I spent five years in the Internet “wilderness,” learning, reading, and gathering. I have to admit, there’s a lot of junk out there, along with some real diamonds. In the interest of saving you a bunch of time performing the same journey of discovery, I present to you the “best of the best.”
Chris on the radio
Listen to Chris discuss the economy and possible responses to an uncertain future on Market-Toolbox with Doug Newberry. Chapter 12 on Debt and Chapter 19 Future Shock were played and questions fielded from live participants.
Listen this two-part series as Chris speaks to the convergence of of the three “E”s With Bill Baue and Francesca Rheannon of Corporate Watchdog Radio. The actual interview starts about 1/4 of the way in. Recorded in April of 2008.
Important background material
As you first confront the evidence that I have gathered in the Crash Course, perhaps there or perhaps elsewhere, you will almost certainly experience a set of emotions as a consequence. After carefully watching seminar audiences over the years I realized that the Kubler-Ross Five Stages of Grief offered a good framework for predicting and managing the stages of these emotions. I have added one more step, fear, and have called this The Six Stages of Awareness. While it shares many similarities with Kubler-Ross’ analysis of the grief associated with loss, this framework applies to the process of becoming aware of information that conflicts with current expectations. For some, that is the same as loss.
One of the greatest risks we face is the fact that we’ve been lying to ourselves about the true state of our condition. In this article, veteran author Kevin Phillips takes us through some of the most common statistical lies, such as inflation, unemployment, and GDP. The effect of lying to ourselves is that we’ve created a false sense of economic progress that has fostered unnaturally low interest rates, excessive government borrowing, and an unsustainable (and dangerous) reliance on debt.
Your bank account may not be as safe as you think (or hope). Taking a deeper look at the legal details and the financial depth of the FDIC reveals several troubling details that call into question how the FDIC would fare during a true banking crisis.
Risks to US Monetary System
This is my explanation of the math problem that lies at the very heart of our entire economic system. It explains the exponential nature of our monetary system.
Since all money is loaned into existence, it means that there is always more debt than money in the system at any one time. When does this mathematically break down? Can we predict this? The answer is, yes, we can predict the end, and it happens when not enough new money is loaned into existence to cover the interest payments on all the outstanding debt. Currently, this means that ~$2 trillion of new borrowing must be located each year…with the number climbing exponentially each year (see The Crash Course – Chapter 4: Compounding Is The Problem for an explanation). Steven Lachance explains this brilliantly in this linked article.
A National Failure To Save
The US is insolvent. There is simply no way for our national bills to be paid under current levels of taxation and promised benefits. Our combined federal deficits now total more than 400% of GDP. This fact alone could/should cause us to stop everything and ponder the implications. After all, broke countries don’t really do all that much besides break down and start over. Perhaps we’ll be different than every other country in history? Don’t count on it.
Are the current levels of debt in the US placing an immoral burden on succeeding generations? Here I make the argument that they are. This is the companion piece to The Crash Course – Chapter 10: Inflation
Robert Hirsch led a study of Peak Oil that was highly instrumental in shaping my beliefs that we’re late to the game and that the scale and scope of the challenge is too massive to be tinkered away. There is just no combination of Ethanol and electric scooters that is going to allow us to preserve our current way of life. Certainly we will find other ways to live, but the sooner you let go of the hope that we’ll somehow build enough of the right kind of smart cars to avoid making some significant modifications to our lives, the better.
This article is one of the first to ask the question “How long before the earth’s metallic resources are used up?” While the data is not robust enough to answer this question with any certainty, this article pulls together enough data to raise the possibility that the end is already in sight for several rare earth metals. As in, perhaps less than a decade away. But even not-so-rare metals such as Zinc and Copper have observable endpoints in their known reserves that are measured in decades, and not very many of them at that. And even these endpoints do not factor in the impact of Peak Oil which will certainly render many of the current low-yield deposits uneconomic well before their theoretical total yield has been exhausted.
In 1957 (not a typo), Admiral Hyman Rickover (“Father of the Nuclear Sub”) delivered a speech that fully outlines the concept of Peak Oil and its implications. This is a brilliant and chillingly accurate summation of precisely what we are experiencing now, delivered 50 years ago. After reading this, it is no longer possible to cling to the belief that that Washington DC was somehow uninformed of the challenges. Read this article.
On April 18th, 1977, President Jimmy Carter delivered one of the most prescient and important speeches on energy ever given by a sitting US president. Oh, that we had heeded his advice! Instead, our country voted for “morning in America,” and turned its collective back on the topic of energy security. Back in 1977, we still had time to transform our country, as we were not yet on the vertical portion of our energy consumption curve. Now our options are severely limited, as much by the limited time remaining as the actual energy reality. I get chills when I read a speech like this, and can only wonder how it is that such a speech seems like such an utter impossibility today. Certainly, none of the current presidential candidates (in 2008) are anywhere close to this level of understanding about our current predicament.
This article does a fantastic job of explaining Peak Oil. Start here if you’re just starting out on this topic.
Matt Savinar put together this primer on Peak Oil a few years back, in a Q&A format that is quite effective. Not for the faint of heart, this site takes an unblinking look at the role of oil in society…and what the decline of oil implies about our future.
This Wikipedia entry is a very sedate, if bland, complete overview of Peak Oil. It’s a Sergeant Joe Friday recitation of ‘just the facts ma’am’ that you’d be hard pressed to get riled up about. Might be the perfect introduction to Peak Oil for some people you know.
To get the best possible understanding of the issues involved in exponential growth, while spending only 20-30 minutes doing so, please read this supremely excellent transcript of a speech given by Dr. Albert Bartlett. This paper transformed my thinking, and I consider it extremely important to understanding the lion’s share of where our future difficulties may lie.
Money & Banking
Join guest columnist Michael Browning, truly one of the most astute observers of markets and financial history that I have ever run across, as he takes you from 1871 to the present in only two pages of text. This article will help you see that our money system has always been prone to operating in fits and starts, but that we are truly in uncharted territory now.
For a great explanation of How Money Is Created, to complement The Crash Course – Chapter 7: Money Creation, you can order a fine comic book directly from the Federal Reserve system (at no cost!) by following the link above. Truly, it is both bizarre and strangely comforting to see the sleight-of-hand mechanics of money creation explained in comic book format.
Okay, perhaps I am just a sucker for all things money, but this section on the history of money is really just fascinating. The older I get, the more I appreciate history and all it has to teach us. I highly recommend this for the background it provides, and because it may well spur some interesting thoughts and conversations.