The US and the Five Stages of Collapse

Interview on WMNF FM, Tampa, Florida

Some excerpts:

First you have financial collapse, which is basically the volume of debt that has to be taken on in order for the economy to continue functioning, cannot continue. We're seeing that right now in Greece, we're probably going to see that in Japan, we're definitely at a point now in the United States where even if you raised the income tax to 100 percent, there's absolutely no way of covering the liabilities of the U.S. federal government. So, we're at that point now but the workout of the financial collapse is not all quite there. We don't quite have a worthless currency but that's in the works.

That, of course, is followed by commercial collapse especially in a country like the United States that imports two thirds of its oil. A lot of that is on credit and if a little bit of that oil goes missing then the economy starts to fall apart because nothing moves unless you burn oil in the United States and, of course, a lot of goods that are sold everywhere are imported again, on credit. And then commercial collapse is generally followed by political collapse because the Congress no longer has the ability to spend money in the fashion to which they have become accustomed. Governments at every level start failing. We're seeing the beginnings of that where fire and police departments around the country are being cut. Right now there's a big fight over the retirement of retired municipal workers. Retirements are, basically, being looted in order to paper over these giant gaping holes in the finance scheme.

Then the last two stages are I think generally avoidable in most places which is social and cultural collapse. Unfortunately to my thinking these two stages have largely run their course in many places in the United States where people really don't know their neighbors and also they don't really do very much for themselves. They expect to be fed at fast food establishments, they don't know how to cook from scratch, and things like that. So, those are the five stages and a lot of people have found this sort of way of thinking useful in terms of understanding what's happening.

What do you see the United States looking like for Americans in the next 5 to 10 to 20 years?

I think the country will be unrecognizable in 10 years, I don't know about 5, but I don't think it will look like a country in 10 years. I think it will be largely dismembered by it's creditors.

Do you think that we're going to be going quickly or slowly into these different stages of collapse?

I think certain stages like the onset of fuel, transportation, fuel shortages will be very sudden. American society tends to be very fragile. People tend to bring shotguns and baseball bats to gas stations and then every thing goes down hill from there. I expect certain parts of the country to go through this cataclysm where suddenly everything that they depend on, which is basically their car, no longer works and everybody's stranded and very angry. It would be a lot of mayhem. We've already seen that, for instance, during Hurricane Katrina and afterward because of all the refinery problems the '..' pipeline that goes up from the Gulf, I think it ends up in New Jersey somewhere, it couldn't be filled so gas stations in places like North Carolina ran dry and I've heard from people in that area that basically civilization ceased to exist. And then, when gasoline supplies were restored civilizaton sort of came back. That should be the pattern in a lot of places in this country.

There's been some limited coverage of peak oil in the press recently, do you think it's enough to raise the level of awareness for people in this country about the things that you predict are going to happen?

Unfortunately a lot of people simply cannot be reached because they refuse to hear what we have to say. It's not that they can't understand it, it's that they refuse to listen. The media, in general, in the United States makes it very easy because there is this fictional reality that they perpetuate and foist on people that contradicts what we're saying. We're saying that 'this will not continue for very much longer, people'. And then the media says that 'everything is fine, everything is normal', and even the President is now in the game where he says completely nonsensical things like drilling in Alaska for oil will actually make a difference. He recently said that. It contradicts what his own government says about the amount of oil left there. Some of these just fictional feel good messages just saturating the media and so the reality based people really don't stand a chance.

The Twilight of the Antipodes and the Cultural Flip

Presented on May 22 at the Northern California Eco-fest. (For those with browser embed/Google login issues, here's a direct link to it.)

Making the Best Use of your Energy Elves

Presented on May 21 at the Northern California Eco-fest. (For those with browser embed/Google login issues, here's a direct link to it.)

Northern California Eco-Fest

I'll be at the Eco-Fest this Saturday and Sunday. (This little promotional graphic is from Mike Rupert's Collapsenet. Not my words; they reminded me of these lyrics: "A lovely little thinker but a bugger when he's pissed." Perhaps I resemble this remark; you be the judge.)

I'll be speaking on making the best of your Energy Elves (they are like the old fossil-fueled Energy Slaves except much smaller; I seem to have made my peace with them) on Saturday at 11:15.

