Wednesday, July 25, 2012

The Upside of Default

Writing The Archdruid Report has its pleasures, and one of them is the wry amusement to be had when some caustic jab of mine turns into an accurate prediction of the future.  Longtime readers may recall a comment of mine late last year to the effect that ordinary investors would surely find some way to pile into the shale gas bubble before the next year was out. Thanks to an anonymous reader and the August 2012 edition of SmartMoney Magazine, which arrived from said reader in yesterday’s mail, that comment can now be moved over into the "confirmed" category.

The prediction, to be sure, didn’t require any particular clairvoyance on my part.  Its sources are, first, a decent grasp of the history of economic stupidity, and second, a keen sense of the levels of desperation in what we might as well call the investmentariat, the people who have a little money and are looking for a safe place to put it.  The investmentariat has been told for decades that their money ought to make them money, but nobody told them that this only works in an economy that experiences sustained real growth over the long term, and nobody would dream of mentioning in their hearing that we don’t have an economy like that any more.

All the investmentariat knows for sure is that the kind of safe investment that used to bring in five per cent a year is now yielding a small fraction of one per cent, and the risks you need to take to get five per cent a year are those once associated with the the kind of "securities" that make a mockery of that title. The resulting panic is SmartMoney’s bread and butter. Smart money in the old sense—that is to say, the people who know what’s going on in the sordid and scam-ridden world of investment—wouldn’t waste five seconds on such a magazine; they know you can’t get any kind of advantage from something that a couple of million people are also reading.  No, this is strictly for the investmentariat:  as glossy, glib, and superficial as a teen fashion magazine, and just as unerringly aimed at the lowest common denominator of contemporary thought.

It will thus come as no surprise that the cover story on the August 2012 issue of SmartMoney is "The Return of Fossil Fuels," and that it rehashes the latest clichés about vast new gas and oil reserves without raising any of the the inconvenient questions that a competent practitioner of the lost art of journalism, should one be wakened from enchanted sleep by the touch of a 1940s radio microphone, would ask as a matter of course. The article trumpets the fact that America is importing less oil than last year, for example, without mentioning that this is because Americans are using less oil—unemployed people who’ve exhausted their 99 weeks of benefits don’t take many Sunday drives—and it babbles about natural gas for two largely fact-free pages without mentioning that claims about vast supplies far into the future rely on assumptions about the production decline rate from fracked shale gas wells that make professionals in the gas drilling industry snort beer out their noses. 

All this, inevitably, is window dressing for suggestions about which stocks you should buy so you can cash in on the fracking boom. Last I heard, it was still illegal for journalists to take payola for pimping individual companies, or to speculate in the stocks they promote; still, I trust my readers will already have realized that one set of professional market players will get copies of the magazine the moment it hits the newsstand, snap up shares in the companies promoted in each issue, and dole them out at inflated prices to SmartMoney readers who get their magazines later, while another set of professional market players will take out short contracts on those same stocks as they peak, wait for the rush of buyers to crest and recede, and cash in on the inevitable losses. Those are among the ways the game is played—and if this suggests to you, dear reader, that the readers of SmartMoney are not going to get rich from shale gas by following this month’s tips, well, yes, that’s what it means.

This is business as usual in the financial industry, which has made a lucrative business out of extracting wealth from the investmentariat in various ways.  This is part and parcel of the broader and even more lucrative business of extracting wealth from everywhere by every available means.  The question that might be worth asking here, and is rarely asked anywhere, is whether the financial industry provides anything to the rest of the economy commensurate with its immense income and profits. Any economics textbook will tell you that companies raise capital by issuing stock, selling bonds, and engaging in a few other kinds of transactions in the financial markets, and that this plays a crucial role in enabling economic growth. Well and good; there are many other ways to do the same thing, but we’ll accept that this is the way modern industrial societies allot capital to new and expanding businesses. How much of the financial industry’s total paper value has anything to do with this service?

Let’s do some back of the envelope calculations. In 2010, the latest year for which I could find figures, the total value of bonds issued by nonfinancial businesses was $1.3 trillion, and the total net issuance of stock by all companies was $387 billion—that includes stock issued by financial businesses, but since this is a rough estimate we’ll let that pass. Total stock and bond issuance in 2010 to support the production of real goods and services was thus something less than $1.7 trillion; let’s double that figure, just to leave adequate room for other ways of raising capital that might otherwise slip through the cracks, for a very rough order-of-magnitude figure around $3.4 trillion.

In 2010, the total stock of debt and equity potentially available for trading in financial markets was $212 trillion, and the total notional value of derivatives that same year was estimated at $707 trillion. Exactly how much of this was traded in the course of the year on all markets is anybody’s guess—some stocks heavily traded by computer programs may change hands dozens of times in a day, while other assets spent the whole year sitting in a safe deposit box; still, this is back-of-the-envelope stuff, so we’ll use the total value just listed as a very rough measure of the size of the financial economy. We can round up a little here, too, to make room for forms of wealth not included in the two categories just named, and estimate the total paper value of the world’s financial wealth at $1 quadrillion, of which the fraction directed into the productive economy in one year amounts to around a third of one per cent.

Now of course providing capital to the productive economy is only one of the things the financial industry does that’s arguably useful to someone other than financiers. Local and national governments use the financial industry to raise funds for public works, individuals borrow money for the occasional useful purpose, and so on.  Let’s be generous, and assume that the amount of money that flows from the world of finance for these purposes is double the total input of capital into nonfinancial businesses via stocks and bonds. That means that in any given year, maybe one per cent of the financial economy has anything to do with the production of real, nonfinancial goods and services.

The rest?  It consists of ways to make money from money.  That seems innocuous enough, until you remember what money actually is. Money is not wealth; it’s a system of abstract, culturally contrived tokens that we use to manage the distribution of real goods and services.  A money system can simplify the process of putting energy, raw materials, labor, and other goods and services to work in productive ways; that’s the reason we have money, or rather the reason most of us are prepared to discuss in public. That’s not what the other 99% of the world’s financial assets are doing, though. They are there to ensure that the people who own them have disproportionate, unearned access to real, nonfinancial goods and services. That’s the other reason, the one nobody wants to mention.

Not that many centuries ago, across much of the world, usury—lending money at interest—was considered a serious crime, more serious than robbery, and was also classed as a mortal sin by Christian and Muslim religious authorities; it’s no accident that Dante consigned usurers to the lowest pit of the seventh circle of Hell. That’s been dismissed as a bit of primitive moralizing by modern writers, but that dismissal is yet another example of the way that contemporary industrial culture has ignored the painfully learned lessons of the past.  In a steady-state or contracting economy, usury is a parasite that kills its host; since the total stock of real wealth does not expand from one year to the next, each interest payment enriches the lender but leaves the borrower permanently poorer. 

Only in an expanding economy can usury be tolerated, since interest can be paid out of the proceeds of economic growth.  Periods of sustained economic expansion are rare in human history, since most societies live close to the edge of the limits to growth in their bioregions; the exceptions, such as the late Roman Republic and early Empire, usually involve the expansion of one society at the expense of others.  The late Roman Republic and early Empire, it may be worth noting, had a large and very successful moneylending industry, which fed on the expanding Roman state in much the same way that the Roman state fed on the accumulated wealth of the Mediterranean world. Only after Roman expansion stopped did attitudes shift, in favor of a religion that was violently opposed to usury.

During the three centuries of their power, the world’s industrial nations looted their nonindustrial neighbors with as much enthusiasm as the ancient Romans looted theirs, but they had another source of plunder—half a billion years of fossil sunlight, stored up in the form of coal, oil, and natural gas. In effect, we stripped prehistory to the bare walls so that we could enjoy an age of gargantuan excess unlike any other.  One consequence was that our moneylending industry was able to metastasize to a scale no previous gang of usurers has ever been able to attain. The basic arithmetic remains unchanged, though: usury is only viable in an expanding economy, and as the global economy enters its post-peak oil decline, the entire structure of money that makes money is going to come apart at the seams.

I’d like to suggest, in fact, that the unspoken subtext behind the financial crises of recent years is precisely that the real economy of goods and services is no longer growing enough to support the immense financial economy that parasitizes it. The current crisis in Europe is a case in point. Since the crisis dawned in 2008, EU policy has demanded that every other sector of the economy be thrown under the bus in order to prop up the tottering mass of unpayable debt that Europe’s financial economy has become.  As banks fail, governments have been strongarmed into guaranteeing the value of the banks’ worthless financial paper; as governments fail in their turn, other governments that are still solvent are being pressured to fill the gap with bailouts that, again, amount to little more than a guarantee that even the most harebrained investment will not be allowed to lose money.

The problem, as the back of the envelope calculations above might suggest, is that you can cash in the whole planet’s gross domestic product—that was a little under $62 trillion in 2010—and not come anywhere close to the value of the mountain of increasingly fictive paper wealth that’s been piled up by the financial industry in the last few decades.  Thus the EU’s strategy is guaranteed to fail. EU officials are already talking about "haircuts" for bondholders—that’s financial jargon for investors not getting paid as much as their holdings are theoretically worth. Not so long ago, that possibility was unmentionable; now it’s being embraced frantically as the only alternative to what’s actually going to happen, which is default.

There’s been a lot of talk about that in the blogosphere of late, and for good reason. No matter how you twist and turn the matter, Greece is never going to be able to pay its national debt. Neither are Spain, Italy, or half a dozen other nations that ran up big debts when it was cheap and convenient to do so, and are now being strangled by a panicking bond market and a collapsing economy. This isn’t new; most of the countries on Earth have either defaulted outright on their debts or forced renegotiations on their creditors that left the latter with some equivalent of pennies on the dollar. The US last did that in a big way in 1934, when the Roosevelt administration unilaterally changed the terms on billions of dollars in Liberty Bonds from "payable in gold" to "payable in devalued dollars," and proceeded to print the latter as needed.  That or considerably worse will be happening in Europe in the near future, too.

A good deal of the discussion of these upcoming defaults in the blogosphere, though, has insisted that these defaults will lead to a complete collapse of the world’s financial economy, and from there to an equally complete collapse of the world’s productive economy, leaving all seven billion of us to starve in the gutter. It’s an odd belief, since sovereign debt defaults have happened many times in the recent past, currency collapses are far from rare in economic history, and nation-states can do—and have done—plenty of drastic things to keep goods and services flowing in an economic emergency.  Partly, I suspect, it’s our old friend the apocalypse meme—the notion, pervasive in modern culture, that the only alternative to the indefinite continuation of business as usual is some unparallelled cataclysm or other.

Still, there’s another dimension to these fantasies, which is simply that the financial industry has done a superb job of convincing people that what they do is important to the rest of us. It’s true, to be sure, that having currency in circulation makes economic exchanges easier, and the kind of banking services that people and ordinary businesses use are also very helpful, but governments used to produce and circulate currency without benefit of banks until fairly recently, and banking services of the kind I’ve just mentioned can be provided quickly and easily by a government that means business; in 1933 it took the US government just over a week, at a time when information technology was incomparably slower than it is today, to nationalize every bank in the country and open their doors under Federal management. The other services the financial industry provides to the real economy can equally well be replaced by hastily kluged substitutes, or simply put on hold for the duration of the crisis.

So the downside of any financial crisis, however grandiose, can be stopped promptly by proven methods. Then there’s the upside. Yes, there’s an upside.  That’s the ultimate secret of the financial crisis, the thing that nobody anywhere wants to talk about: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery.

That statement ought to be old hat by now. Russia defaulted on its debts in 1998, and that default marked the end of its post-Soviet economic crisis and the beginning of its current period of relative prosperity. Argentina defaulted on its debts in 2002, and the default put an end to its deep recession and set it on the road to recovery. Even more to the point, Iceland was the one European country that refused the EU demand that the debts of failed banks must be passed on to governments; instead, in 2008, the Icelandic government allowed the country’s three biggest banks to fold, paid off Icelandic depositors by way of the existing deposit insurance scheme, and left foreign investors twisting in the wind. Since that time, Iceland has been the only European country to see a sustained recovery.

When Greece defaults on its debts and leaves the Euro, in turn, there will be a bit of scrambling, and then the Greek recovery will begin. That’s the reason the EU has been trying so frantically to keep Greece from defaulting, no matter how many Euros have to be shoveled down how many ratholes to prevent it. Once the Greek default happens, and it will—the number of ratholes is multiplying much faster than Euros can be shoveled into them—the other southern European nations that are crushed by excessive debt will line up to do the same.  There will be a massive stock market crash, a great many banks will go broke, a lot of rich people and an even larger number of middle class people will lose a great deal of money, politicians will make an assortment of stern and defiant speeches, and then the great European financial crisis will be over and people can get on with their lives.

That’s what will happen, too, another five or ten or fifteen years down the road, when the United States either defaults on its national debt or hyperinflates the debt out of existence.  It’s going to do one or the other, since its debts are already unpayable except by way of the printing press, and its gridlocked political system is unable either to rationalize its tax system or cut its expenditures.  The question is simply what crisis will finally break the confidence of foreign investors in the dollar as a safe haven currency, and start the panic selling of dollar-denominated assets that will tip the US into its next really spectacular financial crisis. That’s going to be a messy one, since the financial economy is so deeply woven into the fantasy life of the average American; there will be a lot of poverty and suffering, as there always is during serious financial crises, but as John Kenneth Galbraith pointed out about an earlier crisis of the same kind, "while it is a time of great tragedy, nothing is being lost but money."

It will be after that, in turn, that the next round of temporary recovery can begin. We’ll talk more about that in the weeks to come.

End of the World of the Week #32

"If at first you don’t succeed, try, try again," is a common proverb in many fields, but it’s particularly appropriate for prophets of apocalypse. Some make one prediction and vanish from history when it fails, to be sure, but a good many of them are made of sterner stuff, and respond to the failure of one prediction by making another a little further into the future.  Bravest of all are those whose prophecies emerge one after another, each one just as inaccurate as the ones before it, each one uttered with  serene conviction, as though none of the others had ever appeared—or flopped.

Among this aristocracy of apocalypse, evangelical Christian author Hal Lindsey ranks high. He first burst onto the end of the world scene in 1970 with The Late Great Planet Earth, which blended standard Protestant fundamentalist apocalyptic rhetoric with a flurry of topical references to the Soviet Union and other headline-making themes, to claim that the Rapture, the Tribulation, and the Second Coming were going to arrive any minute now.

The Late Great Planet Earth was followed by more than a dozen books, each mapping the same theological claims onto a different set of current affairs  The only thing that was lacking was the Rapture, the Tribulation, and the Second Coming, or for that matter any reason even for believers to think these events would happen when Lindsey said they would.

—for more failed end time prophecies, see my book Apocalypse Not


Cherokee Organics said...

Hi John,

That's my take on future events too. The debt is unpayable without a default. You're right too about the domino effect from a Greece default. It'll happen too, when either politics or a lack of general willingness to support their southern EU partners occurs.

The investment maxim comes to mind at such times, "if it sounds too good to be true, it probably is."

You know, sometimes it is at the back of the business section in an obscure article that you get a glimpse of the goings on in the world at large.

China seeking to park its cash

Apparently, the US Treasury Secretary Timothy Geithner, whilst spruiking US Treasury Bonds at Peking University was ridiculed by undergraduates!

Quote, "Beijing thinks Washington is trying to inflate its way out of debt by speeding up its money printing".

Meanwhile, back in the world of real products and services, has anyone noticed that the real story going on is the failure of the US corn crop? I read somewhere else that the drought has knocked off around 75% of the crop (but I can't remember where so don't quote me).

The Chicago Board of Trade said corn prices were up 53% since June, wheat prices climbed 41%, whilst soybeans were 27% higher.

Apparently also wheat harvests in Southern Russia and Ukraine are reporting declines in output of up to 40% from last year following damaging winter weather in the Black Sea region.

There aren't that many agricultural export nations and most of our agricultural exports go to Asia.

Interesting times...



Thijs Goverde said...

Great post, as usual.
It reminds me of an interesting fact I think I came across recently - "I think", yes, because I couldn't believe my eyes. I read in a more or less reliable newspaper that short-term loans to certain North European governments carry a negative interest.
Yes, serious investors are willing to pay money to loan to Germany or the Netherlands. Because there's a good chance they'll get it back, you know.
Funny, huh?

Thijs Goverde said...

Meh. That didn't come out right. Get the invested sum back, I meant, not the negative interest.

John Michael Greer said...

Cherokee, it's going to be a sparse harvest in the Midwest, and in a lot of other corners of the world. Mind you, here in the mountains we're getting plenty of rain, but this is small farm country, not the big monoculture spreads that produce most US grains. I expect the price of food to be a massive political issue over the next year.

Thijs, yes, I saw that! That's the wave of the future; making a profit is so twentieth century, you know!

brianfrombrisbane said...

Archdruid, your writings are a joy to read, both for the content and the style, points made sharply without recourse to vulgarity or abuse. I live in Australia and have to wait till Thursday afternoons to read your blog, it is always too long to wait!
This area of northern NSW is green politically,environmentally and aesthetically. Although there is a high degree of awareness of resource depletion, climate change, financial racketeering etc., there is very poor understanding that a no growth economy is coming and it ISN'T a choice. But community is strong.
You are a generous spirit. Thankyou.

Thijs Goverde said...

@ Cherokee: I spoke to a Dutch farmer who's rather happy about you drought; the resulting price spike means he'll be turning a profit this year. He said it as if it was an unusual state of affairs.

I wonder if the next round of food shortages will result in another Arabian Spring-type of event. Well, there's a lot of people in South Europe who are somehow experiencing difficulties in making ends meet. Might turn interesting.

