity. It would be strange not to engage in any of this just because it is funded through taxation.

Citizens should refrain from being tax collectors, police men and regulators, because these functions initiate coercion directly. However, teachers, nurses and doctors do not use coercion in their daily work. There is no reason to avoid these professions simply because they are provided by the state.

It should also be noted that private corporations can be just as bad as state run operations. Banks create currency through credit expansion. Media corporations promote state propaganda, and social networks spy on us. Immorality is everywhere. To fight this head on is pointless. The best we can do is to remind ourselves and others that society requires no coercion.

People - By Arnaud 25 - Own work, Public Domain, Link

The 5th Empire - Introduction

The state is such a permanent feature in modern society that most of us take it for granted. Without it society will crumble into chaos. So we are told.

However, the state plays almost no role in our daily lives. We make all sorts of decisions without thinking about laws and regulations. We buy groceries. We send our children to school. We interact with friends, family and colleagues, all without bringing the state into it. Far from being a central element of society the state appears to be a fringe entity, imposing hierarchy while adding little of practical value.

This is not a new observation. Many have speculated that the hierarchies imposed by the state can be replaced by networks of individuals working together in voluntary cooperation. The Kingdom of God, as described in the Bible, alludes to this. So does Nietzsche with his superman, a race of people who will neither rule nor be ruled. But most fitting may be the Portuguese prophesy of a 5th and final empire that will be ruled, not by government, but by a spirit of good will and love.

In this book, I use the 5th Empire as a synonym for voluntary society. I use the term freely, unconstrained by what others have said about it. This is not a book about the myth, but about a practical, real world alternative to state run society, an alternative that exists here and now. Anyone can take part in it. There is nothing stopping us from entering the 5th Empire.

Earth - By Strebe - Own work, CC BY-SA 3.0, Link

The 5th Empire

My latest publication is now available in paper back and on Kindle. I outline the workings of a voluntary society, as opposed to the current system of rulers and subjects. I also make suggestions as to what we can do in order to move towards such a society.

A free PDF copy of the manuscript can be found, bundled together with other books on this site.

 

People - By Arnaud 25 - Own work, Public Domain, Link

World Trade and the Dollar

It's a pretty good deal for the Americans. They issue dollars in return for goods and services. Promissory notes are traded for labor. These notes, used world wide in trade, come into existence through American consumption. The more Americans consume, the more dollars there are.

For this system to persist, world trade has to grow. Every year, there must be more trade, and therefore more demand for dollar. However, at present, world trade is shrinking. Demand for dollars for trade is reduced. For dollars to maintain their purchasing power, some other demand must be found.

The alternative to trade would be investments. Dollars are required for investing in the US. It is also needed for trade in commodities. A shrinking world trade is therefore likely to make the prices of US stocks and bonds go up together with various commodities.

The short term effect of diminishing world trade may very well be higher prices for financial assets. However, with underlying demand on the decline, stocks can only go up so much before the gap between company evaluations and company earnings become too large to support stock prices. The same can be said about industrial commodities. Prices can only go up so much before the gap between supply and demand result in a glut, and a fall in prices.

Bond prices will also face reality at some point. With declining world trade comes declining tax revenues. Together with more expenditures on unemployment and other state programs, the supply of US debt will grow quicker than demand.

However, this does not necessarily mean that prices will come down in nominal terms. The glut of dollars will keep prices from going down. There will be a rush to get rid of surplus dollars. Everything will be bid up in price. But some things will be bid up more than other things. Wary of the gap between prices and reality in stocks, bonds and industrial commodities, there will be a rush for everyday commodities such as food stuff and other essentials. There will also be a rush into precious metals as a safe haven when companies start failing and states go into default on their bonds.

People will find that everything they need for daily life will become more expensive relative to the value of their houses, stocks, pensions and other savings. The only safe havens will be everyday commodities and precious metals, both underrepresented in the typical investment portfolio of pension funds and private individuals.

Federal reserve note

By National Museum of American History - Image by Godot13, Public Domain, Link

Contracting World Trade

It is finally official. World trade is contracting. Consumers everywhere appear to be stretched out on credit. Unable to take on more debt, consumption has stagnated and reversed.

The forecast is for this to last for about a year. However, there are good reasons to be skeptical to this. Debt is not normally paid back very quickly, and the appetite for debt tends to be muted for a while after a debt binge. Having accumulated debt for ten years in a row, there's an awful lot of debt to be paid back.

My guess is that consumption is going to decline even more, and for much longer than a year. There will be layoffs and cutbacks in investments. This will stress the consumer even more. Consumption will be rolled back even further.