I'll also give a talk about the topsy-turveydom, hardcore stupidity and inevitability of collapse for the current economic scheme and about the various ways we can compensate for it on Sunday 11 to noon.

There is also supposed to be a Q&A with Mike Ruppert, a book signing and some amount of general milling around and meeting people. If you are in the area, please drop by.

"What will a post-collapse society look like?"

Stage 0 Collapse: Talking hipster robot apocalypse. If you haven't had your fill of text-to-film yet, enjoy. Thanks, Marcus for putting this together.

Reinventing Collapse 2.0 is now in print

My little box of author's copies has finally arrived, and the rest of the print run will be filtering out to book stores, eventually. If you don't want to wait, the book is also available directly from the publisher.

Since with a second edition there is hardly any excuse for getting things wrong, I have spent what seemed like an inordinate amount editing and finding and fixing errors. And yet, when I opened the newly arrived book I immediately stumbled on a slight imperfection: in it, I suggest that Osama Bin Laden CIA code name would turn out to be "Elvis," but now it turns out that it was "Geronimo" (or his stunt double) who, if you believe the news, was recently killed and dumped in the ocean by a death squad composed of some trained seals. My bad: I should have known that the CIA, being a politically correct organization, would never pick a code name that might be offensive to white people! The world can seem infinitely mysterious; it's all a matter of just how gullible you are.

I am sure that the text contains a few other tiny glitches of this sort, but, in all, the fist edition has stood the test of time. The new edition goes beyond it, putting the unfolding collapse into more of a context. Among other things, it provides a new perspective on how Peak Oil is likely to unfold, and it describes viable collapse-era business management and product development strategies. I am happy that the publisher has decided to keep this book alive for a couple more years, as I hope you will be.

Interview on Business Matters

Rest your eyeballs and prick up your ears: Thomas White of Business Matters gets right past the happy-shiny talk prevalent in the mass media with the help of his two guests: me and Catherine Austin Fitts.

Interview on KOWS FM's What Now with Ken Rose

A lengthy and wide-ranging interview during which Ken asked good questions and lent a sympathetic ear. Ken is right that what I have to say is difficult, unsettling and disturbing; so, to offset that, here's a crazy picture of our cat Zoë eating Baby's Breath.

Financial Totalitarianism

A particularly annoying question I am often asked and have come to hate is: “How do I invest my money for it to survive financial, political and commercial collapse?” The short answer is: “Nohow. Money will not survive collapse; not yours, not anyone else's.” But that answer is not acceptable, because accepting it would require a profound loss of faith—faith in money, a profound Götterdämmerung for a civilization based on the worship of money. People want continue to believe all sorts of things: that they can own land (i.e., shares in the Earth), or that they can do good through philanthrophic spending and charity, or that the world with which they have grown up and have lived their lives can collapse all around them, but that if they are informed and prepared, they can survive with all of their middle-class trappings intact. I am told that there is good money to be made in telling them such things.

Those who care to look can easily turn up plenty of evidence that the value of every type of financial asset, not just fiat currency or debt instruments, is unsupported. Its value derives from the goods and services provided by a functioning global industrial economy, which is quickly running out of every type of resource it requires; not just high-EROEI fossil fuels, but also metals, rare earth elements, phosphate, irrigation water and arable land. As industrial activity dwindles, worker productivity will decline precipitously. Many people point to precious metals as the ultimate storehouse of value, but without industrial equipment a man can only put out about 100 Watts of energy—a light bulb's worth—and won't dance any faster no matter how many gold or silver coins you throw at him.

This eventual outcome is the result of long-term physical trends: physical processes that move at predetermined rates and in only one direction. It is not possible to un-burn oil or coal or to un-mine gold or silver. But the short-term political and financial trends point in an altogether different direction: that of the global industrial economy turning boutique. You see, one shoe has already dropped: the level of industrial activity that can be sustained today is already insufficient to provide anywhere near full employment and a reasonable quality of life for vast numbers of people; the solution is to disenfranchise them, to confiscate their savings, to cancel their retirements, to concentrate all of the remaining wealth in as few hands as possible, and to create a boutique economic and financial environment in which the lucky and unscrupulous few can continue to live comfortably, and... wait for the other shoe to drop, I suppose. That will happen once the industrial economy becomes sufficiently disrupted by social and political upheaval that even its boutique version finally crashes.

