The Crash Course - Chris Martenson [9]
Because I am discussing subject matter of a serious nature, I may seem to be delivering a doom-and-gloom message. But truthfully, I consider myself to be a “realistic optimist.” The spirit and intent of The Crash Course are to help you see the options and opportunities in this story of change. I have created a better life for myself and my family through the insights developed from this work. You can, too.
The mission of this book is larger than helping people build more resilience into their lives and portfolios. At our current pace, we are on track to leave behind more than a few predicaments for our children, as part of a substantially degraded world with fewer opportunities than we ourselves were granted. If we make the right choices from this point forward, we have the opportunity to leave a very different legacy. That is what The Crash Course is about—helping us to individually and collectively understand that our choices matter significantly and that the time to make the right choices is running dangerously short.
CHAPTER 2
The Lens
How to See the Future
I would like to share with you the method of thinking that allowed me to skirt the worst of the financial downturn, illuminate the future, and increase my wealth. It has become the lens through which I view the world, combining the economy, energy, and the environment—which I introduced in Chapter 1 (The Coming Storm) as the three Es—into a single, comprehensive whole.
The first E, the economy, is founded on a workable understanding of how our money system actually operates, as well as basic economic information about debt, savings, and inflation. Not too much; just enough to allow us to assess the sustainability of our current trajectory. A critical understanding rests on the observation that our economy is predicated on growth. It needs growth the way our bodies needs oxygen. Not just any kind of growth, but exponential growth, which is a nonlinear form of growth that begins slowly but compounds with urgency toward the end. If you are interested in peering into the future with the intent of predicting how it will unfold, you must learn this concept.
Even if we were to limit ourselves to examining just the economy while ignoring energy and the environment, we could make a compelling case that prosperity faces the most daunting structural headwinds seen in generations. As baby boomers transition from being net investors and builders to net sellers and downsizers, this change will put downward pressure on the prices of the stocks, bonds, and real estate they will be selling. Further, we might note that the developed world has doubled its debt load over the past 10 years, which was an important component of our perceived prosperity but which, for a variety of reasons, seems unlikely to happen again. Even more dramatically, we have recently seen an explosive expansion in unmatched pension and entitlement liabilities in a majority of developed nations. Without these increases in debt and unfunded liabilities, global growth over the past decade would have been a great deal less dramatic than it was. How will we fuel the necessary growth now required to service our existing debts, let alone double them again? That’s a good question.
However, it’s when we bring in the second E, energy, that the story quickly compounds in urgency. Our economy is dependent on growth, and petroleum—oil—is the undisputed king of fuels that drive economic expansion. It has no substitutes, no replacements waiting in the wings, and it is depleting. There is growing alignment between various government and private institutions predicting the date when an irreversible peak in oil production will occur. This does not mean “running out of oil”; it just means that despite our best efforts, gradually less and less oil will be available each year—though at increasing extraction costs. Many confuse technology with energy, but I don’t and neither should you. Technology is