Reality Blind - Vol. 1

“good thing”) that during such periods, we actually had a shortage of money vs. what could potentially be built and created, because the prospects for future energy and resources seemed immeasurably huge. In that situation – when creating more money would catalyze real wealth creation – it made economic sense to circulate more money. So, commercial banks made loans by choosing the best credit risks, increasing the amount of money in circulation, directing that money towards what seemed to them the best and most scalable ideas, and thus increasing the velocity at which we grew the economy. Eventually, once we burned through the geologically concentrated reservoirs of fossil energy and mineral ores that were the richest and the cheapest to exploit, economies became stressed. We were then forced to resort to borrowing money: not to grow the economy but to pay our current bills , much like a family living beyond its means. Many people are concerned about government debt, which in the USA is approaching $27 trillion. If that seems like a big number (as a US taxpayer, your individual share is now over $80k), let’s not forget that it doesn’t even include unfunded government liabilities such as promises to pay retirees and veterans. Those now stand at well over $100 trillion. That comes to over $1 million per taxpayer —except that most taxpayers don’t happen to have $150k in savings (let alone $1 million). This debt also equates to over 50 years’ worth of total tax receipts based on today’s dollar amount of taxes paid. 135 It gets worse. Due to the way it’s created – via loans - all money is debt, be it private, municipal, corporate, state or federal. Also included in this tal ly are stocks, bonds, checking accounts, savings accounts, etc. Anything required to generate a return is a claim on future energy and resources. There are roughly $300 trillion worth of such financial assets, and people in “developed” nations think they “own” it and consider it their “wealth.” Meanwhile, these nations generate only $75 trillion or so of annual income (GDP). 136 How would you evaluate your financial position if you earned $75,000 a year but owed the bank $300,000 plus interest and dependably needed to add more debt each year to make ends meet? But somehow, we don’t feel quite as alarmed when it is our governments and the entire world that are shooting straight for insolvency, probably because we imagine they must know something we don’t. But the math, and the eventual consequences, are the same, whether you are an insolvent person or a musical chairs global financial system. Back in the old days, monarch and subjects both counted their wealth in tangible assets, such as land and gold. Now, governments and citizens both count their “wealth” in


Powered by