Energy Bulletin posted an article by Gail Tverberg today on the consequences of our growth-based economic model hitting natural limits – a great read for people just getting introduced to the principles of sustainability. Tverberg explains in simple terms the resources we’re expected to run out of shortly, runs through some of the main technofixes and their problems, and predicts what the consequences might be for our global economy.
While most of the article was a review, I was pretty surprised by what Tverberg, an insurance analyst, thinks might happen to our monetary system in the event of a global economic depression:
Two possible outcomes of widespread defaults come to mind. One is that there is so much debt that cannot be repaid that banks, insurance companies, and in fact the whole monetary system fails. The other alternative is that the government guarantees all the debt, so that the institutions do not fail. The latter approach would likely lead to hyper-inflation.
In either event, people and businesses would lose their savings, because money either wouid either be no longer available (first approach), or would be worth very little due to inflation (second approach). In either event, foreign countries would be unlikely to accept our currency in trade. Simple transactions, such as purchasing food or paying an employee, would become very difficult.
Yikes… I better get that backyard permaculture garden started up soon.