Nearly four years on the country finds itself in the midst of difficult times that have taken their toll on millions of Americans through job losses, home foreclosures, unserviceable debt, and ever dwindling retirement savings. By all accounts, Americans are worse off today than they were ten years ago, and the state of our nation, despite what Washington’s media masters report, is fiscally, economically, and socially dire.

With an estimated national debt that will approach $20 trillion in just a couple of years, some $200 trillion in unfunded liabilities over the next twenty five years, scores of millions of Americans dependent on overburdened government safety nets to survive, and a rapidly shrinking domestic economy, the key question becomes,”what is America’s economic breaking point?“

The answer to this question becomes apparent in a recent documentary from Future Money Trends, which suggests that the breaking point for the U.S. economy comes when the cheap energy we have enjoyed for the better part of a century finally dries up.

Future Money Trends is expecting the U.S. to face the perfect storm of events that, when combined, will send gas prices past the breaking point for the average American.

There are three major catalysts that will cause gas prices to reach this breaking point.

Number one, the dollar is in a state of collapse caused by a continuous increase of the money supply by America’s central bank.

Two, instability in the middle east and a potential war with Iran would great[ly] disrupt the supply of oil.

Three, the supply of cheap, recoverable oil is dwindling along with a major increase in demand.

…

America is built for $50 oil and $2 a gallon gasoline. The seriousness of our situation should not be overlooked. We have multiple forces that will drive gas prices past America’s $5 per gallon breaking point… Rising gas prices caused by these three catalysts will break the backs of the American consumer, spiking prices to the point where present day normalcy is no longer the reality.

Via Future Money Trends

Though there is evidence that the peak oil theory of physical shortages is accurate, it’s not even so much that the world will run out of oil per se, as it is that we simply don’t have the technology to extract that oil at a cheap enough cost to maintain our current way of life.

If you consider the significant pressures currently facing the United States financial and economically, it’s not too much of a stretch to suggest that even a minimal rise in the price of gas could seriously hamper the consumption habits of the majority of our population, which in turn will further reduce economic growth. As Future Money Trends‘ Daniel Ameduri notes, even a $1 gas price move has a significant impact with the potential to extract $100 billion from the broader economy.

With gas prices at or above $4 in most parts of the country, we’re quickly approaching 2008′s breaking point. And for those who don’t think prices could exceed those historic highs of 2008, consider that most Europeans are already paying nearly $10 per gallon.

With rising demand from BRIC nations like China and India, tensions in the middle east and unprecedented monetary expansion, ten dollars may very well become a reality. Such a swing in prices would immediately shave some $600 billion in direct consumer consumption and shrink our economy by 5% almost instantly. And that doesn’t even include the consequences that will inevitably hit small businesses and their employees in the months following.

Going into 2008 Americans felt fairly confident about their savings, their ability to find work, and their overall outlook. After four years of malaise, the majority of Americans have lost that confidence, as their ability to maintain the standard of living to which they became accustomed over decades of rampant government spending and easy money has been seriously undermined.

At this point, as suggested by Ameduri, even a one or two dollar increase in the price of gas could be the breaking point that sends our economy and global financial markets into an unrecoverable tailspin. The psychological impact of $5 or $6 gas may cause more of a panic than the price itself, because the only thing keeping the system afloat at this point is confidence in our leadership and that the best-and-brightest will be able to mitigate the crisis.

We were able to suspend the worst when governments around the world stepped in previously and let loose everything in the quiver to abate a collapse. This time, however, with our debts piling up at unsustainable levels and our lenders rapidly diversifying out of U.S. based assets, we will not be so lucky.

Whether the breaking point has been breached is up for debate, but there’s a strong possibility the die has already been cast. With trillions of dollars in capital flows, government intervention and financial machinations behind the scenes, it’s impossible to predict the exact timeline or occurrence of events, but we may well have already crossed the Rubicon.

