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Page added on December 31, 2013
Kunstler: The end of pretend
If being wealthy were the same as pretending to be wealthy, then people who care about reality would have a little less to complain about. But pretending is a poor way for a society to negotiate its way through history. It makes for accumulating distortions which eventually undermine the society’s ability to function, especially when the pretending is about money, which is society’s operating system.
The distortion that even simple people care about is that the gap between the rich and the poor is as plain, vast and grotesque as at any time in our history — except perhaps during slavery times in Dixieland, when many of the poor did not even own their existence. We’ve had plenty of reminders of that in pop culture the last couple of years, including Quentin Tarantino’s fiercely stupid movie “Django Unchained” and the more recent melodrama “12 Years a Slave.” But you have to wonder what young adults weighed down by unpayable college debt think when they go to see them, because without a rebellion that millennial generation will not own their own lives either. They must know it, but they must not know what to do about it.
The pretense and distortions start at the top of American life with a President who broadcasts the message that some kind of “recovery” has occurred in the economic affairs of the country. Either he just wants the public feel better, or he is misled by the people and agencies in his own government, or perhaps he just lies to keep the lid on. To truly recover from the dislocations of 2008, we would have to make a consensual decision to start behaving differently in the process of adapting to the new circumstances that the arc of history is presenting to us. We’d have to decide to leave behind the economy of financialization, suburban sprawl, car dependency, Wal-Mart consumerism, and prepare for a different way of inhabiting North America.
The dislocations of 2008 when the banking system nearly imploded were Nature’s way of telling us that dishonesty has consequences. The immediate dishonesty of that day was the racket in securitizing worthless mortgages — promises to pay large sums of money over long periods of time. The promises were false and the collateral was janky. It got so bad and ran so far and deep that it essentially destroyed the mechanism of credit creation as it had been known until then, and it has not been repaired.
Since then, we have pretended to repair the operations of credit by falsely substituting bank bailouts and Federal Reserve “quantitative easing” (QE) or digital money-printing for plain dealing in borrowed money between honest brokers at the local level. The unfortunate consequence is that in the process we have distorted — and possibly destroyed — the value of our money and the various things denominated in it, especially securities, bonds, stocks and other money-like paper.
The crash of the mortgage racket occurred not just because of swindling and fraud among bankers; in fact, that was only a nasty symptom of something larger: peak oil. I know that many people have come to disbelieve in the idea of peak oil, but that is only another mode of playing pretend. Peak oil, which essentially arrived in 2006, undermined the basic conditions of credit creation in an advanced techno-industrial society dependent on increasing supplies of fossil fuels. Most people, including practically all credentialed economists, fail to understand this. There is a fundamental relationship between ever-increasing energy supplies > economic growth > and credit-based money (or “money,” if you will). When the energy inputs flatten out or decrease, growth stops, wealth is no longer generated, old loans can’t be repaid, and new loans can’t be generated honestly, i.e. with the expectation of repayment. That has been our predicament since 2008 and nothing has changed. We are pretending to compensate by issuing new unpayable debt to pay the interest on our old accumulated debt. This pretense can only go on so long before our economic relations reflect the basic dishonesty of it. Reality is a harsh mistress.
In the meantime, we amuse ourselves with fairy tales about “the shale oil revolution” and “the manufacturing renaissance.” The year 2014 could be the year that the forces of Nature compel our attention and give us a reason to stop all this pretending. I’ll address this question in next week’s annual yearly forecast.
(James Howard Kunstler is the author of several books, including “The Long Emergency,” “The Geography of Nowhere” and “The Witch of Hebron.” Contact him by emailing jhkunstler@mac.com.)
14 Comments on "Kunstler: The end of pretend"
robertinget on Tue, 31st Dec 2013 2:21 pm
Mr Kunstler must be one of our (secret)
contributors at PO.com.
He offers doomer predictions with no actual solutions, save planting fruit trees and vegetable gardens.
(My predictions)
Mr Kunstler will call for stock market crash as has for the last four years.
Like most predictors, one year, he will get it right.
JHK and I don’t believe in magic thinking which is why I never make
predictions more than a few hours out.
Never, for instance, ask a woman when she is due to deliver because of casual empirical observation. If you see the head and shoulders, then and only then
make predictions that a baby is on the way. Another safe bet (49.9/50) is predicting sex of unborn.
One of my favorite energy related predictions gone wrong were billions spent building IMPORT terminals to reprocess liquefied natural gas. (LNG)
No one believed NG prices would collapse from domestic over-production.
Many here on these pages are still in denial. The trick with predictions is simply waiting till you can see the head and shoulders.
Dave Thompson on Tue, 31st Dec 2013 2:49 pm
+ or – energy inputs = economy. Economy =energy inputs + or -.
