“We rail against exploitation of low-paid workers in Asia as we drive twenty minutes to the Big Box to save three bucks on tube socks and a dollar on underpants. We fume over the mistreatment of animals by agribusiness but freak out at an uptick in food prices. We lecture our kids on social responsibility and then buy them toys assembled by destitute child workers on some far flung foreign shore. The Age of Cheap has raised cognitive dissonance to a societal norm.” ~ Cheap: The High Cost of Discount Culture
Cognitive Dissonance: A condition of conflict or anxiety resulting from inconsistency between one’s beliefs and one’s actions.
“[Money] is an odd measure of value. It is so ubiquitous in our culture, so fundamental to how we all live, yet we rarely sit and contemplate what it really “is.” Where it comes from, what it does, and who (in the final analysis) really controls it. Most of us spend most of our waking hours chasing it, without really understanding what it really is we are doing.” ~ Charles Curtis
Have you ever wondered how governments, corporations, small businesses and families can all be in debt….and for such astronomical amounts? How can there be so much money to lend? If you haven’t already read my article on How Money is Created, I encourage you to read that before delving into this one. It will all make so much more sense.
For those of you who are well versed on the subject of how money is created, let’s continue. We know that banks don’t simply lend the money they already have on deposit, they create it out of thin air as debt. Therefore, because the amount of debt is potentially unlimited, so is the supply of money.
Money = Debt
The strange thing is, if I paid off all of my debt I would find I personally have more money to spend because I have no loan repayments, but the same does not hold true for the entire society. If everyone paid off their debt, there would simply be no money.
“That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” ~ Marriner S. Eccles, Chairperson and Governor of the Federal Reserve Board.
We are totally reliant on continually renewed bank credit for there to be any money in existence. No loans = no money. When credit dried up during the Great Depression, the money supply decreased drastically. It’s for this reason that Governments around the world are so worried about the current crises of credit.
“This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create enough synthetic money, we are prosperous; if not, we starve. We are, absolutely, without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is.” ~ Robert H. Hemphill, Credit Manager Federal Reserve Bank, Atlanta, Georgia.
Our money system is not what we have been led to believe. In essence, the creation of money has been privatised. Except for coins, all of our money is now created as loans advanced by private banking institutions. While banks create the principal out of thin air, one very important factor is missing.
If the entire economy pays back all the money that was loaned into existence, but still owes the interest, where does the money come from to pay the interest?
The answer is simple but profound: more money has to be loaned into existence to pay back the original interest!
In order to just keep the system running, the total debt in the economy has to grow exponentially until the end of time, and can never be repaid fully. That means the economy has to grow continuously in order to generate the income to pay back the continuously growing debt. And that means more interest must be paid, resulting in an ever-increasing and inescapable spiral of mounting indebtedness. Doesn’t that make your head spin?
Historic Level of Debt
When viewed historically, and compared to gross domestic product, the current levels of debt are without precedent. This chart (based on U.S. data) shows how my generation has spent their entire lives on the slippery slope of the biggest credit bubble in history. The last time debts got even remotely close to current levels was back in the 1930’s. The credit bubble that burst at the end of the roaring twenties was followed by years of economic contraction and hardship, now known as the Great Depression.
Our economic model requires that the future be much larger than the present
As today’s huge credit bubble gets bigger and bigger, the need to create more and more debt money becomes increasingly urgent. Our entire economic model is based on a rather substantial assumption about the future….that the future will be larger than today.
There is an explicit assumption here that the future GDP is going to be larger than today’s. A lot larger. More cars sold, more resources consumed, more money earned, more houses built – all of it – must be larger than today just to offer the chance of paying back the loans we’ve ALREADY taken on. But each quarter we see that new debts are being made at a rate five times to six times faster than growth in the underlying economy. Even with a fairly optimistic assessment of future growth, this trajectory is unsustainable. ~ Chris Martenson, author of the Crash Course
Exponential growth in debt only appears to be sustainable when asset prices (most notably, house prices) rise fast enough to keep the financial system solvent (i.e. able to pay back the continuously growing compounding debt). Once asset prices stop rising in the context of adequate economic growth, the game is over. That game-over moment is what we all know as the Global Financial Crisis.
Without continuous economic growth, the entire monetary system will collapse. Governments, in their quest to maintain the status quo consider the only course of action is to pump more money into the system. This is done through increasing the levels of government deficit spending and consequently increasing the total amount of debt. The risk is, that without a properly growing real economy, this process could ignite another asset price bubble. This may seem to work for a while, until the bubble bursts and we plunge back into another financial crises, this time even bigger than the last.
