We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Tuesday, July 15, 2014

Debt: Eight Reasons This Time is Different

Click here to access article by Gail Tverberg from Our Finite Planet.

Tverberg is widely followed and respected among scientists and technologists who are informed about energy and the environment. She has been sounding warnings for many years about the fact that we, the citizens of the Earth, are running up against the limits of a finite Earth; and if we don't change our ways, the consequences will be catastrophic. Unfortunately, for whatever reason, she refuses to directly indict the system which is causing this inevitable calamity--capitalism.

In this essay she explains how the capitalist system (she always uses the word "economy") has been able to use debt as a method to solve the inevitable boom and bust crises that have forever characterized the operation of the system. Capitalism and its debt-fueled economies have depended on cheap sources of energy to create growth which always eventually succeeded in ameliorating the periodic crises in the past. However, this time conditions are dramatically different due to diminishing supplies of cheap energy and the impending catastrophe of climate destabilization caused by the excessive burning of fossil fuels. Still, the leaders of this system are hoping once again to use the same method for solving current economic problems--keep increasing the supply of debt-based money. Thus, Tverberg is led to this inevitable conclusion:
We live in perilous times. We have leaders who think they know the answers but, in fact, they do not. The debt problems we face now are not just overspending problems; they are signs that we are reaching limits of a finite world. World leaders do not seem to understand this connection. It is not even clear that they understand the connection of debt problems to the need for cheap-to-produce, high-quality energy products.
World leaders are nevertheless convinced that they know the answers, based on complex, but very flawed, models. Unfortunately, actions taken based on these models have a good chance of making the situation worse rather than better. For example, trying to tie a world economy closer together, when it is already heading toward collapse, seems like a recipe for disaster. 
Read also "Senior Bankers Warn: ‘It’s Crazy, It’s a Boom, It’s a Gold Rush’" by Wolf Richter.