Assuming that a breaking point is inevitable simply because of our failure to fundamentally change anything since the original crisis took hold in 2008, we should look to history as a guide as a way to anticipate the consequences that follow unsustainable governance and monetary policy.

If history surrounding such events has taught us anything, it’s that we must presume whatever is coming will be brutal, violent and it will transpire so quickly that most people won’t realize what happened until they’re walking the streets with worthless paper money in their pockets looking for morsels of food to stock their pantries – we’re talking end of the world type stuff.

The collapse of nations and conventional paradigms is never an orderly thing.

Regards,

Mac Slavo

What Is America’s Economic Breaking Point? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Here’s Obama on the campaign trail: “The problem is … speculators and people make various bets, and they say, you know what, we think that maybe there’s a 20% chance that something might happen in the Middle East that might disrupt oil supply, so we’re going to bet that oil is going to go up real high. And that spikes up prices significantly.”

While blaming economic conditions on speculators is the common stock in trade of demagogues and politicians of all stripes, what is the president actually saying?

People who need energy to keep their businesses working, business that make modern life possible, look around at world events and grow concerned that the U.S. government and others may conspire to interrupt the flow of oil. Behaving like good stewards of their enterprises, they and their agents seek to assure needed oil supplies in an uncertain future by contracting for tomorrow’s oil needs today.

While Obama deprecates the activity, saying that those trying to prepare for future conditions, are “betting,” most oil users would actually prefer stable prices and would just as soon forego the guessing game about future prices. It’s a game that costs them if they are wrong and only allows them to stay in business if they are right. Most are happy that someone – those speculators politicians love to vilify – are willing to take on the risk of being wrong about future price movements for the rewards of being right. The real oil users can then count on liquid markets when they need them and keep their attention – and their capital – focused on delivering the blessings of modern life instead of betting on the movement of prices.

And there is something wrong with this? Hold the phone a moment!

It’s not as though those seeking to secure oil for their future needs are making something up. They’re not concerned about some fantasy development, some exogenous agent like space aliens appearing out of nowhere to suck up all of earth’s oil. This isn’t science fiction. They’re trying to keep things working in the face of very real and very familiar government threats to our way of life.

Maybe they should be praised, not condemned.

While one administration bureaucrat has claimed there is a “Wall Street premium” on the price of oil, it takes government to make a war. Speculators trying to anticipate future prices in the event of a war don’t impose embargoes. Nor do they launch airstrikes.

In The Dollar Meltdown, I estimated that during the constant saber rattling and elective wars of the Bush years, the fear premium on the price of oil may have run from $20 to $40 a barrel, depending on developments. It was, in any case, a huge transfer of wealth from the American people to the oil sheikdoms, Putin’s Russia, and Chavez’s Venezuela.

If Obama is prepared to further de-capitalize the American people and deliver another blow to an economically-depressed world by supporting an Israeli strike on Iran and risking the closure of the Strait of Hormuz, isn’t it a good thing that he has to confront at least some of the cost of such recklessness?

He’s a politician. He should pay a political price.

George W. Bush never did. But we would be better off economically if he had to reckon with the price for his elective war.

Might Bush have been dissuaded from his unnecessary war if he had known that it would cost not under $50 billion, as his administration claimed, but more like $5 trillion?

Would Bush have given up plans for his counterproductive war on Iraq – a war that has only consolidated Iran’s Shi’ite power bloc in the region – if he had known that he would preside over an explosion of the nation’s visible debt from $5.7 trillion to $10.6 trillion?

Would Bush have foregone his wasteful war justified by forged documents and phony intelligence if he had known that its cost would help trigger the steepest downturn in America since the Great Depression, even as the cost of the Vietnam War helped create the stagflation decade of the 1970s?

If he had known the costs and the outcome, would Bush have been capable of better decisions?

