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By Root 1210 0

economic collapse. But it’s important that you understand that these are merely risks, not certainties. My background as a pathologist trained me to view the world as a collection of statistics and probabilities; nothing is ever black and white to people in my (former) profession. People who smoke four packs a day are at higher risk of certain diseases, but are not certain to die of anything in particular. Cancer exists on a continuum of aggressiveness, which we segment into stages, but even then, there are no guarantees as to the outcome of an individual case. Similarly, when I look into the future, I don’t have any certainty about what might come next; instead, I see risks to be weighed and mitigated.

It’s also important to note that I don’t get rattled easily. I undertook no preparations for Y2K, and I don’t fret about flying or driving or being near secondhand smoke. I rock climb and shoot and eat meat. To me, everything is a series of risks, some large and some small, with relatively few above my personal threshold of attention and most below.

The risk that I’m most focused on isn’t any particular one of the individual predicaments laid out in the previous chapters. Rather, I’m primarily concerned about the general possibility that two or more may converge on a very narrow window of the future in a fashion that could overwhelm the ability of our systems and institutions to adapt and respond. Like a rogue wave formed of lesser parts, two relatively small issues could join forces and prove to be far more destructive and disruptive in combination than individually. Let’s review the key elements now in order to better appreciate the risks.

The Foundation

Exponential growth defines the human experience of the past few hundred years. With the advent of effective medicine and abundant energy, exponential population growth became so embedded in our collective reality that we designed both monetary and economic systems around its presence. Without such robust economic growth, as was the case in 2009 when global GDP shrank by a mere 2 percent, our banking system practically collapsed and was said to have been only hours away from meltdown.1

All growth requires energy, and if there happens to be abundant surplus, both growth and prosperity can result. However, if there is insufficient surplus to “fund” both, then you can only enjoy one or the other. If this comes to pass, it will not be a problem to solve, but a predicament to manage.

The Economy

To review, our understanding of the economy began with the fact that money is loaned into existence, with interest, and that this results in powerful pressures to keep the amount of credit, or money, constantly growing by some percentage each year. This is the very definition of exponential growth, and money and debt have been growing exponentially (very nearly perfectly) for several decades.

Keeping this dynamic in mind, we dove into the data on debt, which is really a claim on the future, and saw that current levels of debt vastly exceed all historical benchmarks. The flip side to this (a significant sociological trend in its own right) is the steady erosion of savings that has been observed over the exact same period of time. Combined, we have the highest levels of debt ever recorded, coincident with some of the lowest levels of savings ever recorded. We also saw that our failure to save extends through all levels of our society and even includes a notable failure to invest in infrastructure.

Next we saw how assets, primarily housing, have been part of a sustained bubble that is now bursting and will take many years to play out. When credit bubbles burst, they result in financial panics that end up destroying a lot of capital. Actually, that’s not quite right; this quote says it better:

Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.

—John Stuart Mill (1806–1873)

We learned that a bursting bubble isn’t something that’s easily fixed by authorities,