Chris Martenson's Crash Course

Chris Martenson | chapters - The Crash Course - chapters, Crash Course, Economy, Energy, environment, Peak Oil, videos

"The Crash Course seeks to provide you with a baseline understanding of the economy so that you can better appreciate the risks that we all face."

Overall, a very interesting read. He makes some good points. I just got through it and haven't had time to digest it all, so I'll come back later to post more opinions.

Here's a summary:
Money is loaned into existence, with interest, and this results in powerful pressures to keep the amount of credit, or money, constantly growing by some percentage each year. This is the very definition of exponential growth, which we can easily see in our money, and, of course, inflation charts.

Keeping this dynamic in mind, we encountered the data on debt, which is really a claim on the future, vastly exceeding all historical benchmarks. The flip side to this, but a significant sociological trend in its own right, is the steady erosion of savings observed over the exact same period of time. Combined, we have the highest levels of debt ever recorded, coincident with some of the lowest levels of savings ever recorded.

And we saw that our failure to save extends through all levels of our society and even includes a desperate failure to invest in our infrastructure.

Next, we saw how assets, primarily housing, have been in a sustained bubble that is now bursting and will take many years to play out. When credit bubbles burst, they result in financial panics that end up destroying a lot of capital.

So we learned that a bursting bubble is not something that is easily fixed by authorities, because their attempts to limit further damage are misplaced. The damage has already been done. It is contained within too many houses, and too many strip malls sold for too high prices, and too many goods imported and bought on credit. All of that is done. All that’s left is figuring out who ends up holding the bag, and right now these guys are working hard to assure that that’s you.

Then we learned that the most profound US government financial shortfall rests with a demographic problem that itself cannot be fixed by any act of policy, or law, or level of optimism. It is simply a fact. An inconvenient fact of circumstance, much like gravity sometimes, but a fact nonetheless.

Even more than this, we learned that the assets boomers use to describe their wealth (stocks, bonds, and houses) all have to be sold to somebody at some point in order to extract their value. And we raised the uncomfortable observation that there are simply fewer people behind the boomers to whom these assets can be sold. When sellers exceed buyers, values fall.

Through all of this, the economic numbers that we reported to ourselves were systematically debased until they no longer reflected reality. If false data leads to bad decisions, then it’s no wonder that we find ourselves in our current predicament. Only by returning to an honest self-appraisal can we plot a strategic and meaningful course to the future.

Then we learned that energy is the source of all economic activity, and that oil is, by far, the most important source of energy. Our entire economic configuration is built around the assumption of unlimited growth in energy supplies, but this is an easily refuted proposition.

Individual oil fields peak and so do collections of them. And so Peak Oil is not so much a theory as it is an observation about how oil fields age. We then explored the tension that obviously exists between a monetary system that enforces exponential growth and the fact that our primary energy source has either already peaked or will soon. Somehow, the US has not even begun to invest in a future without cheap oil. We have no “Plan B.”

Lastly, we noted that the environment, meaning the world’s resources and natural systems upon which we depend, is exhibiting clear signs that our exponential population is driving exponential exploitation of resources, hastening their final depletion and altering ecosystems at alarming rates. Also, we learned that even minor changes to the systems we depend on, such as rainfall patterns, can create massive, usually unplanned, costs that will take priority over other needs.

Placed on a timeline, we see that a bursting housing bubble is already happening just as the first wave of boomers enters retirement. At the same time, peak oil demand will outstrip supply, forcing an enormously expensive adjustment even as unknowable costs associated with resource depletion and a shifting climate lurk in the not-too-distant future. And sitting over all of this, limiting our options, will be our national failure to save and invest, and historically unprecedented levels of debt.

This timeline, stretching from now to 2020, reveals a truly massive set of challenges, converging on an exceptionally short window of time.

The question becomes, “Where will the money come from to apply to each of these challenges, if our savings are depleted and our debt levels already in uncharted territory?”

Any one of these events will prove to be a difficult strain on our national economy, while any two could be disruptive. If three or more happen simultaneously? It’s not hard to foresee the economic destruction of our country as a result, or perhaps the dollar utterly ruined as a store of wealth.

 

Huh, sounds like what Ron Paul was saying when he got laughed out of the house... few politicians understand this, much less want to touch it.

 

My only question, we saw oil hit 140+ last year... Do you really think if we were close to peak oil or that we had hit peak oil that the price would have fallen as far as it did the past year? Just some food for thought. Question is, where did the huge bubble come from?

 

WAR! Uh, good god y'all, what is it good for?

sorry, but im hoping for high inflation, as long as wages keep pace.

 

my mortgage note wont change but my salary will. and my portfolio was already cut in half, so the bulk of my retirement is still to be saved.