The End of Growth: Adapting to Our New Economic Reality (48 page)

13. See Alan Hastings, Population Biology (New York: Springer, 1996), and William Cat-ton, Overshoot: The Ecological Basis of Revolutionary Change (Urbana: University of Illinois Press, 1982).

14. Colin Campbell, “Colin Campbell Predicts Credit Crunch Due to Peak Oil 2005,” YouTube video, posted October 16, 2008,
youtube.com/watch?v=lDNMjV6sumQ&feature=related
.

15. The Peak Oil scenario is laid out in more detail in my book The Party’s Over: Oil, War and the Fate of Industrial Societies (Gabriola Island, BC: New Society, 2003).

16. Richard Heinberg, “Temporary Recession or the End of Growth?” Energy Bulletin, posted August 6, 2009,
energybulletin.net/node/49798
.

17. Gail the Actuary, “What Peaked at the Same Time as Oil Prices? Lots of Things,” The Oil Drum, posted October 9, 2009,
theoildrum.com/node/5853
.

18. Joe Keohane, “The Guy Who Called the Big One? Don’t Listen to Him: Inside the Paradox of Forecasting,”
boston.com
, posted January 9, 2011.

19. David Murphy, “Lucky Economists, Unlucky Scientists?” The Oil Drum, posted January 14, 2011,
theoildrum.com/node/7343
.

Chapter One

1. See Marvin Harris and Orna Johnson, Cultural Anthropology (Boston: –Allyn & Bacon, 2006), pp. 98–107. See also Marcel Mauss, The Gift: The Form and Reason for Exchange in Archaic Societies, transl. I. Cunnison (New York: Norton, 2000), and David Graeber, Toward an Anthropology of Value (New York: Palgrave, 2001).

2. Elman R. Service, The Hunters (New York: Prentice Hall, 1966), pp. 14–21.

3. Fernand Braudel, The Structures of Everyday Life (Berkeley: University of California Press, 1992), p. 436.

4. This story is told at greater length in, for example, Jack Weatherford, The History of Money (New York: Three Rivers Press, 1998).

5. Mark Anielski, “Fertile obfuscation: Making money whilst eroding living capital” (Pembina Institute, 2000); Michael Rowbathom, The Grip of Death: A Study of Modern Money, Debt Slavery, and Destructive Economics (New York: Jon Carpenter, 1998).

6. Tim Parks, Medici Money (New York: Norton, 2005), p. 13.

7. The history of economics is told entertainingly and in more detail in lectures by Australian economist Steve Keen, notes for which are available at
debunkingeconomics.com/Lectures/Index.htm#HET
.

8. See Steve Keen, Debunking Economics: The Naked Emperor of the Social Sciences (London: Zed Books, 2002).

9. John Stuart Mill. Quoted in Brian Czech, Shoveling Fuel for a Runaway Train (Berkeley and Los Angeles: University of California Press, 2000), p. 93.

10. This paragraph is based on historical analysis and insights from Herman Daly and John Cobb. See Herman Daly and John Cobb, For the Common Good (Boston: Beacon Press, 1994), pp. 97–120.

11. For a further discussion of this point see Daly and Cobb, op. cit.

12. A periodically updated discussion of the business cycle from various points of view is available at Wikipedia.

13. Though not according to economists who subscribe to the Elliott Wave theory. See A. J. Frost and Robert Prechter, Elliott Wave Principle: Key to Market Behavior (Gainesville, GA: New Classics Library, 2006).

14. This appears to be the opposite of what is happening now — money is tight but interest rates are low. The current situation exists because the Federal Reserve is deliberately keeping interest rates low to stimulate economic activity.

15. See Bruce Jansson, The Sixteen-Trillion-Dollar Mistake (New York: Columbia University Press, 2002).

16. Perhaps the biggest difference between the two forms of investment shows up in demand curves. Speculative demand increases as prices rise. Investment demand decreases as prices of the capital being invested in rise. The notion of market equilibrium is based on negative feedback loops, while speculation creates positive feedback loops.

