Peak Moment 166: The crash course — exponential growth meets reality
“The next twenty years will be totally unlike the last twenty… We’ll face the greatest economic and physical challenges ever seen by our country, if not humanity.”
So opens Chris Martenson’s much-viewed online Crash Course illuminating the relationship between economy, energy and the environment. Starting with the power of exponential growth, he tidily sums up our economic problems: Too Much Debt. Chris discusses the implications if we continue the status quo, and ways to prepare. He believes that “if we manage the transition elegantly we can actually improve things.” (www.chrismartenson.com).
Download the audio for this episode here.
Chris Martenson: The reason I came out with the Crash Course and felt compelled to share it for free with everybody is because there's a story here that is not going to get told by the highest levels. This is one we're going to have to find out for ourselves and it's really important we do that. Individuals need to start thinking about the ways in which their lives are going to change. This change is coming. And if you can get out in front of the changes — they can be better.
Janaia Donaldson: Hi! Welcome to Peak Moment. I’m Janaia Donaldson. My guest today is Chris Martenson. Thanks for joining me. Chris Martenson: Thank you. It’s a pleasure to be here.
JD: Chris, when the oil prices of summer of ’08 hit their all-time high and then we had this economic meltdown a couple of months later, I found myself thinking: "There’s got to be some connection between those two." And about a half a year later I watched your Crash Course –– your free download, the free DVD’s for people – and I said: “You’ll know because you’ve been connecting the dots about energy and the economy and a lot more for a long while. So, I want to hand it to you. Tell us what the Crash Course is…and why you did it.
CM: Well, the Crash Course is the end of about three years of investigation. There was something about the economy that appeared wrong to me – all the way back in 2001–02. You know what it was? I was watching my 401K statements and broker statements just... (motions downward) and I got really tired of my broker saying, “Oh, it’s a blip” and “Stocks for the long-haul” and it started to ring hollow. And so I started to really dig into the economy and found some things that were extremely surprising to me. Here I am – I have an MBA, been in business a long time and have a science background as well. And somehow, in all of that, no one ever told me how the dollar came into creation. Seems like a central and germane part of the story, right? Once I started doing that I wondered, “What else don’t I know?”
And all these things started to fall into place. It was about a year after I started that when energy fell into my lap and the story of peak oil. Once I put those two pieces together I said, “Wow, there’s a really enormous story here.” And of course there is a third “E” which is the environment. I am not looking at global warming quite as much as something more immediate, which is the depletion of resources: soils, fish, ore bodies, timber…you name it. There are all of these things that are disappearing at a really fast rate – an exponential rate. There is this whole thread of the story that suddenly came into focus: we have not just been growing, we have been growing exponentially. Our economy, our use of energy, our use of resources – and that is where the story came from.
JD: That’s the cornerstone that I remember – and your charts which go off the ceiling. “Exponential” is not easy to grasp. What is exponential? I think that is the heart of what your course is saying.
CM: Oh, it is. And they are hard to grasp because we’re humans. We think linearly – at least I do. Exponential growth, if you are looking at a chart, would look like a hockey stick. It starts out slow and then shoots up into the air. Whether we are charting the growth of lemmings on the tundra or looking at the growth of our money supply, we see these sorts of hockey stick charts all over the place. We could live fine with that if we lived in an infinite world without any limitations. The story became fascinating to me because my main conclusion in the Crash Course is that we are alive at a time when an actual resource limit in the world will be hit.
JD: We know that other civilizations have crashed when they have gone beyond the limits of their local resources. You are talking about global?
CM: This is global. There is no next horizon. No next continent. No vast new untapped resources we don’t know about. China is now running around the world acquiring resources – breaking out their checkbook for everything from the last known significant reserves of copper in Afghanistan, to oil from Venezuela, to farmland in Africa, to oil from Canada. So it seems to me that at least one nation out there “gets it.” The next couple of decades will be denominated and dominated by who has access to what. China knows how important that stuff is. My clear sense of China is that they are out of the starting blocks, running down the trails – and the United States does not even know there is a race.
JD: We’re back here still fighting the next level of a cold war.
