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Page added on August 2, 2012
Economist Richard Duncan: Civilization May Not Survive ‘Death Spiral’
Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America’s $16 trillion federal debt has escalated into a “death spiral, “as he told CNBC.
And it could result in a depression so severe that he doesn’t “think our civilization could survive it.”
And Duncan is not alone in warning that the U.S. economy may go into a “death spiral.”
Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan’s Council of Economic Advisers, have come to similar conclusions.
Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included.
However, while the debt crisis numbers are well known to most Americans, the economy hasn’t suffered a major correction for almost 4 years.
So the questions remain: Is the threat of collapse for real? And if so, when?
A team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real – and the danger imminent.
One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:
“We found an identical pattern in our debt, total credit market, and money supply that guaranteesthey’re going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.
“And what’s really disturbing about these findings is that the pattern isn’t limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well.”
According to Martenson: “These systems could all implode at the same time. Food, water, energy, money. Everything.”
Another member of this team, Keith Fitz-Gerald, the president of The Fitz-Gerald Group, went on to explain their discoveries.
“What this pattern represents is a dangerous countdown clock that’s quickly approaching zero. And when it does, the resulting chaos is going to crush Americans,” Fitz-Gerald says.
Dr. Kent Moors, an adviser to 16 world governments on energy issues as well as a member of two U.S. State Department task forces on energy also voiced concerns over what he and his colleagues uncovered.
“Most frightening of all is how this exact same pattern keeps appearing in virtually every system criticalto our society and way of life,” Dr. Moors stated.
“It’s a pattern that’s hard to see unless you understand the way a catastrophe like this gains traction,” Dr. Moors says. “At first, it’s almost impossible to perceive. Everything looks fine, just like in every pyramid scheme. Yet the insidious growth of the virus keeps doubling in size, over and over again – in shorter and shorter periods of time – until it hits unsustainable levels. And it collapses the system.”
Martenson points to the U.S. total credit market debt as an example of this unnerving pattern.
“For 30 years – from the 1940s through the 1970s – our total credit market debt was moderate and entirely reasonable,” he says. “But then in seven years, from 1970 to 1977, it quickly doubled. And then it doubled again in seven more years. Then five years to double a third time. And then it doubled two more times after that.
“Where we were sitting at a total credit market debt that was 158% larger than our GDP in the early 1940s… By 2011 that figure was 357%.”
Dr. Moors warns this type of unsustainable road to collapse can be seen today in our energy, food and water production. All are tightly connected and contributing to the economic disaster that lies directly ahead.
Editor’s note: Germany’s military held a secret investigation into this unsustainable pattern and concluded it could lead to “political instability and extremism.” Details here
According to polls, the average American is sensing danger. A recent survey found that 61% of Americans believe a catastrophe is looming – yet only 15% feel prepared for such a deeply troubling event.
Fitz-Gerald says people should take steps to protect themselves from what is happening. “The amount of risky financial derivatives floating around the globe is as much as 20 times size of the entire GDP of the world,” he says. “It’s unsustainable and impossible to unwind in any kind of orderly way.”
Moreover, he adds: “People can also forget that the FDIC can only cover a fraction of US bank deposits. It’s a false sense of security. Just like state pensions, which could be suspended at any time. A collapse could wipe out these programs. Entitlements like Social Security and Medicare are already bankrupt and simply being propped up.”
We can see the strain on society already.
In two years, Congress won’t have any money for transportation, reports the Washington Post. Cities like Trenton, NJ have layed off one-third of their police force due to budget cuts. And other cities like Colorado Springs, CO removed one-third of streetlights, trashcans, and bus routes, reports CNN.
Fitz-Gerald also warns of a period of devastating inflation. A recent survey, reports USA Today, notes that in the coming years it could take $150,000 a year in household income for a family to afford basic living expenses – and maybe go out to a movie.
Right now, in fact, “52% of Americans feel they barely have enough to afford the basics.”
“If our research is right,” says Fitz-Gerald, “Americans will have to make some tough choices on how they’ll go about surviving when basic necessities become nearly unaffordable and the economy becomes dangerously unstable.”