Nah. Bush was not capable of forethought or making wise decisions. When he ran for reelection in 2004, Americans still hadn’t come to terms with the monstrosity of his bogus war. And his opponent, John Kerry (“Reporting for duty!”) wasn’t willing to risk defeat by opposing the prevailing war fever. Had he done so, he would have still lost in 2004, but could have easily been elected on the “told you so” platform by the time people began seeing through Bush’s war in 2008.

Whatever Obama’s real view about war with Iran, he at least has enough foresight to know that it will result in even higher gas prices.

At his first press conference of 2012, Obama responded to a question about gas prices with a question of his own, asking the reporter, “Do you think the President of the United States going into reelection wants gas prices to go up higher? Is there anybody here who thinks that makes a lot of sense?”

Obama knows that the price at the pump can cost him the election.

If it is wariness about the political cost of higher oil prices that has Obama preferring “engagement” to bombing Iran, it is a good thing. If it is speculators buying oil against future possibilities that keep Obama from reacting as Romney and the neocon Republicans egg him to start another needless and ruinous war, then we owe speculators a debt of gratitude.

Regards,

Charles Goyette

I Love Oil Speculators was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

And they ain’t lyin’!

Writing for Forbes Louis Woodhill gets this seeming contradiction right. He views the price of gas not in terms of the depreciating monopoly money issued by the politically-empowered central bank…but in terms of the market’s favorite money: gold.

When viewed in relation to gold, gas prices are low…only 82% of their average over the past 41 years.

Gas prices aren’t high. The dollar is just falling, its value being undermined by politically-driven over-issue. So if you count the Fed-issued dollars as money — and are actually using it as a savings vehicles — then your world is being rocked by rising gas prices (and rising prices in everything else, too, except for computing power).

But it’s not just the rising prices of everything that threaten all of us. In his article Mr. Woodhill reminds us:

“Right now, the threat posed by rising gasoline prices is not just to family budgets. An even greater danger is that the government will use escalating oil prices as an excuse to do something stupid.

“After President Nixon abrogated the Bretton Woods monetary arrangement in stages starting in September 1971, both gold prices and oil prices started to rise. The government responded by imposing wage-price controls. This made a bad situation much worse.

“This time around, the stupid policies being considered to ‘deal with’ rising gasoline prices include additional cuts in payroll taxes and higher taxes on energy producers.

“During the 1970s, the toxic combination of a weak dollar, high tax rates, and onerous regulations introduced a new word into America’s economic vocabulary: stagflation. Reaganomics banished this word to the history books. Now, President Obama and Fed Chairman Bernanke are teaming up to give stagflation another try. It is not likely that Americans will like it any more this time around than they did 40 years ago.”

Source

It amuses us that the “gold is for nutters” crowd loves to point out when a mere 250 of their beloved dollars could acquire the gold they hate so much. Yet they seem to forget that their dollars could buy more than ten times as much in the past — back before the Federal Reserve was established.

They also write off those times when gold reveals the inherent weakness of their treasured paper currency…like when the gold price surged to $850 in 1980…and now as the price of gold hovers near $2000 thirty years later.

If you look at it the right way — in terms of the eternal golden money — it’s the dollar’s periods of strength that are the aberration.

It’s not gold and silver prices that are volatile. Those have been incredibly consistent for thousands of years in terms of commodities they could buy. And because of the increasing standard of living being raised by free market economies, in a very real sense these eternal monies actually buy more. It’s the dollar that has been erratic in its overall declining trend ever since it’s been cut loose from gold (and silver).

Again, people looking at the cost of a gallon of gas, or of milk, or the cost of a nice suit, or rent from behind their piles of gold and silver are finding very little to worry about. In fact, to them, prices are lower than normal and declining.

Also the price of oil has tended to track the price of silver awfully closely for about as long as oil has been industrially useful. And so it’s no mistake that you can still get a gallon of gas for about about $0.20…as long as that $0.20 is composed of a pre-1964 90% silver dimes.

