The title of this piece is taken from Tim Morgan’s latest blog.
This is an important piece, which should be circulated widely. Not necessarily to be believed that this is how things are, but rather to rise awareness that this view exists.
Whether you agree or not with the information presented in the piece, depends on your mindset and vested interests.
Tim Morgan writes:
The true cause of inflation is the worsening disequilibrium between the ‘real’ economy of products and services and the ‘financial’ economy of money and credit. The only way to tame inflation is to eliminate the anomaly of negative real costs of capital. Combined with deterioration in material prosperity, this points towards a fundamental re-pricing of the economy.
The underlying dynamic is that the economic driver of the industrial era – the supply of low-cost energy from oil, natural gas and coal – is winding down, and there is no assured replacement at hand. Transition to renewables is imperative, but there’s no guarantee that an economy based on wind-turbines, solar panels and batteries can be as large as the fossil-based economy of today. The probabilities are that it will be smaller.
Examples of the implications of this in relation to the UK are:
- The real economy is shrinking and will continue to do so irrespective of Government attempts to create growth. GDP may increase and will be said to be a sign of economic growth.
- Prosperity is declining and will continue to do so. Wages will not keep up with inflation.
- There will be a sharp fall in discretionary (non-essential) spending. On things like the purchase and use of cars, up-market food and clothes, restaurant meals, expensive holidays, private healthcare and so on. Employment in these markets will decrease.
- Those with access to their own gardens will grow and process their own food and sell and barter their surpluses.
The public/private sector establishments will be unwilling to see these changes as a portent of endless economic shrinkage and no growth. Politically this view will be seen negatively.
All of these changes will come about because, as Tim Morgan explains:
“….. if we consume less energy, the economy gets smaller. Likewise, if we use less energy per capita, the average person gets poorer.”
Party political acceptance that is how things are and will be would lead to a fundamental rethink of what should be done.
A pdf copy of Tim Morgan’s piece can be downloaded here.