Jeffrey Kotyk said...

Seems now would be a good time to invest in friends, family and community. The profit would be immeasurable, especially in the coming years...

John Michael Greer said...

Brian, thank you! The end of growth is so far off the radar screens of contemporary culture, even on the green end of the spectrum, that it's going to take quite a while to sink in. Richard Heinberg's book The End of Growth is a useful guide to the new reality -- might be worth recommending to people you know who are ready to start thinking for themselves.

Jeffrey, that's one very good set of investments. Useful skills are another. I'll be talking about others as we proceed.

Nathan said...

A lovely essay. It liberated me from my some of the perverse interest I have taken in watching the financial system unravel since 2008.

Usury is evil, but I have had a hell of a time convincing anyone of it. It has become a central piece of our collective economic imagination. I have found far better reception talking about anything besides criminalizing usury -- whether it is peak oil, economic contraction, rampant food shortages, space lizards.

Leo said...

i'd say its also a product of what i've started calleing the idea of absolutes which is linked to the apocalypse idea. When talking to my friend (speciffically he was asking about utopias, the venus project i think, and statements and questions from it) and other times, i notice a lack of thinking in gradients or grey of things (the goverment being one, the effects of cultural things as well), it seems to leave out the possibility that the major organisations can respond, i remeber telling him that goverments do act since it just passed his thinking entirely.

escapefromwisconsin said...

A similar point is made in this blog post:

It's conventional nowadays to mock pre-WWI European elites for believing that a general war between the great powers would be a short one, but few people realize that the "out of money" fallacy played a role in the mistake. But Ahmed reports that in September 1914, "at a dinner party in Paris given in honor of the British secretary of state for war, Field Marshal Lord Kitchener, the French finance minister confidently proclaimed that the fighting would be over by July 1915 because money would have run out."

This was the finance minister, mind you, someone who should have known better. Similarly, "the Hungarian finance minister, Baron Janos Teleszky, when questioned in the cabinet about how long his country could pay for the war, replied three weeks."

Generals, needless to say, being less knowledgable about economics would never make this mistake. A country can lose a war because it runs out of soldiers. You can lose a war because you run out of guns. You can lose a war becaue you run out of ammunition. You can lose a war because you run out of food. You can lose a war because you don't have enough trained pilots. You can lose a war because you don't have any working nuclear weapons. You can lose a war because your cities have been burned to the ground. You can also lose a war because the political authorities decide that reducing household consumption to direct production to the war effort is no longer worth it, all things considered. There are many reasons you might lose a war. But no country on earth has ever lost a war because it's "out of money." If you have the soldiers, and the soldiers have guns and ammunition, and you have the ability to grow food to feed the soldiers and the workers making the guns and the ammunition then as long as you prefer continued fighting to surrender you can keep waging the war.

That's all pretty obvious if you think about it for ten minutes, and of course nobody surrendered in World War I because they ran out of money. They borrowed money, they printed money, they bartered, they did what they had to do. You fight with your real resources and money is one of several tools for mobilizing real resources.

Something to keep in mind as we're constantly told how 'broke' we are. Governments' money, and consequently, resources are going to the usurers rather than the needs of society. Here's the BBC making a similar point: Greece: The upside of default

KindofBlue said...


One slight suggestion to an otherwise stellar essay would be to clearly distinguish and differentiate between investments and savings. Get-rich-quick Americans have been sold the idea that investment and saving are interchangeable and we are, as a whole, about to learn in spades that they are distinctly different.

An investor puts money at risk in order to acquire a larger return at a later date. A saver, on the other hand, is interested in virtually zero risk and simple preservation of purchasing power. By 'investing' for retirement we are -- as you pointed out -- trying to capture some old age security on the cheap. What most of us thousandaires want is to set aside a dollar and have it be there later when we need it.

A quick aside to illustrate. When I was a knee knocker 50 years ago a US 90% silver quarter would buy a gallon of gas (gas @ 25 cents/gal.). That same 90% silver quarter will still buy that gallon of gas 50 years on and then some (@ $4.00/gal.)!

The problem with hoarding excess silver is that it is a very useful commodity and industrial metal. No different theoretically than hoarding substantial excess food during a famine (not very community minded - hurts the economy). But gold is different. Gold has very little industrial utility thereby making it ideally suited for storing wealth (future purchasing power). Oddly enough, the higher the price goes, the better and more efficiently gold stores wealth. The mainstream financial community disparages physical gold ownership I guess as there's damn few commissions in it.

A small working farm is wealth. A skilled trade is wealth. A grand piano is wealth. A fine, rare wine or painting is wealth and so on. Once one has taken care of the things which matter -- which you eloquently and regularly address -- and if one has or wishes to protect future purchasing power with excess savings then physical gold in ones near possession is worth considering as a store of value. Keep in mind that "the reserve currency" is by definition the saving of paper promises in lieu of real wealth assets. Gold is simply the best and most efficient wealth reserve asset.

John, In my mind I was disinclined to broach this subject imagining you saying "well, that's not really what we do here." I have no agenda -- no horse in this race -- but simply to share what I've learned about money at age 50 and only left to wonder how we got out of high school never having touched the subject.

Mean Mr Mustard said...


I recall reading a comment on a blog recently that the recent defaults such as Argentina were contained because they were then able to trade at lower prices into a still functioning global economy - export driven recoveries. But 'this time it's different' - being as all are drowning in debt together.

Regarding derivatives, here's a scary but really ultra cool set of graphics. Enjoy(?)


The carp who jumped Hukou Falls said...

I've never heard of SmartMoney magazine, but the timing is interesting. Yesterday's Times (of London) had, as its main editorial, a glowing endorsement of the wonderful new future of prosperity that we can expect to build on shale oil and gas. I don't have it to hand, but it did actually say something to the effect that peak oilers' mistake was to not understand that different hydrocarbons can be substituted for each other. It would be interesting to compare that editorial with the article in SmartMoney, to check how much overlap there is in terms and vocabulary.

Paul said...

Former diplomat, Craig Murray blogged about all this stuff today, in a historical context. Here's what he had to say...

I am currently reading David Brown’s Palmerston; A Biography.

In 1846 Palmerston had threatened the government of Spain with military intervention if it defaulted on its bond interest payments. Palmerston faced a Chartist candidate, George Harney, at the general election in his Tiverton constituency. At the hustings debate, Harney said Palmerston’s threat to Spain was unjustifiable:

“These Spanish bondholders are English capitalists, who lent some millions of money to the government of Spain, not, as has been represented, because they were anxious to help the people of that country to obtain “Liberal institutions”, but because they were promised a higher rate of interest than they could get at home. That money had been derived from the labour of the English people.”

Harney argued that Palmerston’s foreign policy was simply to deploy the resources of the state to defend the interests of the rich.

The Tiverton crowd greeted this assertion with “immense cheering” and Harney had a clear majority at the show of hands at the hustings, which was attended by most of the adult population of Tiverton. He withdrew from the actual ballot, however, in protest at the extremely limited franchise – only about 600 people in the constituency had the vote.

George Harney, forgotten hero. We could do with him today.

Yupped said...

The puzzle-pieces have been fitting together more clearly for me over the last couple of years, partly as a result of reading this and other blogs: the whole financial paper economy rests on some very hazy assumptions about future economic growth - the hazier those assumptions, the better, as long as everyone plays along. And fake asset bubbles work just fine as a way to show growth.

Everything the financial powers that be have been doing in the last few years is to buy time before the next growth cycle kicks in, and they have been quite successful in the time-buying part. But the longer they try to build a fake bridge to the future, the more visible the fake bridge becomes. More and more regular people are seeing that now.

On one level, this doesn’t matter much to me: the big players can keep building the bridge for a long, long time for all I care. But the impact plays out on a local level pretty severely, with municipal governments and local businesses not able to borrow to fund operations. That’s where the impact will hit for most people; not in the sudden collapse of wealthy-people’s stock portfolios, but in the slower collapse of local economies who rely on debt to operate.

Ivan Lukic said...

Good moment to read again Ezra Pound's Canto XLV (on usury).

Yupped said...

And relative to last week's post, we're seeing a lot of financial "bargaining" at present to preserve wealth in the absence of growth: buying gold or parking cash with least-bad governments for negative interest rates.

It used to be that wealth preservation for most meant haying, curing and canning. A neighbor recently showed me a copy of this summer's Williams and Sonoma catalog - a high-end retail catalog for wealthy cooks. It was full of equipment for food preservation, chicken keeping, bee hives and brewing. It was all high-end stuff, and not a spot of chicken manure in sight, but that has to mean something!

Alex Boland said...


If you're looking for more perspective on this particular issue, I'd recommend "Currency Wars" by Jim Rickards. One of the possible outcomes he talks about is that the U.S. government could confiscate all physical gold in U.S. territory (which is something around half of the world's gold) and re-instate Bretton Woods. Also, in general his book takes on a very non-ludic view about currency that makes classically-trained Ivy-League economists red in the face.

As per apocalyptic collapse, I'm glad that your belief in a more gradual decline is actually a relief to me. I think that the only blind spot in your analysis is that you're relying too much on broad historical knowledge, which is usually very helpful, but it fails to take into account that our current civilization is an order of magnitude more complex than any other past civilization. As Nassim Taleb put it "we are a giant on clay feet" (and while he doesn't talk about peak-oil, he and Mandelbrot are/were as frightened as you are on the simple basis of how over-optimized the world's economy is.)

The fear I have is not apocalypse but more minor black swans taking us by surprise--power failures, water contamination, supply-chain failures regarding food, currency crises, riots, etc. I do what I can to prepare for emergencies, but we're all in a bit of a social strait jacket.

There is some amount of awareness though. The book "Emergency", by Neil Strauss, comes to mind. Who would have imagined that a rolling stone journalist turned mythical womanizer would spend a year and a half learning how to survive without infrastructure and write a book about it?

Twilight said...

Debts that cannot be repaid (because there is no growth) will not be. That's too simple a concept for everyone to miss. The question is who loses? Part of our social paralysis is due to everyone maneuvering in the hope of being the winner rather than the loser.

If your back-of-the-envelope estimates are close, that would indicate that only a very small amount of notional money represents actual production capacity of real goods and services. Therefore he size of the tertiary economy must reduce to something commensurate to the primary and secondary economy. That in turn means that rather than thinking of every present deal as having one winning party and one losing party, instead there will be vastly more losers than winners. And yet people are still stuck in a winner takes all mentality, fixated on holding on to all of what they thought they had and being one of the winners.

Without a change to that attitude there is no acceptance that we're all going to lose, probably quite a bit, and so otherwise rational steps cannot be taken. Basically, because we still think the money is going to be worth something, we cannot focus on making sure things of actual value – food and the basics of life – will be available and distributed as they could be.

Justin said...


I've done my own back of the envelope calculations about the dollar specifically and its purchasing power. From the information that I've gathered, the American dollar stands to lose its purchasing power for imported goods by a factor of 5-6 if the system of empire that keeps goods flowing in and paper flowing out collapsed tomorrow. That means the imported computer (or TV) purchased for $500 today would go for about $2500 tomorrow under this contrived scenario.

The way I've arrived at this is by comparing international exchange rates with purchasing power within the domestic economy of a handful of poorer nations relative to the US. The dollar's value in the international market does not translate in domestic economies, which means U.S. citizens are far poorer relative to food, shelter and clothing that is produced in the U.S. than they may otherwise believe.

Anyway, the upshot of a collapsing currency is to get as illiquid early. Convert your dollars into tangible goods that will produce wealth within your local and household economy now, and nothing will ever be as cheap as it is now and I am not solely referring to what economists consider normal monetary inflation. As others have pointed out, commodities prices are spiking at paces that are outpacing wage inflation by several laps. If you have savings, invest in property and equipment now that will produce tangible wealth before the dollar inflates away debt.

Btw, any easy tips on how to get rid of grubs in a garden? I'd let the resident skunk take care of them, but he keeps digging up my plants.

xhmko said...

This is the kind of concise economic analysis that would look like toilet paper to modern economists. Congratulations. You're wry grin can widen even further.

The thing about all this is, that the less you rely on these circles of finance, the less they tend to crush you when they fall. Keeping your lifestyle humble, tolerably communal and as self sufficient as possible now, may just make these financial storms seem so much more like pleasant breezes.

Of course, the repercussions will hit in staple food prices, and at the bowser, which thereby affect businesses ability to supply both products and employment within the current paradigm, but a bicycle based business model started now, will carry you through the upcoming turbulance better than a fleet of trucks.

And my guess with foods is that, the super rich will continue to get what they want, buying their share of any goods and services they like, while the staples will become too expensive to supply the modern middle class snack food industry to the level that it currently operates at. There will be snacks, but they will be treats, not breakfast lunch and dinner. Grains and flours and the like will be traded mostly as whole foods for the lower socio economic demographic, which will constitute most of the population, many of whom will work in the production and distribution of that food in one way or another.

Mary said...

I think my long post was lost courtesy of google. Here's the short form:

The creative financiers can invent infinite extend/pretend games. It will take some critical mass or external event to bring their scheme tumbling down and push the government to finally hit the money reset button.

I still think global warming will trump all. There may not be mass famine here in the US, but Africa already has a billion or so on the brink. In the meantime, the heartland looks to be nearing Dust Bowl II. Greenland is melting. and Vibrio species is suddenly flourishing in the Crimean -- far, far north of its normal digs. For non-biologists, Vibrio includes among its family V. cholerae of cholera fame, as well has harboring numerous members that cause dysentery and other minor gastric distress. People living in the southeastern US can prepare for a return of dengue fever and other mosquito-borne, tropical treats. Here in the midcoast of Maine, I am suddenly able to grow musk melons. Although I continue to prepare to hunker down in place, I'm still hoping a climate refugee will buy me out so I can move further north. Summers are suddenly feeling more like the PA I grew up in than Maine. Already, I can't take the jungle-like heat/humidity. Thank goodness my dragonflies are back to eat the skeets.

Meantime, for the first time I'm able to grow musk melons and have half a dozen or more coming along. And I've started including the perennial sorrel I started last year as part of my regular mixed greens. Adds a wonderful, tangy, lemony zing surprise to salads and sandwiches!



Jetfire said...

Parasites indeed- and isn't the oil-extracting class parasitic in its own way, leeching energy from the Earth?

If the end of industrial civilization brought about the end of economic parasites, I'd be hard pressed not to consider the tradeoff worthwhile. Sadly, as your Roman example demonstrates, I suppose they'll always be with us in some form, no matter how much energy civilization uses.

And much obliged for mentioning Christianity's opposition to usury. I studied quite a bit of theology on my way to my Great Texts bachelor's degree (yes, it's a real degree), and coming across Thomas Aquinas' assertion that lending at interest is a mortal sin was a real treat. It's the kind of idea worth spreading around as economic growth reaches its limits.

Mister Roboto said...

When the structure of global finance finally collapses, the amount of disruption that will initially occur will seem apocalyptic to an awful lot of people. American institutional life, and plenty of this seeps down to this grassroots especially in the older generations, is characterized mainy by arrogance surpassed only by ignorance. When the matrix that allows this willful buffoonery to thrive and rule finally buckles, a great many people will have absolutely nothing on which to fall back existentially. That's going to mean an awful lot of people (whose ranks I expect to be swollen with Baby Boomers and fellow Gen-Xers) who will be in a state of mind where they are willing to believe absolutely anything that might serve as an existential security blanket. That's going to be a scary time, to my way of thinking.

It won't surprise you to hear that the New Age Movement has its own equivalent of Hal Lindsey. His name is Gordon Michael Scallion, and he is best known for the Scallion Map, which purports to predict a whole new configuration of the continents in the wake of a series of ultra-catastrophic "Earth Changes". The first year I ever heard the man give for his map-prophecy was 1996. I probably don't even need to say that it's rather well past 1996 now. And of course, he's still at it. Here's hoping that the big finacne-collapse puts the increasingly silly and irrelevant New Age Movement (or at least the portion of it represented by such meretricious trash as *The* *Secret*) well and truly in its place.

Avery said...

City Journal also had an article promoting coal this month. I bought a copy and read it closely, but I don't think there was any point to it other than to remind people that coal is necessary for our lifestyle. It just drives home the amount of coal the world needs over and over. One graph is captioned, "Global Coal Consumption: No End In Sight".

Source_Dweller said...

A loving companion at one's side, family nearby, a bit of valley land with plenty of water, skills and a sensible attitude, and hope, as defined by JMG some time back. Seek these , friends. Robert

Brien said...

"a competent practitioner of the lost art of journalism, should one be wakened from enchanted sleep by the touch of a 1940s radio microphone"

That sounds like a hilarious and yet poignant topic for a short film! A journalistic fairy tale.

It will be interesting, in a tragic train-wreck sort of way, to see how the steady-state economies of the future deal with all-too-human ambition and ruthlessness. Some decades from now, Feudal Lords may be like dentists: Nobody likes them, but everybody is looking for a good one!

Jason said...

I was just noting that Fukushima dosmieter readings were falsified by lead sheaths to give safe ratings that were nevertheless lethal -- it's the same dodge as SmartMoney sells with.

Also that serious insurers are not covering fracking sites now.

GHung said...

"Then there’s the upside. Yes, there’s an upside. That’s the ultimate secret of the financial crisis, the thing that nobody anywhere wants to talk about: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery.

Russia, Argentina, Iceland... these 'recoveries' were all possible in a global environment of relative stability and at a time of peak resource extraction worldwide. One wonders, when the dominoes begin to fall, how the EU, US and other nations will gain a foothold on the synchronistic slippery slope of resource depletion, climate change, and overshoot. Never before have so many been so far removed from the production of things that matter, so utterly dependent upon artificialities and complexity to support their means.

