Debt

I read a statistic this week that I won't forget in a hurry. The world is $152 trillion in debt.

As kids we are taught that banks are places where people keep their savings and the bank then lends that money out to people who want to borrow money. If money is based on gold or silver then this idea works. The amount of gold available doesn't change much. A little more is mined each year but the total amount of gold on the planet is finite. This means that the banks would only have money (gold) to lend to people, if they had deposits from people who have savings or excess gold.

Paper money has no physical limits. It literally grows on trees. We can chop down more trees, make more paper and print more money. But the government has put in strict controls to limit who can print money and how much is printed.

There are no controls at all over digital money.

Digital money represents 97% of the money supply according to positive money (who have lots of simple videos to help people understand how money really works). The banks create digital money by typing the numbers into a computer every time a loan is made, then they charge interest on it. No wonder bankers get such big bonuses and have no concern about gambling millions on stock markets and currency speculation, because they can just create more money at the tap of a key.

If you are still struggling to believe this, then ask yourself how the world can be $152 trillion in debt otherwise? Where did all this money come from to lend to people, businesses and countries?

How are we going to pay back all this debt? Create more money of course. But the banks charge interest on all the money they create so in effect you need more money than has been created to be able to repay the debt and interest. The debt can only continue to grow.

If you are personally in debt, which most people in the UK are if they have been to university or have a mortgage, there is a certain amount of stigma and guilt attached to it, along with pressure to pay it back. Partly this comes from the general feeling that we have borrowed someone else's savings, when in reality this money is created by the banks from thin air (not requiring savings or even trees to grow it).

It is important to understand that it is IMPOSSIBLE for everyone to pay back that debt in the current system, because of the interest attached, which means there will always be more money owed than money created. Not unless we change the system so that money creation is controlled and created without any interest attached. Until then people are debt slaves, working all their lives in the hope of paying off their debts so that they can enjoy their old age. Just know that when you pay off your debts they are just getting passed on to the next generation of debt slaves and their burden will always be heavier.

Please don’t get stressed or beat yourself up if you are in debt. Money in its current form is a trap and even most countries with all their financial advisors are in debt. See how fast the UK’s debt is growing here. That is currently equivalent to £48,000 for every tax payer, with an average salary of £27,000, which may put your personal debt into proportion. Some point soon there will need to be a reset – governments going bankrupt and wiping the slate clean. (Only we had best hope that we are out of the EU before then, otherwise they will force the UK to take on more debt, whilst expecting a ‘bail-in’ payment from anyone with savings over £200,000, followed by a sell-off of all assets, such as ports, monuments, and the NHS, whilst simultaneously cutting pensions and welfare payments. Just saying!)

If you want to reduce your personal debt TheMoney Saving Expert website can provide helpful tips to help you budget and save money.

The way I see it is that money no longer represents any kind of barter or exchange. It is purely used as a tool to create debt to the banks (debt slavery). On the flip side barter and exchange rates are not linked to money. Think about it. Anything you want can be bartered or exchanged without money. Money was originally created to make it easier to collect tax. The government struggles to tax 20% of the runner beans that I gave my neighbour or 20% of the jar of jam she gave me in return.

 

You would be surprised how many exchanges are used every day. For instance, instead of me paying for a taxi or train, my friend gave my son a lift when I wasn’t able to, knowing that I will return the favour (or complete my side of the exchange) for her daughter in the future. If you want to free yourself from debt then increase your exchange, barter, favours and gifts with family, friends and neighbours. From grouping together to provide childcare, carpooling, to couch surfing, hitch-hiking, house swapping and various other ways of cutting money out of your everyday transactions.  Focus on developing new and existing skills such as growing vegetables, carpentry, playing music, hairdressing or anything that gives you something to trade with others for the things you need.

 

This kind of currency promotes trust and respect – something lost from our banking system.

Collapse and preparedness

Having taken care of the whole family, even the dog (?) through coughs that cling on for weeks and sap you of energy, it is now my turn. This means that I have a mountain of work backing up, the house is a mess, the garden and allotment untouched, minecraft is 'babysitting', dinner will be takeaway and.....I have had some time for reading :-)

Yesterday I read the latest post on The Archdruid Report. Don't be fooled by the light-hearted title 'A pink slip for the progress fairy', it is rather heavy, scary stuff, the kind that can make you feel depressed. If you have already read the likes of The Limits to Growth, then you are probably mentally/ emotionally prepared. Otherwise it may be a good one to skip.

To summarise, Mr Greer has studied history and proposes that all civilisations rise, then collapse slowly over the period of 100-300 years. The collapse isn't apocalyptic in the sense of a sudden catastrophic event ending everything. More that a succession of war, drought, disease, famine, flood and more war, interspersed with relatively peaceful periods, will define the downward slope, as it has for all previous civilisations.

