Back to Basics: Infinite Growth in a Finite World

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.

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2 thoughts on “Back to Basics: Infinite Growth in a Finite World

  1. Dave Aakhus says:

    It is true that our foreign debt is increasing along with government spending, and that in itself is cause for concern. However, the scenarios that Ms. Tverberg rolls out in this article do seem to be a little far-fetched. She starts with the basic assumption that oil production is near its peak. Once we reach that, production will decline and bring on a slew of negative consequences. One flaw in this argument is that oil production could be increased again, because many experts have forecasted that global reserves will be able to match growing demand until around 2050. Coal to liquid is expensive and super dirty, nevertheless it could also ease the decline of oil. In essence oil produced after peak production may be more expensive, but it would still be produced.

    Ms. Tverberg then bases more or less the rest of her argument on this primary decline in energy resources. Where I have a big problem here, is that when fossil fuel energy becomes so expensive that renewable energy is competitive, why would we continue to pay higher prices when there is alternatives? And the potential growth in the renewable energy market is vast beyond present comprehension. So instead of letting our narrow dependence on fossil fuels to drag us down the drain, we invest more and start really developing solar, wind, hydrogen, and clean(er) ethanol energy and the vehicles and infrastructure that go along with them. That, I believe, is how we continue to sustain our growth.

    I do agree with Ms. Tverberg that we are not living in a sustainable system and need to start making changes now. I just think that her vision is narrow and does not take into account creative innovation. She expects a self-constructed doomsday to come a little too easily.

  2. Brock says:

    You’re right, Dave, that Tverberg’s analysis smacks of the hysterical. It seems pretty unlikely even under the direst of circumstances that our financial system would actually collapse. On the other hand, our economy is vulnerable in so many places at the moment (housing, foreign debt, peak oil) that some kind of recession in the near future seems almost inevitable.

    While I’m not really hoping for an energy crisis, easing our way off of fossil fuels over several decades seems to me just as frightening a prospect. James Hansen, the USA’s leading climate scientist, has warned that we have 10 years to stabilize worldwide CO2 emissions before they get to a point where catastrophic feedback loops kick in – think temperature rises of 7 to 8 degrees F. Exhausting the world’s known oil reserves would place us far beyond that point, as would the hundreds of coal powerplants that the US and China are intending to build.

    So in a sense, then, we’re faced with the choice between major economic disruption over the next 10 to 20 years or major climactic disruption over the next several centuries. Personally, I’d take the former.

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