The Great Crash

New York Stock Exchange, Oct. 29, 1929

Today is 80 years after the “Black Tuesday” which signaled the stock market crash of 1929 and the Great Depression. The Great Depression was caused, basically, by a credit bubble: living beyond our means.

Hey, that’s what we’re doing now! We are close to (or most likely past) the peak of world oil production, and our economy can’t function without oil.

Certainly an oil depletion crash would be bad news for all the people who lose their jobs, houses, or worse.  But this is a problem with the transition, which we should handle with utmost compassion, not with where we’re ultimately headed.

In terms of our destination, it’s good news. This economy, while good at some things, is pretty stupid with the really important things. It promotes consumerism, destruction of animals, war, pollution — and don’t get me started about drivers talking on their cell phones.

There’s even more good news today: high government officials are aware of this issue. “(Steven Chu, US Secretary of Energy) was my boss. He knows all about peak oil, but he can’t talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can’t say anything about it.” (From David Fridley, a scientist at Lawrence Berkeley National Laboratory.)

We’re in a massive credit bubble right now. Total U. S. debt (credit cards, business loans, government debt, etc.) went from $2.4 trillion in 1974, to $17.2 trillion in 1994, to 44.7 trillion in 2006. It is now over $50 trillion. Uh, where is this all headed? Has anyone ever heard of “Limits to Growth”?

Oil depletion is not the only problem that our perpetual growth economy has created, by the way — think soil erosion, deforestation, global warming, and all the rest. Oil depletion is merely the first insurmountable problem. We can’t “save” our perpetual growth economy, nor should we try. We need to prepare for, and welcome, the era of limits. “Simple living” is a good thing, and we’re going to see more of it.

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