CM: It’s the old model – the model we’ve run for a long time. And this is the reason why I do the work I do. It’s very normal for cultures, for societies, for big corporations to continue doing what they’ve been doing. It’s the reason why, out of the original 30 Dow companies, only one is left alive. All the rest went out of business. When you stick to an old model, you stick to it until it runs out. And that is my concern.
JD: What is the existing story and then what story do we need to be finding?
CM: The old story for the U.S. and, I think, for a lot of the NATO countries in combination is “gunboat diplomacy.” If you have a strong military, you can maintain a presence and you can control your access to the critical resources. If you look at where the U.S. has its military arrayed in the Middle East, it’s kind of all around the oil fields. Not an accident and makes complete sense – but in an old paradigm. People like me are starting to question, “Does it even make sense? Can you really secure access to something like oil?" You have to put it into a big slow ship that is now explosive because it’s filled with a burnable substance and sail it 12,000 miles. To me, this does not sound like a strategy I want to put all of my eggs into. People are starting to get – rationally or intuitively – that there is something about how we are conducting ourselves at this critical turning moment in history that doesn’t really add up.
JD: I think the unease that we are feeling with the crash and the foreclosures and the unemployment – I think people do feel that the ground has shifted under us.
CM: Right. First of all, we completely misdiagnosed this problem. The diagnosis is really simple. I can sum up our entire crisis that we just had in three words: Too Much Debt.
JD: Too Much Debt?
CM: In 2000, at the beginning of the year in January, we had 26 trillion dollars of debt in America – that is corporate, federal, state, local, and personal debt. All levels of debt. By 2008, that had gone to 52 trillion.
CM: Absolutely doubled. What do we know about debt? You have to pay it back or you default on it – those are your options. How do you pay stuff back? You have a job, you have income. If you look at what happened to jobs and income over that same period of time, one was flat and the other went backwards. So, while we were expanding our debt at exponential rates, the means to pay that back was stagnant or retreating. That’s the story. It wasn’t any more complicated than that. How the Federal Reserve can still claim to have missed this, “...it was too confusing” – it’s not. It’s a very simple story. An old story. We just went overboard with debt. So to attempt to try and recreate the experience we had living with too much debt – it’s worse than foolish. It’s wasteful It’s going to be counter-productive. It’s kind of like taking two more steps up the ladder that you’re about to fall off instead of two steps down.
JD: And that’s what we’re doing.
CM: That’s what we’re doing. And people know that and that’s why it doesn’t feel right – doesn’t make sense. If we took those same trillions of dollars we have been putting into trying to keep the banks going and instead we were putting in a smart grid, a high-speed electric rail system, and we were actually taking the natural gas we have and figuring out how to build pipelines and distribution centers, and turning our cars into LPG-fueled vehicles – I would have such a completely different feeling about where we’re at. But, trying to get everybody back to borrowing more money so that we can be like we were so that the status quo can be maintained is a broken story.
JD: How can we get out of this?
CM: We have to start telling ourselves a different story. First, we have to recognize what the problem was.
JD: Yes. But people are doing this instinctively. People on “Main Street” are tightening their belts. The governments aren’t – too much.
CM: This is the great story. People are getting it. I’m sure your listeners are getting it. People who come to my site get it. People who we don’t know about everywhere are getting it. I can feel that movement starting. Where people’s minds go, eventually politics will follow. But for now, there’s this very large and growing gap between people and politics. This is starting to come out in various ways. It creates a sense of dis-ease in people to know that we want to go this way but we seem to be going that way. When I hear people express the statement that, “Our country’s off-track,” that means something very profound to me. I fear that when people in D.C. read that, they think we need a different policy tweak or maybe we’ll get angry at the bankers for a week – and then it will go away. They’re just out-of-touch with reality.
JD: How would you articulate that other story – the new story – for folks who “get it” so that we could then begin to talk to our neighbors about it?
CM: Imagine the world 50 years out – what does it look like? I think that we’ve created a world that is worth inheriting. What is a world worth inheriting? To me, it has intact ecosystems, fresh water, lots of opportunity, meaningful jobs. We have real connections with ourselves and also with nature. It’s a world where humans have figured out again – we have re-learned – that we are a part of the world. We are not separate from it. And we are living within the carrying capacity of wherever it is that we live. We don’t have a million more people on any part of the landscape than that landscape can support.