It does look like we must be approaching the collapse stage, but Mr Greer is of the opinion that the Western civilisation started collapsing in 1914, with World War I, the Spanish flu pandemic, the Great Depression, World War II and the dissolution of the British Empire. The last 60 years in comparison have been a relatively stable period, where civilisation has been flourishing particularly well due to the exploitation of non-renewable energy resources. The second act is imminent though and could be triggered by a number of factors, such as an Ebola pandemic or financial crash.

The easy bit to predict is that our civilisation will decline, but predicting the details of how and when is impossible. So Mr Greer paints a fictional account of what the next 300 years might look like in his post, to better illustrate what he is talking about.

I have read Mr Greer's The Long Descent before, so was acquainted with his general collapse scenario, but had not read before his interpretation of the years 1914 - 1954. It sort of makes sense to me. Those years were hard times and the British Empire didn't survive in tact. I had the impression that we came through those years, but under a burden of war debt, scarred by bombing, with aging machinery and infrastructure, and it was an enormous struggle trying to build things back up again.

The BBC have a great population graphic for the UK, which shows the impact of the World Wars and Spanish flu on the population. I also find it amazing that the birth rate in 2011 is still lower than in 1911. The increase in UK population is a result of a lower death rate, meaning people are living longer. The average age of the population in 1911 was 25, whereas in 2011 it is 40. That means that half the population of the UK is 40 or over.

But if the years from 1914 to 1954 were the first stages of collapse then most people survived. It was really just a partial collapse. Things could have been a lot worse. In fact we learnt lessons about looking after each other, so the years following saw the birth of the National Health Service. Even during WWII lessons had been learnt from WWI, in that rationing was introduced quickly and changes were made to improve the prospects for the poorest during tough times. Looking after the health and basic needs of the poor are the reason we have such a low death rate now.

But here's the thing, most people weren't expecting any of it. We get on with our day-to-day lives and do the best we can. Some days are happy, some sad, but they end and the next day arrives. We aren't supposed to know what is around the corner, otherwise how do we find the courage to face it? What Mr Greer is really saying is that the death rate is going to increase somehow, because our civilisation is out of balance. It is a natural cycle of events beyond our control.

It does seem that many more people in the US are concerned about collapse and are being prepared and stockpiling. Whereas in the UK it seems we are oblivious to a possible collapse. Or maybe we see it, but are too conscious of social protocols and what other people think to act. Or else just more laid back about it - what will be, will be. Which is it do you think?

This brings me onto Wendy's recent posts on her blog Surviving the Suburbs. She has been talking about useful lists. Lists of things we should probably have at hand in order to be prepared for the worst. Now don't freak out at me, but weapons is one of the things on the list. This is normally the point where us Brits decide it is all extremist doomsday scenario stuff and switch to more polite conversation. The trouble is that almost everything else on these lists makes sense. It is handy to have a torch or headlamp in case of a blackout or even just blowing a fuse. And if you have a torch then spare batteries are helpful, especially if you don't use that torch very often. Common sense right?

And whilst I have this cough, the prospect of running out of loo roll or sugar, really doesn't appeal, because I would rather not have to shop this week if I can get away with it. Wouldn't it be nice to know that you had a small stockpile of some of the essential items stored away just in case? Last year there was a major water leak in my area around Christmas, which caused havoc for some families. It would be a good reason to keep at least a few gallons of water in the garage to tide you over. Does this seem extreme?

What about phone numbers? Do you know the numbers of your friends and family or will they all be lost if you damage your mobile? And do you keep spare cash at home, just in case you run out and need some desperately? And does your car always have at least half a tank of fuel, a blanket, first aid kit and bottle of water handy?

The thing is, you don't have to believe in a doomsday scenario, but labelling prepping as extremist and not even considering it, means that some of the practical stuff doesn't get discussed. Some people aren't prepared for even basic emergencies like the boiler breaking down, let alone a major power cut which is a real threat this winter.

It relates to the post a few weeks back about resilience. It may be frugal and efficient to only buy the items you need this week, but it is far more resilient if you have a cupboard full of tins, rice and pasta to fall back on when something unexpected happens. Even more resilient if you have some seeds and know how to make use of them.

How far do you go to be prepared?

I've peaked!

This month is my Birthday, and I am officially at my 'Peak' age. Below is the card I received from my mother. Thanks mum!

Funnily enough I felt more disturbed by the colourful message I received from google. I don't recall filling in my date of birth, let alone giving permission for them to use it in their sneaky clever marketing ploys! Are there no privacy laws left?

But really, is down hill that bad? Getting up to this point is such hard work. I mean we have to learn everything from scratch, from tying shoe laces to strange social cues. Then we are climbing a ladder, trying to pass exams, get a career, buy a home, raise a family and juggle all manner of urgent issues to keep life ticking over. Maybe free-wheeling down the otherside is going to be the fun bit!? It may lead to a time when I actually get to sit and enjoy my garden, or read a book, or not have to work for money - now wouldn't that be bliss?

