If you think professional economists have any authority left to talk about finance, debt and banking, remember that most of them failed to predict the Great Recession of 2008. Then consider how many of those same financial experts have been saying on and off since the crash that the economy entered a recovery, even if only a “jobless” one.
Sure, the Dow Jones Industrial Average is back up to early 2008 levels. Corporate profits are up too. A few really rich people still seem to be buying yachts. And the Koch brothers apparently have plenty of money to throw at lobbyists and buy right-wing politicians.
But all that says is that the top 1% is still doing well. Heck, maybe they’re doing even better than they did before? With the rest of us poorer, the gap between the wealthiest people and the 99% is bigger than it has been since just before the Great Depression. And it’s happening not just in the US, but around the world.
Economists never told us the story of financial inequity. It took the Occupy movement to do that. And many economists still continue to tell us reassuring fairy tales about how economic growth must and will return.
So, who are you going to trust? Start with Chris Martenson, one of the lay financial analysts who did predict the banking collapse in fall 2008.
Despite its home-made look, the online video version of “The Crash Course” available for free on Martenson’s website has been seen more than a million times. It’s well worth the three and a half hours it takes to get through all 20 parts. Watch a 1:47 introduction here.
Now, Martenson has just published this material out in book form as The Crash Course: The Unsustainable Future Of Our Economy, Energy, And Environment. The book seems to cover much the same ground as the videos, but with updates on the economy since 2008 and adaptation to make such topics as money creation through fractional reserve banking, the role of the Federal Reserve and of course, peak oil, more accessible to a wider audience.
I especially appreciated Martenson’s discussion on exponential growth and his advice on how to prepare for the next twenty years that are sure to be very different than the last twenty years.
Americans are famously bad at math, and being an English major, I’m surely among the dunces of the dummies. I’d heard about exponential growth before and I understood in a vague way it meant that the expansion of things like world population, sovereign debt and oil demand was worse than we thought. That it could be shown by a “hockey stick” that’s nearly flat for a long time and then skyrockets at the last minute, like the graph of global temperatures that gave Al Gore a chance to stand on a cherry picker in An Inconvenient Truth but has since become a bugaboo for climate-science deniers.
It’s why a petri dish that doubles in population every minute and is merely half full at 11:59 pm will be totally full only sixty seconds later, at midnight.
But it wasn’t until I read Martenson’s chapter “Dangerous Exponentials” that I finally understood all the fuss about linear vs. exponential growth. It’s easy to see, for example, that if you start with 2+2=4, you can keep adding more twos to get six, eight, ten, etc. This kind of growth happens at a steady rate which is simple to plan for.
But the most crucial measures of the economy, energy and environment today are not growing in a straight line. Instead, they’re growing exponentially — and that’s what makes them really scary. “The greatest shortcoming of the human race is the inability to understand the exponential function,” said the physicist Albert Bartlett, quoted by Martenson.
“You happen to be surrounded by examples of exponential growth. And your future, like it or not, will be heavily shaped by their presence,” as Martenson explains. He then gives us the “Rule of 70,” a handy formula to easily calculate the rate at which something growing will double. With exponential growth at a steady rate, the doublings come closer together as time goes on.
Martenson then offers three concepts to help us see why we should make the effort to comprehend exponential growth:
Exponential growth is why China has used more energy in the last nine years than in all of its thousands of years of history before that. It’s why the global warming hockey stick is actually sound science. And it’s why the US can’t keep doubling its level of government and private debt much longer and why economic growth will soon be a thing of the past.
It’s why we don’t have much time left before something big happens to global industrial society and the modern way of life.
As Martenson quotes Nixon economic adviser Herbert Stein, “If something cannot go on forever, it will stop.” It’s a sign of how screwed up our times are that this obvious statement should come off as deep wisdom. But there it is.
Martenson gives three scenarios of what he thinks could happen in the next twenty years given that industrial society is now on a path towards the end of exponential growth:
Which scenario you accept could determine what you do to prepare, but above all, Martenson tells us to “prepare to be surprised” and to try to achieve enough resilience to ride out a variety of future events.
To get to the most resilient place, Martenson recommends actions for the world’s governments that will be familiar from the peak oil and sustainability movements: don’t depend on technological breakthroughs but do push for gadgets that use less energy or help to store energy, such as better batteries; stop valuing fossil fuels by how much they cost today, which is a poor indicator of their overall value, but instead, by the energy they provide compared to alternatives, and conserve the fossil fuels we have left accordingly; slow, stop and reverse population growth voluntarily before nature does it for us in a brutal way.
For individuals, Martenson gives his own decision to relocate his family from suburban Connecticut to a rural area in western Massachusetts as an example. He wanted to live in a walkable town where neighbors knew and cared about each other surrounded by rain-fed farmland. On the financial side, he got his family out of debt and to protect against inflation, he invested in commodities, especially silver, which he feels has great potential to appreciate in the future because of its limited supply and many uses in manufacturing.
“The economy is a wholly owned subsidiary of the environment, not the other way around,” as Sen. Gaylord Nelson, founder of Earth Day, famously quipped. In that spirit, The Crash Course ties in today’s Great Recession with underlying issues of energy and environment, unlike most books on the economy today.
And while most economists are still singing “Happy Days Are Here Again (Soon!),” Martenson is not afraid to give us the bad news that 2008 was the just the beginning. An even worse crash is coming and that there’s nothing we can do to stop it.
The good news? Once we recognize that the growth-economy jig is up, there’s lots we can do to prepare. And the sooner we start, the better. If there’s someone in your life who you think needs a bit of friendly bad news to awake from complacency and a bit of non-threatening good advice to start preparing, The Crash Course could be most welcome under the tree this holiday season.