JD: So in 50 years, there will probably be a stabilized population on its way down?
CM: There will be a population that is in relationship to the world around it. If that is the future, how do we get there? Let’s get a commission at the national level to understand, support, and study, “What is net energy – for any of the things we might want to invest in?” Net energy meaning, "If we are going to take one barrel of oil to find natural gas, make a hydro-dam, etc. – how much do we get back?" It is not how much energy we have that we care about. It is how much extra energy we get back after exploration. If we had that information we’d know whether to build a new ethanol plant or insulate existing structures. We cannot answer this if we only know the cost but not the benefit to us – the return. CM: Here’s an example: Before I had this information, I was a 42-year-old guy with three young children, lived in a five-bathroom house on the coast of Connecticut, and had a boat in the slip with two engines. Now, I live in a house less than half the size with one-and-a half bathrooms and I have a kayak with a paddle.
JD: You down-sized considerably.
CM: Right. So by American standards, my standard of living fell off a cliff. But my quality of life…[motions upward].
JD: In what way is the quality better?
CM: It is because I started changing the stories I was telling myself. What was important to me before was my job, earning money, lots of symbols of status. I had bought into the whole story of consuming – that the acquisition of things was a way to get a good feeling about life. I changed my story. My story now is – the thing that is going to be the most valuable to me going forward are the people I know ... my community. In changing what I value, it changed what I do, what I say, who I know. In this reconnection with community, I have found much more joy, satisfaction, and sense of purpose in my life – and it has nothing to do with stuff. It has everything to do with what I consider to be more important now. That is just how I approached it and this has been a story that my family and I have all pursued. It has made a lot of sense for us.
JD: If America is going to continue to live by the old story, there is going to be a lot of suffering. There already is.
CM: Well, the old story is already breaking down.
JD: We see the holes. When you talk about looking at our energy use, I imagine that part of this is looking at our individual use – cutting back – because it will be more expensive.
CM: It will be more expensive. There is another energy crisis in front of us – whether it is in 2 years or 20 years. It’s coming and we know this for a fact. Here is how I translate that into my own life. I’m thinking about the money I do have. I don’t know where to put this. But as soon as I put it through this filter of the understanding that we’re going to have an energy crisis, I know where to put it. It makes perfect sense. The next $20,000 I am going to spend will go into solar hot water panels, putting a little solarium off of the side of the house, and a variety of other energy infrastructure improvements. I guarantee it will be the best possible return I can get off that money out of anything I could do right now in terms of an investment.
JD: Makes sense because utility prices will continue to rise.
CM: They will – if we don’t actually face shortages at some point in time.
JD: For people who own houses, what you describe makes sense. For those who don’t, a smaller car, biking, or other options that use less energy or create their own energy – or as in your case – sending energy back to the grid which benefits other people and gives you an economic return. Still, there are people who are retired with money in an IRA. What do they do when they cannot pull it out?
CM: That’s one of the most difficult questions there is to ask right now. In many ways, the money is trapped – there are tax implications involved. That might inhibit us and we may not want to touch it. Yet we can look at what the Federal Reserve is doing right now – printing all of that money – and realize that there is a serious risk that all of our assets could get eaten up by inflation. This is a challenging dilemma. Find a financial adviser who gets it. If you ask what they think about peak oil and they look at you like a dog listening to white noise, you’ve got the wrong one. You need to talk to somebody who can talk to you about monetary policy. They exist – there are growing numbers of them.
JD: Give me a sense of the horizon. What else is going to be changing? What do we need to be doing over the next 20–30 years?
CM: It’s kind of hidden in this story that we’re changing our narrative – so much implied by that. I think this is an exciting time to be alive. Glad I’m the age I am but if I was in my twenties, I’d still be excited. I’d be a little depressed if I thought the future needed to look like the past. It’s not going to. But where we might have had a lot of jobs that were involved in the complexity of society – service-oriented jobs – our future jobs are going to be much more tangible. You mentioned one. Farming in the future won’t be like farming in the past. It will be more sophisticated and is going to take an incredible amount of knowledge. (You’re) going to have to understand things like nutrient cycling at a depth that most farmers today are mostly unaware, understand principles of permaculture – be a soil expert because we’re going to have to figure out how to get the same amount of yields not using the easy club of fossil fuel inputs. This is going to require the talent, passion, and motivation of our best and brightest. We can talk about jobs that exist like that all across the spectrum of our most basic needs – energy, food, water, sanitation. We’re going to have to be more focused, sophisticated, and more careful stewards. I think that there are a lot of incredibly purposeful jobs in that sphere that we were just talking about.