The credit expansion that led to expanding consumption is about to be replaced by shrinking credit, resulting in less consumption. Uncertainty about the future will force people to pay down debt as fast as possible. Those not in debt will put money aside as savings.

Companies will have to cut back even more. This will continue until a new equilibrium is reached, with much less debt and much less consumption.

None of this is good for the Status Quo. Central banks will do everything in their power to get the consumer back into buying stuff. Interest rates will be set near zero. However, none of this can fix the fact that the principle owed by consumers is already too much to bear. There is no room for more debt.

Wall Street, on the other hand, is likely to respond positively to lower interest rates. Stock prices may very well continue up while the real economy tanks. But this cannot last for very long. Wall Street cannot ignore the fact that companies are becoming less profitable. Not even negative interest rates will be able to save a stock market full of loss making companies. After a short lived spike in stock prices, reality will overwhelm the markets, forcing prices to more accurately reflect the profitability of companies.

Sunset in Matosinhos

Epic Incompetence

After having seen nine churches being vandalized over the last week, without ever figuring out who have been behind that, the French police finally showed how efficient they can be. Within hours of the fire breaking out in Paris's landmark cathedral, the police had clear evidence of it all being due to an accident related to the restoration work being done on it.

However, setting fire to big oak beams is easier said than done. It's not possible to set fire to such structures merely through careless use of matches or cigarettes. It requires a collection of easily combustible material, heaped up close to the ceiling. Only gross negligence by the curators could have resulted in a sustained fire. They must have been a bunch of fumbling idiots.

This in turn begs the question why amateurs were in charge of the restoration work. Who hired these guys and why? If the French police is correct, then something deeply corrupt is going on in French politics. Only corruption of the most grievous kind could have lead to the accidental torching of Europe's most iconic landmark. Somebody very high up needs to explain this and take responsibility.

What makes this all the more urgent and important is that YouTube's fact checking algorithm quickly made the connection between the Paris fire and the attack in New York eighteen years ago. The algorithm made it absolutely clear that the New York attack and the fire in Paris were related, insinuating that the fire in Paris was the handiwork of Saudi nationals.

YouTube officials have since come out, claiming that their fact checking algorithm malfunctioned. But the damage has already been done. Conspiracies will no doubt run wild after this epic blunder by YouTube.

Notre Dame

By Wandrille de Préville - Own work, CC BY-SA 4.0, Link

Stock Market Priced Higher than the GDP

The American stock market is currently priced higher than the American GDP. This is not good, and this is why:

GDP is an estimate of the turnover of the entire economy of a country. Turnover is not profit. It is merely the movement of money.

A company doing all right, but not fantastic, manages to produce a profit of 10% on its turnover. This means that a person buying such a company for an amount equal to its turnover will have to wait 10 years to get his money back. If the company goes broke before 10 years have gone by, money is lost. If it goes broke after 10 years, money is made.

If the stock market represented the entire economy, and the companies in it were reasonable profitable, we would be looking at a 10 year horizon on our investments. However, the stock market is not the economy. GDP includes privately owned companies, private individuals and the government. None of this is represented by the stock market. The stock market is less than half the economy.

That leaves us with a horizon of at least 20 years before profits cover our upfront costs, provided the stock market contains reasonably healthy companies. But here again we have a problem. As many as 40% of the companies are currently running at a loss. This loss has to be made up in profits of the remaining 60%. This in turn pushes out the time horizon. We need at least 40 years before the stock market returns a profit equal to our upfront cost in buying into it.

Short term, no-one cares about this. All that matters is that someone in the future is willing to buy the stock market at an even higher price. However, this does not work in the long term. We all need to consume, and that consumption can only come from profitable entities. Unless we have sufficient savings to cover our 40 year time horizon, we have to take our consumption from somewhere else or sell our part of the stock market.

Most of us cannot wait 40 years before we start consuming our savings. Pension funds typically start paying us by the time we are 70. Any payment made into a pension fund after we reach 30 is therefore unable to cover the upfront cost with profits. Many companies go bankrupt in the space of 40 years. Their loss must be covered by the surviving companies. It is not at all certain that money put into a pension fund will ever recover its purchasing power.

All of this adds up to a picture in which we can say with near certainty that money invested in the stock market today will not be recovered. While it is possible, and even likely, that stocks continue up in nominal terms. The purchasing power will not increase. There is simply not enough profitable production in the stock market to cover the costs.

Purchasing power is sustained through production. Owning companies that barely make a profit is not a sound strategy for maintaining purchasing power over time.

If a 10 year time horizon can be considered reasonable, then the current stock market is as much as four times more expensive than it should be. A 75% drop will be required in order to bring its price back to a more sustainable level.

Wall Street

By Vlad Lazarenko - Own work, CC BY-SA 3.0, Link