While historical comparisons are quite valuable, I've seen little to change my gut feeling that this time will be different, if only by its scale. Humans are quite literally running out of room and the stuff of sustenance.

No frontier to escape to; no new worlds to discover; no fossil fuels or industrial bonanzas to seed a recovery; even fewer ideas acceptable to the 'investmentariat'. The promise of growth has always been a beacon of hope and a stimulus to recovery. There has always been the illusion that the grass is greener, somewhere. Inputs of recovery have always been available elsewhere.

What happens when it sinks in that societies must turn in upon themselves to transform their cultures into no-growth, sustainable communities? Historical examples for this also exist. Planet Easter Island comes to mind, though quite the extreme base-line; default in its truest sense.

We'll need very powerful stories to overcome our inherent need to over-exploit that which sustains us, and some very powerful taboos upon ecological usury. That this ultimate choice has been presented to us for some time now, and has been largely ignored, says much. We aren't handling this thing well. Not at all. The pain is baked in.

The upside? Most folks reading this likely will be long gone before the real fun starts.

Joe Johnson said...

Here's a link to the online version of the SmartMoney article you mention.

What drivel!

Wolfgang Brinck said...

Good points re default on debt as a stepping stone toward a steady state economy by way of a shrinking economy
It has occurred to me that it isn't just the financial industry that needs excess wealth to feed it. Jobs need excess wealth to exist. Jobs are a way to distribute the excess wealth to the majority of the population by having them do busy work that doesn't really need doing. As much of the busy work can no longer be financed for lack of excess wealth, many of us will have to make do in new ways. Or perhaps the government will once again get into the make-work business.

Renaissance Man said...

I was about 12 when I realized that, somehow, the Seven Deadly Sins of the Age of Faith have been re-worked into Seven Prime Virtues of the Age of Industrial Free-Market Capitalism. (Not exactly in those terms at that time, of course.)
If they were still sins to be abhorred, I wonder if we'd be in the mess we're in?
Treating such behaviour as 'sins' is a feature of small, localized, economies, whereas larger, complex trading economies, the sort promoted by the free-marketeers treat these behaviours as laudable.
Moreover, across history, I see only complex, centralized economies get into the sort of economic difficulties we're facing.
Small, localized, decentralized economies suffer from vagaries of local weather and predation by roving armed bands, but they rarely have 'recessions' or 'depressions', at least not that I can determine.
There is a lesson in there...

shtove said...


Negative interest rates = the age of making money off money is over.

I recommend the illusion of prosperity blog - the guy simply posts charts showing the failure of long-term exponential trends, with bitter sarcasm:

(the security code is "2m Eatist" - surely an underestimation.)


T'internet provides so many sources for understanding the financial disaster.

JMG is just one, but nobody crafts a better paragraph. Thanks.

Gary said...

As a newer regular reader, but first time commenter I first want to thank you greatly for the prolific amount of well reasoned writing you share with the world on matters of great importance and widespread ignorance or misunderstanding.

Something I have noticed, as a bicycle advocate and blogger who came into understanding the peak oil dilemma by way of tracing transportation spending and policy, is bicycles get fairly scant mention in most of the peak oil literature I've read. Even in Heinberg's The End of Growth, where he spends a small section solely discussing transportation ideas, car ride sharing features heavily, but bikes are not mentioned at all, and I've seen this focus in some interviews as well.

I find this to be a huge omission given that many US cities and towns are in the beginning stages of a bicycling renaissance that is finally gaining some traction and momentum in the past few years, and car pooling is at historic lows. Unlike many alternative vehicles schemes bikes are already abundant in the US but underutilized. 70% of the residents in my 8 square mile municipality own bikes, but the ridership rates for non-recreational riding are in the paltry 4%-5% range. America is a big country and our inhabited area spreads wide, but many US car trips are less than 5 miles and even less than 2.5 miles, distances easily covered by even the most non-ambitious bicyclist. The biggest hurdle is one of psychology, but I do see signs of that changing in at least some circles.

There is an enormous untapped potential for a mode shift there that could enable decent mobility beyond walking range even as the economics of driving strained heavily. With a properly outfitted rack or trailer, even substantial amounts of cargo can be carried over moderate terrain. As is common practice in countries like the Netherlands with high bike ridership despite unfavorable weather. They have much better bike paths than we do by lightyears, but take any city doing a freeway expansion and you slice a hundred million dollars (pocket change in our transportation spending world) off that wasted effort and you have more than enough to make incredible cycling paths and on-street lane striping. Most US cities overbuilt road and lane width and can fit in a bike lane without even making the politically contentious move of reducing the number of car lanes, something bike advocates working overseas in tight street spaces eye jealously.

When I hear Heinberg talk about transportation, I feel like even he can't imagine Americans giving up holding onto cars as long as they possibly can, or at least is not willing to say so publicly. But as a young person who sold their car in 2008 (and not because I couldn't afford it) and associates with many other millennials that gave up driving or reduced their driving significantly, often by taking up bicycling and public transit, I feel the potential for a culture change in transportation values is being overlooked. We have millions of simple to maintain machines already lying around that allow a human to travel further, faster, and able to carry more than walking, while under their own power and burning fewer calories per mile covered.

Since reading a few of your books, my own thinking has been that bikes could be quite powerful tools in the industrial scarcity and salvage stages of collapse as you have outlined it, and a salvage culture already exists in the bike co-ops all over the country keeping bikes running, teaching people their own maintenance skills, and building up bikes out of fixed up old parts and selling them to keep the lights on. The first co-purchase with my wife, then girlfriend, was an old Schwinn Twinn tandem bike much older than we are, and was acquired fairly cheaply. We were able to fix it ourselves with a little guidance at the local bike co-op, simple tools and some dusty manuals.

Any thoughts on the subject would be greatly appreciated.

Cheers from the west coast.

-Gary K

blue sun said...

Disclaimer: I don't want to waste anybody's time with the boring details of my personal decision-maiking, but I suspect that other people may be wondering about the same questions I am.

It’s funny you mention this topic. I was grappling with making a related decision just last week. It was fortunate that, after nearly getting laid off last month, I was able to find a new job. I’m very grateful for that. So I had to make a decision whether to participate in the new 401(k). Now my personal rule has always been, I wouldn’t do it unless the company provided an employer-match, which they do. If I save 6% of my salary they’ll add an extra 1.5%. So I think of it as a 25% return, because as a peak-oil-initiate I expect a 0% (or negative) return on any retail investment. I chose the only Money Market fund offered—I don’t know how those will fare in the coming decades, but I assume they’ll at least retain principle based on their short-term nature and the Federal move in 2008 to FDIC-equivalent ensure them—which I considered the most “safe” option.

There are, of course, other factors to consider: the limited choice of funds, the fees, the vesting schedule, etc. etc. This stuff is utterly confusing—I believe intentionally—But Anyway, the point is that I found myself focusing in on one specific tradeoff. I wondered, does the enticement now, to get a matching 25% of my investment for free, outweigh the possibility that in 30 years’ time, when I’ll be allowed to take out the money without penalty, the funds won’t be there? It’s not inconceivable to me that in 30 years, Vanguard, Fidelity, Merrill Lynch, etc. will no longer exist. Not to mention these ridiculously convoluted 401(k) laws. Will they even exist in the same form? All kinds of variables—changes to the early withdrawal penalties, the age of retirement, tax rules—could change the equation.

Well, I ultimately chose to take the 25% match now, partly from inertia, and partly hoping that I’d have enough time in the coming decades—local crises permitting—to make an early withdrawal, pay the 10% penalty, and come out in the black. Or maybe all will go well and these funds will still exist in 30, 40, or 50 years (for those who haven’t already drawn down their accounts)? I’d be curious to know your thoughts on that.

For me, this was the first time I’ve ever actually wondered whether an employer-match is a real or an imaginary incentive. I find myself wondering if some realms of my decision-making have not grasped peak-oil’s implications as fully as other realms.

Jason Heppenstall said...

Negative yields on bonds? Yes, that's exactly what is happening here in Denmark. Money is pouring into the country and putting a smirk on politicians' faces. Call it financial triumphalism.

I also noticed a recent article saying that the US corn disaster is excellent news for this grain exporting country as this year's cycle of heavy rains followed by intense bursts of sun has led to a bumper crop.

On a related note, don't you think that the rising tension between southern and northern European states i.e. the debtor and creditor states, is going to end with far more than just angry editorials? You made an oblique reference recently to an Irish poster saying something like 'I hope Ireland isn't going to be dragged into the next round of European wars.' If so it strikes me as there being a bit more than money at stake here.

Hidden Author said...

When are you going to do an article addressing the upcoming crisis of revolutions and regional secessionist movements? You keep saying (or at least seem to imply) that you will address this topic but you keep finding other topics more interesting to blog about.

Justin said...

Oh, I have this cartoon about usury in the context of the bailouts and all that - where the government gave money at no interest to financial institutions to lend out at low interest. The Overton Window.

The point I am trying to make is to consider how extreme and isolated the current political and banking system. The only acceptable thing to do in a government stimulus situation is the practice of usury, every other option including loans with structured debt forgiveness built in would be tarred as un-American, socialist, comminist, terrorist, etc. by the entire political system if it were even allowed to be brought up, which it is not.

This is not just the U.S., but every other country except Iceland. At this late date, I'd say the elites are mostly locked in.

Thomas Daulton said...

People have thrown out several good quotes here, and I am also reminded of the Tom Tomorrow quote from a previous stock market crash back around the 90s sometime:

"Small investors are indeed very important to the stock market, in much the same way that stranded motorists are important to B-grade horror movie plots..."

Gary said...

JMG, Smack-on as usual, but I have one small point upon which to quibble. Your point that charging interest and being paid back again is impossible without continuous economic growth is a pernicious myth. The best debunking I've seen was done by Steve Keen in his videos on and economic Crash Course:
The second video in the series gets to the point...
which is that as long as the bankers are spending their interest, using it to consume goods and services in the real economy, it is possible to have a steady state economy with a fixed amount of money in it and a viable banking sector charging 5% on the loans they make, etc.
So usual per-se is not the issue. I'd suggest that it is the accumulation of unpayable obligations by one class at the expense of another class - exacerbated by a Ponzi-based finance sector fueled on cheap energy that has put us where we are. But the argument that it is theoretically impossible to having a steady state banking system is incorrect.

Thomas Daulton said...

This would also be an appropriate time to repeat my recommendation that JMG and others interested in these subjects read David Graeber's book, "Debt: The First 5000 Years" (which another Archdruid poster, Justin, first turned me on to).

Practically the whole finance sphere is based on a specific numerical reckoning of debt and interest on debt, as your column today discusses. But people in other times and other places have conceived of debt very differently and resolved debts very differently. Given a contracting economy where it's not possible to keep making profits off of finance for its own sake, humans may return to other means of understanding and discharging debts.

In the past, in many areas where central governments were weak, debts sometimes tended to be resolved from family to family or homestead to homestead by sending a family member over to the other household for marriage or what was basically indentured servitude. People basically served as currency, in areas where currency was scarce or didn't yet exist. I wonder if in the future, labor may also tend to replace scarce currency. Hopefully with less emphasis on slavery, and more emphasis on things like time banks and community scrip/alternate currencies. If so, that strikes me as a good thing, cutting out the "moneylending middleman" so to speak.

The Extra-Environmentalist podcast, where JMG has given a couple of interviews, has several different episodes devoted to alternative forms of currency, typically local ones that bootstrap themselves without the need for a central government.

Graeber also makes the provocative point that the concept of "barter without currency" as we Americans tend to envision it -- "I'll trade you my cow for exactly 15 pigs!" "No, I'll only give you 12 pigs!" That is more or less a historical aberration. Graeber claims that the historical evidence says such strictly numeric bartering only occurs in situations where people used to have a hard currency, but the currency collapsed. In other words, money did not evolve out of barter as we (and Adam Smith) envisioned it, but rather barter as we envision it evolved after money died in a location. For most times and places in humanity's history, debts were discharged in a much more informal, fuzzy, qualitative sense, (what others have called a "gift-giving economy"). This despite the fact that ancient peoples did indeed have the math to handle debts. Common citizens simply found numerical debts too difficult and inflexible to keep track of in many cases; math was only for the rich.

I wonder if, in a collapsing-economy future, maybe Americans will finally give up their anal-retentive economics and trade with each other in a more mellow, less structured manner.

Allison said...

@ Gary - Bikes require significant petroleum inputs, too. Tires, metal refining, plastics, roads suitable to ride on, etc. They might be fine for transitions for a decade or two, particularly the sturdier mountain-bike models, but they're ultimately going the way of the auto. No sense investing much in terms of money or resources in them, though reasonably-priced used models do nicely between the time cars become impossible and the roads have crumbled. Horses seem a better bet for the mid- to long-term, or else walking...

But it's great that you've fixed them up yourself, and they're much better than cars, if you live in an area where they're workable!

John Michael Greer said...

Nathan, my take is that people don't want to talk about usury because most middle class Americans realize, at some level, that their lifestyles depend on having wealth they don't earn, often by means of usury. For them, to grapple with the reality of interest is to abandon any claim to a morally justifiable life. That's understandably unpopular.

Leo, excellent! You're quite correct, of course -- one of the most pervasive and destructive bad habits of modern thought is the inability to get out of extreme binary thinking.

Escape, thanks for the link! That's quite correct, of course, and it's all the funnier that people insist, on exactly the same basis, that a major war isn't possible in our time.

Blue, I've discussed the problem with that logic repeatedly in this blog. If your store of wealth consists of a stockpile of stuff -- any kind of stuff, including gold -- there will be no shortage of people who want to push you off the stockpile and take it for yourself, and sooner or later your ammo will run out. As the economy spirals downhill, gold will become a magnet for thieves, robbers, and governments -- for heaven's sake, what's to stop the US government from doing exactly what it did in 1933, making private ownership of gold illegal, and requiring everybody to hand theirs over to the government in exchange for a below-market payment in devalued dollars? (If you say, "my stash of guns," permit me to laugh; they'll send a couple of Predator drones, and dig your gold out of the smoldering ruins. End of story.)

Mustard, yes, I've heard that -- but of course it's an irrelevance; once the defaults take place, nobody's drowning in debt at all, goods and services are still being produced, and some form of trade will quickly spring up to exchange them. Thanks for the link; those are very compelling graphics!

Carp, if the Times of London is spouting that nonsense, we're in deeper trouble than I realized. Might be time to assume crash positions...

Paul, many thanks for the quote!

Yupped, what the big players don't realize, and can't realize, is that there's nowhere for the bridge to go. There's no new boom on the far side of the crisis, and so all their efforts to build a bridge are producing a bridge to nowhere.

Ivan, Pound was an odd duck but he got some things right.

Yupped, that's fascinating! I hope my readers have the common sense, though, to avoid the overpriced yuppie products and get sturdier gear at a fraction of the price from Lehman's or the like.

John Michael Greer said...

Alex, I'll check it out; the guy's quite right that a government seizure of gold in the hands of US citizens is one logical move as we proceed. As for minor "black swans," that's an important part of what I'm predicting -- remember, the model of decline I'm talking about isn't smooth, it's a sequence of less-than-total collapses and partial recoveries, zigzagging around a trendline that slides down toward dark age conditions over one to three centuries.

Twilight, precisely -- all that hallucinatory wealth will sooner or later be reduced to its actual value, which is zero.

Justin-with-the-hat, that sounds about right. As for grubs, depends on what kind -- different species have different natural enemies. A good book on natural treatments for problem bugs (there are several) should give you some ideas.

Xhmko, that's my estimate as well -- and it may explain why being able to grow at least some of your own food in a backyard garden is so important just now.

Mary, enjoy those melons! Climate change may do it, but my guess is that it's more likely to be military defeat. More on this down the road a bit.

Jetfire, you're welcome! Expansion breeds parasitism; contraction tends do the opposite. It may be a while before we get usurers again, once all this falls to bits.

Mister R., thanks for the tip! I'll look him up, he may just feature in an upcoming End of the World of the Week.

Avery, the article was probably paid for by the coal lobby; by some estimates 75% of the "news" that appears in US newspapers and magazines is produced by marketing flacks and placed with the media for cold hard cash.

Dweller, it's a workable plan.

Brien, feudalism usually takes a couple of centuries to emerge on the downside, so feudal lords may be rather a bit further off than that. We've already got the precursor, though, which is the post-tribal warband -- we call them "street gangs" nowadays, complete with the music and poetry that will eventually give rise to the heroic epics of the postindustrial dark ages. (You never thought of beowulf as rap, did you?)

John Michael Greer said...

Jason, the fracking news is important -- as the insurance industry backs away from fracking, the air's going to start leaking out of that bubble.

Ghung, I could just as easily have listed other examples of defaults at other times in history; it just so happened that these three were very recent. "It's different this time" is just as dubious a claim when we're talking about crashes as it is when we're talking about bubbles.

Joe, thanks for finding that -- and thanks also for a nice crisp summary!

Wolfgang, as energy per capita declines and energy prices rise, human labor will become more economical than fossil fuels again, and that will take care of the jobs issue -- to the extent that demographic contraction doesn't take care of it.

Renaissance, good! There was a whole genre of proto-economic literature in the 17th century that took that as its theme, insisting that the seven deadly sins were actually good for society because they fostered prosperity.

Shtove, thank you!

