James Howard Kunstler: The Dangers Of The Age Of Delusion

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Submitted by Adam Taggart of Peak Prosperity,

It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen

James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.

Instead, we are embracing a narrative based in "magical thinking" (e.g., prosperity through the printing press, energy independence through domestic shale) that assures us everything is fine. That we'll be able to enter the future without having to make any changes to our manner or standards of living, despite our massive debts and depleting resources:

History is very peculiar in the sense that sometimes cultures and societies go through very strange periods of their history, and we’re in one of those now. And I characterize this as the “great period of America lying to itself.” And the way that it’s really carried out as a practical matter is that accounting fraud is now the basic mechanism for running most of the important things in American life. Accounting fraud is now the basis for banking and finance, and it’s certainly the basis for government, and certainly for its fiscal role.

 

So I think what you’re seeing is a kind of deformity of the consensus. And of course, the most striking feature of our current times is this inability of the country to construct a coherent story about what’s happening to us, and therefore the inability to construct a story about what we might do about it.

And the sad thing is there is much we can get busy on to address our situation. But to get started, we need to engage in an eyes-wide open assessment of our true state:

What's really happening in reality, in this moment in history, is a comprehensive contraction in economic activity, because there’s a connection between the energy inputs into an economy and a culture and your ability to accumulate wealth of the kind that we’re used to, produced by industrial activity. And that’s coming to an end, and there’s no way around it.

 

Now, there are plenty of things we can do. And the terminology that we use, I think, the way we deal with this – for example, using the word “growth” incessantly is, I think, very counterproductive rather than using the term “activity”. Because you can have a lot of activity of the kind that we need without necessarily having the kind of industrial growth that we’ve experienced in the past. For example, we have a tremendous amount of work to do in this country to reform and downscale and re-localize and reorganize the major activities of American life, whether it’s agriculture – which is going to have to get smaller and more local and finer and be done by more human beings than machines, and be done by more human beings than energy slaves – or commerce – which has got to be reorganized from the Wal-Mart level of twelve-thousand-mile supply lines and warehouses on wheels, depending on all of the tractor-trailer trucks running incessantly around the interstate highway system.

 

So that’s a huge test that faces us. We basically have to rebuild the Main Street economies – and not just in an intellectual or conceptual way, but actually in the bricks and mortar. We’ve got to go in there and refurbish our downtowns. We’ve got to change the transportation system, because the airline industry is failing and the happy motoring industry or way of life will be coming to an end, probably sooner rather than later.

Yet if we continue to cling to our magical, no-consequences narrative, Kunstler fears we will likely burrow deeper into our delusion:

It comes back to the unfortunate condition of a nation that is so frightened of the consequences of what it has been doing that it cannot really face reality, and so it just spins one story after another.

 

I think Jim Rickards put it pretty well the other day when he said that this kind of monetary policy exists in what he referred to as a critical state dynamic. In other words, you can’t just dial up free money and then dial down free money when you seem to be getting into an inflationary problem. The control, the toggle, just doesn’t work that way. And what happens, in fact, is that things go critical because it is a critical state dynamic.

 

And what’s been going on is that we’ve been trying to compensate for the lack of capital formation with this imaginary money. And by capital formation, I mean the ability to accumulate real wealth from real wealth-producing activities. And creating credit card money on a national level is not real wealth-producing activity.

 

I think the closer we get to this point of criticality, the more delusional we’re liable to become about it. So this is just a subset of that larger dynamic of, the more distressed the society gets, the more delusional it gets.

Click the play button below to listen to Chris' interview with James Howard Kunstler (46m:59s):