I tweeted earlier (@powerdowngirl) about a Jim Puplava interview with Chris Martenson. While listening (about 20 minutes in) on the topic of money system debt, Chris describes the situation in such a way that I felt compelled to transcribe just that bit. I do understand time constraints and the whole interview is almost an hour long so below is just 2 minutes on why consumption and investment are NOT the same things. Given I’ve not finished listening myself, there may well be other gems of wisdom waiting for me as Chris is the author of the excellent Crash Course, which links energy, economy and environment and is well worth a look. It is split into small chapters, so can be dipped in and out of. I strongly recommend Chapter 17b on Energy Budgeting if you’re still a bit confused about net energy.
Anyway, despite record low interest rates and billions of dollars pumped into the global economy via quantative easing and other incentives to spend and consume, we’re not seeing the sustainable growth required by our financial systems. Chris asks, “If we really were going to spend that much money in deficit, what are we spending it on? Are we spending it on consumption or investment coz it’s a world of difference between those two and frankly almost all of that money has gone straight to consumption, not investment. And by investment (I mean) taking the natural gas that we think we have in relative abundance for the next 10 or 20 years, put the pipelines in, do things with that gasoline, figure out how we’re going to invest in the next round of energy technology, you know, these are things that would be investments and we’re not investing with this money we’re just trying to get back to consumption.
And so here’s the model. I think it’s a broken model but that’s my opinion. But the model here is that consumers are supposed to consume and the way they do that is they take on debt and we need them to consume more than they are actually earning. We love that model. Remember you had your home and it was rising in value and you could (re-mortgage), spending it, that drives the economy and everybody’s happy. Maybe we have credit cards, we’ve got student loans, we’re borrowing for cars, that’s the model we had and the consumer, rightly and as predicted, just started to retract when the recession hit. That’s a good normal behaviour. What’s abnormal in this story is the Government stepping in saying ‘oh, I see you guys were overspending and now you can’t, let me take on the overspending role for you guys’. That’s a broken model.
Somebody lost the narrative in this story which says that in a time when consumers are undergoing normal consumption and they have to retrench from that, the Government can fill that tiny gap. When we’re overconsuming and the Government says ‘not only will I fill that but I’ll double you’, that’s where we lost the way. So yes people who look at these deficits and are concerned that they are unsustainable, as you mentioned, they’re absolutely right on. They are unsustainable but it’s worse than that. It’s how we are trying to sustain something that’s fundamentally, any grade school kid could tell you is unsustainable. We’re trying to sustain the idea that we can live beyond our means forever. The thinking caps have been taken off and we’re just reacting at this point and clearly when that story breaks, and it will, because things that are unsustainable have a way of building up until they stop, in that stopping moment we might find that it’s actually fairly unpleasant consequences and it’s something that I worry about and I know other people are worried about“.
Good, innit? So why do so few people get this? Anyone up on psychology? Because that’s what the next human breakthrough will be – psychological, not technological. Our next real breakthrough will be to understand (or should I say re-learn!) our place in this world, the importance of scale and rate of change, the abhorance of waste and, most importantly, the urgent need for cooperation to replace competition as a way to live. We need a new model and this time, could it please be one which works for all life, not just one elite sector of one rather smart primate?