(November 20, 2010)
The status quo models of "growth" and credit expansion inevitably lead to collapse.
Frequent contributor Harun I. has captured the essence of why the status
quo is intrinsically unsustainable.
Readers often do a better job than I can in explaining a profound feature of
our world, and Harun's commentary is devastating in its logic and clarity.
(CHS: Emphasis is mine.)
Our problems began in 1913 when the Fed and therefore de facto
centralized planning was established. And every generation that
ignored the fact that counterfeiting money and lending it at interest
is a scheme that has catastrophically failed in all previous attempts
deserves what eventually befalls them -- results equal intentions.
The problem with maintaining inflation at 3% is that it compounds
until the curve approaches vertical. This exponential growth will
eventually outpace real productivity and therefore, at some point,
fake prosperity has to be created through expansion of fiduciary media
(credit). What this implies is that what is happening today could have
been and probably was predicted well before 1913. But once again
politics trumped reason.
The effects being experienced today had to materialize. Mathematically
there is and can be no other outcome. Ceteris paribus, as real
productive activity decreased, credit (fiduciary media) had to be
expanded at exponentially increasing rates until exhaustion.
Exhaustion occurs at the point where the curve approaches vertical
where infinite credit or money has to be injected infinitely. This is
impossible and is why all efforts thus far have failed.
Mish is absolutely correct when he observes that credit is being
destroyed faster than it can be created.
Those demanding that you tender solutions do not understand that: 1)
The 106 trillion dollar gorilla in the room cannot be satisfied. What
is so egregious is that the Boomer generation saw or should have seen
it coming. Instead of tackling a very difficult problem they chose
distraction by bread and circuses.
That the most technologically
advanced country in history could conceive that sending worthless
pieces of paper to China so that they could buy worthless Treasuries
so that we could continue to purchase "things" that required real
human effort and natural resources is either collective insanity, rank
stupidity, desperation, or just plain old greed.
And now that we have engaged in this type of activity for decades and
the comeuppance is upon us we demand solutions to avoid the inevitable
consequences of ineptitude and apathy.
Means testing will cost billions we do not have, will be implemented
ineffectively, and, on scale, will prove ineffective at deflecting the
53 trillion dollar asteroid the size of Rhode Island hurtling at us at
a few hundred-thousand miles per second.
The situation is untenable. That an insolvent government (starting
from a 106 trillion dollar deficit) and facing global peak resource
utilization, will somehow effectively manage to administer to a huge
retired population whom have no savings, assets that they will only be
able to sell at a loss and pensions denominated in a worthless
currency, as a line of thought, is at best, imprudent. I take no
pleasure in stating, and do so without any hyperbole, that you are
about to forget about Katrina.
2) This Grand Cycle top is unlike any other faced by mankind. We are
at peak everything; peak oil; peak food; peak water; peak
industrialism; peak credit; but not peak population. There is and
will be no excess capacity for growth. The very mechanisms that have
allowed homo sapiens to reach such high levels of population density
are at or near exhaustion.
And there is no Plan B. Those depending on
technology to the rescue do not understand that by the time the
Trident Submarine was put into production its design was 20 years old
-- and obsolete. This type of government performance is not
encouraging. Very long term there will be no return to what has become
to be known by the Boomer and current generation as status quo.
What will have to happen is a return to using precious resources not
for consumerism with all of its built in waste (planned obsolescence,
disposable everything) but for producing absolute necessities.
This may all sound grim but if you remove the adjective, it simply is.
I have not read Mr. Kunstler's book but the title cuts to the heart of
the matter -- we have entered a long emergency.
Thank you, Harun, for summarizing our shared situation.
Here are a few books which address the intrinsic limits of the status quo:
The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century
Early Retirement Extreme: A philosophical and practical guide
to financial independence
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
The (Mis)behavior of Markets
The Fourth Turning
The Great Wave: Price Revolutions and the Rhythm of History
The Shock Doctrine: The Rise of Disaster Capitalism
Overshoot: The Ecological Basis of Revolutionary Change
The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization
Manufacturing Consent: The Political Economy of the Mass Media
Collapse: How Societies Choose to Fail or Succeed
The End of Work
Survival+: Structuring Prosperity for Yourself and the Nation
The Collapse of Complex Societies
Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism
Greed, Fraud & Ignorance: A Subprime Insider's Look at the Mortgage Collapse
Planet of Slums
Reinventing Collapse: The Soviet Example and American Prospects
Depletion and Abundance: Life on the New Home Front
Globalization and Its Discontents
The Coming Anarchy: Shattering the Dreams of the Post Cold War
When Giants Fall: An Economic Roadmap for the End of the American Era
Fiasco: The Inside Story of a Wall Street Trader
The Dollar Crisis: Causes, Consequences, Cures
The Party's Over: Oil, War and the Fate of Industrial Societies
The Coming Generational Storm: What You Need to Know about America's Economic Future
The Sovereign Individual: Mastering the Transition to the Information Age
Who Rules America? Challenges to Corporate and Class Dominance
Financial Armageddon: Protecting Your Future from Four Impending Catastrophes
The Long Descent: A User's Guide to the End of the Industrial Age
Horsemen of the Red Hand: Book Two of the Operation SERF Trilogy
Governing the Commons: The Evolution of Institutions for Collective Action
War Is a Force that Gives Us Meaning
Empire of Illusion: The End of Literacy and the Triumph of Spectacle
Cornered: The New Monopoly Capitalism and the Economics of Destruction
Radical Homemakers: Reclaiming Domesticity from a Consumer Culture
Dirt: The Erosion of Civilizations
False Dawn: The Delusions of Global Capitalism
Get Ready!: Preparing for the Coming Catastrophe
Peak Everything: Waking Up to the Century of Declines
China's Trapped Transition: The Limits of Developmental Autocracy
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