Or you could use a pre-1964 90% silver quarter for that gallon of gas and get back some change.

You see, the pre-1965 quarter is worth $6.38 as I type this. The pre-1965 dime is worth $2.55. These coins hail from a time when the dollar was still tied to gold (at the official price of $35 per ounce prior to Nixon nixing the gold standard). The dollar was still as good as gold — even though Americans themselves were forbidden to own gold bullion from 1933 till 1974 — and there was actual silver in the coinage until that content was reduced in 1964 and eliminated in 1965.

Those old silver coins shine the harsh light on the strength of the currency and the abuse that currency suffers from the feds and the Federal Reserve.

If you’d been saving in gold, then from your point of view gas prices have been coming down for the past few years. If you’d been saving in that old “junk” silver (pre-1965 quarters, dimes and half dollars), then gas prices are a downright bargain, too.

(In fact, we strongly believe that silver is still severely undervalued. While gold is more than twice its 1980 high in terms of dollars, silver still hasn’t quite hit its 1980 all-time high when less than an ounce of silver could buy a barrel of light sweet crude. Silver may be more expensive in dollar terms than it was ten years ago…but it’s still incredibly cheap in terms of both gold and in terms of oil…

…Back in 1980 at silver’s peak it took less than one ounce of silver to buy a barrel of oil. Oil is going higher…and silver is likely to try to play catch up and outpace both oil and gold. Silver is just as much a monetary metal as gold…and just as much a vital industrial commodity as oil. Yet again, silver is severely underpriced in relation to both gold and oil. And it stands to gain more than both as both climb higher. So physical silver has been and continues to be our favorite, simple way to hedge against the demise of the dollar.

We turn now to the Wall Street Journal where they find U.S. monetary policy more than a little at fault for the rising dollar cost of gas…

“Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama’s term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama’s appointees who are now a majority on the Fed’s Board of Governors.

“Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of “quantitative easing” in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he’s betting on gold, the ultimate hedge against a falling dollar.

“Fed officials and Mr. Obama want to take credit for easy money if stock-market and housing prices rise, but then deny any responsibility if commodity prices rise too, causing food and energy prices to soar for consumers. They can’t have it both ways, as not-so-stupid Americans intuitively understand when they buy groceries or gas. This is the double-edged sword of an economic recovery ‘built to last’ on easy money rather than on sound fiscal and regulatory policies.”

Source

It seems so simple to us. The politicians want to prop up certain markets with inflation from the central bank…while keeping it easy for the government to borrow. But like any man-made abomination worth its salt, those newly created dollars don’t ever behave exactly how their creators want.

Stock and house prices are mostly flat or outright falling. The dollars meant to be puffing them up are instead spilling over into everything else.

The housing market is like a sad, burst balloon. Air just flows in and right back out. The stock market seems to be filled to capacity, its size delineated by annoying fundamentals like earnings. The price for these earnings is just too high right now and more new money in the economy just can’t drive those stock prices much higher.

That new money — the various QEs — is having an affect on other prices though. All the stuff you use to live. If you insist on believing in the dollar — and writing gold and silver off as barbaric nonsense — then you will be able to afford less and less of the life you want and to which you’ve become accustomed. Further if the history of paper monies is any kind, you could find yourself completely wiped out if you store your wealth in dollars or euros or pesos or whatever other paper lie is set to unravel next.

They will tell you that creating new money is necessary to keep the economy growing, to fight unemployment, to promote the general welfare, etc, etc.

But all it does is destroy your savings and make it easier for the feds to keep on borrowing to pay for welfare and wars. If you want to make sure the dollars you earn today can pay for the same amount of food and energy down the pike, trade those dollars for something of real value right now. We heartily recommend the type of money that actually fulfills that “reliable store of value” function.

Regards,

Gary Gibson

Why Gas Prices Are Actually Falling was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

A gas station in Ashland, Oregon, May 2011

…If you pay with un-debased U.S. currency.