Gary, I'm far from convinced that bicycles will be viable in a postindustrial economy when rubber tires and paved roads will be a good deal less common than they are now -- though I'm prepared to be surprised. Since I don't use a bicycle myself -- I much prefer the more sedate pace of walking -- it's not something about which I have much to say in a personal sense, either.

Blue Sun, as long as you don't rely on having that money in 20 or 30 years, it's probably a reasonable gamble -- the odds are probably no worse than those at, say, a Vegas casino. Just make sure to have a plan B. In your place, mind you, I'd turn down the co-pay and take the additional cash now, then use it for things I'm much more confident will be useful two decades from now, but that's my call, not a universal rule.

Jason, there's a lot more than money involved, but it's the aftermath of the current crisis that will lay the groundwork for the European wars of the future. Hard to say exactly how those will shape up, though I have my suspicions.

Hidden, I'll get to that when I get to that -- there are, as you've quite correctly noted, other topics that seemed more immediately relevant.

Justin G said...

"one of the most pervasive and destructive bad habits of modern thought is the inability to get out of extreme binary thinking. "

Have you made any progress on your systems theory interpretation of the Daode Jing? The line "一生二,二生三,三生万物”(from one came two, from two came three, from three came everything in existence) seems to fit your practice of looking for the ternary.

John Michael Greer said...

Justin-in-the-hat, yes, I've noticed that. It'll be interesting to see what it takes to start opening up a wider range of options than simply another round of usury on top of usury.

Thomas, funny!

Gary, I'm familiar with that argument. It's simply a variant on the "trickle down" theory William F. Buckley used to promote -- after all, rich people also spend money on goods and services, and that ought to mean that vast concentrations of wealth in a few hands aren't an imbalance, right? What that theory neglects is that just as the rich person cycles some of his wealth into becoming richer, the usurer cycles some of his interest into more loans, and thus increases his unearned income, taking over a larger and larger share of the real goods and services available in a society, and leaving a smaller share for everyone else. Since all the usurer is doing is gaming the money system for his own benefit, rather than producing any actual goods or services, his activities are a net burden on the system and one that a stable or contracting economy cannot afford.

Thomas, it's a worthwhile recommendation!

John Michael Greer said...

Justin G., it's been on the shelf for a while -- I've had a flurry of other writing projects that had to come first -- but I'm hoping to get back to it shortly.

exiledbear said...

That the U.S. has another 5-10 years is being incredibly optimistic in my opinion.

As far as alternatives to the banking system, you might want to investigate bitcoin. Completely borderless, completely decentralized, and far as anyone can tell, impossible to double spend.

Ricardo Rolo said...

Well, in spite on the thruthfulness on blaming the current pains of EU in the debts ( some time ago I heard a european former PM stating that sovereign debts were not made to be paid , just "managed" ... ), there is a underlying cause that tends to be forgotten: the fact that the EU beaurocrats consciously deindustrialized anything that was more than 500 km from the Rhine river in the last 3 decades ( they called it "rationalization" in those days ), making the edges of the system completely dependent of the production that comes out of the Rhine valley area. True, the edges are in trouble because of the debt issues, but all the european countries west of Kiev nowadays ( except, as you stated, Iceland ) have cripling debts and the worse are the suposed core economies ( in fact the european country with the biggest debt, if you count the one shoveled to lower governemental entities, is Germany ... ) and the debt issues of the edge countries are less a symptom of bad management in, say , Portugal or in the Eire, than of the fact that the transportation of goods from Germany or France to those countries became far more expensive than in earlier years, putting strain in already hollowed out economies. This is not a excuse for those countries governements, OFC, just explaining why IMHO the cracks are appearing where they are and not somewhere else ...

On the SmartMoney article ... well, that is a classic bait the idiot manouver, just to spike the market out. Typical in in the end part of a bubble life ...

It is interesting that you mention Dante. Dante himself was from a city that was one or two centuries away of being bought out by a banker family ... in fact you can mark the end of the Middle ages mentality in a certain area by checking the attitute towards bankers and burghers in general. In all Europe, the first mark of the feudal age colapse is the fact that usury is no longer socially condemned ( the church attitude is pretty much irrelevant, since the Catholic church still condemns usury nowadays, in spite of having a bank too ... ) and the process was already running in the days of Dante ( just remember that the Templars demise was because the King of France was highly indebted to them and pushed his papal strings to "default" his debt ;) ). That first era of european banking was pretty much cut short in the XIV century and only resumed when the Portuguese and Castilian explorations opened new areas to European "interests" (as in the current US governement speech ;) )...

Anyway, in resume: in all of the times in History there was a strong banking development, the civilization that developed it collapsed fast unless they could expand their plunder basis. As our world does not seem to be increasing in size ...

GHung said...

@JMG: "It's different this time" is just as dubious a claim when we're talking about crashes as it is when we're talking about bubbles."

I respectfully beg to differ. I just spent the evening re-reading David Korowicz"s Trade-Off - Financial System Supply-Chain Cross-Contagion: a study in global systemic collapse ( ), which I recommend to all of your readers (pdf). It isn't so much that the ongoing processes are different, but how those processes are inplemented, and that societies' ability to respond has been grossly compromised.

We each reach our own conclusions, but my years of experience with large scale interconnected adaptive systems, along with excellent analyses such as Korowicz's, leave me a bit agog at our collective level of vulnerability to, what in the past, were manageable problems to some extent. This is the source of my belief that viable solutions will be local. Our reach has exceeded our grasp.

My Granddaddy had a saying: Bad shat always comes in threes" Financial/economic calamity, environmental/resource degradation, and social/cultural delusion will test humanity on a biblical scale. No way to sugar coat that.

Gary said...

JMG & Allison, thanks for the replies,

Concerning some of the potential challenges bicycling will face, many of these points are things I have given some time considering, but what I feel would be a fully adequate response is beyond the scope of a blog comment. I am working on a small "zine" publication & mini eBook aimed at the bike culture and activism scene in the US, to further expand on my own ideas about it.

In brief summary of some key points and addressing concerns; walking should be metric by which we organize human life, bikes don't replace that need, but we already inhabit the land beyond walkable scale. I'm starting to develop a view of bikes as a transitional "appropriate technology" for an age of deindustrializing transportation for a landscape where beyond walkable scale habitats are already widespread.

If bikes will make sense at the very end of this process and oil has run it's course, I'm not entirely sure myself. But we've got more than a billion bikes on earth already (estimates very widely as they are not well tracked), the hundred million or more in the US are not utilized to their potential, and they can be put to productive use carrying people and cargo with far less resources than efforts like trying to keep the cars going by other means.

Some other attributes I feel worth consideration; bikes can be put to work with modification producing small amounts of electricy, or kinetic motion applied to working water pumps, knife sharpening wheels, and other non-transportation tasks as well.

Before we used any synthetic rubber for tires, we used natural rubber from rubber trees. But it did not scale up to the mass motoring visions of Ford, despite his failed effort at a super rubber farming and manufacturing community in South America called "Fordlandia" before synthetics were developed.

Between simple patching of flats, the trickle of continuing supply, more durable designs, recycling and natural rubber, I imagine the possibility of bike scale tires enduring for a very long time even if it may only be sustaining on a far smaller scale.

Bike frames can be built from fast growing bamboo, and it's a more forgiving ride quality than metal which may be an advantage in a world with less maintained roads and paths. Passable roads and streets for bicycling do not require bitumen and massive infrastructure, but may be less easy and comforting. Calfee, a California company most known for it's production of handmade carbon fiber bikes, has started perfecting bamboo bikes using natural fibers for junctions.

A lot of metal that can be re-purposed and worked into components and gears is scattered all over the landscape. Not to mention perfectly fine parts on otherwise busted bikes. All the cars as they are slowly abandoned become another resource. For context, a German artists Folke Koebberling and Martin Kaltwasser, produced 2 (albeit very clunky and crude) entire ridable bicycles only from the parts of 1 broken car built in a gallery space. I rode one when their exhibit was complete, and hardly a practical ride, but it gets the imagination going about what may be possible with refinement.

I'll keep in touch when I have more writing out exploring the topic of bikes and peak-oil in greater detail. I've found it to be a subject worth exploring but there seems to be a lack of serious analysis connecting the interaction of the two from my own reading.

-Gary K

Brien said...

Seeing that translation of the Tao te Ching would be excellent; and thank you for another lucid insight into our predicament!

Regarding rap, I can definitely see the similarities. A professor of mine once showed me the following clip of a dramatic reading of Beowulf. At one point the poet is openly mocking Grendel for having his fingers painfully mangled. Not praising Beowulf, but mocking Grendal for having pain. Grendel needed to be fought and destroyed, but seeing the narrator exult so at another's pain was discomfitting to me at the time. Sadly, it may be a taste of culturally-condoned inhumanity yet to come.

On a very similar note, have you noticed the recent tendancy for soldiers and SWAT officers (and video gaming wannabees of same) to cover their faces with gas masks and face shields? It's almost a deliberate self-inhumanization, reminiscent of the ferocious masks that Norsemen often wore. I don't see it portending anything good.

Gary said...

JMG, No it's not really "trickle down", it's more the difference between stocks and flows where lies the confusion. Please realize I am no apologist for the financial sector! But there seems to be a belief among many that it is theoretically impossible to have a sustainable economic system that charges interest on loans if the entire economy cannot continue to grow. That is false, as is aptly demonstrated by Keen's example. This leaves aside more pressing issues of power and wealth inequities that you so nicely address. When we finally rebuild from the ruins of what is coming, we should not lose site of the fact that there are times when an exchange of presently available, but unused, capital is worth paying a premium for over time. That's lending. In itself not an evil, but very easily corrupted! I'm just trying to draw that distinction.

Kieran O'Neill said...

@Allison (and JMG) re: bicycles

It depends on how far down we go (or how far down we are talking about). Bicycles were born some time before petroleum fuel came into use, but certainly during the age of coal. Coal will likely be with us some time longer than petroleum (assuming it doesn't all get turned into liquids to go into automobiles).

As for the postindustrial world, well the first bicycles had wooden wheels, which would have been hellish to ride on, but not impossible. Rubber vulcanisation basically just involves adding sulphur, compressing the rubber and heating it to 170 celsius, all of which is easily achievable without fossil fuels.

And as for roads, for much of the history of the bicycle, they were ridden extensively on dirt tracks, and designed for that purpose. Modern road bikes may not handle that, but the average bicycle of 1-100 (or 50, or 150) years ago could. As long as there are roads that a wheelbarrow or cart could use, bicycles will remain viable (if they prove worthwhile to produce).

Far into the postindustrial, who knows? The relative energy efficiency of a bicycle (over humans walking or horses) may prove to be sufficient incentive to offset the cost of production. Or it may not.

Richard Larson said...

One of the best investments through-out history has been planting a seed. Some strains will even grow thousands of times its weight, and is a most important ingrediant to life. Growing seeds is but one line of investing - labor and capital(seeds).

Of course I am not typing about mining the soil.

Where is the labor and capital in these financial shcemes?

Money can not grow - I don't care how many more numbers your computer screen reads is up to. All these paper increases is/was courtesy of easy credit. Paper/digital money increases are less than current outstanding credit, so the increases showing on some computer screens are actually only a part of the grand negative. This in conjunction with the extracted productivity gains of fossil fuels is why we find ourselves in the pit of hell.

Credit needs a payback, and at this level payback is impossible - is impossible. And the readers of this blog know all about the fossil fuels story.

It is going to end badly for most, I will follow the ArchDruid on the timing.

Justin G said...

"I'm far from convinced that bicycles will be viable in a postindustrial economy when rubber tires and paved roads will be a good deal less common than they are now"

If paved roads were so important bicycles wouldn't be nearly as popular in places like sub-Saharan Africa. Of course, the super-skinny tires common on modern road bikes would be essentially useless, but there are plenty of bikes that can easily handle off-road riding.

As long as some form of scarcity industrialism can produce a modicum of vulcanized rubber, the extreme mobility extension of a bicycle would make purchase of tires worthwhile, even if the price were to skyrocket. Bicycles seem to be exactly the sort of appropriate technology that Schumaker was so fond of.

As an aside, my understanding was that usury was still fairly common during the middle ages in Europe and the Islamic world, just that it was only practiced by Jews. I understand if you don't want to touch that subject with a 10 foot pole, but it would be interesting to hear your comments on how that relates to the ability of a steady state economy to bear usury.

Gideon's Laptop said...

Jellyfish Rat-Heart Robots

"…a team of scientists has taken the heart cells of a rat, arranged them on a piece of rubbery silicon, added a jolt of electricity, and created a “Franken-jelly.” Just like a real jellyfish, the artificial jelly swims around by pumping water in and out of its bell-shaped body…"

Wow, modern day Frankenstein corporate researchers have made a hybrid robot jellyfish powered by muscle cells from a rat's heart, how practical! I want one now!

It's actually the new Jaime Dimon Proto-Type, a spineless jellyfish robot with a rat's heart, aka The Perfect Banker.

They can be cloned and have a movie featuring them:

The Rat Hearted Robot Jellyfish Bankers from Brazil.

I guess being a Reptile-Oligarch was shooting for far too high minded an avatar for the likes of a bankster CEO like Jaime.

Repent said...

Another bubble is the higher education savings bubble. When I went to university in the late 1980's tuition was about 2,000 a year. Now the same university charges about 16,000 a year. (And this is not a high end university either, private high-standing universities are much, much worse).

I moved out of home at age 17, working and attending university at the same time. Now at 16,000 a year for tuition, university would be out of reach for someone in a similar situation to the one I lived with. Wages have not increased for youths that would compensate for the rise in costs with no increase in benefit over the last quarter century.

Years ago my parents, forced my wife and I to take out education savings plans for our two kids. Even though they had never done that for me. (Suggesting neglect if we did not do so!) In the run up to the 2008 financial crisis the education plans actually came to us after 6 1/2 years and said- 'You don't have to contibute any more, the interest has compounded enough to shave 8 years off the payment plans'. (The plan has been flat with earnings since 2008).

My kids are still 4 & 7 years respectively from higher education and I'm certainly worried the bubble will pop long before then and the value of these plans will drop to zero. At the same time what of all the kids who don't have supporting parents to pay outrageous amounts for higher education, this is a scam as much as any other, one that preys on the youth of our society. The youth riots all over the place about tuition fees should not be considered unexpected in these circumstances.

What are your thoughts about higher education during decline and slow collapse?

Ivan Lukic said...

From late Ivan Illich:

The main notion of Ivan Illich is the concept of counterproductivity: when institutions of modern industrial society impede their purported aims. For example, Ivan Illich calculated that, in America in the 1970s, if you add the time spent to work to earn the money to buy a car, the time spent in the car (including traffic jam), the time spent in the health care industry because of a car crash, the time spent in the oil industry to fuel cars ...etc., and you divide the number of kilometres traveled per year by that, you obtain the following calculation: 10000 km per year per person divided by 1600 hours per year per American equals 6 km per hour. So the real speed of a car would be about 3.7 miles per hour.

John Michael Greer said...

Bear, yes, and people were saying that five and ten years ago, too. History has its own pace, which is not that of Hollywood.

Rolo, an excellent point. I've commented before how ironic it is that Europe fought two bloody wars to prevent Germany from getting the hegemonic power over the continent that European politicians were in such a hurry to give it in the last few decades. Notice also that when they defend the Eurozone project, they tend to talk about how important it is to prevent a return to the, ahem, little difficulties of the past; I sometimes wonder if what they're actually saying is, "Look, if we give the Germans what they want peacefully, we won't have to get invaded by them again!"

Ghung, you did notice that I critiqued that very study in last week's post, I hope? It makes the usual mistake of fast-collapse scenarios, which is to assume that those who have the most to lose in a fast collapse, and the largest range of options to do something about it, will sit on their hands and do nothing while their world comes to its end. Still, that's the beauty of dissensus: you prepare for the future you see coming, I'll prepare for the one I see coming, and the chance that at least one of us is right goes up.

Bicycle Gary, I'd very strongly urge you to start a blog on the subject of post peak bicycling and repost to Energy Bulletin and elsewhere. If it's your passion, you're the best possible person to talk about it, and get other people talking about it.

Brien, you're seeing the first stirrings of the warrior culture of the postindustrial dark ages. No, it's never pretty, though it may be necessary.

Usury Gary, there I disagree -- it's exactly the same as the trickle down theory, and relies on the same obfuscation between real wealth, on the one hand, and the arbitrary tokens we call money, on the other. In a contracting society, there is no surplus of unused real (nonmonetary) capital -- that's entirely a feature of eras of growth. When you have surplus real capital, it makes sense to allocate it to other uses, and usury is one (deeply flawed) way of doing that. When all available real capital is in use, using usury to game the monetary system to extract some of it in interest, for the personal benefit of the usurer, is a luxury no society can afford.

Kieran, sounds like you and Bicycle Gary (apologies for the nickname, but since we have multiple Garys here, some such tag will have to do) might want to talk about starting the definitive post peak bicycle blog.

Richard, excellent. Labor and (nonfinancial) capital are real wealth; money is a set of tokens, that can be rigged to "grow" in various arbitrary ways -- but the laws of money are not the same as the laws of real wealth, and trying to make money substitute for real wealth is a strategy with a very short shelf life.

Justin, not with a ten foot pole!

Laptop, funny.

Repent, higher education right now is a corrupt industry that exists to maximize its own wealth and influence, largely at the expense of students. If I had children, I'd encourage them to do almost anything else. A trade school that teaches some needed hands-on skill would be about the only exception I can think of -- and even there, an apprenticeship would probably be a better option.

Ivan, thus about walking speed. That makes perfect sense to me.

