Saturday, November 20, 2010

End Game: Why the Status Quo Is Unsustainable

The s

tatus quo models of "growth" and credit expansion inevitably lead to collapse.

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

Deschooling Society

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

If you would like to post a comment where others can read it, please go to, (registering only takes a moment), select Of Two Minds-Charles Smith, and then go to The daily topic. To see other readers recent comments, go to New Posts.

Order Survival+: Structuring Prosperity for Yourself and the Nation and/or Survival+ The Primer from your local bookseller or from or in ebook and Kindle formats. A 20% discount is available from the publisher.

Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle

Thank you to everyone who chose to purchase their Amazon Kindle through this site -- I greatly appreciate your support and readership. Thank you to everyone who chose to make their purchases through this site-- I greatly appreciate your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:
Correspondents' email is strictly confidential. The third-party advertising placed by Adsense, Investing Channel and/or other ad networks may collect information for ad targeting. Links for commercial sites are paid advertisements. Blog links on the site are posted at my discretion.

Our Commission Policy:
Though I earn a small commission on books and gift certificates purchased via links on my site, I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by 2008

Back to TOP