The Crash Course: The Unsustainable Future of Our Economy, Energy, and Environment by Chris Martenson
Authors: Chris Martenson
Tags: United States, General, Economics, Business & Economics, Economic Conditions, Forecasting, Economic forecasting - United States, Economic forecasting, Development, Sustainable Development, Economic Development, Sustainable Development - United States, United States - Economic Conditions - 2009
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complicated paper-based abstractions that even the brightest Wall Street minds sometimes have trouble deciphering.
As you read this book, it will be helpful to recall that what most people call “wealth” isn’t actually an independent source of wealth, but is instead a dependent claim on wealth. In a world of limitless natural resources (primary wealth), the distinction between independent and dependent wealth is irrelevant. We can ignore it, concentrating instead on playing the game of accumulating as much wealth of all kinds as we can while it’s our turn to be in our prime. But in a world of limited resources—soon to be limiting resources—the distinction is vital, especially when the claims on that wealth are literally manufactured out of thin air.
For many of us, tertiary wealth is all that we know; it seems very real, and we base many of our future expectations and dreams on how much of it we hold. Stocks and bonds have been tangible, useful vehicles for storing and growing our collective wealth for such a long period of time that it’s easy to see why they’ve assumed such a superior position in most people’s minds.
It bears repeating, however, that all wealth begins with primary wealth; without it, there is nothing. Today, when there is more abundant luxury available to more people than at any point in history, much of it traveling from very far away to arrive in our lives as if by magic, it has been easy to lose sight of this fact, but it remains as true today as ever before.
Money and Wealth
What about money—how does it factor into the wealth story? Money can and should be a store of wealth, but it’s not wealth itself. It’s a way for us to conveniently measure and transfer ownership of true wealth from one entity to another, but just like a stock, bond, derivative, or any other financial product, money is simply a claim on wealth. It also happens to be an exceedingly important social contract that we collectively uphold, a vehicle in which we’ve invested the enormous power to shape lives, nations, and destinies. Ultimately, though, what we call “money” is either a piece of paper (indistinct from any other except for the ink patterns on it) or it’s an ephemeral collection of numbers that exist as a series of ones and zeros on a computer hard drive somewhere.
Money has value because, and only because, we collectively agree that it can be exchanged for something. If we go far enough backward or forward in any line of transactions, that “something” is always some form of primary or secondary wealth. Perhaps we exchange money for a college education; this might seem to be quite different and less tangible than the examples of primary or secondary wealth that I’ve already described. But if we keep following the path of money in that exchange, we’ll eventually find the money in the pocket of a college professor who will use it to buy food, or clothing, or a house, or some other form of primary or secondary wealth.
The point of money is to help us secure those things that we need, beginning at the very bottom of Maslow’s hierarchy of needs. 1 We start with food, shelter, warmth, and security, and then progress higher if and only if the base needs have first been satisfied. It’s vitally important, then, that money be stable and trustworthy, because if it’s not, and people begin to suspect that money might fail to enable them to meet their basic needs, the entire social contract that money fulfills will begin to fray. As long as money exists in a balance with actual primary and secondary sources of wealth, then it will retain its perceived value and perform an important function. However, when the supply of money gets out of balance with resources, money’s value can begin to gyrate wildly. We call this process inflation or deflation , depending on whether the gyration goes down or up.
The Nature of Wealth
The idea that monetary wealth
As you read this book, it will be helpful to recall that what most people call “wealth” isn’t actually an independent source of wealth, but is instead a dependent claim on wealth. In a world of limitless natural resources (primary wealth), the distinction between independent and dependent wealth is irrelevant. We can ignore it, concentrating instead on playing the game of accumulating as much wealth of all kinds as we can while it’s our turn to be in our prime. But in a world of limited resources—soon to be limiting resources—the distinction is vital, especially when the claims on that wealth are literally manufactured out of thin air.
For many of us, tertiary wealth is all that we know; it seems very real, and we base many of our future expectations and dreams on how much of it we hold. Stocks and bonds have been tangible, useful vehicles for storing and growing our collective wealth for such a long period of time that it’s easy to see why they’ve assumed such a superior position in most people’s minds.
It bears repeating, however, that all wealth begins with primary wealth; without it, there is nothing. Today, when there is more abundant luxury available to more people than at any point in history, much of it traveling from very far away to arrive in our lives as if by magic, it has been easy to lose sight of this fact, but it remains as true today as ever before.
Money and Wealth
What about money—how does it factor into the wealth story? Money can and should be a store of wealth, but it’s not wealth itself. It’s a way for us to conveniently measure and transfer ownership of true wealth from one entity to another, but just like a stock, bond, derivative, or any other financial product, money is simply a claim on wealth. It also happens to be an exceedingly important social contract that we collectively uphold, a vehicle in which we’ve invested the enormous power to shape lives, nations, and destinies. Ultimately, though, what we call “money” is either a piece of paper (indistinct from any other except for the ink patterns on it) or it’s an ephemeral collection of numbers that exist as a series of ones and zeros on a computer hard drive somewhere.
Money has value because, and only because, we collectively agree that it can be exchanged for something. If we go far enough backward or forward in any line of transactions, that “something” is always some form of primary or secondary wealth. Perhaps we exchange money for a college education; this might seem to be quite different and less tangible than the examples of primary or secondary wealth that I’ve already described. But if we keep following the path of money in that exchange, we’ll eventually find the money in the pocket of a college professor who will use it to buy food, or clothing, or a house, or some other form of primary or secondary wealth.
The point of money is to help us secure those things that we need, beginning at the very bottom of Maslow’s hierarchy of needs. 1 We start with food, shelter, warmth, and security, and then progress higher if and only if the base needs have first been satisfied. It’s vitally important, then, that money be stable and trustworthy, because if it’s not, and people begin to suspect that money might fail to enable them to meet their basic needs, the entire social contract that money fulfills will begin to fray. As long as money exists in a balance with actual primary and secondary sources of wealth, then it will retain its perceived value and perform an important function. However, when the supply of money gets out of balance with resources, money’s value can begin to gyrate wildly. We call this process inflation or deflation , depending on whether the gyration goes down or up.
The Nature of Wealth
The idea that monetary wealth
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