Alice Y. said...

Thanks for another great post JMG, always interesting reading.

'The Times' of London is owned by Murdoch's News International and I have heard of difficulties since 1981 which could result from the owner's agenda; I think it is not the same creature as formerly.

Cherokee Organics said...

Hi John,

The weather here today has had me imagining that I live in the Scottish Highlands (Dunvegan possibly?). Mist, rain (2 inches over the past two days), gusty winds, everything that a proper winter should be. Of course less the snow, frozen ground and sub zero temperatures which would be rather unpleasant and probably kill off my sub-tropical fruit trees!

Back to the topic at hand though.

Usury is closely tied to both the wealth pump concept and self interest.

Usury is really an individual pursuing something for nothing. The ultimate - and unspoken - goal though, is if that individual acquires enough monetary assets then their income will be large enough that they won't have to work.

Yet someone has to work. As a society, we tend to believe we can outsource work, pollution, capital costs to someone, somewhere else and go on as if nothing is wrong with this picture.

A steady state civilisation is additionally painted as one of unrelenting hard work. This is patently untrue and I think it may also be one of the manufactured visions from those benefiting most from the present system.

There were a few historical accounts here that the Aboriginals used to think that settlers and convicts from the UK were crazy because they worked so hard when they could have been enjoying the bounty of the environment (and working much less).

The accounts of the activities of subsistence farmers in northern Italy (which I've been reading about recently) also inclines me to believe that they don't work as hard or as long as most office fauna jobs.

However, for the majority of the Industrial worlds population, there is little collective memory of such matters and what memories have been retained are mutated with the desire of individuals to travel and consume.

As always the truth lies somewhere in between.

I worry about food. Those mono culture farms are very efficient, but not very resilient to environmental shocks. More than anything else, this will be our undoing.

Hi Thijs,

Nah, there is little in the way of drought in Australia at the moment (the south west corner of the country is an exception). The previous two years were the wettest on record here (over 1,400mm each) and this year is just extremely wet but not record defying.

I never realised that the Netherlands was such a large exporter of food stuffs. Whilst the Netherlands are very productive per hectare for wheat, they are far behind Australia in terms of volume - of which a lot is exported to Asia, but certainly it is not enough to make up for the loss of the corn crop in the US due to the drought. We don't even rate as a corn producer because of the relative infertility of our soils. I must admit that I have struggled here with corn.

Hi Mary,

How good is French sorrel? The stuff grows like a weed here. It would be good for drought affected areas too because it has such deep tap roots which can pull up moisture and nutrients from way down in the sub soil. I like the toothy taste too as do the chooks.



monsta said...

JMG wrote:
"Ghung, you did notice that I critiqued that very study in last week's post, I hope? It makes the usual mistake of fast-collapse scenarios, which is to assume that those who have the most to lose in a fast collapse, and the largest range of options to do something about it, will sit on their hands and do nothing while their world comes to its end. Still, that's the beauty of dissensus: you prepare for the future you see coming, I'll prepare for the one I see coming, and the chance that at least one of us is right goes up. "

Sure the government and financial elite will respond but you make the assumption that their response will mitigate the situation and reduce the speed and impact of the problem at least for a time. Let us not forget the law of unintended consequences. Time and time again politicians have provided 'solutions' that merely mask the initial problem but create much larger unintended consequences down the road. I would say there is more than a decent probability that their actions and responses may actually exacerbate the situation. Just witness the handling of the financial crisis and EU for proof of this.

When making our conclusions we also need to factor in their current knowledge and more important the ideologies they beleive in and act upon. The politicians and financial elite have access to less than perfect information. They also hold certain bias due to the ideologies they follow. These two factors can elict a response that actually works against their best long-term interests. I wonder how many politicians/wealthy people really believe on the end of growth, resource depletion (peak oil etc.). Without subsribing to such factors their solutions (i.e. promoting more growth at all costs) may lead us to a more vicious collapse than if they sat down, twiddled their thumbs and did nothing.

xhmko said...

@JMG, Absolutley. At the moment I've got an experiment running with rye, oats, and wheat to see how much will come from just a little path of each. Also trying my first batch of chick peas, and kidney beans, plus the standard crop of broad beans. But jut looking to grow some stuff for keeping longer term. I'm also engaged in a very funny discourse about my other home food source, my chickens (for eggs) with the local council right now, who have some very weird notions about what chickens require to be kept in a backyard.

@ Bike Gary, That's a really cool about bamboo. I just this morning took a removalist's trolley, and set it up as a bike trailer by using the upright part of one of those little aluminium scooters that are so popular to throw away over here (Australia) as the connection to the bike. I just hose clamped it the ittle rack on the back of my bike. It steered liked a charm. And I rode it off to a gardening job. And then got another job offer on the way home. I'm looing to make it into a little sideline business and off to a good start.

The only issues I see affecting bicycling in the long term, is the supply of grease and the availability of the quality of rubber needed. Being able to make it per se is not the same as being able to make it. Perhaps lard, or some form of vegetable oil would be sufficient as grease substitutes but I doubt it as they tend to get sticky. Of course the wheel has been around for millenia now, but pumped up rubber tyres with little valves. We'll see. So long as we get used to rough riding over pebbly, washed out walking paths it'll be fine. I'm definitely making the most of it in the meantime, and pretty much only make my bikes up out of ones that have been thrown away. If you do start a blog, post a link up here.

Bill Pulliam said...

Re: post-industrial bicycles... regardless of their long-term sustainability, I think they will be useful in the transition as a response to poverty and fuel scarcity. As we have discussed here many times, this is a long and erratic path down. Roads, rubber and steel are not going away in a *poof*. I've noticed more bicycles around here in the last year or two, in an area that does not have a "bicycle culture" in any way, shape, or form.

Stanley Dundee said...

Dear Archdruid:

Many, many thanks for your clear-sightedness and plain speech from a long-time reader but first-time commenter.

I regret to call your attention a bit of apocalyptic memery in your own post:

That’s what will happen, too, another five or ten or fifteen years down the road, when the United States either defaults on its national debt or hyperinflates the debt out of existence.

Must we pass from our status quo to financial apocalypse? A more nuanced view takes into account a key feature of national finances that you've not considered here: monetary sovereignty. A monetarily sovereign nation issues its own "fiat" currency (essentially by spending it into existence, although that's often obscured by simultaneous issuance of debt) and allows the currency's exchange value to float freely against other currencies.

Most importantly, a monetary sovereign issues its debt in its own currency and hence can never be forced to default on its debts (although it may choose to do so as a matter of policy). Nations lacking monetary sovereignty may use a currency of which they are not the issuer (as in the Eurozone), or peg their currency's exchange rate to another currency (as in pre-default Argentina), or merely issue debt in a foreign currency (as in pre-default Russia). Note that none of these apply in the US, nor in Japan, nor in Iceland, all of which are genuinely sovereign, monetarily speaking.

The practical consequences of monetary sovereignty make it quite plausible that the US and other sovereigns will muddle along quite a bit longer than you might expect, encountering neither default nor hyperinflation. Consider Japan, which has staggered along in near depression for over twenty years, since its property bust of the late eighties. No sign of default, mild deflation, and near zero interest rates. With all the bad debt lurking on private balance sheets, and the fever for austerity raging in so many centers of power, we may have more to fear from deflation in wages and prices (e.g. real estate) than from inflation! In a fiat currency, inflation versus deflation are policy choices.

All this should not be construed to detract from your larger message, which is a sound one. Most of us live in the real economy, in which your theme of contraction in face of resource depletion should be taken as seriously as ever. But money is a key tool, and if we are to manage decline so as to preserve as many blessings as we can, we must be clever in our use of tools!

For more about these topics, I suggest the works of Randall Wray, Bill Mitchell, and Stepanie Kelton. Michael Hudson is most illuminating on the use of debt as a weapon of class war. Richard Koo has provided useful analysis of balance-sheet recessions such as we are now experiencing. The ongoing discussion at the Naked Capitalism blog is insightful and entertaining. Finally, the work of Hyman Minsky is invaluable for understanding the debt-driven cycles of a capitalistic economy.

Thanks again for such a great work!

John Michael Greer said...

Alice, well, that would certainly explain a thing or two.

Cherokee, exactly -- the attempt to get something for nothing is one of the enduring forces in economic history!

Monsta, I find that history makes a much better guide to what governments are likely to do, and what the effects will be, than abstract speculations. What history shows is that governments typically fiddle around doing as little as possible -- as they're doing in Europe right now -- until the crisis reaches the point at which national survival is an issue. It's at that point that drastic remedies come into play; those remedies have been used many times in the past, and they work. They're simply very painful for the rich, which is why they're not used until there's no other choice. We're still in the fiddling phase; how much longer that will last is an interesting question.

Xhmko, excellent!

Bill, oh, granted. My doubts are purely about the long term viability of bicycles, which is why they don't play a part in Star's Reach; as for the transition, since I don't use a bike, I'll leave discussing them to those who do.

Stanley, our status quo has already reached the point at which the Fed is the major purchaser of the US national debt -- that is to say, we're paying our national debt via the printing press. I know of no country that's ever done that and avoided a massive crisis not too far down the road. To claim that inflation and depression are policy choices is true in an abstract sense -- when a country's over its head in debt, it can spin the presses and get hyperinflation, or it can refuse to do so, default, and get depression -- but taken as a blanket statement, it's a huge oversimplification of the complex processes by which money either succeeds or fails at its function of facilitating the exchange of real wealth. That said, of course we won't go directly from the current status quo (a failing economy and the national debt being financed by printing money) to default or hyperinflation; there'll be any number of intermediate steps, short term crises, and downward lurches on the way to the endpoint I've outlined, which is why I suggested the final crisis is five or ten or fifteen years away -- plenty of time for those intermediate steps, you'll notice.

Edde said...

Good morning John Michael,

Watermelons & blueberries are in, figs nearly done. We're over run with chanterelles!

I'm with Bicycle Gary! I've operated a mostly recumbent bicycle business since '95. Now transportation/work bicycles & tricycles plus recycled cycles dominate my interest & shop.

Each person need not cover ALL the food bases if they live in proximity with folks who do. I belong to a CSA (1 1/2 miles down the road) and several neighbors raise chickens. Those watermelons were traded for bicycle maintenance. We garden in containers and are installing grow boxes now I have more time to tend them.

I look forward to your weekly articles - they stimulate clear thinking about what I'm doing.

Good luck to us ALL!


Odin's Raven said...

Here's a story of imminent apocalyptic flooding, a reprise of Cayce, which you might like to follow. If anything like this happens in the next year you will lose a lot of readers!
See the Coming Flood part2 section under today's date.
Apparently one of your American Druidic colleagues has been getting similar warnings.(Scroll down to The Coming Flood) Don't the spirits tell you this kind of thing?

(My previous comment on a different topic seems to have got lost in cyberspace.)

Raymond Duckling said...

About Bicycles,

I am confident that a simple version (a.k.a. no composite materials, nor switchable gears) of this technology would be able to survive in the long long run. The main 2 roadblocks (pun intended) would be availability of appropriate material for the wheels, and decaying road infrastructure.

Thinking about the last one, you guys may want to check this article about the Chinese wheelbarrow. It has a section on how the problem of infrastructure decay affected both China and the former Roman Empire, roughly at the time of the (European) Dark ages.

Of course, there are tradeoffs all over the place (by example, support of cargo animals does not come cheap and it requires a different set of specialized skills in the form of husbandry). I suspect different solutions will arise depending on local conditions, and plain dumb luck.

Gideon's Laptop said...

An amazingly lucid summation of the global financial situation.

It begins with the news item that the world's .01% have $24 trillion +++ hidden away in off shore havens like the Caymens, all channeled basically through the City of London, the least regulated financial center on Planet Earth.

The City of London, world headquarters of Financial Terrorism. MF Global, Lehman Brothers collapse, Bernie Madoff, LIBOR rigging, JP Morgue's huge loss by 'rogue' trader, ALL through the City of London. All financial crimes of huge proportion alway come from London, few rules, almost no enforced rules, a financial criminal's Valhöll (Hall of the Slain)

"...Western bankers are using weapons of mass financial destruction as the world is entering into global recession and depression.."!

Bill Pulliam said...

JMG -- no disagreement. I am thinking narrowly about the rest of *my* life, during which I expect bicycling to town will hopefully remain viable for as long as my body holds together. We are 5 miles from the courthouse, so a bicycle changes 4 hours of walking (round trip) into less than an hour of pedaling. I view it as bridging the gap between the car culture and the eventual foot-and-hoof culture; the poor man's pony for as long as we can still scrounge together parts. It's going to take quite some time for the foot-and-hoof system to re-emerge; at the very least, horses and mules don't breed like rabbits and you can't just call millions of them into being out of thin air! I expect I will live long enough to see draft dogs and goats reappear; I would not be surprised to find myself using one. But I am wandering from the core topic of the week...

I am still concerned about what happens with we who own property and hence owe property taxes after a financial collapse. I asked this before, not sure I saw an answer: In past financial collapses, has there been mass confiscation of land from the less affluent because taxes are still due and payable in cash but there is no cash to be found? Or has something intervened? This could conceivably speed the resurrection of feudalism by turning landowners into tenants at the mercy of the State or other landlord who acquired title to their land after a tax default.

John Michael Greer said...

Edde, enjoy those chanterelles! If I recall correctly, they dry well -- you might consider drying and bagging a bunch for future barter.

Raven, yes, this kind of thing pops up every year or so online. The predicted catastrophes never happen, since people are misreading obviously symbolic experiences in boneheadedly literal terms. My Druidic colleague -- well, he's answerable to his own tradition and not to mine, but if somebody in AODA came to me with that sort of claim, I'd recommend a refresher course in the nature of visionary experience.

Raymond, well, we'll see.

Laptop, do you remember how I was talking about the way that people were going to be flailing around to find somebody to blame for the current financial mess, and pin as much of our collective shadow on the chosen scapegoats as possible?

John Michael Greer said...

Bill, I don't know of an example of mass seizure of land in the course of an economic collapse. It's usually quite the opposite -- if the financial system comes unglued, the rulers are more than usually vulnerable to mass unrest and upheaval, and very often (as FDR did) go out of their way to placate the common people with steps like debt relief on property and a moratorium on tax sales. Any aspiring demagogue, after all, can win a huge and passionate following by promising something of the kind, so the existing ruling class typically bows to the inevitable and promises it first.

Glenn said...

I seem to have made a mistake, and my first bicycle post disappeared. In the mean time, several other people have said almost everything I was going to.

One critical aspect of how common they will be is the amount of iron we can keep above ground. The technology of the basic "safety bicycle" as the Victorians called it, was late 19th century, hardly complicated. _But_ their's was an industrial civilization utilizing coal to produce huge amounts of iron and steel. As others have said, natural latex rubber can be used, and the climate in which it grows seems to be coming more common in N. America ;). That being said, bicycles use two orders of magnitude less iron, other materials and energy to produce than automobiles do.

So I think they will be usable, and maintainable right through the periods of Industrial Scarcity and Salvage. The Dark ages between Salvage and the Ecotechnic? Not so much.

Anyone interested might read Martin Caidin's book "Bicycles in War". A soldier on a bicycle can carry as much as an infantryman, farther and faster except in really bad terrain. Even then, he can usually push it while it carries his pack. It usually costs about as much as a horse, but does not have to be fed. The soldier may eat a bit more, but not in proportion to the increase in mobility. Bicycle Dragoons are quite practical. They are not a replacement for cavalry, as they cannot use both hands for weapons (you can train a horse to respond to knee control, and not need reins). And due to lack of the horses mass, cyclists do not replace heavy lancers or other impact based shock troops. Anyway, much as JMG said coastal states will have a great motivation to keep sail cloth and cordage factories functional, all states will have a strong motivation to keep bicycle production technology going.


Marrowstone Island

Bill Pulliam said...

Raven -- just to echo JMG, apocalyptic visions are "visions*, they are not premonitions. It is no surprise at all that people have images of flooding impressed into their brains -- Katrina, the Japanese tsunami, the movie "2012," and videos every week about massive mudslides and floods from all over the world. The world is a big place, there is a calamity of just about every kind happening somewhere on it every month. Even those who do not have a constant stream of TV and YouTube images fed to their brain still hear about floods (fires, storms, etc.) all the time unless they are hermits. So of course when troubled times feel like they are imminent, the mind uses the visual language it knows to represent "Big Trouble Beyond My Control."

One only needs to look at the absurdity of Fundamentalist End Times Eschatology to see what comes of taking your visions literally. Naked people floating into the sky? Really?

Bill Pulliam said...

JMG Re: foreclosures -- that is exactly what I was hoping you would say. It did seem to me that it would be a recipe for populist revolt; but I don't have the broad historical background to really know what has happened before.

Mark Luterra said...

Regarding the bicycle debate, I would caution against being too certain what will and will not be viable in the distant future.

If we accept the two tenets of Peak Oil, namely that
1) Industrial society is completely dependent on fossil fuels, and
2) Alternative sources cannot provide anywhere near as much energy as fossil fuels,
it still doesn't necessarily follow that the end of fossil fuels will mean the end of everything that currently requires fossil fuels.

As I like to remind naive optimists and doomers alike, our renewable energy systems have not yet been tested. They are, at present, a warm, fuzzy, largely irrelevant addition to fossil energy, and largely dependent upon fossil energy for their production. Thus it is wishful thinking to assume that as fossil fuels decline renewables will magically take up the slack. But it strikes me as equally wrong (unwishful thinking?) to assume that these technologies will fail to support themselves when they are truly needed.

