Commentary By Ron Beasley
The politicians of both parties, the Federal Reserve and the Treasury Department keep telling us that at some point economic growth will return to rates we have seen in the past. They are:
- In denial
This is what makes debt, both government an non government, a serious problem. The economic growth much of the world has experienced for several decades was unsustainable and has come to and end. A credit based economy is dependent on economic growth to pay the interest. The economy is going to be reinvented and we have two choices:
- We can let it reinvent itself
- We can guide it
If history is a guide we will chose number one. So why the end of growth? Richard Heinberg explains:
Many financial pundits point to profound problems internal to the economy�including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble�as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.
Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:
- The depletion of important resources including fossil fuels and minerals;
- The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)�leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
- Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs�and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.
In short we are running out of resources we can afford. Peak Oil gets most of the attention. We are already at peak cheap oil - yes there is plenty of oil left but can we afford it? If we are talking about maintaining our consumption based global economy the answer is no. It's not just oil. It's water, phosphorus, tin and nearly every other mineral resource. It's still there but we have picked all the low hanging fruit and the cost of discovery, production and delivery will continue to increase.
When the politicians tell you they can make things just they way they were in the 50s, 60s, etc don't believe them.
Come gather 'round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.