JD: We are just starting to see these. I think of Paul Stamets and his research with mushroom mycelia in cleaning up toxins and all kinds of other things we don’t even know about.
CM: A perfect example. What I’m working towards most right now – we have to raise awareness about these issues. But we have to go beyond awareness into understanding. Awareness might be realizing that inflation may be coming. Yet to really understand what this means to us, we have to do a little more study before we can move to solutions or responses. Kind of like if I’m driving my car and see the red engine light come on. I’m now aware that I have a problem but I don’t understand how the engine works. Therefore, anything I do is probably going to be an accident. So we have one path where we have to raise awareness about the issues and build understanding at all levels – individually, with local councils, with the federal government, corporations…everywhere. At the same time, we need to start articulating that vision of the future. If you don’t know where you’re going, it’s hard to get there. So what does that picture look like? One way or another, we’ll end up in a future. I would just like us to be able to pick the one we’re going to inhabit. And then we have to work backwards and think about all of the things we have to do to get there. There’s going to be a lot of work but it can be challenging, exciting – it may be difficult, could be disruptive. But if we do it right, I think that we have all of the resources and time we need to get it done.
JD: And we don’t need any magic new technologies?
CM: No, they’ll be nice when they come – but we don’t need them.
JD: When you talk about that kind of understanding, I think that your Crash Course is probably one of the clearest sources that takes esoteric information (I didn’t study economy!) and helps us to understand it in the context of everyday life and how it will affect us in the near future. Thank you for doing a brilliant job in helping lay people to understand these factors that are getting woven together. I encourage people to watch this 2 or 3 times. As we go towards understanding – when inflation rises and purchasing power goes down, it won’t help if a person has a million dollars in the bank but a dollar is worth only half a cent. You’re keeping a blog going that helps people stay informed with regard to where we’re going. Do you have other sources that you direct people to in order to get that understanding?
CM: There are all kinds of sources on the Internet that are easily accessed. There are a number of great books that have been written. I have a collection of these resources on my site. I’m also a fellow at the Post Carbon Institute – they, in addition to the Transition Movement, have some wonderful resources. Amazing how many are out there. But my strongest recommendation is – don’t do it alone. Find other people that you can be in community with as you move through this information. The Crash Course is about getting an intellectual understanding. But there is an emotional dimension to that. If the CC is left brain, let’s take care of the right brain in another way. It’s going to point to some financial implications that you can take some steps around. There are some physical preparations that occur to people. And then there are some emotional ones that I think often get overlooked. They are the most important ones.
JD: In our culture, we emphasize the intellectual but we have emotional responses as well – fear, vulnerability, concern about losing our jobs and homes. To me, sharing this understanding with others and being mutually supportive is reassuring – and enjoyable.
CM: It is amazing how important this is. When I hold seminars of 50-100 people and we talk about the implications of the Crash Course – honestly, I could say nothing for the whole weekend and they (would) get so much out of it. These are just “regular” people: farmers, ranchers, business people, housewives, single mothers, etc. They get to see that they’re not crazy or alone – that they’re actually normal people. This in itself has an enormous benefit. So when I say that people should find other individuals or community to share this with – there is a powerful and even tangible benefit to go along with the intangible. So don’t be alone with it. That’s my strongest piece of advice.
JD: Yes. Don’t be alone with it! You have just broken through a bunch of barriers – both on the intellectual level and in your willingness to spread this message for free on the Net which is incredibly generous. But I expect that the returns will be there for you as well – because you don’t want to walk that path alone. We want buddies!
JD: We aren’t alone on this one. Thank you very much for what you are contributing and for sharing that with us.
CM: Thank you.
JD: You’re watching Peak Moment – locally-reliant living for challenging times. I’m Janaia Donaldson and my guest is Chris Martenson. If you value this program, come visit us at our website and see how you can contribute. Peakmoment.tv. Join us next time.