Can debt continue to grow exponentially in a finite world?
Since the physical world has a finite quantity of resources, the quantity of goods and services produced in the economy cannot always grow fast enough to match the continuously growing debt. The perpetual growth required by our current economic system requires perpetually escalating use of real world resources and energy. More and more ‘stuff’ has to be created from our natural resources and turned into garbage. This must continue every day, of every year…forever…Just to keep the system from collapsing. Given what we know about Peak Oil and other resource limitations, how long do we think this system will last?
” [It’s] our monetary system itself that is out of step with reality. Everything else we see around us economically is merely a symptom, while the cause of our current and future ills is the dependence of our monetary system on perpetual exponential growth. A profound and important set of conclusions immediately result from the acceptance of this argument. ~ Exponential Money in a Finite World by Chris Martenson
What can we do about this very scary situation? For starters we need a very different concept of money and wealth. In trying to envisage a sustainable future, it’s very clear that our current system of money is not workable.
Shifting to a more sustainable lifestyle is a process. It’s not like you wake up one morning and can make a massive reduction in your impact on this planet. We’d like to think we can, but in reality it takes time to change our habits. Trying to change everything at once can also feel like a shock, it’s not much fun and often we’ll revert to our previous way of living pretty quickly.
Living sustainably needn’t be a drag. There are some really simple things we can all do which will also save you money, something we can all appreciate in these tough economic times. Today I’ve decided to provide a list of some of the first things we started implementing on our road to a simpler, more sustainable life. All of these changes have been really easy to implement and although they are great for the planet, they are also nice on the hip pocket.
We replaced our light bulbs with compact fluorescent light (CFL) bulbs. They might cost more to purchase but they last for years and save money on your electricity bill. To be honest, they weren’t even that expensive to buy. We got a bulk pack from Costco and replaced the high-use bulbs in our house first. As the rest of our regular bulbs need replacing, we swapped in more CFLs.
We walk to the grocery storeand carry home our shopping in reusable canvas bags. It’s great for the environment and even better for our biceps. It takes a little strategic packing, but we have the clerks at the grocery store well trained now. We make a point of refusing all plastic bags and it’s been interesting to watch people’s reactions to our explanations. I must say, recently we’ve been getting less strange looks. Perhaps it’s catching on.
We buy less stuff. I have a real problem with buying more new things which just adds to to the amount of waste produced. We try to buy everything second-hand, but in many cases we just don’t buy anything. We’ve got a fantastic thrift shop nearby, but you could also try craigslist.org and freecycle.org.
I use the local library. I love to read. I inhale books and of course I have the bookshelves to prove it. These days I can find most of the books I want in the local library. I also use Paperbackswap to trade books I’ve finished with. So far I’ve found new, loving homes for about ten books I no longer needed and I have credits I can use for any other books I might want.
We repair. Actually, Brendan repairs and I congratulate him on what an amazing job he’s done. He’s extremely resourceful and has saved many an item from the scrap heap. Most recently he’s given a second life to a beloved pair of shoes I’ve had for about 10 years. Not only has this saved us quite a substantial amount of money, but I get to keep using items I love and we save them from becoming landfill.
We minimise our heating. On cold nights we put more clothes on and/or use a throw rug. We open all the blinds that allow sunlight in during the day and then closed everything up mid afternoon as the sun drops low.
We regularly give the car a checkup. Actually Brendan maintains the car and I congratulate him for having so many useful skills. Having dirty oil or a dirty air filter actually costs you more to run the car. A quick tune-up will see your car run more efficiently and it will emit less pollution.
We turn off the tap (faucet). It’s such an easy one. We don’t need to keep water running while cleaning our teeth or peeling potatoes. We water our very minimal lawn as little as possible and we wash the car at a car wash that recycles their water. When we lived in Australia we would always be on water restrictions. It was a normal part of life in a dry country. Now we live in California, another very dry place and we are horrified at the amount of water that is wasted.
Switch to low flow shower heads and low-flow aerators to further cut down on water use. We actually got them for free from the center for sustainable energy here in San Diego. Check with your local water company to see if they offer something similar.
We utilise reusable water bottles and mugs. There is no need for a new plastic water bottle every time I want a drink. I just refill my BPA-free bottle with filtered tap water. I also carry my travel mug with me on trips to the coffee cart. My barista appreciates that I bring my own and do my bit to reduce the horrendous amounts of paper and plastic cups making their way into landfill.
