Part 1 described how humans face multiple ongoing, interlocking and spiraling crises of existential proportions, all of which can be conveniently subsumed under the theme of carrying capacity, the ability of an environment to support a population at the limit of sustainability, a limit we have exceeded. The basic elements of the story are these: Through the exploitation of fossil fuels, humans have over-run the planet, cantilevering the entirety of complex industrial society on finite sources of fossil fuels, which we are using to extract itself other resources unsustainably to the point of collapse while altering the basic chemical and biophysical operating conditions of life. Thus, the collapse of the physical environment threatens mass extinction on the order of five previous mass extinction events on Earth. This is not exactly news, yet it’s tenaciously more controversial than it should be. Today’s tour examines how we got locked into one particular death spiral, the “debt spiral,” that keeps us locked into the fossil fuel death spiral.
The very recent “success” of humans in economically advanced countries has culturally engendered a misleading assessment of human accomplishment, deranged notions of wealth, and conditioned unwarranted expectations for more of the same. To borrow a phrase from Jim Hightower, industrial humans were “born on third base and thought they hit a triple.” The baptismal font of fossil fuels has fostered a belief system in which the religion is growth and the supreme being is the Lord of More, an orthodoxy that is both irrational and nearly ubiquitous in industrialized nations, and probably far more damaging than any conventional dogma Richard Dawkins has railed against. The irrationality of this system stems from the simple fact continual growth of any kind is impossible in a finite world.
Despite its root insanity, this belief system has been not merely elevated as a national narrative, but has been reified as the operating system of our physical economy in the form of debt-based financing. Still worse, as the leading global power of “The American Century,” we have pushed to globalize this operating system on the rest of the world, to exert a kind of neocolonial control over resources and political systems through inventive regimes of debt and discipline, and largely succeeded.
On the ascending limb of resource extraction, economic growth, and credit expansion, debt-based assets could be rolled over into the foreseeable future, and interest-laden fiat capital could function as a tradable substitute for actual resources, such as oil. The belief in infinite resource extraction has allowed debt-based fiat economies to runaway from ecological reality. As alluded to in part 1, we are hitting hard limits to physical capacity, leaving only imaginary exponential functions to vary to infinity. The master resource of oil has by any reasonable estimate begun its terminal decline, which guarantees economic contraction, which in turn certifies the impossibility of rolling all the old debt into new debt. Thus the viral proliferation of the operating system has also hit hard limits, and the ascending limb of inflationary credit expansion has transformed into its nasty alter ego of deflationary credit contraction. The American wealth pump has begun to run in reverse. How did we get here?