jameslambton
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Is all Debt EVIL? No of course not, as previously noted societies cannot function without debt, some monetary, some social. The obvious has been stated over and over again here and elsewhere, the fundamentals of the “western” economies is all wrong, most of us are living an untrue economic reality financed on debt – national, state, provincial, municipal, city, town and individuals, almost all of us. So what sort of debt is not evil or dangerous to society? Anything that is supported by a substantial portion of equity and will be productive. A very simple example of this, is my friend Sol, hard working, smart, and wily. He wanted to develop a small trailer park, for real folks to live affordably, including himself. He had taken his savings and owned the land, but had only that as equity no more cash. He couldn’t get approval for subdivision without infrastructure in place, namely septic systems. A friend of a friend introduced him to a site services contractor who was slow on work and understood how a real economy worked. What he offered was to do the work, and wait for payment, until the first trailer was installed and paying rent, then Sol could pay him back as his income came in. Over time these two entrepreneurs provided affordable housing, provided work for the contractor and his crew, purchased materials from various suppliers and provided Sol with a place to live and an income. None of which would have happened without a small amount of debt and a large amount of equity. How to fix our existing problems? It seems obvious to me, declare bankruptcy, rewrite our financial rules, require all significant debt be supported by a substantial amount of equity and that the debt be useful and productive in itself, otherwise why have it? The reality won’t be nice for many people, the real economy will be real, or another way to put it, is that our existing economy will shrink substantially and we won’t be able to live the way we are today. If we do this in a planned, methodical way, nobody needs get hurt on the way down, inconvenienced YES, work harder YES, annoyed almost certainly, but not hurt! Of course this isn’t going to happen, so get ready for the only option left.
A big thank you for The Automatic Earth, being an amateur student of current affairs (for survival/entertainment), I appreciate the access to hight quality/timely commentary on what the hell is going on financially in the world. I add that conventional media, in many cases is simply repeating a “prepared” news release from the government/business world. If you want to know what is really going on, I use a reverse analysis, if the Federal government feels it is nescessary to spend money telling us how good the economy has been and still is, then the reverse would read the economy is hanging on but not for long! In no way should a so called “modern world” have to constantly interpret the untruths and lies of entities in power – why the hell can’t everyone just tell the truth! A big thankyou for your mention of a 95% reduction in energy consumption, this is key for humanities survival, George Monbiot was the first author to write that a 90% reduction in CO2/energy emissions was required to stabalize climate change. It seems impossible but with some small effort it can be acheived with only a little sacrifice and inconvenience – a small price to pay for a future!
In response to the previous post “I need income coming in” Since our family lives on a very small income, I feel perhaps I can offer some practical advice. Rule #1 – you need very little income once you own your own accomodation – this of course need not be a house in suburbia – a well found trailer on a good site would do for many of us. #2 – once you need very little income a small part time job – EVEN for minimum wages will provide plenty of cash to live on. #3 If at all possible build safe income earning capital, perhaps you own an asset that is in fact a costly expense ie: nice truck, sell truck, buy good bike and shoes, invest money in high interest savings account – earn 2% on capital (not great with inflation around 1%, but with deflation this money may be worth much more in the future #4 grow food, not by using the Lee Valley catalogue to spend thousands on pretty stuff, but by opening up some ground and putting seeds/transplants in – you will get healthy farming, healthy eating and all for a few dollars in seeds. #5 If you are this far and have capital to invest, think about investing in your OWN utility – PV electricity has become CHEAP, it is easy to install and almost maintenance free and you will NEVER get another hydro bill – while reducing your carbon emissions – in fact all of the above are part of a low carbon lifestyle #6 Now with a very low cost of living you can declare yourself mostly retired and stop worrying about your financial future – a small life is a much safer position to be in. The above is a structured simplification of one path to safety/freedom – one we followed and I am happy to report it has been successful. Everyone’s path is different both whence they came, where they are and where they are going – and must be adapted to a rapidly changing world. For one example of a mini life go to http://www.the-mini-house.blogspot.com GOOOOOOO Nicole!