We buy local and seasonal food. We eat all the fruit off our orange and apple trees. We frequent our local farmers market and do our best to identify local produce in our grocery store. Earlier this year we started a small vegetable garden in our courtyard.
We eat less meat. Meat production has very large environmental impacts. Simply by replacing some of our weekly meals with meat-free dishes we reduce our impact and save a bundle at the grocery store. Lentils and beans are very inexpensive and you’d be amazed at the tasty recipes we’ve discovered on the internet.
We watch less TV. When we moved to the USA from Australia we saw no point in getting cable. Personally I think cable is a lot of money to fork out every month and if I had it I’d probably feel like I needed to sit in front of it all the time to justify the expense. If there is something we really want to see, we can usually find it for free on the internet or we can get it on Netflix.
There are plenty of other simple, cost-effective things we could all be doing. What are you doing to save money while living more sustainably??
One of our favourite outings is to spend a couple of hours at the local library and that’s where Brendan and I spent yesterday afternoon. It’s simple, educational and frugal, so we try to go at least a couple of times a month. I’ll check out a couple of books and then we’ll grab a comfortable armchair and while away the day reading as many magazines as we like. There’s no need to hurry and when we’ve had enough, we jump on our bikes and coast home.
Here’s what I have checked out for the month. It’s probably a little ambitious to think I’m going to get through them all, but I’ll give it a try.
Yesterday we were lucky enough to spend half the day at the Seeds at City Urban Farm on the San Diego City College Campus. I’ve now been to a couple of talks at this location and I must say, it is a truly wonderful urban garden. Right there in the middle of the city is this lush paradise full of edible plants and teeming with insect and bird-life. Being a Saturday, it was also teeming with volunteers for the morning. It’s a very inspiring place to be on one of our typical sunny days.
The subject of yesterday’s talk was: Planning Your Winter Garden. The climate in San Diego is perfect for growing food all year round. In fact, more food can be grown here in the cool season than during the summer, so there is really no excuse to let our garden be unproductive for half the year.During the talk, we were exposed to the diversity of crops that are possible to grow during our mild winters, and we also learned the basics of biointensive gardening as we prepared a vegetable bed on the farm.
Like most people, I learn best by talking to people and seeing it in action, so I love that there are so many wonderful people in San Diego who are willing to share their time and knowledge.
Yesterday’s presentation was by Paul Maschka. He was recently selected by Kashi as a Grains of Change Community Leader . You can watch a video of him filmed by the Sundance Channel at the Seeds at City urban farm.
As you might expect, I came home very inspired to get to work on our cool season garden. Here’s my independence days update for the week.
Planted: Sowed seeds of Broccoli, Spinach and Collards.
Harvested: Because we’ve been away from home so much, we have a big lull in our garden at the moment. It would have been great to have the crop rotation in, but with noone to manage the slugs, it would have been a waste to get seedlings started while we were gone. Having said that, we still have a little food being produced, mostly Cherry Tomatoes, Basil, Cayenne and Jalapeno peppers.
Preserved: Basil as pesto.
Waste Not: Green waste collection has recommenced in my workplace and I think everyone has been saving bucketloads for me. It feels good to divert all that waste from landfill and turn it into compost.
Build community food systems: Helped some friends with ideas for cool-season vegetables to grow.
Eat the food: Finally cracked open the Apple Liqueur I made in late August. It’s delicious and because it was sitting so long this time, it seems more alcoholic that the last batch. We are enjoying Cherry tomatoes which Brendan proudly grew from seeds he’d saved.
Over the last couple of years I’ve done a lot of reading on the topics I touch on in this blog, including peak oil, the economy, the environment, our food systems, voluntary simplicity and much more. I’ve finally gotten around to adding a new page with a list of books I can recommend on these topics.
There is a growing movement around the world centered around the way food is grown and distributed. In many places, access to food is still a severe problem, and food costs are rising. Overall, the aggregate global price of food has doubled in real terms over the past eight years, while in many places, the workers with the lowest incomes are seeing those incomes fall. As if this weren’t enough, climate change impacts weather patterns, leading to increased rainfall in some places, and decreased rainfall in others. The African continent is especially harmed, and as drought impacts growing regions, farming and grazing for cattle and other animals compromises yet more peoples’ access to food.
Locally produced food as a solution
The concept of “food miles” and the carbon footprint of food is becoming more widely known. The basic concept is: as we have increasingly globalized our food supply, we use more petroleum flying food all over the world. Locally produced food doesn’t bring this problem, and it also provides many additional benefits. So what is local food, and why is it so great? Instead of going to the supermarket and buying food that comes from another country, your money helps support your local community, where it stays within the local tax base, and provides local jobs. All while helping to stop climate change.