One gas station in Ashland, Oregon, is accepting payment for gas in the old, un-debased version of the currency.

The more prices change, the more they remain the same. At least when the currency is sound.

A gallon of gas was nearing $5 per gallon at the time the above picture was taken. Two old 90% silver dimes were worth about $5.00 of the newer 0% silver dimes and quarters. If you’d saved your money in plain ol’ currency back before the Treasury pulled another fast one, you’d be able to buy about a gallon and half of gas for $0.20.

We often tell people to start saving their nickels. This is why. This isn’t a get-rich-quick scheme. It’s not even a get-rich-slow scheme. It’s a don’t-get-hosed-by-central-bankers scheme.

Note that for all the years that dimes and quarters were 90% made of silver, the price of gas was around two of those (mostly) silver dimes.

Also note that there is a red line that shows the inflation adjusted gas prices. When the currency was sound and stable and the dollar price of gas was stable, people were better able to afford gas. This is because prices were stable as incomes were rising, a condition that Keynesians generally can’t stand.

(And heaven forbid prices actually fall slightly while incomes stay the same or even rise slightly. That sort of “deflation” is to be stopped at any cost.)

But see what happens when the silver is removed from the coinage in 1964? The price trends up a bit. And then after the U.S. dollar is entirely cut from gold in 1971, the price of gas really started to move in dollar terms. There was a spike leading up to 1980, a slight drop and leveling off for years (for various reasons we won’t go into now) and then it was back off to the races.

In 1918, a gallon of gas was about two 90% silver dimes. In 1928 about the same. And in 1948. Fast forward to 2011 and a gallon of gas is still about two 90% silver dimes, despite the rise in price in terms of the debased currency that really got going in 1974.

Even with all the Hunt Brothers drama and attendant price drops after 1980, silver’s price movements in dollars looks suspiciously like that of a gallon of gas…

Source: SilverPrice.org

You see, a gallon of gas isn’t getting expensive. Your currency is getting cheaper. Has been for a long time, since the official closing of the gold window. The speed at which it’s getting cheaper appears to be accelerating, too, as the central bank creates unprecedented amounts of new cash–unbacked by anything commodity or productive activity of course–to inject into the economy.

Meanwhile, the REAL currency is doing pretty well. Largely forgotten the silver version of the currency is keeping its value relative to things you buy. A gallon of gas is still less than $0.20. Twenty REAL cents. Not the forgeries that pass for money in the minds of the unwary.

If you think that’s something, realize that a gallon of gas is just five or six cents in terms of the old dollar bills that were also gold certificates. (One pre-1934 dollar was good for 1/20 ounce of gold, or about 80 of today’s dollars.) That’s an even more impressive holding of value than the silver coins. (Though silver still stands to surpass gold as the winning bet for beating currency debasement.)

Even the lowly penny has gotten in on the act. Say you missed out on (illegally) hoarding gold before 1934…and then again (legally) with silver coins before 1964…if you’d diligently saved your copper pennies before they were replaced in circulation with that shabby zinc substitute, you’d have protected your purchasing power quite well.  The metal in about $1.25 worth of pre-1983 pennies would buy you a gallon of gas today, priced at about $4.75 of today’s dollars.

Again, roughly a $5 gallon of gas in today’s money is five or six cents of the old dollar gold certificate, twenty cents of the silver dimes, a buck twenty-five of the copper pennies. There appears to be a strong correlation between length of debasement and multiplication of purchasing power.

The dollar was partially debased in 1934, the gold it represented made illegal for private American ownership, then completely cut free from gold in 1971. Dimes, quarters and half dollars started being debased in 1963 and were completely de-silverized by the end of the year (40% silver-clad half dollars were available for a few years after that). The penny got the same treatment and was completely de-copperized during 1983.