“People need to begin to make preparations with their investments, retirement savings, and personal finances before it’s too late,” says Fitz-Gerald.
19 Comments on "Economist Richard Duncan: Civilization May Not Survive ‘Death Spiral’"
Newfie on Thu, 2nd Aug 2012 10:50 pm
Never ending growth is an adolescent fantasy of the human race, a fairy tale, a cultural myth of the modern era. Any math textbook will tell you that the exponential function cannot be used as a model for a real system. It’s astonishing that the human race has deluded itself into believing in the impossible. The cult of perpetual growth is the strongest religion on earth.
DMyers on Fri, 3rd Aug 2012 12:23 am
The Ponzi Pattern is everywhere. They have condensed it to a mathematical formulation. Did they simply find what they were looking for? With Chris Martenson involved, I’m going to believe it was objectively derived.
We don’t know, from this, what factors were used to enumerate the pattern. What Newfie has described would be bound up with the human factors involved.
But you have to understand something about what Newfie calls the “cult of perpetual growth.” People actually know that infinite growth is impossible. I knew that in tenth grade, and my fellow tenth graders knew it, too.
The only thing is, we haven’t reached the limit yet, and we won’t know where it is until we get there. “We’ll cross that bridge when we get to it,” as they say.
The Ponzi Pattern is telling us that the bridge to cross will turn out to be a wall to hit.
dsula on Fri, 3rd Aug 2012 12:29 am
That’s the question, ain’t it? When? Should I worry? In 2 years? In 5, in 10, in 50, in 100, in 500 ?
BillT on Fri, 3rd Aug 2012 2:25 am
dsula, you can be pretty sure it will be in your lifetime and soon. When? Next month, next year, 2 years? If we are lucky, we may have 5 years to try to adjust and prepare, but I think the 2×4 is already swinging and we will feel it in the face soon. Have you noticed the speeding up of just about everything important in the world? Maybe you are part of the mindless flock, more involved with the latest circus happening in the UK and not noticing the fast paced collapse of Europe, or the accelerating cost of food, or the higher and higher temperatures as climates change, or the multiple war fronts currently escalating?
MrEnergyCzar on Fri, 3rd Aug 2012 2:54 am
There’s always war to pull us out…maybe not anymore….
MrEnergyCzar
socrates1fan on Fri, 3rd Aug 2012 2:58 am
I just pray the decline is slow so at least some of us can survive. None of us would survive if society collapsed tomorrow or even over the course of 5 years. We would have nuclear meltdowns that would render most of the world toxic. Same with chemical plants. We need a decade, at least, otherwise we all die.
Stephen on Fri, 3rd Aug 2012 3:05 am
I think a lot of the reaction will depend on how the lower class reacts to this. One way they could react if this gets severe is to take a non-traditional approach in which finance is not needed for food or shelter, and put main street ahead of wall street as a national priority. I also see tax increases as a possibility to restore services, and a case in which the CDOs and derivatives become worthless or obsolete. I also see an environment where people will have to go against the flow and take matters in their own hands, as opposed to letting the marketplace and corporate America solve it, and maybe the bankers will end up getting poorer for the mess they caused.
I also see the possibility of hyper deflation as opposed to hyper inflation. If there isn’t enough money to go around, this could cause prices to drop if no one can afford them.
It might be best for governments to start spending the money on their own services and spend less of it on debt payments (default). Yes, we will have to rely on tax revenue for everything, and won’t be able to borrow for a few years, the outcome in the long run may be better than feeding this CDO mess and government debt mess.
In the end, wall street investors will have to make big sacrifices. Society will also have to rebuild the retirement systems of generations X and Y, to one that can survive environmental resource depletion, the end of economic growth, and does not depend on wall street, the stock market, home equity, or other types of investment instruments.
BillT on Fri, 3rd Aug 2012 5:45 am
Stephen, you have a good idea, but the Military/Security complex will not accept cuts to their trillion dollar plus budgets. The march to world conquest is burned into the minds of the corporate elite and they see their time coming to an end. Ergo…everything is speeding up and becoming visible. No, I still hope we have at least 5 years, but I doubt it.
