Building a world of
resilient communities.

MAIN LIST

 

The last bailout

My post this week will be short and early as I am on my way to the ASPO-USA conference.

While watching this week's turmoil in the world markets, I thought back to a piece Howard Odum wrote in 1974. In it he wrote:

Worldwide inflation is driven in part by the increasing fraction of our fossil fuels that have to be used in getting more fossil and other fuels. If the money circulating is the same or increasing, and if the quality [of] energy reaching society for its general work is less because so much energy has to go immediately into the energy-getting process, then the real work to society per unit [of] money circulated is less. Money buys less real work of other types and thus money is worth less. Because the economy and total energy utilization are still expanding, we are misled to think the total value is expanding and we allow more money to circulate which makes the money-to-work ratio even larger.

I think what we are seeing is the convergence of colossal financial mismanagement with energy stringency. Not surprisingly the authorities think that only money is the problem, i.e., there isn't enough of it available to fill the holes created by the disappearing value of various types of financial instruments. But if energy stringency is also part of the problem, then merely filling the financial voids with new money will only add fuel to the already potent inflationary mix which I fear is about to ignite.

In saying this, I offer no solution to the problem as stated. The real solution is much harder: deep cuts in energy use, rapid investment in and deployment of alternatives, reworking the infrastructure including agriculture for a low energy society. I'm under no illusion about whether such proposals will be made at the highest levels since there seems to be little awareness of our energy predicament.

I title this piece, "The Last Bailout," because if we are at peak, then financial bailouts will do little to help us. In the past when society had rising energy supplies with large energy profit ratios, these financial bailouts could avert disastrous consequences. They would allow the economy to regain its equilibrium and await the next sustained upturn. But, what if there is no next sustained upturn? If that turns out to be the case, then even if additional bailouts take place after today, they will all ultimately be lumped together into one, namely, the last bailout. And, the last bailout will of necessity fail to work as advertised.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Tags:  

Alternatives to Capitalism

It is said that capitalism believes in competition but hates competitors. …

Own a Home in Just Four Years? This Co-Op Program Keeps Workers in the Neighborhood

Alex Cedeño quit renting two years ago. Now, he has just two years …

Co-operatives Need to Confront Climate Chaos

The challenges for 2015 are the same ones we've failed as a movement to find …

Making Sense of the Sudden Market Plunge

The global deflationary wave we have been tracking since last fall is …

Back to the Future for Work

What if we’re slowly, or not so slowly, giving up on the idea of work?

Why Is Market Fundamentalism So Tenacious?

One of the great economists of the twentieth century had the misfortune of …

“Don’t Owe. Won’t Pay.” Everything You’ve Been Told About Debt Is Wrong

The legitimacy of a given social order rests on the legitimacy of its debts.