Factory farms require huge carbon inputs and produce huge carbon outputs in the form of methane. It takes more than a calorie of fuel to produce every calorie we eat and, in industrial meat production, the ratio of calories-in to calories-out can be as high as 58:1. Eating livestock from your local community lessens this problem, but it still has a higher carbon output than a vegetarian diet.
Growing commodity food on an industrial scale requires huge carbon inputs in the form of pesticides and fertilizers. Many fertilizers are petroleum-based. Small- and mid-scale diversified farms are actually carbon-negative: they store carbon in the soil.
Production of Corn-based ethanol
To quote food justice advocate Raj Patel, “It should hardly be surprising that the decision to burn rather than eat a large share of the US corn harvest would push up food prices. Estimates of the impact on global food prices vary from a high of 30 per cent to a low of around 5 per cent.” While it’s impossible to single out one cause for the global food crisis, taking corn out of the food supply and into the fuel supply had a very quick impact on global hunger. People rioted in protest in many countries, especially in India. While this issue is quite complicated, and this is a simplification, one key take-away is that climate solutions that rely on agriculture are not cut-and-dry fixes to the problem, and they bring with them consequences just like any other alternative.
This post is part of my World-Changing Wednesday series. Tune in each Wednesday to read my thoughts on an issue which I think will have a huge impact on how we live our lives in the years to come.
“My main motto never changes, the era of low oil prices is over.”Dr Fatih Birol, Chief Economist, International Energy Agency
Most mornings I try to read the headlines in the Australian news because I like to keep up with what’s happening back home. This morning I was surprised to see the following headline in the Breaking news section: ‘Four Saudi Arabias’ needed for oil. For many of us aware of Peak Oil, this is hardly breaking news, but I’m somewhat pleased that this type of article is finally making its way into the mainstream media. I consider Peak Oil to be the one issue which could impact us most in the decades to come, affecting almost every facet of our lives. I think it’s about time for me address this topic on my blog.
Firstly, I want to say right from the start, Peak Oil does not mean we’ve run out of oil, nor will we run out any time soon. What it does mean is that there will be a decline in production of ‘easy oil’ (light, sweet crude oil) and we’ll move to more production of ‘difficult oil’ (heavy, sour crude oil, oil shale and tar sands) . Since I like to use diagrams, let me try to explain this visually.
Peak Oil definition
Peak oil is the simplest label for the peak in global oil production. The rate of oil ‘production’ (meaning extraction and refining) has grown almost every year of the last century. Once we have used up about half of the original reserves, oil production ceases to grow and begins a terminal decline, hence ‘peak’. The peak in oil production does not signify ‘running out of oil’, but it does mean the end of cheap oil, as we switch from a buyers’ to a sellers’ market.
Oil production peak
Extraction of oil is not like pumping water from a tank. Oil does not simply flow out at a constant rate until there is no more. When an oil field starts production, the oil is under a lot of pressure and comes up easily. Images like the one to the right show how oil literally gushed from the ground when new fields were tapped. As more and more wells are sunk into a field the amount of oil able to be extracted from a field increases….up until a point. Eventually water, steam or gas has to be injected to repressurise the wells. Finally, once most of the recoverable oil has been taken out, it becomes impossible to maintain the same production rate. The remaining oil has to be pumped out at a much slower rate. The production peak occurs when that output begins to decline.
Typically, each oil producing country will stagger the development of their oil fields. The biggest and easiest fields will be developed first. Then the harder and smaller ones. As more and more fields reach their production peak, the production of the country (the aggregate production of the individual fields) will also eventually peak and decline (see below).
Every oil field exploited to date has exhibited this same basic extraction profile. Just as individual fields peak, so do collections of fields. Peak Oil, then, is NOT an abstract theory. It is a physical description of an extremely well characterised physical phenomenon. Already, a large number of oil-producing countries are past the peak of their oil production.
As more and more countries are reaching their own national peak, the question on everyone’s minds is: When is world oil production going to peak? The answer to this question is what is generally refered to as ‘Peak Oil’.
In the 1950s the well known U.S. geologist M. King Hubbert was working for Shell Oil. He noted that oil discoveries graphed over time tended to follow a bell shape curve. He supposed that the rate of oil production would follow a similar curve, now known as the Hubbert Curve. In 1956 Hubbert predicted that production from the US lower 48 states would peak between 1965 and 1970. Most people inside and outside the industry quickly dismissed the predictions but as it happens, the US lower 48 oil production did peak in 1970/1. The peak was only acknowledged with the benefit of several years of hindsight.