JohnRM on Fri, 3rd Aug 2012 6:51 am
Even the most optimistic of us (me) should have little doubt that a great reformation shall be upon us, shortly. It will be a difficult time, but I do believe that we will prevail. Defense of the system in place will slow our transition, so many of us may not make it to the other side, but there is another side. Material wealth is not the essence of happiness. “You are NOT your fucking khakis!” There will be a conversion of consciousness from one of materialism to one of…if I could tell you, it would be here already.
BillT on Fri, 3rd Aug 2012 7:23 am
JohnRM, yes, there is another side and a few of us will make it if we don’t pull out the nukes first. Let’s hope there is still some sanity in the powers that be but it is slim.
gates outcast on Fri, 3rd Aug 2012 7:51 am
The blue collar world that my burb exists in, will not hear any discussion of weather change, life style consumption change. Gay people, Harry Potter, Halloween and evolution are the evils to fear. I mention just briefly being prepared for a storm or an event,they stare back with a blank look, then begin their outrage thats Socialism, gay folks, video games, or the few left wingers cry out as soon as the rich pay more, recycle, and hug a gay person everything will be fine, or solar power will power our current life style,oh well I am going fishing in our erie canal, fish glow at night.
eric on Fri, 3rd Aug 2012 8:48 am
2012 is the year of Archery in Hollywood. I think its clear now why. One of the creators of Pixar’s “Brave” has commented archery as a good movie theme not because its a fun sport but because (paraphrased)-“everyone senses hard times ahead, a need to be self-reliant.”
The movie “Hunger games” is all by itself the most profetic movie yet. People used to laugh and gawk at people like Wes Straud and Bear Grylls, but Ishi is having the last laugh as so many flabby Americans race to learn how to knapp arrowheads from stone and tiller a perfect bow from an imperfect blank of lumber! We’ll its enjoyable and it beats gnashing of teeth! I’m trying to figure out when and how I’m going to tell my loved ones that I’m headed out for the hills with a crappy bow and some fire making material, and ask if they will join me.
If Hunger games truly is profetic, the wilderness won’t be safe to hide, there won’t be a single place to hide!
ohanian on Fri, 3rd Aug 2012 1:53 pm
There is nothing new here. We (by we I meant the students in the university studying the course ecology and the environment) knew about this 20 years ago.
Rick on Fri, 3rd Aug 2012 6:33 pm
“Fitz-Gerald also warns of a period of devastating inflation. A recent survey, reports USA Today, notes that in the coming years it could take $150,000 a year in household income for a family to afford basic living expenses – and maybe go out to a movie.”
I’m not sure I agree with this. And 150,000, no way. This will only create a civil war.
Jerry McManus on Fri, 3rd Aug 2012 7:23 pm
Even a brief survey of human history reveals many examples of how humans typically organize themselves during times of scarcity (which before the bonanza of fossil sunlight was just about always):
Warlords and roving gangs of armed thugs.
Really the only wildcard is the nukes. Not a bad way to go, really, if you’re one of the lucky ones who gets instantly vaporized.
DMyers on Sat, 4th Aug 2012 1:11 am
Instantly vaporized. I get high just thinking of it.
Warlords, roving gangs and armed thugs. We’re back to that scenario, aka zombies. Isn’t that a wild card as well? What may happen to a coddled, urbanized, electricized, human existence suddenly thrown into desperation is very much an unknown variable.
It may be open to argument, but I don’t think there is a precedent on this scale.
BillT on Sat, 4th Aug 2012 1:23 am
Somewhere I read that about 50 million Americans are on some variation of psychopathic drugs to keep them ‘balanced’. When the SHTF, and those drugs are suddenly not available…
Then there are the folks using the ‘illegal’ recreational drugs that add $70 billion per year to the GDP…
And the folks that consume the millions of barrels of alcohol every year…
And many of these same folks are armed with 250,000,000 firearms…
Yes, it is going to be interesting…
Kenz300 on Sun, 5th Aug 2012 4:04 pm
Too many people and too few resources…
If you can not provide for yourself you can not provide for a child.
EBL on Tue, 14th Aug 2012 11:22 pm
So you are saying get ready for the Hunger Games?