The old gold certificate dollars are worth 80 times their face value in the current currency…Well, technically they are collector’s items and museum pieces; the gold they represented is what has value today. The old dimes, quarters and half dollars more than 25 times. The old penny only three times.

The same thing that happened to gold certificates, quarters, dimes and pennies is happening to the cupronickel nickel. The value metal in the five-cent piece is staying steadily above the face value of the currency in which it’s minted. Put another way, a five-cent piece is worth quite a bit more than five cents. About 35% more, or 1.35 times face value as of this writing.

We expect all these factors above in bold to increase over time.

A market for pre-1963 90% silver coins is well established. These coins trade for the aforementioned 25x-plus their metallic content. A market for trade has only just begun to develop for pennies like it has for old silver coins. It hasn’t yet for nickels. It will.

The government figuratively took the gold out of the paper dollar. They literallly took the silver out of the dime, quarter and half dollar, and the copper out of the penny. The nickel is the only thing the U.S. has left to debase. It will probably be getting around to doing just that very soon. So now would be a good time to stock up.

This is your last chance to protect yourself from dollar weakening (and perhaps dollar destruction) by merely saving your money in the right form. No premiums attached! Just go to the bank and exchange whatever dollars and cents you have for nickels. They will give you 100% of your money back in nickel form without taking a cut.

Go to any bank right now and hand them $100 and ask for nickels. The teller will gleefully give you back about $135 in metal (as of this writing). We suggest you do this as regularly as you can.

No, you can’t take advantage of that now by turning around and selling these cupronickel pieces (“nickels” are actually only 25% nickel and 75% copper) for an immediate 35% gain. Not yet. But that time is coming. It could take years, but we doubt it will be that long this time around. The pace of debasement is accelerating over time. It’s taking on the classic “hockey stick” form on the charts.

You should still be buying gold and silver because there is plenty of dollar debasing left to go. But you should also be gathering nickels because they are so damned easy to acquire (go to the bank and see) and because they insure against both dollar strengthening (which could still happen) and declining.

In the unlikely event that the dollar gets stronger over the course of the rest of your life, you have merely saved money that you can still use at face value. In the much more likely event that the central bank keeps printing up new money, the metal content of the nickels will continue to climb far above their face value.

When the metal value gets way above the face value, the Treasury will surely do what they always do: issue a new, debased version of the currency with a much cheaper metal (probably zinc). This could happen as early as next year. This opportunity will not last forever. We strongly urge you get on a program of regular nickel-gathering now.

Perhaps best of all, any substantial wealth is virtually theft-proof in nickel form. As I recently noted on the Whiskey Bar Panel: if you have $10,000 in nickels in your house, no one who breaks in is going to get more than about forty bucks of that. At least not without lots of time, help and planning.

Nickels have very low value per unit. So even a fairly tiny amount of purchasing power in nickel form is very heavy. Forty dollars worth is heavy and awkward enough to make the effort and risk to reward ratio low enough to deter most thieves.

Now if a devoted thief plans a competent heist…if he gathers accomplices and makes sure he has a reliable getaway car and plenty of loading time, then you’re probably out of luck. But I suspect that thieves with that level of skill and dedication would be targeting all the gold bugs, not the nickel-hoarders.

You should absolutely be buying gold, silver or both. Silver especially still looks like the best way to multiply purchasing power instead of just protecting it. But you should also hold some cash, just in case, and much of that cash really ought to be in a form that will do just fine whether the dollar goes up or down. It ought to be in nickels.

Regards,

Gary Gibson
Managing editor, Whiskey & Gunpowder

Gas Prices Don’t Move Much In Good Currencies was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

One of the Last Outposts

The premise of World Made by Hand, James Kunstler’s new book, is apocalyptic. For a variety of reasons related to Peak Oil and economic collapse, American civilization simply broke down. The wheels just fell off. The economy collapsed. Commerce broke down. The entire social construct of over 200 years vanished.

