Shortly after Zero Hedge published “Norway’s Big Fish Story,” I received an email from Lars Haugen, living in Oslo. He was most concerned about the unsustainable debt growth and future pension obligations, which already exceeds the value of the SWF (Sovereign Wealth Fund). He also expressed concern about the European Central Bank, mainly driven by the German one (Bundesbank), making a giant and irreversible mess.
The ECB Ponzi Funny Money Machine in Motion.
Seeing that we live in close proximity, we decided to meet later that afternoon in Fornebu to discuss our concerns:
We are now seeing a crisis precipitating: bank solvency is only possible because of serial bailouts and low-interest rates. However, we reached the conclusion that there will be no near-term crisis. Taking advantage of the public trust, the Central Bank and Government will engineer solutions that effectively kick the can down the road:
Basic Income – Currently, the Finns are trying this out. With 10%+ unemployment, the current government is desperate to stay in power. Essentially the government gives people money and then they return it through rent, food, taxes, and entertainment.
A house made out of a shipping container. In theory, this should cost $10,000 but with excessively low-interest rates, this would cost $300-500K in Norway and require a 30-year mortgage, effectively enslaving the buyer.
Loan Extensions: If rates rise to shore up the currency and counteract inflation, it is very realistic that Central Banks and Governments will allow people to refinance their massive debts into 100-year loans, effectively making them indentured servants or slaves, depending on the severity of the individuals’ situation.
With today’s technology, bribing the public with printed money is more cost effective than dealing with an uprising. As long as food (GMOs), building materials (recycled garbage and mud), and entertainment (apps and Netflix) are cheap and abundant, governments can prolong the current situation and buy votes at the same time.
However, at some point, a natural limitation must be dealt with: printing too much money leads to inflation, offering benefits to everyone leads to a decline in production, taxing the working class 100% leads to mass emigration, etc.
Lars affirmed that Norwegians are overly trusting of mainstream media and the Central bank. This is further complicated by the lack of math and economic education in Norwegian public schools. The general population is oblivious to the underlying mechanisms, unable to differentiate between the illusion of wealth, enabled by debt, and the real kind built on positive cash flow and a culture of conserving resources (savings).
Many Norwegian liberals do not equate sound personal finances with conserving nature. Living within your means leads to less consumption and drives people to better utilize what already exists.
Currently, Schibsted Media Group dominates the information consumed in this part of the world. They are the same group that equated Trump to Hitler. It appears that there is a strong thirst for a new information source. New alternative media are beginning to emerge in Norway, aspiring to fill the Breitbart and ZeroHedge gap on the Scandinavian peninsula.
I would hope that the editors of these publications can band together to counter the Norwegian equivalent of CNN, MSNBC, New York Times, LA Times, and the Chicago Tribune.
We both believed that Norway should aspire to be like Switzerland and not Kuwait: a diversified and industrialized economy built on Protestant and egalitarian values. Norway has all the raw ingredients to not only replicate Switzerland but exceed it. With a few reforms on corporate taxation (eliminate the asset value tax) and a national sense of purpose, brought about by strong and decisive leadership.
If Norway doesn’t correct course, it will end up like Argentina, once the richest country in the world now among the poorest in the Americas. This is what happens when you spend more than you make.
With blockchain solutions become more volatile, it’s perhaps time to think about buying some gold before it’s too late. Eventually, tangible beings want tangible goods.