14 January 2013
Norman Pagett writes:
A government debt of $16tn (and rising) is the last desperate attempt by politicians to pretend that life can go on like it always has. The entire debt structure of the USA has grown on the expectation of an infinity of cheap oil, so the debt will go on getting bigger because no one will accept that there’s no more cheap oil left. Oil has quadrupled in price in 12 years, our system can’t stand that so it’s crashed. Without cheap oil there is no economy but politicians have to go on borrowing money to pretend that we can go on enjoying prosperity that was only ever a mirage. Now the entire country has been hocked to fund that fairy tale. This is not a recession, it’s full stop, but politician’s minds are still locked into the era of cheap oil.
It is the economics of infinite debt. It doesn’t matter about the politics of it, everyone demanded to good things in life, and we voted for politicians who promised that the ‘American Dream’ could go on forever. Politicians will promise anything to keep their jobs. (In that respect they are no different to anybody else).
But that ‘dream’ has never been a political gift. It was the product of (cheap) hydrocarbon energy, oil coal and gas. For 200 years we have been finding and using ever greater energy sources, using that energy surplus as collateral for next year’s debts. Our ‘industrial economy’ is based on nothing more than that.
We gave that energy a monetary value, and the more we found and burned, the more ‘wealth’ we had. Our prosperity depended on burning it faster, so we devised means of doing it by building bigger better faster machines that used fuel in every form imaginable.
We had the delusion that it was our inventive genius and machines that made us wealthy, we saw the fuel burned in them as a trivial side issue. So we built millions of shiny things, and planes, wartoys, cars in an endless stream became the focus of our prosperity, and we came to regard heat, light and dragging a ton of steel everywhere as normality. Cheap oil also supplied 99% of our food and fooled us into overbreeding, now we have a billion starving while we add to their number by converting their food into more cheap oil to keep our wheels turning. We thought it was a money-economy, but what we had was a cheap-energy economy funded by debt, because this year’s debt can only be supported by next year’s oil production. Politicians are fooling themselves (and us) into thinking that we can have cheap oil again; we can’t, it was a once only geological anomaly that allowed a century of luxury for a few. The debt will go on getting bigger until it swallows the nation entirely. The party’s over, and we have been presented with a $16 trillion bill to pay for it.
Welcome to poverty folks.