The Crash Course - Chris Martenson [66]
From the U.S. Code:
EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104 Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of—(1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.
Coincident with this loss of fiscal prudence, corporations, municipalities, states, and individuals all took similar approaches toward saving and financial responsibility. Between 1985 and 2010, the United States experienced a profound cultural shift with respect to financial prudence that began at the top, filtered throughout the remaining layers of society, and now permeates our entire economic landscape.
This is our legacy—the economic and physical world that we are choosing to leave to those who follow us. Most of these bills will come due, in a big way, in the twenty-teens. Given the massive amounts of debt, low savings, demographic headwinds, and other economic challenges, we are entering the next 20 years with our economic shoes firmly laced together.
1 An important realization about NPV calculations is that by definition, all future cash flows have already been taken into account. This means that all expected streams of revenue have been offset against future expenses. Therefore, if a pension has a $1 trillion shortfall, we would need to place $1 trillion in the funds today toward future needs, and if we don’t do this next year, the shortfall will almost certainly grow. The only way it could be smaller is if benefits are reduced or the fund’s assets outperformed the assumed rate of growth that fed the original NPV calculation. That is, reality would have to be different than the initial assumptions. This happens all the time, but for a variety of reasons, initial assumptions have almost invariably turned out to have been overly optimistic, not pessimistic.
PART IV
Energy
CHAPTER 15
Energy and the Economy
Now that we have seen how our economy is based on perpetual exponential growth and reviewed the ever-accumulating series of debts and deficits with which we’ve saddled ourselves, we are ready to get to the heart of the matter: linking energy to the economy. This chapter is essential to appreciating why enormous economic changes are coming our way.
One of the many ways that classical economists go astray is by assuming that the economy exists in a vacuum, a complete little private universe that can be understood on its own, without considering “externalities” in the form of the resources that cycle in and the waste that must cycle out. The problem with this view is that the economy is absolutely not a complete little universe all its own. Quite the opposite; it’s like an organism, as dependent on its surroundings as a baby in a womb. Where economists assume that needed resources will magically arise because the marketplace demands them, a more holistic model would begin with the observation that the economy only exists because resources are available. The natural world isn’t a subset of the economy, it is the other way around—the economy is a subset of the natural world.
Recall from Chapter 9 (What Is Wealth?) that primary wealth leads to secondary wealth, which leads to tertiary