One thing that the fossil fuel age has given us is a deep scientific understanding of physics, biology, chemistry, etc. Most of the ongoing research will disappear when the energy crunch comes, but the knowledge will remain. It may be wishful (since I can't provide solid proof), but I have to believe that once all the world's scientists are out of work, at least a few will sift through that knowledge for workable ways in which humans might tap some fraction of the terawatts ultimately provided by our Sun. Whether that is photovoltaics produced using solar energy, solar/wood furnaces to smelt metal, substitutes for rubber in bike tires, or any other critical need of the future, I find it just as unreasonable to assume that it can't be done as to automatically assume that it can be done. We don't know, and since none of us will be alive when the current generation of salvageable materials runs out, it doesn't really matter. In my view, when the future is uncertain, and when the possible outcomes have no real bearing on our life choices, then it never hurts to err on the side of hopefulness.

Kevin said...

For the poor and particularly for those on fixed incomes, isn't hyperinflation quite a bit worse than default and depression? My guess is that that's the "solution" the USA will probably opt for, given our longstanding subservience to the ideologies of captial.

Tyler August said...

Joining the Great Bike Debate, my bet is that they will be around for the long haul.

I suspect bamboo frames will be in vogue, but I have seen a number of beautiful hardwood bicycles as well. Even composites aren't out of the question, using natural fibers and epoxy-like resins that can be cooked from soy, canola or other oils in processes I think any enterprising medieval alchemist could master.

@xhmko brought up grease, but the Industrial revolution was launched on biological-sourced greases.
As for wheels, for a long while performance rims were made of hardwoods rather than more-pedestrian iron, and composite spokes are the "in" thing in the racing world right now. (See my point about composites). Even if biologically sourced composites prove unsuitable, the first bicycle wheels were really just cart wheels, and we can go back to that at a moderate weight penalty.

That leaves metal gears and bearings, though the first bicycles, too, lacked ball bearings. And the chain, of course.
Aye, the chain's the rub. The chain looks scary, when you think of a poor blacksmith trying to hand-forge all those hundred fiddly bits, but most of it could be stamped out by a water-powered mill. The chain isn't the soul of the bicycle, either. One can substitute belts (leather, perhaps?), drive shafts, or even rope in one Hungarian design.

Needless to say, if anyone does want to start a Post-Peak Bike Blog, I'd be very interested in joining in.

Robert Mathiesen said...

If I'm not mistaken, goose grease (made from goose fat) was used effectively to lubricate machines before petroleum-based oils and greases were developed.

Robert Mathiesen said...

The academic institutions of "big science" will surely break down within the next fifty years, but much of the knowledge will remain for a good length of time in the form of the original paper journals and handbooks.

And even after the end of "big science," there will still be engineering, which in some ways will be far more useful day to day than science. Engineers are, on the whole, highly practical people, and have the knack of kludging things when needed.

My father was a mechanical engineer. He had nothing more than a bachelor's degree, and he had not earned stellar grades while in school, either. Even so, he was an effective part of the team that first designed the Norden Bombsight, which was a primitive mechanical analog computer used during WWII to deliver bombs from aircraft with much greater ease and accuracy than had been possible before. (Among other things, it was used to deliver the two atomic bombs that were dropped on Japan.) Subsequently he was part of another team that designed the first mechanism to let satellites sense orbital decay as it occurs and automatically correct for it, thus enabling them to stay aloft in fixed orbits for much longer periods of time than had been possible before.

His father, in turn, had no education whatever beyond public high school. Even so, he worked as an electrical engineer for Otis Elevator Company, contributing to the design of the mechanisms that even now prevent an elevator from plummeting to the bottom of the shaft when its cable breaks.

The point of these family reminiscences is simply that you don't actually need a functioning network of research universities, or even a nationwide system of college and university education, to produce significant numbers of highly competent engineers. The mathematics and science courses of a public high school provide enough to get a talented young engineer started, and the rest can be developed on the job under the tutelage of older engineers.

xhmko said...

@Tyler August, it's a good point about the industrial revolution. I'm not sure exactly what lubricants were used in those factories but, there are a whole lot less whales around these days too, and a whole heap more squeamishness about killing them for oil. Still, it's a good point. There are also self lubricating timbers like lignum vitae and tallow wood that would work well and that were used for high resistance cogs and the like. The thing is that this is all looking like 100 years in the future talk, which is worth having now, especially if you want to get a plantation of lignum vitae going, but its still a way off.

As for chains, I think, we should always be ready to rethink these systems. You could probably get away with knotted rope for a short life span chain. And if rubber is still in vogue, well that's what is used in some harley davidsons, a toothed belt, steel reinforced no doubt. But they need to provide a decent amount of torque to make bicycles anything more than people carriers. Pedalling up hill puts a lot of strain on a chain.

If chains are to survive in anyway like those we now have, then it will probably be specialty of a local set of blacksmiths in an area where there is a market, and return for doing so. Plus the added benefit of having lots of resources handy. So we're basically talking about cities as always being the centre for bicycle production and maintanence.

Robert Mathiesen said...

JMG wrote that "higher education right now is a corrupt industry that exists to maximize its own wealth and influence, largely at the expense of students."

Having spent my adult life within that system (at Brown University), I have seen the very great changes it has undergone from about 1960 onward. I want to bear witness that JMG quite right. His words apply not only to the best ivy league and state universities, but generally to higher education throughout the United States.

He also writes, "If I had children, I'd encourage them to do almost anything else. A trade school that teaches some needed hands-on skill would be about the only exception I can think of -- and even there, an apprenticeship would probably be a better option."

Again, the Archdruid is spot-on here. I do have children. One of them was smart enough to figure all this out for himself half way through his undergraduate education. He dropped out of Brown at the start of his junior year and built a very successful career for himself on computer expertise that he had largely developed outside of formal schooling. The other had to learn the same lesson in the school of hard knocks after finishing his PhD in cosmology (a branch of physics). He is now happily employed as a technical writer and editor of technical writings in France, where our only grandchild (his daughter) is growing up and will almost certainly escape the worst parts of the future in store for the United States.

It strikes me as significant that my family's history in North America will end in such a way. I have a very thin line of ancestors and descendants -- only one child in each generation has had a child of her (or his) own since the 1870s. We came came to North America from Europe in the early 1600s, and we played our small, odd parts in many of the developments that made the United States what it has become. Now, after sixteen generations, things are probably coming to a slow and (so far) barely perceptible end here -- both for my family line and for the nation in whose history we have participated for half a millenium.

SLClaire said...

Re the posts last week and this trying to argue that fast collapse will happen this time because states are so much more complex and energy use is so much higher than ever before: remember the Soviet Socialist Republic? It collapsed in 1991. OK, it was poorer and not quite as complex as the US of the time. It's nearly my bedtime so I'm not in a humor to search for the exact ratio of former Soviet Union GDP or energy use to that of the US. But it wasn't more than an order of magnitude less for each based on memory (I was in my 30s at the time). When it collapsed, exactly what JMG says would happen, did happen: responses were kluged together by the state and ordinary people alike. Yes, the death rate went up. Yes, people became poorer. But they didn't revert to the Stone Age. We won't either. You want documentation, read Reinventing Collapse by Dmitry Orlov.

True confession, again: I live off of interest, so I suppose I'm one of the evil folks being derided this week. My husband and I reduced our spending enough that our (modest) savings from the 1970s through the 1990s, invested in various US bonds, brings us enough to live on and has for ten years now. I'd like to say I have the moral scruples to stop doing this, but the fact is, I'll keep on doing it for awhile longer. However, we are gradually turning the principal into useful goods for a low energy world as bonds redeem. Meanwhile, we have started getting pensions, which are the same thing all over again ... about the best I can say is I have learned how to grow food pretty well and my husband is a good brewer and winemaker, so we at least have some useful skills for a low energy world.

Cathy McGuire said...

I realize this is more appropriate for the previous post on denial, but I had to share:

From the Jetsons to Cory Doctorow, science fiction writers of all stripes have imagined a world where any object could be instantly created. Modern economics on the other hand, is built on the principle of competition for scarce resources. And while it may not seem like a video game and printer could alter this economic reality, we beg to differ. Minecraft's creative mode is the perfect vehicle for understanding a Post-Scarcity world; a place where resources are permanently available and constantly regenerated. It shows that with unlimited resources, people end up creating amazing digital structures! Of course, a world of infinitely available resources seems pretty fantastical until you consider the Makerbot and the future of 3D printing. The Makerbot is an at home device that allow you to print real three dimensional objects, meaning a Minecraftian future where you can print anything you want at anytime might not be that far away...

Um... so... being able to print something means that the raw materials just appear out of the air?? This would be funny if it wasn't scary...

Cherokee Organics said...

Hi John,

Thanks. It also occurs to me that if we were to collectively tackle the debt problem, we would also have to tackle the asset problem at the same time. The banks and economists tend to view loans as being securitised against assets - generally property, but they can also be intangible assets, debtors - all sorts of assets really.

Our collective delusion about the value of assets feeds directly into the debt problem and makes it that much easier for the lender to make a living.

Sometimes I wonder about property prices here. Back in the 1980's it took about 3 times the median family income to purchase a house and now it takes almost 8 to 9 times the median family income here. However, now it is the norm for two people to produce that median family income whereas during the 1980's this was not the case.

I strongly suspect that we've been had. No wonder the economists are always banging on about labour productivity...

Hi Bill,

I would have thought that for land taxes to be levied, that they would also have to be collectable. Meaning, services have to be provided for those taxes and the collection would have to be enforced. I sort of think that perhaps either of those conditions would be difficult in a crisis situation, although I don't know what happened here during the Great Depression and wonder about this aspect too.

I also wonder whether ability to occupy and utilise land may also provide a path to ownership during such times. The reason I think this is because of the general lack of farming skills in the general population. It all comes back to food. I’m only speculating though.



Bill Pulliam said...

Amusing... substitute the word "internet" for "bicycle" and we have had this discussion many times. Just because it is possible does not mean it will happen. It'll depend on all the tradeoffs of needs and effort. Something that has not been mentioned much is freight capacity. In a post-fossil-fuel era there isn't likely be a lot of travel just for travel's sake; nor will many people probably have daily commutes to "jobs" that require them to bring little but themselves and the clothes on their backs. Much of the time you will be carrying something. If you add up each progressive loss of efficiency/increase in weight as you replace each component with non-metallic substitutes, and you add the need to carry 50 pounds of freight on each trip, I suspect you might find the bicycle dies the death of a thousand cuts. Easier to hitch up the goat to the cart, or wait for the neighbor and his mule on their run to market and see if you can catch a ride in the cart with the cabbages. Or just shoulder the napsack and hoof it yourself.

There is a bit of imprinting of an image of happy people pedaling their way into a green future; it shows up in pop culture fairly often. It's kind of the white picket fence of the the fantasy green village of tomorrow. If wishes were bicycles then beggars would ride...

But as I said before, I don't expect to live in the post-petroleum world, and I'm already living in the post-peak-oil world. I certainly don't expect to personally outlive the metal-frame, rubber-tire, chain-and-sprocket-drive bicycle. But I don't expect to outlive the pickup truck either (even if it is bio-fueled and only used for occasional medium-weight hauling towards the end of my life).

GHung said...

@JMG: " prepare for the future you see coming, I'll prepare for the one I see coming, and the chance that at least one of us is right goes up."

My preparations will be the same regardless of how things play out, and very much along the lines that you have laid out. I did notice your critique of Korowicz last week, which is why I took the time to reexamine the paper; thought it might be useful to repost the link for those who may have missed it. I'm not religiously convinced that fast collapse is in store for industrial society, yet am quite sure the potential exists.

It makes the usual mistake of fast-collapse scenarios, which is to assume that those who have the most to lose in a fast collapse, and the largest range of options to do something about it, will sit on their hands and do nothing while their world comes to its end."

It occurs to me that it may be the greater mistake to assume that TPTB have the sort of control you imply. The options you mention that they may have may also be as illusory as their perceived wealth and power.

Stoneleigh reiterated, yesterday:

"The formal 'control' mechanisms have done nothing of substance to reign in the development of a global Ponzi structure, in fact they have more often acted to facilitate it. In reality they do little beyond lulling us into a false sense of security. The existence of an institutional framework is no guarantee of effective function. The substance is long gone, and what we are left with is a shell. The appearance of a large, robust structure is an illusion, and the risk we are facing is one of implosion. This is how all bubbles come to an end."

As I said, my preparations will be the same. My goal isn't to create fear, panic, or a societal bubble of doom, but to remind other readers that a sense of urgency may be prudent. Those I know who have accepted the slow-collapse scenario seem also to have been lulled by it; doing "nothing while their world comes to an end"...

LewisLucanBooks said...

Of bicycles and roads - Several times over the last year or two, the deterioration of rural infrastructure has been discussed. It always brings to mind what Rustilius Namatianus had to say in his "A Voyage Home to Gaul." In 416, just 6 years after the (first) sack of Rome he decided to travel from Rome to his home in Gaul.

"I have chosen the sea, since roads by land, if on the level, are flooded by rivers; if on higher ground, are beset with rocks. Since Tuscany and since the Aurelian Highway, after suffering the outrages of Goths with fire and sword, can no longer control forest with homesteads or river with bridges, it is better to entrust my sails to the wayward sea."

Old Rutilius lived in tempestuous times. The Wikipedia entry on him is pretty interesting. He was a government official (and poet) who must have been pretty light on his feet. He managed to survive several changes in government but at some point must have decided it was in his best interest to retreat back to the hinterlands of his youth.

I guess the point is, even the celebrated Roman roads deteriorated pretty quickly. But by quickly, I mean, there had been a decline in maintenance for as long as a century. A Roman road is only as strong as it's weakest links.

Bill Pulliam said...

JMG seems to have given up on this particular issue and let it slide, but it bugs me so I'll mention it... He does not go by "John." He goes by "John Michael."

Glenn said...

Bill Pulliam said:

Amusing... substitute the word "internet" for "bicycle" and we have had this discussion many times. Just because it is possible does not mean it will happen. It'll depend on all the tradeoffs of needs and effort.

Agreed on the trade offs, Bill. But the trade offs are _very_ attractive in favour of bicycles. The technology is also several orders of magnitude lower than the 'net.

The V.C. moved up to 500 lbs. per bike over the Ho Chi Minh trail, using them as push carts; so the potential is quite great. I think between the simple tech (forget blacksmiths for the chains, what you want is a competent home machinist or fabricator; a simple factory wouldn't be that tough at even a mediaeval level of tech.) and the huge usefulness, we'll have bikes as long as we can spare the iron.

As a minor, but indicative example, bargees on an estuary in the Cornish Coast used to live aboard the barges during the week up to the 3rd quarter of the 19th century. As soon as bicycles were available they rode home every night. IIRC the estuary was only 12 miles long, and the 50 ton barges were without power or sail, and were operated entirely by playing the tides and using oars for maneuvering and docking. So here's a medieval transport system (tidal barges) combined with Victorian tech. to make labourers lives more comfortable.

Bicycles also don't wear out that fast. I am a regular rider, and have had mine for over 20 years. I've had to replace one bottom bearing (crankset), one wheel due to caustic steam exposure on ship board, and a few tubes and tires. Never had to replace even a chain link or brake pad.

So I don't see bicycles in the same wishful thinking category of "we'll have it because we want it so badly" as the internet; bicycles are actually achievable and maintainable at a very primitive (read low energy, limited materials) level of technology.

Marrowstone Island

Isis said...

Re: higher education in America. Here's an interesting fact to ponder: college has never been more expensive, and students have never studied less. The former is common knowledge, and as for the latter, well, take a look at e.g. the following article:

I suggest reading the whole thing, but here's a snippet:

"According to time-use surveys analyzed by professors Philip Babcock, at the University of California Santa Barbara, and Mindy Marks, at the University of California Riverside, the average student at a four-year college in 1961 studied about 24 hours a week. Today’s average student hits the books for just 14 hours."

I suppose what's going on is that students and their parents place a very high value on a college diploma, but not very much at all on college education.

Cherokee Organics said...

Hi everyone,

Not to shut down debate on bicycles, but if fuel for transport is ever in short supply necessitating the wide spread usage of bicycles, the problems arising in agriculture will far outweigh any concern about bicycle related engineering issues.

If you are struggling to feed yourselves, then food becomes a priority, transport is a secondary and minor issue. Sure this is a simplification, but the old fable about the 20 mile boots provides an insight into the future of limited transportation. Horses are a pipe dream too because there aren’t anywhere near enough (including available feed) to make any difference whatsoever.

Seriously, the diversity and availability of food today is quite staggering and historically unprecedented. I recommend to anyone unconvinced to spend some time working on a low energy organic farm and see what sort of output it produces across the various seasons. I worry because it doesn’t freeze here over winter either and there are still plenty of sources of food here (including fresh greens) during this time. I can’t imagine the privations imposed on the population in colder climates during these periods.

Hi Mark,

Trees and firewood are self-replicating and can be sourced and used with simple technologies.

Photovoltaic panels probably have a life span of around 50 years. They're good, but all of the support electrical systems required for their usage (batteries, regulators, wires, fuses, inverters) won't last anywhere near that long – and they are probably built to be more rugged and long lived than the domestic appliances that they are intended to support. On their own photovoltaic panels will make a nice roof for a chook shed but they have no other value if the support electronics are no longer available.

My place utilises both sources of energy so I speak from experience.

PS: Is Bill correct? Is it your preference to be called John Michael?



Jim R said...

Peak silicon?

