The age of resource scarcity, which smart people have been warning us about for well over 30 years, has finally arrived. To confirm this casual observation, it should be sufficient to visit a gas station or to take a look at your utility bill and observe that prices have gone up somewhat. The term “somewhat” may sound facetious because a doubling in the price of energy over a period of just a few months is a bit of a shock for most people. But I chose this word carefully because what I want to explore is the definite possibility that coming up in the near future are order-of-magnitude leaps in price followed by market failure where essential commodities will become unavailable altogether for any amount of money.
This is not to say that the commodities in question will cease to exist. Nor will money cease to exist: there is likely to be more money sloshing around than ever. Nor is this to say that the commodities themselves will somehow be changed in form or function. What will be transformed out of all recognition is money itself. Instead of a universally recognized, infinitely fungible store of value and means of exchange, it will become a fractured and conflicted concept, cumbersome to use, risky to hold and increasingly useless.
To people who throughout their lives have been conditioned to treat money as the wherewithal and the measure of all things and to think that every last thing must have its price (determined by the invisible hand of the free market) this will be a most jarring, psychologically disruptive transition—a Götterdämmerung—twilight of the gods, or god, specifically the god Mammon. This is a romantic interpretation, and perhaps psychologically valid, but a more down-to-earth, technical view of it is that this is a new sort of inflation—one which I choose to give the name “structural hyperinflation.” It shares a lot of features with good old regular inflation which everyone should be getting used to by now, but it also has some additional features which make it potentially life-threatening—especially to liberal economists, investment bankers, traders, speculators, the rich, the poor and (not to leave anyone out) everybody in between.
The topic of structural hyperinflation deserves a book-length treatment—a weighty tome rivaling Karl Marx’s Das Kapital. I can’t provide one here, and so I will instead sketch out the rough outlines of this brave new world and provide some entertaining vignettes from current events to give you a better feel for it.
ClubOrlov 