John Michael Greer: The investment delusion

…The economic history of the 19th century offers a good example. The rising industrial economy of the time drove a massive increase in the production of real wealth. Most industrial nations, though, inherited money systems backed by gold reserves that offered few options for expanding the money supply to match the supply of real wealth. The result was a deflationary spiral that brought major economic depressions every couple of decades for most of the century. In response, in the 20th century, nation after nation abandoned the gold standard’s straitjacket and retooled their money systems to meet the needs of an expanding economy.

That’s the context of the present crisis because, in terms of real wealth, we no longer have an expanding economy. The production of real wealth in the world’s industrial nations has been in decline now for decades. Some of the deficit has been made up by importing real wealth from overseas, but not all; compare the lifestyle available to a single salary working class American family in 1969 to the lifestyle available to a similar family today and it’s possible to get a glimpse of just how much impoverishment has taken place over the last forty years.


This impoverishment went unnoticed by most people because the money supply didn’t follow suit. Until the economy came unglued in the second half of 2008, money had never been so abundant or readily available. Some of it got spent on real wealth, which is why real estate and other commodities soared to giddy heights, but most of it was diverted instead into various forms of abstract pseudo-wealth related to money in much the way that money relates to real wealth. Yes, I’m talking about your investments.

The confusion between money and wealth and the biases imposed by the long economic expansion of industrialism have made it almost impossible to talk sensibly about investments these days. It seems normal to most people that they should be able to invest their money and, as a matter of course, get back more than they put in. This reflects the dynamics of an expanding economy; if the production of real wealth is increasing, investments on average will increase in value over time to match the growth in real wealth, and the payback on investments reflects this. Outside of the special conditions of a growth economy, though, that logic no longer applies.

Energy Bulletin