A feeble (feeble-minded?) counter-reaction to these trends can be discerned: many people want to somehow find an escape from this system while still clinging to their money. This may seem like a contradiction in terms—“fleeing the money system while clinging to the money itself”—but this point seems lost on many people. Most of this counter-reaction is focused on the stampede to precious metals (gold and silver). This train of thought starts out as a smart market play: precious metals have been and continue to be a spectacular investment, and a good way to avoid being robbed blind by the out-of-control printing presses at the US Treasury. But eventually it goes off into ontological self-delusion—that gold and silver are “real” money, as opposed to paper fiat currency, which is “fake” money. Ladies and gentlemen, it doesn't matter whether or not it's shiny; it's all as real or as fake as you are. Some people go straight over the edge and decide to take the law into their own hands and, waving about a dog-eared copy of the US Constitution, set off to coin their own “coin of the realm,” not realizing that the realm isn't theirs. If the realm is financially stable, it will simply change the rules to make such a gambit unprofitable. If the realm is financially distressed and teetering on the verge of collapse, it will panic, shout “Terrorism!” at the slightest provocation, and the result is long-term political imprisonment for the ontologically deluded:

March 21, 2011

WASHINGTON (Reuters) – A North Carolina man was convicted for creating and distributing a counterfeit currency that was very similar to the real dollar, a U.S. Attorney said.

Bernard von NotHaus, 67, minted Liberty Dollar coins in the value of $7 million dollars. The conviction concludes an investigation that was started in 2005.

“Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” Anne Tompkins, U.S. Attorney for the Western District of North Carolina, said in a statement on Friday.

“While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she said.

This Reuters story has since been taken down, after being ignored by media in the US (but not in Russia). Von NotHaus is looking at 20 years in jail. This is a lot, you might think, for stamping some politically edgy shiny trinkets, but then Stalin gave out similarly long sentences to millions of people for doing absolutely nothing, so let us count our blessings. Let's get one thing straight, though: in the United States, by law, anyone who, “except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design . . .” faces a fine or imprisonment. It is the same in every other country: the term “coin of the realm” implies that it is the realm that controls creation of all coinage and its circulation. You can wave your US Constitution around, or you can swat flies with it, or you can use it as kindling: the result will be exactly the same.

You cannot create your own global money system, and you cannot change the way the global money system works; either you are part of it, or you are out. Most of us lack the ability to sever all ties with the financial realm, but, as with so many things, having the right attitude is very helpful. To that end, let me drop a Bible-bomb on you. (I do this as someone quite free of any religious sentiment; I just find the Bible to be an interesting and useful work of world literature, filled with highly quotable, pithy remarks.) Here's a particularly nice quote from the Beatitudes: “Blessed are the poor in spirit.” Never has a truer phrase been written. Many of the more recent self-styled or so-called “Christians” have attempted to distort it to mean that it doesn't imply depriving yourself of any worldly goods, and that “poor in spirit” is a special, strictly spiritual sort of poverty. That is, of course, nonsense. You do not have to dig deep for the real meaning: “Poor” just means “poor,” and “in spirit” means “on purpose, not as a result of, say, injustice, misfortune, or being lazy, stupid or a gambler.” Oh, and “blessed” means “not damned.” Accordingly, Christian monks take the vow of non-acquisitiveness, which is a virtue, with the corresponding vices of stinginess (“what is mine is mine”) and greed (“what is yours is mine”). It is rather difficult to embrace such basic tenets while remaining within a culture that has elevated avariciousness and rapaciousness to the status of virtues. But here is a key insight: being poor on purpose is much easier than being poor as a result of suddenly having less than you are accustomed to having. Voluntary poverty is a hell of a lot easier than involuntary poverty.

And so, the answer to the perennially annoying question “How do I invest my money for it to survive financial, political and commercial collapse?” is this: “There is no answer to your question. Try asking a different question, to which there might be an answer.”

Interview on Keiser Report