The small, 19th Century town of Union Grove, New York was a lost backwater during the buildout of modern American suburbia. But in post-Peak Oil America, Union Grove became one of the last remaining outposts of some small measure of stability. But what sort of stability?

In Kunstler’s vision, Union Grove is a futuristic, yet in many respects colonial, frontier society. But Union Grove is no Fort Apache. Indeed Union Grove is isolated, and that is its saving feature. It is so small that few bother to go there. Like Ireland during the Dark Ages, it is too remote and isolated for the barbarians to want to conquer. And that suits the locals just fine.

The contact between Union Grove and the outside world comes through the occasional traveler, or via water-borne commerce down the Hudson River with the city of Albany — or what’s left of it, which makes for a scary couple of chapters.

And what is left of civil society in Union Grove is a ragtag group of citizens who barter with each other over goods they’ve ransacked from the ruins and landfills of 20th Century America. People live in utter simplicity, farming as best they can and living off the land.

A New Form of Social Construct

But life in Union Grove is far from primitive. There are houses with fairly tight roofs. There are brick ovens and fresh-baked bread. There is a small-scale hydropower system that both channels running water and delivers a modicum of electricity. There’s a sawmill, and metal-forging operation. And there is a modest-scale farming, dairy and poultry operation staffed by a new sort of laboring class that resembles serfs of old.

Serfs? Kunstler offers a quick summary of social regression in a low-energy community:

“All the (Union Grove) trustees were men, no women and no plain laborers. As the world changed, we reverted to social divisions that we’d thought were obsolete. The egalitarian pretenses of the high-octane decades had dissolved and nobody even debated it anymore, including the women of our town. A plain majority of the townspeople were laborers now, whatever in life they had been before. Nobody called them peasants, but in effect that’s what they’d become. That’s just the way things were.”

Indeed, in previous days there were ample amounts of cheap energy. Cheap energy was, both literally and figuratively, a great force for social mobility, and political harmony. And over time the social-enabling process of cheap energy became second-nature. Using energy released by ancient deposits of coal and oil, the U.S. built much of its 20th Century social construct.

But in World Made by Hand, Kunstler asks us to reconsider the entire concept of our social arrangement in the vanishing light of a low-energy existence. There is no “Americans with Disabilities Act” in Union Grove. Indeed, most Americans with disabilities have died off.

The new world is hard, if not harsh. The old world of niceness has vanished. The society that has taken its place offers a living example that is reminiscent of the Old Testament.

The implications of this can shock the unprepared mind. But don’t blame Kunstler, who merely poses the questions and invites the reader to extrapolate the answers.

The Aesthetic Sense

Kunstler explores another key issue of post-Peak Oil modernity as well. Can people recover a sense of aesthetics in the low-energy world of the future? In Kunstler’s book, Union Grove is cut-off from its larger past, as both part of a great nation and as part of a mass-culture.

In the new world, Union Grove is not subject to any outside dictates of contemporary standards — whatever those may be. So any aesthetic sense now has to come from within. In other words the days of the mass-culture, of aesthetics being handed-down and blessed — if not jammed down one’s throat — by the likes of Oprah or Martha Stewart (let alone the architects on retainer with McDonalds or Midas Muffler) are over.

The simple lawn of Kunstler’s narrator Robert, for example, is a raised-bed garden. Yet it may as well have been designed by Palladio, if not the ancient Imhotep. “It was geometrical, a cruciform pattern, the beds transected on the diagonal as well, with brick paths carefully laid. With our many material privations, it was not possible to live without beauty anymore.”

The Personal Life — the Pursuit of Happiness

In Kunstler’s Union Grove, life is local. It has to be. And for this reason alone, people actually know how to party. They get together for local festivals, at which people eat real barbecue — something of a rarity and delicacy in a low-energy society.