No oil producing region fits the bell-shaped curve exactly because production is dependent on various geological, economic and political factors, but the Hubbert Curve remains a powerful predictive tool. Later in life M. King Hubbert predicted a global oil peak between 1995 and 2000. He may have been close to the mark, except that the oil shocks of the 1970s slowed the consumption of oil for close to a decade.
From the graph below, we see that global oil discoveries peaked in the sixties which means that the bulk of oil extracted today is coming from aging fields discovered decades ago.
Of the 65 largest oil producing countries in the world, up to 54 have passed their peak of production and are now in decline, including the USA in 1970, Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004. Hubbert’s methods, as well as other methodologies, have been used to make various projections about the global oil peak, with results ranging from ‘already peaked’, to the very optimistic 2035. Many of the official sources of data used to model oil peak such as OPEC figures, oil company reports, and the USGS discovery projections, upon which the international energy agencies base their own reports, can be shown to be frighteningly unreliable.
Personally I find myself in the ‘near peak’ camp meaning I tend to think world oil production has already peaked or will very soon. I’ve tried to keep today’s post pretty simple and based on factual evidence based on what we know about the characteristics of individual oil fields. Over the next few weeks I intend to delve a little more deeply into this issue and also look at some of the ramifications of peaking global oil production. I hope you join me.
On Sunday I returned from yet another trip away. I swear I’ve been away from home at least once per month this year and I’m feeling burned out from it all.
To set the scene, my job requires me to attend quite a number of meetings throughout the year. Nearly all of them are on the other side of the country and a few are even international. The only way I can get to these meetings is to fly….. and I feel as guilty as h&*# about it. I know flying is one of the worst things we can do for the environment and I feel like this one aspect of my life undoes all the good work I do in other areas.
For many of us who are trying to live a more sustainable life, one of the most difficult realisations comes when we begin to understand that as long as industrialised civilisation exists, there is very little impact each individual can make. Sure, I could quit my job and go and live a subsistence lifestyle in the woods, but someone else will simply take my place at all these meetings. That someone else might make no attempt to minimise their impact while travelling, while at least I am conscious of my impact and attempt to reduce it where possible by:
Taking a direct flight if not prohibitively expensive
Minimising the amount of waste I produce on the aircraft and in airports (have you seen the amount of trash produced every flight!)
Taking a train where possible
Unfortunately I think that until we can scale the entire system down to a much smaller level, business as usual will continue. While flights around the continent and the world remain cheap and plentiful, people will continue to travel. Of course we all have a choice to reduce our “non-essential” travel, but until something big forces equally big changes, the system as we know it will limp along for as long as possible.
My view is that flying will simply have to become more expensive – be it through ever higher fuel costs, taxation or as a result of emissions trading. Only by becoming more expensive will ticket prices start to better reflect flying’s environmental impact and therefore drive down demand. Business will be forced to reconsider how much flying is really necessary.
Don’t get me wrong, while we’ve had them I’ve enjoyed cheap flights as much as the next person. However I willingly concede that there are things in this world that do not reflect their true cost…flying is one of them. The era of cheap flights must end.
“In the next 50 years we will need to produce as much food as has been consumed over our entire human history. That means in the working life of my children, more grain than ever produced since the Egyptians, more fish than eaten to date, more milk than from all the cows that have ever been milked on every frosty morning humankind has ever known.”
~Megan Clark – head of Australia’s national science agency, the Commonwealth Scientific and Industrial Research Organisation, (CSIRO).
Since 1981, World Food Day has adopted a different theme each year in order to highlight areas needed for action and provide a common focus. This year’s theme is:
Achieving Food Security in Times of Crisis.
At a time when the global economic crisis dominates the news, the world needs to be reminded that not everyone works in offices and factories. The crisis is stalking the small-scale farms and rural areas of the world, where 70 percent of the world’s hungry live and work.
With an estimated increase of 105 million hungry people in 2009, there are now 1.02 billion malnourished people in the world, meaning that almost one sixth of all humanity is suffering from hunger.
I’m not sure how aware most people are when it comes to food security, mostly because people in wealthy nations see food as trivial, something that is available on supermarket shelves in large quantities and resupplied on a regular basis. Unlike previous generations, most of us are no longer participants in the production of our own food. We are relying on an increasingly industrialised model of food production which leaves us with little redundancy if anything should go wrong. Personally, I can see many areas in which things could go wrong, particularly when you consider environmental degradation (water, topsoil) and increasing energy prices (oil, natural gas).