For sentimental reasons, I was looking over some stock prices of companies to which I have donated some of my retirement funds over the last few years. I happened on this view of MEMC Materials, now going by the name MEMC / SunEdison. This is one of a small handful of companies on the planet that purify silicon to the "nine-nines" level required for semiconductor manufacturing.

The view shown in that link makes me wonder if one could predict the actual date when the last microprocessor will be made.

I realize that there are a lot of variables not counted in this curve:
-- The other companies are in Asia, and still appear to be going strong;
-- Stock price is not necessarily a measure of output;
-- Electronics are still shrinking, so less silicon is required these days to make a chip;
-- The whole economy is winding down in its own, speeded-up version of catabolic collapse, dragging down publicly-owned companies like this.

But the symmetry of it was particularly appealing, with its peak in 2007/2008. What else peaks at about that time?

Jim R said...

@Cathy McGuire,
I had to go find the boingboing article you referenced.

I would say that the Makerbot will probably be around as long as ultrapure silicon is available to build Makerbots and imbue the resulting projects with brains.

Until the end of the Makerbot era, we will be fine so long as our economy revolves around making little plastic geegaws in our basements. After the end of the era, those of us still around shall have to take up whittling again.

Ricardo Rolo said...

Well, Mr Greer, and in response to your anwser to my comment ( and BTW I had read your comments on Germany and EU on the time you wrote, just didn't commented at the time ), it is a little more complicated than that ( as usual ). I could possibly make a detailed explanation, but I'll give you just a resumed version of how Germany got where it is now, from the perspective of someone that has seen the show from the outskirts of EU in the last 30 years.

As a historical backround, I must point that the ancestor of the EU was the EEC, that was heavily propped up by the US in it's beginning. We might even say that the EEC was made with the objective of making that the Western Europe would not fall out of the American hand, and that meant not only econimical cooperation to take the European economies out of the mess the WW II left behind, but also to make that the defeated powers of it would not rise again. Thus, the EEC was extremely French centric and the West Germany governement was pretty much in the bad side of a wealth pump controled by Paris ( I do remember how France used the entry of Portugal and Spain in the EEC in 1986 to extort some money to the EEC ( thus to Germany, since France was always a net profiter of the EEC subsidies and Germany always a net loser ) because the poor southern french fruit farmers would suffer because of those evil southerners with their milder climate allowing them to produce ripe fruit some weeks earlier ... )

That arragement help more or less until the USSR decided to implode. By acident the French leadership was in the hands of far less capable ones than the ones in Bonn and the West Germans, first with the anexation of Eastern Germany ( or like yhey like to call it, reunification, in spite of the Germany that exists today still bears the formal name and laws of the western part and none of the eastern one ), then a large diplomatic manouver that allowed the Eastern Europe governements to rely somewhat in Germnay ( first with treaties formally renouncing to dispute the post WW II borders, than with lavish military gifts ( like selling the East Germany MIG fighters to Poland by 1 dollar ) or promises of investement ), thus removing the risk of a French centered anti German aliance including Poland and other eastern Europe countries , and last, but not least, by recognizing ( and supporting the ) independence to the breakaway Yugoslavian northern republics ( where France was completely catched by surprise ).

So after the reunification of Gernamy, Paris saw itself again against what they had tried to avoid since 1870 , a strong and unified Germany with more everything that you can name ( inhabitants, industry, GDP ... ) than France, with the Eastern Europe in the hands and a Russia in serious risk of further implosion. So they decided to go with the "IF you can't beat them, join them" and as Germany also did not wanted to confront anyone for a while ( they had inherited a lot of problems with East Germany ), they pretty much decided to make a duumvirate to control the EEC and make it into something that marched to their orders, with the germans paying the party, the French doing the beaurocratic parts ( keeping the whole system of EEC still working ) and with the United Kingdom as a friend with benefits . In fact all the € confusion comes from the fact that Germany decided to to a Zollverein on steroids at the same time that France wanted to kill anything that competed with their productions ( not long ago you could easily see milk productors in Lisbon ( where I live ) being arrested by trying to give milk that Bruxells ( aka the EU ) did not allowed to be produced in Portugal, because it would harm the European milk market ( in other words, the French milk producers ) ): hollowed out edge economies trying to live like Germans ( including using German cars, German machines ... ).

Ricardo Rolo said...


BTW and as another bicycle user, I've read the discussion on the bike usage in the future and , to be honest ( and due to my experience in a very unfriendly to bikes area, with fracture valleys with a lot of ups and downs and with strong and pretty constant winds that are fully against you when you try to go against the general slope direction ( BTW a good area for wind power ) and with a high level of metal corrosion due to salty mists and winds ), I tend to agree with Mr Greer in not seeing too much of a future for bike usage.

First, bikes are quite high tech instruments ... they need to be because all the mechanical advantages the bikes have are lost due to the very limited human power if the bike passes a certain weight. This means that anything that has a lower strenght per weight than steel will make bikes unusable in their current form ( that is why wood bikes never caught on historically ... ) because you can't gain enough speed for the gyro forces to balance the bike ... and if you want to simply carry stuff on top of it while you push or pull ( that is pretty much what you can do if you can't get enough speed to bike normally ), you are far better served with a chinese wheelbarrow or one of it's derivates.

Second, bikes need a lot of small parts that are impossible to make cheaply enough even today without using metal, like the chain or the brakes ( and if you want to use less than good tracks , you need brakes ... and gears. Fixies will not do ). Besides the fact that all of this parts meaning a lot of work hours invested in fabrication and assembly, they are , especially if they are expected to move a lot, extremely vulnerable to corrosion. You can minimize it easily with lubrification, but if you go off track the lub tends to get filled with dust, mud and whatever you find in your way, thus needing to be maintained with frequence if you really use a bike off track on a daily basis for something more than a recreational use.

So, in resume , I'm not convinced that the current bikes will be the standart for a deindustrilized future or even be a good alternative to the in between. But anyway, if the bike blog opens , I'll be more than happy to go there to be convinced otherwise :D

John Michael Greer said...

After some thought, I won't be responding here to bicycle posts -- as already mentioned, I don't use one and they're not a technology I know well enough to discuss in useful terms. Furthermore, this whole discussion is pretty far off the topic of this week's post. A case could be made that it's very relevant to post-peak living, but that ought to be another incentive to setting up a post-peak bike blog or forum.

Therefore I'm going to draw a line under the bicycle discussion at this point. The one thing I'll post from here on is a comment with a link to a post-peak bike blog, so those of you interested in debating the issue can do so in an appropriate forum.

One final comment: talk is cheap, and talk on the internet is even cheaper. It's very easy to talk all day and night about what you think somebody or other ought to be able to do in the post-peak world, but if you yourself aren't willing to do something about that now it doesn't matter one bit. If you want to show the world that a post-peak bike is viable, build one now, using the tools and resources you can reasonably expect to have on hand in the deindustrial future. If you don't do it, who will?

John Michael Greer said...

Okay, on to the non-bicycle comments.

Bill, glad to be of help!

Kevin, it depends. Hyperinflation is great if you have debt, because the debt loses value along with the currency; you can pay off all your debts with a spare million-mark bill as you take the rest of the wheelbarrow-load to the grocery to buy bread. Default and depression usually means you don't have a job any more, so the lower price of necessities doesn't help you much.

Robert, and of course that's crucial. I expect to see a lot of very clever technology devised on the way down, and if engineering know-how can be maintained in a few places, the ecotechnic age is likely to come a good deal more quickly. As for higher education, I wish it wasn't true -- the ideals of a liberal education are something I value tremendously, but it's a hard truth that those values have been debased into a sales pitch for a corrupt system.

SLClaire, it's difficult to avoid participating in the corruptions of a corrupt system, and sometimes the only choice you've got is between different forms of evil. I don't think less of people who live off their investments; it's simply that the age in which that is possible is ending.

Cathy, oh bright gods. I think you may have just found the gold standard for epic cluelessness. Of course, if you pretend that the raw materials just show up out of nowhere, along with the energy to run the thing, the spare parts, etc., etc., it looks great!

Cherokee, "assets" are simply what you get when real wealth is treated as though its only value is how many arbitrary tokens ( = money) can be exchanged for it: the precise opposite of the real state of affairs. I suspect both problems will solve themselves, messily.

Ghung, all I'm suggesting is that governments can do things that they've done dozens of times in the last century. That seems fairly reasonable to me. As for "slow collapse," it's a source of wry amusement that people keep trying to shoehorn my views into that inaccurate label, with its implication of a gradual process. Again, what I'm talking about is a stairstep collapse, in which sudden but not total breakdowns on a variety of scales clobber industrial civilization over the course of one to three centuries. The fall of the Roman Empire was an extended process, sure, but for anybody who was caught in southeastern Gaul when the Huns came through, it was not a gradual process!

Bill, thanks. I also don't go by "Michael." Online, though, most people just use "JMG," which is fine.

Isis, granted! The collapse of education in America has many causes, and the contemporary culture of entitlement is certainly one of them.

John Michael Greer said...

Jim, that's fascinating -- and of course it points up once again the issue I keep on trying to raise about technology, which is that it doesn't greatly matter whether something can be done; what matters is whether there's a sufficiently strong incentive to get people who have many other calls on their limited resources to do it. The fact that computer technology is, er, neat-o is not enough!

Ricardo, thanks for the info! I'd wondered about France's remarkably supine response to the centralization of economic power in German hands. As for the destruction of peripheral European economies for the sake of France and Germany, I'd have a hard time thinking of a better illustration of the "wealth pump" principle.

Robert Mathiesen said...

JMG wrote: "the ideals of a liberal education are something I value tremendously, but it's a hard truth that those values have been debased into a sales pitch for a corrupt system."

I value them, too. Fortunately, the old traditions of a liberal education, at least in the humanities, are the one part of current higher education that might, with foresight, be saved from the coming storm in a small way. It's the least expensive part to implement and maintain.

As the old quip goes, all that's really needed is a student on one end of a log, and Mark Hopkins on the other. Mark Hopkins himself is long gone, but the books that produced him are still available. I think there will always be a few people who want to be wise more than they want anything else, and who also will work hard to become wise.

Kieran O'Neill said...

In answer to JMG's request for a "definitive post-peak bicycle blog", I have created one. It can be found at:

I've made an initial post summarising some topics for discussion raised in the comments here, and with its own comment section to allow for this discussion to continue.

Gary and Tyler expressed some interest in being involved as writers; apparently I need your email addresses to add you to the blog. You, and anyone else interested in contributing, can find instructions on the first post.

kleymo said...

In reply to Blue Sun:

This morning I see that Chris Martenson's "Peak Prosperity" is endorsing a bullion storage company that can be used for retirement accounts.

My wife and I are in the position of already having retirement accounts that would be heavily penalized if cashed out before retirement. We have been considering what to do.

We will be looking into the above as a less bad solution to our condundrem.

xhmko said...

JMG, Fair call. It was very off topic.

On topic, I wonder what effect, a widespread domino effect of default within European would have over here in Australia initially. We are not dependant directly on them for many goods, and I'm not sure we have a huge import trade to them, yet I think that it would definitley cause a ruckus. I could foresee an enormous amount of workers seeking better opportunities with the current mining boom, particularly here in Western Australia, and European ex-pats living here looking to repatriate families. Tat much is already happening. The US defaulting would be much, much more significant in effect. We depend immensely on the USA even just for moral support as our big paternal military bum buddy. And I just don't know what people will do for entertainment. And I dread the idea of America getting into some last ditch effort military conflic and invoking the ANZUS treaty as happened during the Coalition of the Willing daze. The last thing we need is to be entrenched in warfare.

Cherokee you may even have a clearer view on this.

Phil Knight said...

Interesting article about just how close Franco-British military co-operation is getting these days:

(you may need to scroll down to read the full article).

Interesting quotes from the French:

They promised to work ‘more closely than ever before’, a sentiment they reiterated in Paris last month. The plan, to use the current buzz word, is for ‘interoperability’, so the British and French can be deployed as a Combined Joint Expeditionary Force by 2016, or earlier if an urgent call comes.

‘We are closer now than we have ever been,’ says Colonel Chasboeuf of the French 8th Para.

and the British:

‘The French seem very emotional about working with us, though’ says Major Wight-Boycott.

‘They seem so pleased it’s the British. I think they thought they would end up working with the Germans'

Anyone else getting a sense of deja-vu, here?

Don Stewart said...

Dear JMG
A good post, as usual. So let's suppose you were the Absolute Lord of the United States. Ahead you see the inevitable default in 5 or 10 or 15 years. What would you do, politically? It would be nice to get rid of all the debts with default now--but you have to screw both the One Percent who hold the debt and you also won't be able to borrow money to meet current expenses, so you probably would have to reduce promised payments such as social security and Medicare.

What's your plan?

Don Stewart

John Michael Greer said...

Robert, an excellent point, and one that I'll have to remember for an upcoming sequence of posts. It may be a bit, but once the decline and fall of the American empire is out of the way, I want to stray into the subject of education -- more specifically, how those who didn't get one (and if you went to an American public school in the last forty years, odds are you didn't) can get one now, without handing their future to the education industry. Should be interesting.

Kieran, thank you! I'd like to encourage everyone interested in post-peak oil bicycling to pedal over to the new site.

Xhmko, good question. You may be screened from most impacts by your dependence on China and the US.

Phil, as Yogi Berra said, it's deja vu all over again. Am I the only one who suspects that what's going on here is military preparations for the post-EU Europe?

Don, if I were an absolute ruler, I wouldn't have to worry about the whinings of the 1%, now would I? In fact, it would probably be a good plan to take a hint from Machiavelli, round up a few of the more egregious bank CEOs, and have them hanged, drawn and quartered in Times Square to win popular support for the austerity program that I'd be imposing. Once my power was solidly established, yes, I'd default on the US debt, and use the pressure from foreign debtholders as an excuse to impose a means test on Social Security, Medicare, and the whole range of government and military pensions, which would cut a very large chunk off government expenditures.

The same excuse would allow me to go through the Federal bureaucracy and delete everything that simply duplicates programs on the state level -- that's at least half the executive branch, including at least one cabinet-level department. Those two steps, plus shrinking the military to a reasonable size and getting out of the global policeman business, would cut Federal expenditures well below revenues, and provide the wiggle room needed to deal with the other economic problems we're facing. Now of course all of that's politically impossible at a time when power's as diffuse as it now is, but you asked what I'd do...

Kieran O'Neill said...

Following from Robert's post, and on the topic of future education:

My parents both worked for a university (my mother is there still, but nearing retirement age). They have observed (and observed the same from friends working at universities in other countries) how universities have corporatised over the past few decades.

It occurred to me the other day, that if universities transform themselves (as they are doing) from a place of teaching and learning into a place of providing a product or service for a price, then at that point they have crossed from the realm of the didactic to that of the economic, and are subject to the whims of economics. Most specifically, it is quite likely that someone will find a more "efficient" way to provide the same "service".

Cherokee Organics said...

Hi John,

Thanks for your thoughts re: assets. I also wonder about the tipping point for average incomes too? For example, how much unemployment can a society accept before median incomes and the overall standard of living drops dramatically. I kind of feel that as a society we are not mature enough to come to a consensus on this matter which only really gets resolved once a crisis hits and a new equilibrium is achieved albeit at a lower state.

People like to blame someone else, but our society is really a reflection of the collective decisions of individuals often based on our own self interests. The blame game is really a deflection and delaying tactic.

On another note relating to your response to Don, years back I took over management of a very dysfunctional team. As an interesting side note, they'd suffered some serious duplicity and shock due to the previous incumbent. Anyway, I tried setting up boundaries and roles and using healing arts on them and generally being quite gentle on them whilst they were in a state of shock. This worked for a time, but had diminishing returns.

When this strategy became no longer viable, I employed the Machiavellian strategy and axed the most irritating of the team publicly. After this event, there were no further issues.

I was amazed at how effective this strategy was to regain a level of control in a difficult and inflammatory situation and can see that it can be employed on a large scale quite effectively.

It certainly isn't my normal modus operandi to employ those sorts of tactics as I try to work co-operatively with people, but I became increasingly unsure of how to address a difficult situation and my preferred methods were ineffective. I have been putting some thought recently towards conflict resolution for future situations and would appreciate any insights that you could share.

PS: I am enjoying your intellectual honesty in your book and it is also a very clever idea as it neatly side steps a whole basket load of problems. You are serious about dissensus too and I take that as a sign of strength of character.



Cherokee Organics said...

Hi xhmko,

Hope you are well and enjoying the rain over your side of the country. Did I read a couple of weeks back that you were once up in or around Marble Bar or am I mistaken? Man, that place is hot...

I don't know about your question as a decline in global consumption will most certainly affect Australia via our trading link with China. It all depends on whether the Chinese government decides to stock pile our exported commodities using their vast foreign exchange reserves (ie. US$3.2t).

As an interesting side note, most long term raw material export contracts are fixed at US$/tonne and any downturn in the value of the US$ may mean that Australia will end up on the losing side of that deal.

However, stop taking those units of exchange and things will not be good either.

I don't know much, but I do know that I don't have the cojones to work in that area! My mind sees it as a giant game of musical chairs.



xhmko said...

We'll be buffered financially. Our market will be predominantly Asian within ten years I'm guessing. And China's big fuzzy warm security blanket might just be enough to wean us from the states, though it'll take a significant cultural shift. But if there's conflict in Europe, well there's nothing like a war to get Australian's of their derrier. A third will be against it, A third will be in it. If Western Europe ends up in some conflict, which I personally can't see happening until at least 50 years down the track, then I really think we would be there somehow. What I'm more concerened about is one of the southern European nations feeling dejected and abused and coming to terms with intergenerational distaste for their real and perceived usurpers. If Greece or Spain get out of the community loop, and suffer a great deal more, then that inspirational madman we dread might just come knocking on the North's door. That I could see happening sooner. But we'll see.

ando said...