Lacking the boom-boom tools of sound amplification, old-fashioned folk music emanates from simple instruments and sincere voices. People get drunk, smoke pot (cannabis plant grows wild) and make eyes at each other — all of which leads to some interesting hookups in a world where people are a diminishing and endangered species.

And in Union Grove there is even intellectual opportunity. There are books to read, although a limited selection of titles. In one short scene, for example (and Kunstler at his best in his use of micro-detail) the narrator ponders the meaning of Inside the Third Reich by Albert Speer, architect and Minister of Armaments under Adolph Hitler. Really. Kunstler chose to highlight Albert Speer, of all people. It’s brilliant.

Things Can Get Worse — and They Do

At the end of the world, though, things can still get worse. A fundamentalist sect rolls into Union Grove and begins to assert a creeping, if not creepy, sort of control. In one instance, the sect members confront townspeople on the street and force them to cut their shaggy beards. It’s sort of a post-Peak Oil version of the modern PETA activists hurling blood-balloons at people who wear fur coats.

Yet the religious sect offers an angle to Kunstler’s story that is nothing if not intriguing. Most of the sect members are decent folk with important mechanical skills. And some are warriors. That is, some former soldiers are tough-as-nails and well-worth having on your side in a fight. And Kunstler’s narrator Robert gets into a fight or two in this book.

On a higher plane, Kunstler has devised a scene that is just astonishing. It actually leaves the reader wondering if God has truly channeled divine powers through one sect-member in particular. You’ll have to read the book and make your own call on that one.

A Fall from a Great Height, if Not from Greatness

Let’s stop right here. Kunstler’s book was published in March, when oil was selling near $100 per barrel. Now a few months later oil is well over $145 per barrel.

What a difference four months and $45 dollars makes. High cost oil burners are already confronting disaster. Airlines are crashing financially, and we are on the way to “Silent Spring” by next year. Trucking is breaking down under the strain of $5 diesel, while American motorists are going broke with gasoline over $4 per gallon.

So since Kunstler’s book hit the shelves, we are further away from the past we know. And we will probably never go back. And we are much closer to a future that is yet unknown. Sad to say, we may arrive there sooner than we expect.

All of which is why World Made by Hand is an important book, as well as a pleasure to read. Kunstler’s book is thoughtful. And it will push you to the edge of your comfort zone. The book is harsh, without being nightmarish. It is cautionary, without being overly judgmental. And Kunstler’s book even offers glimmers of hope.

Kunstler’s writing style is careful, in a way that is reminiscent of fine work of F. Scott Fitzgerald. No, World Made by Hand is not exactly The Great Gatsby. But like Fitzgerald, Kunstler tells a summer tale and writes with grace, elegance and astonishing attention to detail.

Through it all, as with the protagonist Nick in Gatsby, Kunstler’s narrator Robert relates the story of a fall from a great height, if not from greatness. At one point in World Made by Hand, the narrator Robert recalls how he used to fly from coast to coast — Boston to Los Angeles — as a matter of routine, with his old job at the software company.

In the days of old Robert flew so high, and moved so far. But his paradise is lost. He has been cast down to where he now dwells, near the Zip Code for Pandemonium. Robert is challenged just to journey forty miles or so, down a failing road to Albany where people might kill him for his shoes.

How far has Robert traveled in his life? And how far has he been brought down? Now in Union Grove — and fortunately for him — Robert is surviving. He is a troubled man, living a post-apocalyptic life in a low energy world. His daily existence is filled with dark shadows of a lost past. And you finish the book wondering if you will one day be so lucky.

Until we meet again…
Byron W. King
July 14, 2008

P.S.: Kunstler’s fictional story is certainly enough to scare us. Imagining a world where Peak Oil has ravaged our current lifestyle is just the incentive we need to start coming up with a solution now. That’s where the oil vacuum comes in. This new invention is one of the best innovations of the past decade and could easily be a big part in the Peak Oil solution.

“World Made by Hand” Book Review was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.