We live in a time of deflation. The grease we call money that keeps the economic machinery running is simply disappearing. US citizens are paying off their debts (or walking away from them) and when they can, they are saving money for a rainy day. The country's GDP appears heading for another stumble as there is no longer sufficient increase in production to keep up with the growing demands of the citizenry.
Our various federal, state, and local governments try to encourage economic growth while showing bipolar attitudes toward government indebtedness. Many seem at a loss on what to do, when to do it, and how to do it. In fact, for the most part they cannot agree on what the problem is. I don't think they can really control the deflation that is going on. Deflation is happening, and I expect it will continue to happen for some time.
Those who stand back and look at the historical perspective tell us that this has all happened before, and things will eventually work out. We may have to "muddle through" for the next couple or ten years, but eventually, everything will return to normal. That has always happened in the past, so it will happen again in the future. They say it just takes patience.
The kicker in this plan for the future is my three cats: peak oil, climate change, and population growth. These three trends are more and more rapidly changing the environment our economy works in.What worked in the past does not work the same way in the future.
In the more recent past (couple of hundred years), there has been more and more energy available, and its flexibility has increased while its cost has fallen to unprecedented lows. The climate has been mostly stable. It has become dependable enough for us to build huge agro-industrial complexes. The population has been increasing, but at a rate that provided the increasing number of workers to needed to match the continuing growth in the economy of the world.
The resistance to growth has been minimal, and we have become so accustomed to growth that we think it is always here. Some contend it is one of the inalienable rights of mankind.
Imagine a world where the resistance to growth increases. Peak Oil means the cost of energy, especially fuel for transport, begins to rise at an increasing rate. Imagine that it keeps on increasing -- $3/gal, $5/gal, $10/gal, $25/gal, $100/gal -- When do you cry "Uncle," and quit transporting anything because it simply costs too much to do so.
Climate change means that established patterns of living and farming suddenly don't work as well as before. Real dust bowls come back. Fires burn most of the timber in the mountains, Major coastal cities and industrial sites may be wiped out by rising sea-levels and more and more gigantic Hurricane K-K-Katrinas.
And what happens when the earth's population exceeds the capacity of the world to distribute food to everyone, especially at those higher transport prices. In fact, there are already nearly one billion of the people on earth today that are underfed, and that number is expected to grow.
What has happened is that the worldwide environment for our society and economic structure has changed, and it will continue to change as time progresses. Growth as we have seen it in the past is destined to become a relic of that past. Growth in the future will happen only in very specialized niches, and not everyone will have access to those niches.
Our current economic path is a one of deflation. What most people ignore is that we are also moving out of the smooth plains of plenty where things can be like they were before. Now we are moving into the deserts, hills and mountains of scarcity, change, and adversity. Our environment is changing. Our future will require solutions different from before. It is time to start mapping those different solutions. People who wait will be left behind.
Sam Penny
with LEDs at www.prudentrver.com
