Inflation/Deflation – Why All The Fuss?

By: André Angelantoni
Source: Inspiring Green Leadership (www.InspiringGreenLeadership.com)

In my (Andre’s) view, we are living in a brief period of inflation (M1 is down but M2 and M3 are still going up) that will turn into hyperinflation soon. After that we will have The Great Decline, when money essentially moves to being worthless. Everyone who conveniently didn't think oil had much to with the economy (thinking it was the knowledge economy or the service economy or some such thing) will rudely be taught that energy, especially oil, was not just the basis of life on Earth, but also the basis for money. When the oil goes, so too will the value we place on the current incarnation of this interesting concept called "money."
 
What will this period look like? Maybe like this:
 
The presses of the Reichsbank could not keep up printing money though they ran through the night. Individual cities and states began to issue their own money. Dr. Havenstein, the president of the Reichsbank, did not get his new suit. A factory worker described payday, which was every day at 11:00 a.m.: "At 11:00 in the morning a siren sounded, and everybody gathered in the factory forecourt, where a five-ton lorry was drawn up loaded brimful with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you had caught one you made a dash for the nearest shop and bought just anything that was going." Teachers, paid at 10:00 a.m., brought their money to the playground, where relatives took the bundles and hurried off with them. Banks closed at 11:00 a.m.; the harried clerks went on strike.

The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items -- bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes (they didn’t have the network of copper transmission lines and street lighting that is now being ripped off) and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter -- a pair of shoes for a shirt, some crockery for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug. In the cabarets the newly rich and their foreign friends could dance and spend money. Other reports noted that not all the young people had a bad time. Their parents had taught them to work and save, and that was clearly wrong, so they could spend money, enjoy themselves, and flout the old.

The German Hyperinflation, 1923

Personally, I've stocked up on a few things that I may be able to barter for things Christine and I need in the future, but I have yet to purchase the solar panels and battery backup system that will give us power when the grid fails, which it eventually must do. It is a fragile thing, more fragile than most people know.
 
If you are interested in reading about the electric grid, see this post on The Oil Drum called "The U.S. Electric Grid: Will It Be Our Undoing?"
http://www.theoildrum.com/node/3934

An interesting comment on the grid was added by CJ Wirth:
 
The answer is yes, the electric power grid will be our undoing. The nation depends on electric power for: industry; manufacturing; auto, truck, rail, and air transportation (electric motors pump diesel fuel, gasoline, and jet fuel); oil and natural gas heating systems; lighting; elevators; computers; broadcasting stations; radios; TVs; automated building systems; electric doors; telephone and cell phone services; water purification; water distribution; waste water treatment systems; government offices; hospitals; airports; and police and fire services, etc.

Phillip Schewe, author of "The Grid: A Journey Through the Heart of Our Electrified World," writes that the nation's power infrastructure is "the most complex machine ever made." In "Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You," author Jason Makansi emphasizes that "very few people on this planet truly appreciate how difficult it is to control the flow of electricity."

A 2007 report of the North American Electric Reliability Corporation (NERC) concluded that peak power demand in the U.S. would increase 18% over the next decade and that planned new power supply sources would not meet that demand. NERC also noted concerns with natural gas disruptions and supplies, insufficient capacity for peak power demand during hot summers (due to air conditioning), incapacity in the transmission infrastructure, and a 40% loss of engineers and supervisors in 2009 due to retirements.

According to Railton Frith and Paul H. Gilbert (National Research Council testimony before Congress), power failures currently have the potential of paralyzing the nation for "weeks or months." The problem is one of how do you get the power up when there is no power? When power failures occur in winter, millions of people in the U.S. and Canada will die of exposure. There are not enough shelters for entire populations, and shelters will lack heat, adequate food and water, and sanitation.
 
Water purification and water distribution systems will fail, leaving millions of metropolitan residents without water. Waste water treatment systems will fail, resulting in untreated sewage that will contaminate the drinking water for millions of residents who consume river water downstream. Transportation and communications failures will cripple federal, state and local governments -- leaving and residents without emergency services, emergency shelters, police and fire protection, water supplies, and sanitation etc.
 
When oil becomes scarce enough, there won't be enough to maintain the highway systems (state governments do that), and there goes the power. And, when there is no power, how do you refine and deliver oil, and what about coal. The answer to your question posed here is yes. Again, good post. It's all sad, but true.
 
Interesting conundrum, no? How does one get the power up when there is no power (in the world of Energy Descent)?
 
For the Canadians on the list, don't forget that North America has an integrated grid system. If the U.S. grid goes down, so does the Canadian one until you sever the interties between the national grids.
 
Bottom line: find a way to produce power personally WHILE working on larger scale community efforts to install renewables. We may be just a few years away from having power less than 24 hours a day, then no power if the grid fails between you and the power source.