To those who have not seen it, Kunstler was saluting his "homeys"
today and he did the archdruid right.

"The Archdruid Report. To the casual observer John Michael Greer would seem an odd figure, being a long-bearded, shambling, threadbare enthusiast of things druidical (whatever they are), but he's also about the most humane, articulate, and lucid observer of the crumbling economic and political scene from the realm of totally outside the box. He puts out a beautifully crafted essay every Thursday from the backwater of Cumberland, Maryland, and his view of where the human race is headed is sobering, reassuring, and full of authentic empathy for our multiple predicaments."

JMG, "humane" IS the word I was looking for.



Johan said...

Commenting rather late, but wanted to mention that British newspaper The Economist had a special report on "An unconventional bonanza" on July 14, the first part of which can be found here.

There's no very good reason to read it, though, unless you're interested in what the high and mighty are supposed to be learning about the fracking boom. It's a rather breathless piece of cheerleading. They do mention that production rates decline quickly, but don't provide any numbers.

Rocco said...

Since I began following The Archdruid Report I have had a bout of frustrated fantasy now and then about how the ideas and vision expressed here might find a larger audience. "Fresh Air" on NPR or Frontline on PBS or perhaps Bill Moyers's program. Whether or not what is presented here is accurate, sane, and reasonable (as I think it is), it is certainly worthy of wider discussion and debate, especially as things begin inevitably to close in on us. Then I read the answer to the thought question from Don regarding how one might act as an Absolute Ruler. I must say that I cringed a bit when confronted with the suggestion of how a group of financial CEO's might be treated. I understand the context, but in the current state of things, this is the sort of comment that causes one to be demonized, marginalized, isolated, ignored. I admire your nerve and your clarity of vision, but I wonder if such flights of fancy might better if they remained unexpressed.

John Michael Greer said...

Kieran, one could hope! Certainly I see no chance that higher education as it now exists will last long into the deindustrial period; it might be useful to start talking about, and then building, what might replace it.

Cherokee, thank you! As the head of a Druid order I've had to dismiss a few people from membership, and it does make an immediate impression. Too much gentleness is not always a virtue.

Xhmko, I doubt it will take fifty years, precisely because the EU's been stripping southern Europe to the bare walls to enrich the North, and that's not something that can be sustained for long.

Ando, hadn't been over there yet -- thanks for the heads up.

Johan, thanks for the link -- it's worth watching the media in full lullaby mode.

Rocco, for heaven's sake, the things I talk about are already demonized, marginalized, isolated and ignored; besides, there's precisely zero chance that an archdruid, any archdruid, will ever be invited to appear on Bill Moyers' program. For someone on the fringes, as I unquestionably am, rying to play nice to attract the attention of the mass media is a losing game, for reasons you can look up in any book on the sociology of deviance.

That's a source of freedom; since I don't have to trim my message to fit what the mainstream wants to hear, I can say what needs to be said -- including pointing out that any near-future US dictator could win substantial public support by publicly executing a bunch of bank CEOs in the messiest way possible. (And thus, by implication, that a less unconstrained politician could do the same thing by arranging for said executives to do a perp walk or two.)

Bill Pulliam said...

A thought about education, to be filed away until the topic is on topic... The American higher education system is most decidedly not "being" transformed from a place providing education to a place providing market services. This transformation happened decades ago, and has been complete for some time. When I reached grad school in the early 1980s, we were already passed the middle point of that shift. The split between the older and younger generations of faculty was obvious. That older generation is now long retired and mostly dead; that younger generation is now the old guard in charge of everything, with another generation below them who never knew it any other way. I eventually walked away from Academia because it had been hopelessly and irretrievably converted from the home of the scholar to the home of the salesman.

What has become of the scholars now? And where will they go in the future? I expect this will be a fascinating discussion at some point in the near future.

Yuri Kuzyk said...

Hi John Michael,

"Cherokee, thank you! As the head of a Druid order I've had to dismiss a few people from membership, and it does make an immediate impression. Too much gentleness is not always a virtue."

"Rocco, for heaven's sake, the things I talk about are already demonized, marginalized, isolated and ignored; besides, there's precisely zero chance that an archdruid, any archdruid, will ever be invited to appear on Bill Moyers' program. For someone on the fringes, as I unquestionably am, rying to play nice to attract the attention of the mass media is a losing game, for reasons you can look up in any book on the sociology of deviance."

This type of comment seems to crop up a fair amount: "How can you be [master of some lineage] and not be 'nicer'?"

Whether it is willingness to provide commentary and/or opinion on current issues such as peak oil, climate change or simply overpopulation, there seems to be some conception that folks who have practised these ancient traditions are supposed to have the personality of a kitten video on youtube.

Another example, such as proficiency and practice of ancient weaponry (often part of a lineage,such as the sword or bow) seems to upset people since they view this as being "violent" and inappropriate for some "enlightened person". It appears that the message for these traditions that seems to have drifted out in pop culture is of being as meek and mild as possible.

This would be a great topic since it is quite an elephant in the room. Sometimes the best teaching method is the swift kick in the ass...

Jaqship said...


Congrats on your h/t from Kunstler.
I have reservations about your responses about gold etc. to KindofBlue etc. At least in some locations, catabolic collapse would be accompanied by some preservation of a trade economy, rather than quick descent into a Mad Max situation where one's gold would be swiftly confiscated by brigands or "govt's". In such an economy, gold/ silver/ stainless-steel screws will have a hugely better chance of holding value than will any paper "wealth".
If the US gov't survived, and were it to emulate FDR's gold policy, that would be nowhere near as draconian as you imply; it's main effect was to inspire millions of citizens to turn in their EXCESS gold, but FDR let people keep FIVE ounces each, and there were very few successful prosecutions of those defying his policy.

I'll wager that the gov't will have more pressing concerns than sending G-men trying to storm gold bugs' homes and pry 1 oz. coins out of dead gold bugs' hands.
And if my bullet-proof vest fails to stop brigands from getting to empty my pockets of gold coins (or my stainless-steel screws), I probably won't survive the experience anyway.
BTW, hiding farmland (from brigands or govt's) will be much harder than hiding gold coins (or barrels of super-precious oil!).
Were I much younger than my three-score yrs., I'd be doing what I'm advising my (much younger) girlfriend to do: stock up on skills.

Lidia17 said...

Ivan mentioned Ivan Illich, and I think Illich's take on modern education is worth mentioning.

The text of his work, "Deschooling Society", can be found online.

I think Kieran's identification of educational trends is correct, but his timing is off. The for-pay credentialist system of modern universities has already opened the door for a huge number of private diploma mills to make a bundle for their CEOs and shareholders; Keiran's future is already here:

Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university.
... Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million. Education corporations, which receive as much as 90 percent of their revenue from federal financial-aid programs, are “private enterprise that’s almost entirely publicly funded,” Henry Levin, director of Columbia University’s National Center for the Study of Privatization in Education, said in a telephone interview.

I recently read
Charles Hugh Smith's latest book. His analysis of how corporations zero in on The State as the most profitable mechanism for funnelling money towards themselves was quite chilling: he presents this as an inevitable process.

John Michael Greer said...

Bill, duly filed. I have some ideas about that, as I'm sure you suspected.

Yuri, well put! C.S. Lewis talks somewhere about the bizarre modern notion that "spiritual" means vague, fluffy, formless, and somehow also rather prim, and contrasts it with the medieval vision -- he really was the last of the red-hot Neoplatonists -- of the spiritual world as more structured, more exact, and far more powerful and dangerous than the vague, blurry, muddled world of matter. It's part and parcel of that modern notion that spiritual teachers are supposed to be smiling, vague, and impractical, and that traditions of martial spirituality -- which we have in the West also, by the way, though they scraped through the industrial age in far more threadbare shape than the Asian systems did -- cause so much confusion to so many people in the modern industrial world.

Jaqship, I'd recommend the stainless steel screws, frankly. Whether or not the government seizes your gold supply -- and I doubt they'd leave five ounces this time -- it's pretty much inevitable that, if gold does hold value extremely well, plenty of people will be lining up to take that value off your cold dead hands. Again, if your only store of value consists of a stockpile, that stockpile will draw looters the way a dead rat draws flies; if you're more valuable to others alive and happy than dead, on the other hand, your chances of remaining on the right side of the grass for the whole of your natural span go up considerably.

Rocco said...

As one who has wasted plenty of time over the years in front of a TV and made an effort to align himself with the mainstream (facts I am not particularly proud of, but they do offer me some insight given my newly awakened awareness), I beg to differ with you that someone like Bill Moyers wouldn't dream of inviting you on his program. You may have included Moyers in the group of "tame" intellectuals, but he has consistently been willing to talk for broadcast with many non-mainstream guests. I may have been fooled, but I think that Moyers has chosen to talk to people who hold positions that are contrary to that of the mainstream. (Andrew Bacevich, for example) What he requires is a unique point of view and plenty to back it up. Seems custom made for you, since you have both of these qualities, in spades. Going on TV is dangerous for anyone of course. One's words and one's image can be manipulated to appear to be something that is essentially a lie. I could see avoiding the risk for that reason, but I think the choice is yours. It wouldn't happen not because they don't want you, but because you don't want them.

Mr. Kuzyk errs if he thinks I should be grouped with those who think you and the tradition you follow imply that you should be meek and mild. On the contrary, I think no such thing. Rather I think, as I said before, (in different words) that many more of the clueless among us could benefit from being coaxed into this tent. Harsh words about executing some of the true villains of our society in "messy" ways can turn off people who otherwise might come and listen. This was my sole point, and it seems to have been lost.

Breedlove said...

John Michael,
I wanted to thank you for helping to justify my aversion to the 401k and other "future" planning schemes. Although I don't believe you stated this explicitly, investors--pension funds, individuals whoever--are simply the latest target of the imperial wealth pump. When you have to canabalize those closest to you, the system is irreparable. Fortunately I suppose, it goes without saying that we have a unique opportunity to build a better society, at a more responsive and responsible scale, when the overleveraged, carbon-intensive socio-economic system collapses.
Steve Breedlove

Glenn said...

JMG said: if you're more valuable to others alive and happy than dead, on the other hand, your chances of remaining on the right side of the grass for the whole of your natural span go up considerably.

Amen to that. Summer crab season is upon us, and my daughter and I are doing well (her license is free until she turns 15). We give about 40% of our catch to family and neighbors. My brother does the same with their eggs. An undefined web of mutual obligations is slowly being woven here.


Marrowstone Island

Ian said...

@Bill, also for the education file: regarding the conversion of education to business, I'd suggest it has been a bit like collapse itself. It has happened unevenly, effecting disciplines, institutions, and departments at different rates.

Back when I started grad school almost 15 years ago, the wave was still mostly on the horizon for the various liberal arts departments, though was soaking other departments. During my time there, they built a fancy and monstrously large business school building that dwarfed about everything but the hospital. That was unnerving and sent a sign to just about everyone as to where the real priorities were.

Jim R said...

"... about the bizarre modern notion that "spiritual" means vague, fluffy, formless, and somehow also rather prim ..."

I wonder if this isn't simply a manifestation of the presently dominant religion of "progress". In other words, "your ancient belief system is a fuzzy fairytale, while mine is founded on modern absolute truth"?

Kevin Anderson K9IUA said...

Here is a comment applicable to several of JMG's weekly essays lately --

My son pointed to a video on Facebook that seems to be circulating, titled "If I wanted America to fail...":
It is an attempt, under the auspices of "Free Market" to present all that is wrong (and has been since back to the first Earth Day or thereabouts) about just about everything, to gather the hearts (or is that confuse the hearts and minds) of followers to a leave-it-alone free market agenda. It is presented in a double-negative way of presentation that can easily confuse or mislead someone. Extremism on steroids.

Jaqship said...


Thanx for reply. Of the many issues it raises with me, I'll focus on one:
You've referred (e.g. in "Collapse now, and avoid the rush") to assembling "the resources... that will be the key to survival". How does one prevent those resources from being pillaged by the looters who you expect to make off with gold etc. Are you expecting that such stuff, like stainless steel screws, won't catch the eyes of looters as gold will? Or is it just that, with a basement or garage full of low-cost screws and other mundane items, unless the looters come often or with a huge truck, they can't take ALL of the mundane items, and so we will still have left a crucial stash of them?
What about hiding "valuables" amid piles of junk, e.g. in storage lockers?

(We live in a shabby, 100-yr. old house right on a main drag in a large Midwestern port city.)

DragonFly said...

It's probably already been raised in other posts, too many to read with younglings running amuck. A government might just default on its debts and print its own money, and that will fix some problems but the real issue is what value countries put on its natural resources? A piece of paper might have an agreed value in one country, but its not a tangable wealth like gold or oil, unless it's backed by these things, and if you haven't noticed they are becoming fairly scarce. We have created an emormous population bubble, relying almost entirely on modern farming and transportation systems that have become so dependant on global trade in oil and mineral resources that any disruption will likely cause wide spread starvation and suffering. I agree that the massive debt burden is causing a great deal of unnecessary grief to countires who would be better off defaulting and reseting their monetary systems, but how do you equate the difference between the fake wealth of an econimic system and the reality of countries being unable to feed their starving masses? America has been blessed with atleast enough resources, in particular liquid fuels, to run a large agricultural system, but here, fake governement issued junk back by equally trashy promises won't fill my tractor.

Stu from Rutherford said...

Hello JMG,
Still enjoying your weekly essays, but haven't posted in a while because I'm too busy reading everyone else's comments!

Since it's the end of the essay "week", though, I thought I'd post a "Happy Lammas" or "Happy Lugnasadh" to those for whom August 1 is a special day. Despite drought, I've got a few things out back to harvest for dinner tonite. I hope everyone else does as well.

jollyreaper said...

That bit about interest only working in an growing/expanding economy I think is key.

What is the most important rule of having money over the history of this country? Money begets money. Without interest, the rich man who does not work is eating his seed corn, even if there's a vast amount of it. His fortune will dwindle. With interest, the rich man may live off of it while never drawing down on his capital, producing no goods, performing no services.

We've talked about the rentiers here before. They want to collect rents without performing any services in return. The lord who builds and maintains an essential road may fairly collect a toll. The lord who demands a toll for anyone who passes along a route he's had no part in making is just a hopped up highwayman.

A steady state economy may look all the same to those of us on the bottom but it's the end of the world as they know it for the rich.

I'm thinking that it's a time horizon thing. The people calling the shots are old, they have more years behind them than before them. They simply don't care what happens after they're gone, they just want to keep the plates spinning and the balls in the air until then.

Jonathan Byron said...

John Michael - that's an interesting take on the role that consensus may have had on the organizational dynamics of the Occupy movement. The only time I have seen consensus work well in an organization was with the Religious Society of Friends (Quakers). And they are an organization that is rather small, where people self-select according to whether they are strongly committed to a particular vision.

Justin said...

Time and again, JMG has argued here that it is personal response and action that matters, and if done well, may draw others along their own path by example. Television is a medium that is defined by its imagery and words. To enter that medium is to validate it, something that JMG has explicitly argued has no valid purpose. Whether Bill Moyers would have JMG on is beside the point, from what I gather, JMG wouldn't appear on a TV show that would have him on out of principle.

I am genuinely curious as to why so many commenters are lobbying for an on air Archdruid Report, to what means or end is such an appearance supposed to serve?

The evolution will not be televised.

Carlo said...

In the US we've enjoyed the safety of having our recent wars, "over there," or as sung by Roger Waters, "the safety of being out of range." Hey, it makes for great TV, although we don't get to see much anymore. I mean, it's not like the Vietnam War where you could watch guys in a firefight on the evening news.

What I find troublesome is the way that we have let ourselves become, or we are told that we have let ourselves become, so frightened and unsure of ourselves. What is the first thing that one should do when faced with extreme and terrifying circumstances, why panic of course - that is what we do in the movies. I remember turning off the movie The Shining when a crippled Jack Nicholson with an ax was such a fearful encounter that all our stars could do was to panic and die.

After 911, we were told that we were still strong, that this wasn't going to defeat us - huh? One building hit in one city, were we at risk of being brought to our knees? Reflect on that. I spent the next few days waiting for the assaults on our movie theaters, shopping malls, schools, water and power mains that never came. I expected it to be the opening salvo in some real hurt. What would we have done then, gone to counseling?

Are we really so fragile? If so, then the specter of military defeats abroad will not only disrupt our ability to procure resources, it will shake rather that stiffen our moral resolve. That can't be good, but maybe it will make for some good TV.


Hello John,

I just read a very interesting article in New Scientist about a mathmatician named Peter Turchin who has a mathmatical theory about the rise and fall of empires. The article can be found at:
What do you think of this theory?

Scott Whittemore said...

I love your writing, John, and I'm working my way (in my slow way) through your blog posts in roughly chronological order. On reading your "End of the World of the Week #32", I felt compelled to offer a suggestion that, for all we know, the rapture (and perhaps even the the tribulation and second coming) might have actually come and we just didn't notice. As I read the New Testament, it seems to me the folks who would be most qualified to be "raptured up" would be the sort of people whose absence might not make much of an impression on our collective consciousness. We also don't know the mechanism of the rapture (assuming for the sake of argument that there is such a thing). Instead of suddenly and dramatically vanishing en masse, as in the silly movies, maybe the raptured simply die of seemingly natural causes. :-)

Anyway, please keep writing. I'm loving it.