Filed under: sustainability
IndyMac Bank has gone bust. This is the second biggest financial institution ever to go bust in America. The reason is that too many people were losing confidence in it and were trying to withdraw their money. Because the housing market is not growing the bank would not be able to meet all these requests. So the regulators moved in and seized it’s assets. People now can’t get their money!
Pyramid schemes operate a little differently. The classic pyramid is fairly easy to see through. However there are more subtle versions as explained in the Wikipedia article. Debt-based money systems strike me as another very subtle version of the same thing. The economy must grow to prevent the system collapsing. Debt-based money systems are what we all use - euros, dollars and pounds.
When economic growth slows or stops, the ‘pyramid’ of lending that debt-based money systems rely on starts to collapse. In previous recessions, a few of the most exposed lenders would go bust and some people at the bottom of the pile would feel the pain. When the economy picked up again things would get back to normal. However, if we are at or close to peak oil there may be no more economic growth. Conventional growth based economics is due to collapse - it’ll be a bumpy ride and will take many years to pan out. But it will happen.
This will be a relief to me as it is hard living in a world where most people are so deluded that they believe in perpetual economic growth as a good thing…. (unfortunately economic collapse might increase the number of deluded people believing in fairies and a monotheistic god…)
(EDIT: Richard Heinberg has an excellent analysis of the current problems. He explains why the current situation is unprecedented in history.)