J-Gav on Tue, 31st Dec 2013 3:21 pm
Aw, shucks! Just when the party’s gettin’ revved up, JHK has to come along and crap in the punchbowl …
Not that a lot of people will be listening when he explains that actions (and even attitudes, belief systems etc) have consequences. Or that pretense and make-believe are not viable options if the the goal is to maintain some semblance of social order in the future.
jmm on Tue, 31st Dec 2013 4:13 pm
precies….eindelijk iemand die het ziet….
stilgar wilcox on Tue, 31st Dec 2013 5:40 pm
The end or just the beginning of pretend? QE I am sure has a long way to go if Japan is any indicator.
Arthur on Tue, 31st Dec 2013 6:23 pm
JHK with his familiar message that everybody is in denial, is pretending, has distorted views of reality and that we (Americans) should “prepare for a different way of inhabiting North America”. Hopefully (for JHK, not us) the collapse will occur during his lifetime so he finally can harvest his ‘told ya so’ satisfaction. My secret suspicion is that Gods inhabiting the Olympus love to fool us mortals and that the collapse will come, only after Heinberg, Kunstler and Orlov publicly have stated that they were wrong all along and that there will be no collapse.
Less than five hours to go before 2014 arrives. My mid-sized Dutch town sounds like an Aleppo war zone, fortunately only because of the firecrackers.
In advance, I wish everybody a happy, collapse-free New Year and a peaceful 2014.
andya on Tue, 31st Dec 2013 7:08 pm
Peak oil arrived in 2006, and how much has it dropped since peaking? Talk about living in pretend, and denial. In the land of the blind, the blindest man is king.
Django Unchained is a fracking awesome movie.
GregT on Tue, 31st Dec 2013 10:46 pm
Django Unchained, is nothing more than a sad indication of the digression of our society. Precisely what Tarantino is trying to convey. Violence has become far too complacent, to the point of being ridiculous.
How much has our economy stagnated, and how much more debt has been created since 2008? The direct result of the peak of conventional oil in 2006. To not understand this, is to live in pretend and denial. Blindness is commonplace. JHK is not one of the commoners.
DMyers on Wed, 1st Jan 2014 2:04 am
We’re living a collective cartoon. I think that’s Kunstler’s position, and I agree with him, all the above criticisms and sarcasms notwithstanding.
If someone sees a situation that is unsustainable and leading to disaster and says so, i.e., “this is unsustainable and leading to disaster”, and he says this on Thursday, and by the following Thursday disaster has not occurred, do we dismiss the prediction as unfulfilled? How about giving it a year or two or three?…. Look, it’s still going to happen because the situation is, in fact, unsustainable, by the very laws of Nature which apply invariably. You can’t get more than there is. The fulfillment of the prediction will not, therefore, be a lucky hit. It will be a valid fulfillment of the prediction.
Kunstler is right on every point here. Anyone who wants to claim otherwise, please take the point and show that it’s wrong.
RICHARD RALPH ROEHL on Wed, 1st Jan 2014 6:02 am
Meanwhile… the ongoing horror of Fukushima seeds a major EXTINCTION EVENT. And there are 440+ aging nuclear time-bomb plants on this planet.
Don’t worry! Just keep $hopping.
moli on Wed, 1st Jan 2014 3:01 pm
in a world of surplus. why is there so much poverty and pain. . the most fundamental truths are so manipulated we the seekers don’t even know if the energy we talk of is fossil or abiotic in origin . . the economic systems emerge controlled by the banking sector to control the masses , , the sheeple. . . others are controlled intellectually considering themselves illuminated even tho they remain in the dark to basic truths. . . all of this shows that there are levels of control which we cannot escape. if a whole model of economics is based on deficit despite it being the most powerful military machine in the world . . what does that mean?. . juxtapose this with an economic model based on surplus in a country full of slaves like china. . . ? isn’t all this enuf to show us that we live in a matrix of lies. . if there is growth . . it is for the rich at the detriment of the poor. . and if there is collapse it is a collapse upon the poor. to the advantage of the rich. . the system of control remains intact.
moli on Wed, 1st Jan 2014 3:08 pm
2008 could just be the milking of the Ponzi cow whose udders had over bloated and needed milking. . the numbers in money are not real. . the consequential enslavement of people due to greed is.
moli on Wed, 1st Jan 2014 3:14 pm
if it wasn’t oil it would be usery over generations. . and if it wasn’t that it would be thugary like William the conquror. . the worst bit being that one has to then go on in war to die for the very ppl who have sucked the life out of you by then anyway.
rollin on Thu, 2nd Jan 2014 3:10 am
I am going to pretend I didn’t read this article.