Skip to Content.
Sympa Menu

permaculture - Re: [permaculture] The US is no longer food self-reliant?

permaculture@lists.ibiblio.org

Subject: permaculture

List archive

Chronological Thread  
  • From: Toby Hemenway <toby@patternliteracy.com>
  • To: permaculture <permaculture@lists.ibiblio.org>
  • Subject: Re: [permaculture] The US is no longer food self-reliant?
  • Date: Fri, 17 Aug 2012 09:25:41 -0700

On Aug 16, 2012, at 7:28 PM, venaurafarm wrote:
>
>> My bet is on a brief, extreme currency collapse

> Could you comment further on what seems to be a pretty extreme
> statement, Toby?

You're right, this is the sort of stuff, like all doomerism, that brings out
the crazies. I will hedge a bit and say I don't think an abrupt currency
collapse is inevitable, but medium likely. A slower one, very likely. There's
a huge amount of stuff on this all over the web, with some of the more
rational commentators at
http://theautomaticearth.com --see their "primer" pages. They are
deflationists; others are not.
http://www.peakprosperity.com
and the economic posts on theoildrum.com . Nate Hagens is particularly good.
Mish Shedlock http://globaleconomicanalysis.blogspot.com
All of these people are Peak Oil savvy, pretty gloomy but not Doomers. But
take your Halcyon before reading.

I learned a lot from the professional economists and traders at Matt
Savinar's old LATOC (life after the oil crash) site before it shut down. It's
still archived somewhere; there was a long thread on Inflation vs deflation
that gave all possible sides of that issue. But what made one thing very
clear to me was John Michael Greer's post
http://thearchdruidreport.blogspot.com/2012/07/the-upside-of-default.html
where he pointed out that the "true" annual GDP of humanity, what people
actually make in tangible stuff each year is about 3 trillion dollars worth,
while financial instruments like derivatives comprise roughly 1 quadrillion
dollars per year. That means there is about 30 times as much debt money out
there as real stuff to base it on. Historically people have been comfortable
with about 10/1, but in scary times, like the Depression, that can drop to
3/1 or worse. What that means is that 2/3 to 9/10 of the world's money could
disappear--the way 10-15% of it did in 2008. Put another way, there are $30
of claims being made on each $1 of real goods, so at some point, $29 of those
claims could be unredeemable and would evaporate. It's hard to print money
fast enough to counter that kind of crash, so inflation may not even be
possible, though I'm not sure of that.

In that kind of deflation, a dollar buys more and prices fall each succeeding
day, which sounds good, but its real effect is to shut down all money
movement--manufacturing, investing, sales, because everyone believes things
will cost even less in the future, so they won't spend or buy now. Massive
unemployment, few goods for sale, no money to buy things. Prices do come
down, but much slower than currency value. That was how people experienced
the Depression. Add to that, today, increasing resource costs forced by
scarce oil, and you have high prices and very hard-to-get money. That's why I
foresee high prices of the stuff we need, and low valuations on things like
houses that take debt. Equity disappears, but prices of food are high. Nasty.

If I were to make my worst case prediction, though less likely than straight
deflation, it's for short term inflation, and maybe hyperinflation, followed
by deflation. Since the economy is so sluggish (because it can't grow without
abundant oil) gov'ts will print money--they in effect have with Quantitative
Easing, the stimulus, the bailouts, etc--and print more and more to reflate
the economy. So, inflation. But that won't work because growth takes cheap
oil, people will lose faith in money, and we'll see a currency collapse. If
it's very abrupt, like that in Argentina and many other cases, there will be
a period where the dollar is essentially worthless, followed by creation of a
new currency (Gov'ts take very harsh steps in collapses--they don't just sit
there, and that's why money collapses are short). A huge amount of real
wealth--real goods--will change hands very cheaply, the way it did in Russia
when a horde of new oligarchs got rich (in Greece, most of the airports,
highways, railroads, two energy giants, and the national lottery are for sale
right now). It's a great way for powerful people to grab a lot more of the
commons. Oops--there I go into pessimism.

The point is, if you own real stuff--land, house, tools, inventory, maybe
gold and silver--you weather the brief spike better, whether it be inflation
or deflation. Cash is good in deflation, not in inflation. And a strong local
community economy where people know and trust each other's skills, so that
they continue to do business with each other even when the dollar is
worthless, is, I think, the real key, on a host of levels: goods continue to
be exchanged, and people don't kill each other because they need each other.
The less we participate in the dollar economy, and the more we create local,
resilient ones, the safer we all are. Community is everything.

Toby
http://patternliteracy.com





Archive powered by MHonArc 2.6.24.

Top of Page