17. Charles McKay, Extraordinary Popular Delusions and the Madness of Crowds (1841, various editions).

18. It is useful to distinguish among hedge, speculative, and ponzi finance. Hedge: investors have money to repay both capital and interest on the loan. Speculative: investors can only pay interest and count on rising values or new loans to pay capital (example: subprime, interest-only loans). Ponzi: investors cannot even pay interest, and count on rising values to repay both capital and interest (example: subprime loans in which interest is added to capital).

19. Investments that systematically generate returns higher than economic growth are impossible to sustain in the long run, as investors would eventually come to own all wealth.

Chapter Two

1. Andrew Ross Sorkin, Too Big to Fail (New York: Viking, 2009); Bethany McLean and Joe Nocera, All the Devils Are Here: The Hidden History of the Financial Crisis (New York: Portfolio, 2010); Charles Ferguson, “Inside Job”, documentary movie, Sony Pictures Classics, 2010.

2. William Greider, “The Education of David Stockman,” Atlantic Magazine, December, 1981.

3. Both the president and Congress pledged to put in place new regulations that would make the recurrence of such a fiasco impossible. The result was a mild rewrite of laws; according to Christine Harper of Bloomberg, “Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery.” Christine Harper, “Out of Lehman’s Ashes Wall Street Gets Most of What It Wants,” Bloomberg Businessweek, January 5, 2011.

4. Financial Crisis Inquiry Commission, preliminary report, February 2011,
fcic.gov
.

5. The term “Giant Pool of Money” became the title of an award-winning episode of the NPR radio show This American Life which originally aired on May 9, 2008.

6. James B. Stewart, “Eight Days: the battle to save the American financial system”, The New Yorker magazine, September 21, 2009.

7. Financial Crisis Inquiry Commission, preliminary report, February 2011,
fcic.gov
.

8. Report of the Financial Crisis Inquiry Commission,
fcic.law.stanford.edu
.

9. “The global housing boom.” The Economist, June 16 2005.

10. See for example Harry S. Dent, The Great Depression Ahead (New York: Free Press, 2009), pp. 132–133.

11. Dowell Myers and SungHo Ryu, “Aging baby boomers and the generational housing bubble: Foresight and mitigation of an epic transition” (2007). Journal of American Planning Association, 74:1, pp. 17–33.

12. Michael Kumhof and Romain Rancière, “Inequality, Leverage and Crises,” IMF Working Paper (2010),
imf.org/external/pubs/ft/wp/2010/wp10268.pdf
.

13. US Department of the Treasury, TreasuryDirect, “Historical Debt Outstanding, 2000– 2010,”
treasurydirect.gov/govt/reports/pd/pd.htm
.

14. Congressional Budget Office, Report to the Joint Committee on Taxation, March 5, 2010.

15. Congressional Budget Office, “Monthly Budget Review,” October 7, 2010.

16. James Galbraith, “Why We Don’t Need to Pay Down the National Debt.” The Atlantic,
9/21/2010theatlantic.com/business/archive/2010/09/why-we-dont-need-to-pay-down-the-national-debt/63273
.

17. For a perspective on why US government debt may not face limits anytime soon, as long as the economy returns to growth, see James K. Galbraith, “Casting Light on ‘The Moment of Truth,’” The Huffington Post, posted December 3, 2010.

18. Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (New Jersey: Princeton University Press, 2009).

19. See Paul Krugman, “The burden of debt,” New Y Times. 4/28/2009. krugman.blogs.
nytimes.com/2009/08/28/the-burden-of-debt/
; Daniel Berger, “The Deficit: Size Doesn’t Matter” (2009). Roosevelt Institute.
rooseveltinstitute.org/new-roosevelt/deficit-size-doesn-t-matter
.

