Ever climb a mountain? Ever speed your car up to 100? Ever run the one-hundred yard dash? Ever ride a bike so fast your thighs screamed in pain? Ever fly in a plane that hit 30,000 feet?
What do they all have in common? Answer: no matter how fast or high you go, you will always come back down.
In 2009, the United States maxed out, hit the wall, smashed on the brakes, screamed into the abyss. Results: 15 million unemployed Americans; 35 million subsisting on food stamps; $12 trillion debt; added three million more people via immigration; up to its ears in debt to China; extended two wars at $12 billion cost every thirty days.
Colorado economist, Mike Folkerth, www.kingofsimple.com wrote a brilliant piece on what we face--"The Top of the Mountain: Every Way Out is Down." With permission, I bring you this interview:
"I believe that America's economy has reached zenith," said Folkerth. "What I'm saying is that should anyone care to consider inflation and per-capita share of GDP, we've hit the top of the mountain, when a nation reaches the tippy-top of the mountain, it's a beautiful view right up to the point of realizing that everything from that point is downhill."
What we face in 2010 and beyond
"I want to fortify my beliefs with a few pesky facts," said Folkerth. "The U.S. represents 4.8% of world population. We use 25% of the energy produced on earth and 30% of the materials produced on the planet. Some of those people who represent the other 95.2% of the global population are beginning to want their share and are getting a little testy about the whole thing.
"Over our lifetimes we consume 75% more than our European counterparts and more than 1000% of that of the folks in 3rd world nations. The U.S. hit peak oil in 1970 and today we use 40% more oil and produce 40% less than we did in that pivotal year.
"Want more? Okay, the National Debt in 1970 was $380 Billion with a "B" and represented 37.6% of GDP. In contrast, the National Debt in 2009 grew to $12.8 TRILLION with a "T" and represents 90.4% of GDP. The debt is expected to eclipse 100% of GDP in 2011"I say 2010. Another way to view our debt is to realize that we have replaced growth of real commerce with growth of real debt.
"How much does our economy have to grow in order to balance with debt? We don't know because we haven't had enough growth to pay the bills since 1969. Think hard about that one folks. The best growth year that we ever had since 1969"wasn't enough.
"In 1970, the oldest baby boomer was 24 years old and employed. That means the oldest of the 78,000,000 boomers were putting money into the system, not taking it out. Today, the oldest boomer is 64.
"Next year, 2011, the first massive class of boomers will line up for full Medicare and full Social Security benefits at a time when the coffers are drying up and the U.S. is running a $1.75 TRILLION annual deficit. That line of boomers that will begin next year, and who expect to have their entitlement tickets punched, is 17 years long!
"Still want more? Okay, you're gluttons for punishment today. In 1970 the U.S. produced all of our oil needs and EXPORTED crude. Today, we IMPORT about 70% of our 20 MILLION barrels per day of usage. In 1970, we had a foreign trade surplus; today we have a trade deficit to the tune of $700 Billion annually. That comes out to"heck, let's just round it out to $2 Billion per day. In 1970, we were the largest creditor nation on earth. Today we are by far the largest debtor nation on earth.
"In 1970, NAFTA and the World Trade Organization agreements were 24 years in the future. Today those agreements are 14 years in our past. During that time, we have abandoned our industrial and manufacturing base and shipped those jobs to the lowest bidders in the world. We now face unprecedented unemployment and our leadership says that we'll grow out of it as if it were as simple as children growing out a bad behavior stage."
Just getting warmed up!
"Still more?" said Folkerth. "I'm just gettin' warmed up? Yeah, I've had enough myself. But I'll cap it off with the big hammer. In 1970 we eclipsed the time when the physical system could provide for the desire of humans to populate and consume exponentially. There are limits, and in a sane world, we would have recognized that we had reached those limits. Instead, the gold standard of checks and balances was abandoned and we began shinnying out on that precarious limb of borrowing against the future; big time.
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