What about Peak Oil? Should we be scared to be at the peak looking down? There are so many different opinions on this, ranging from 'technology will provide a solution' to 'we are facing the extinction of man', that it can be bewildering and scary to contemplate. One thing is certain though, oil is becoming harder and more expensive to extract, and prices are going to continue rising.

Oil prices are linked to recession. Almost all productive activity in our economy is reliant on oil, from ploughing a field, to building a house, to trading round the world. When oil prices increase it has a knock on effect on everything else. If you want to find out more about this rather than take my word for it, try reading 'Oil supply limits and the Continuing Financial Crisis' by Gail Tverberg on her blog Our Finite World.

I think we can expect that oil prices will rise to a new record high, which will cause another recession. Some people feel that we are only months away from this happening. Tom Therramus in his post 'Oil Price Volatility on the Way?' suggests that based on the last 10 years the price spikes have had an average of 33 months between them. It is 30 months since the last price spike, so we don't have long to wait to see if he is right.

Governments and financial institutions have not really recovered from the last major financial disruption, and if anything are even more burdened with debt, which is certainly true of the UK, so it seems very likely that there will be more financial wrecks. Whether there is a full global financial meltdown at that point I don't know, but there is likely to be more countries and banks collapsing. If you have savings then I hope you paid attention to what happened in Cyprus. There is so much to say about financial collapse that I will come back to it in another post.

Demand for oil slows down during a recession, so normally oil prices would drop back again. This is why many predict a rollercoaster of highs and lows for oil prices. But I'm not so sure, because at some point the World will wake up to the fact that oil is getting scarce. In these circumstances I wonder whether most countries would put their own needs first and and hold back on selling any surplus until they can extort the best price.

Ok, it is a pretty bleak predicament.... if you are hooked on oil. The best preparation we can make for ourselves and our communities is to reduce our oil dependence fast. That is not just about driving less, it is about adapting our lifestyles to a new reality. One where we don't depend on plastic wrapped 'stuff' imported from the other side of the World.

There are many people around the world who live without oil and all it's 'luxuries', and the rest of us are going to find out what that is like quite soon. I can see that there could be some benefits to life without oil, for rural communities who know how to feed themselves and can enjoy a simple life. I hope they get a better deal without all the oil-fuelled deforestation, and exploitation for resources and cheap goods. Peak oil writers often depict a future of oil wars, but as you need oil and money to fight the war, and war depletes both even faster, I can see a future where wars will peter out. It is really food and water that is central to our lives, along with shelter, basic healthcare and community.

Just as for me, where the attractive side of the slope has slipped away, and crazy eyebrow hairs and wrinkles are what I can look forward to, the otherside of the Peak Oil slope can look rather ugly on the surface too. It's not all as bad as it seems though, because the last 40 years has been about learning and developing. Beneath the superficial view on the surface, there are hidden depths of knowledge and wisdom. Suddenly reaching the peak may be a bit of a shock and need a period of adjustment, but we can adapt to a reduction in oil consumption.

The population is likely to take a hit, but that's another story too. I may have to face that my half-way point was probably ten years ago, because with severely reduced oil-supported healthcare, life expectancy may drop. Dmitry Orlov talks of a shortened life expectancy caused by the financial crisis and break up of the former Soviet Union in his book 'Reinventing Collapse: The Soviet Experience and American Prospects', where diseases spread from the overcrowded prisons and there were middle-aged suicides when people found their lives in ruin. It seems much more likely to me that life expectancy will drop as an impact of the stress of loss of savings, earnings and security, combined with reductions in healthcare and spread of disease, rather than from wars or riots. The BBC ran a news story recently about how birthrate is decreasing in Europe, especially in Southern areas like Spain, because people don't want to have children without financial security.

So here I am trying frantically to unlearn the habits and expectations that have been drilled in to me for the best part of 40 years. I'm training myself to enjoy walking in the countryside rather than getting excited by a cheap flight to Barcelona. I'm learning to grow my own produce for excellent seasonal flavours, rather than buying the flown in exotic foods. I am finding that more choice of clothes only means it takes longer to choose what to wear (Thank you Jo for that insight), and that there is more fun and bargains to be had buying secondhand at the carboot sale, without having exploited factory workers and poisoned cotton farmers on my conscience.

This is downshifting. This is changing down a gear ready for a steep descent. It isn't living in fear, it is being realistic about what the future may hold. This is not hiding away in a bunker, but moving forward with your eyes wide open and your brain engaged. Different people will be coming from a different starting point, but the important thing is to think through the possible scenarios and see how you could be better prepared to face them.