20. Michael J. Panzner, Financial Armageddon (New York: Kaplan Publishing, 2008), p. 45.

21. Ellen Hodgson Brown, The Web of Debt (Boxboro MA: Third Millenium Press, 2010), p. 197.

22. McKinsey & Co., “Debt and Deleveraging: The Global Credit Bubble and Its Economic Consequences” (2010),
mckinsey.com/mgi/publications/debt_and_deleveraging/index.asp
.

23. Herman Daly, Beyond Growth: The Economics of Sustainable Development (Boston: Beacon, 1997).

24. CNN
Money.com
, “Bailout Tracker,”
money.cnn.com/news/storysupplement/economy/bailouttracker/index.html
.

25. Christian Broda and Jonathan Parker, “The impact of 2008 tax rebates on consumer spending: preliminary evidence” (6/29/2008).
insight.kellogg.northwestern.edu/index.php/Kellogg/article/the_impact_of_the_2008_tax_rebates_on_consumer_spending
.

26. See, for example,
heritage.org/research/reports/2010/01/why-government-spending-does-not-stimulate-economic-growth-answering-the-critics
.

27. Pam Martens, “The Tax-Payers’ Tab: a Cool $9 Trillion and Then Some,” Counterpunch, posted December 20, 2010.

28. For example, see Vox Day, The Return of the Great Depression (Los Angeles: WND Books, 2009).

29. “QE2: More Effective Than QE1,” International Business Times, posted November 7, 2010.

30. Henny Sender, “Spectre of Deflation Kills the Mood at Jackson Hole,” Financial Times, September 13, 2010.

31. L. Randall Wray, “Why Mortgage-Backed Securities Aren’t (Backed by Securities): How MERS Toasted the Banks,” The Huffington Post, posted December 30, 2010; Yasha Levine, “Dude, Where’s My Mortgage? How an Obscure Outfit Called MERS Is Subverting Our Entire System of Property Rights,”
AlterNet.org
, posted December 16, 2010.

32. One of the most prominent inflationists is investor Jim Rogers; see, for example, “Jim Rogers Says Hyperinflation Will Consume Us,”
allthingsjimrogers.com/2009/03/12/–jim-rogers-says-hyperinflation-will-consume-us
.

33. See, for example, John Williams,
shadowstats.com/article/hyperinflation-2010
.

34. See, for example, Nicole Foss,
theautomaticearth.blogspot.com
; also Harry S. Dent, Jr., The Great Depression Ahead (New York: Free Press, 2009).

35. See, for example, Nicole Foss (“Stoneleigh”), “The Unbearable Mightiness of Deflation.”
theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html
.

36. This is the position of Nicole Foss; see “Stoneleigh Takes on John Williams,” theauto
maticearth.blogspot.com/2010/08/august-8-2010-stoneleigh-takes-on-john.html
.

Chapter Three

1. There are now many books on Peak Oil, among which some of the best are: Kenneth S. Deffeyes, Beyond Oil: The View from Hubbert’s Peak (New York: Hill and Wang, 2005); Matthew R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (New York: Wiley, 2005); Paul Roberts, The End of Oil: On the Edge of a Perilous New World (New York: Houghton Mifflin, 2004); Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (Gabriola Island, BC: New Society, 2005). Two websites offer daily updated links to articles relevant to Peak Oil:
EnergyBulletin.net
and
TheOilDrum.com
. The Association for the Study of Peak Oil and Gas, with chapters in many countries, convenes annual conferences for the discussion of new data relevant to oil depletion and our energy future.

2. “...[In 2035] Global oil production reaches 96 mb/d, the balance of 3 mb/d coming from processing gains. Crude oil output reaches an undulating plateau of around 68–69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.” International Energy Agency, “Executive Summary,” World Energy Outlook 2010 (Paris: OECD/IEA, 2010), p. 6; Also see the graph “World oil production by type in the New Policies Scenario,” IEA, “Key Graphs,” World Energy Outlook 2010,
worldenergyoutlook.org/docs/weo2010/key_graphs.pdf
.