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Defending money

In a recent book entitled Our Final Century, Sir Martin Rees, the Astronomer Royal of United Kingdom, wrote:

Within the next few years, we face the "End of the First Half of the Oil Age." It lasted 150 years and allowed industry, transport, trade, agriculture and eventually the population to expand in parallel with oil. It also created vast amounts of new financial capital, which in turn led to the subject of Economics by which to manage and manipulate money.

It seems that this system created money out of thin air in the form of interest on loans that banks made without actually having the corresponding amounts on deposit. The system required ever more loans, which somehow made their own collateral in the form of the expanding economy. In other words it needed growth to survive which in turn was made possible by an abundant supply of cheap oil-based energy.

The Second Half of the Oil Age now dawns. It is characterized by the decline of oil production and all that depends on it, including most significantly the Financial System. In logic, the onset of oil decline undermines the very foundations of the economic system, which may accordingly collapse long before oil runs out or becomes in serious short supply.

Cool, eh?

Isn't it strange how Iraqi oil hardly rates a mention on the mainstream news?

Isn't it strange how the precious oilfields of Sudan never get a mention?

What's going on?

It helps if you understand that the spending power of our money depends upon a plentiful supply of cheap and easy oil. If that oil supply were to fail, money in all it's forms (especially the US dollar) would hardly be the worth the paper it's printed on. Dollars would be litter... not even good for landfill.

Oil can buy any amount of money, but money cannot buy oil once the reservoirs fall below critical level. This is not and never was a two-way deal. Oil strictly belongs to the realm of nature's bounty.... a fortunate one-off.... and the closest thing we ever had to something-for-nothing.

Money exists in the imagination. It is literally the stuff that dreams are made of.

While money creates dreams, only abundant energy gives humans the power to realize those dreams. A week's worth of hard manual labor from your average Australian bloke doesn't equal the power required to send the family car to the shop and back. Think about it.

...and the world is running out of "sweet", cheap oil. Think about that.

Consider the crazy politics of the last few years; strange alliances, lies from the right, feeble response from the left. Along with the War on Terror, weapons of mass destruction, Saddam etc., it all seems to be a kaleidoscope of things glimpsed in a whirl of smoky mirrors.

It is supposed to be that way. No-one will willingly let you see the deep dark hole at the center of it all.... the hole where the oil used to be.

The reason that both the right and left of Australian politics are willing to shop at the US Free Trade Mart is not because of the bargains. It is not in order to get privileged parking. It is because of the prospect of discount petrol vouchers. The USA is bent upon scoring the last of the "sweet" oil energy and we are hopeful of catching some crumbs from the captain's table.

Now I will be uncharacteristically generous towards the Willing Coalition leaders. I believe, notwithstanding the deaths of so many innocents, that our leaders felt they were doing the right thing; that they gambled on a course that might result in the smallest quantum of Western death and misery. Along the way they took good care of their privileged buddies of course (and too bad for the poor old Iraqis).

I believe they are trying to avoid the global chaos of a whopping depression. Falling from the heights we climbed, to the depths of a pre-horse and buggy world, would leave Westerners at each other's throats. Only we have tied our food supplies too tightly to oil energy.

So it is that I have been pondering these things in the temporary safety of my ramshackle cottage, trying to understand and forgive, like a little tin god.

All the while I looked for omens. Maybe some shift in our Labor Party's attitude which would signal to me that fabric is being cut out for a parachute.... some socialistic tendency which might suggest a co-operative, inclusive strategy for the future of the global village.

Nothing ...

Then it happened. A catalyzing revelation ...

The supermarket in Paraguay burned down, and it is said that the manager ordered the doors to be locked, so that fleeing shoppers could not leave without paying. So they perished, along with the consumer goods ... the precious money only serving to feed the flames.

Could this be a metaphor for the rest of us?

How many will be sacrificed in the defense of economics?

"George! Tony! John! ... where is the back door? I smell something burning!"

"Ah, sorry mate. The Exit signs were removed during the seventies."

Et tu, Liberals. Et tu, Labor Party. Et tu, Democrats.

Cheers, fellers.

© 2004, by the author.

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