Americans have always been an optimistic people. That natural trait has helped them to overcome past catastrophes, like the Great Depression of the 1930’s, and to prosper as a nation. Partially as a result of good fortune in the form of having access to cheap natural resources and partially by hard work and smart business practices Americans have been successful as a prosperous nation and have come to believe in their exceptionalism.

As a result of past successes most Americans, certainly their leading politicians, believe that they are somehow better than other peoples of the world and are entitled to a lion’s share of world resources and prosperity. The converging catastrophes of the 21st century are about to put their belief in American exceptionalism to the test.

It is unreasonable to think that you can conduct your own business along the lines of a third world banana republic and after some period of time not take on the characteristics of a banana republic. Yet, by being reckless in managing its economy and by becoming the largest debtor nation in the world the United States is well on the road to third world nation status. In some of its former premier manufacturing cities, like Detroit, Michigan and Cleveland, Ohio, third world conditions have already arrived.

Now the convergence of several catastrophes early in the 21st century may set the US and other industrialized nations back a hundred years or more. It is a dangerous time for America. Most Americans have no idea as to how life will change over the next ten years or so and are totally unprepared to revert to a pre-industrial age, one in which even electricity is rationed or non existent. I doubt if Americans will accept such a change in living standards gracefully. The early 21st century will be a time of social upheaval and the failure of governments, possibly even the US government. It will not be a pretty time in which to live in the United States.

The converging catastrophes will be as follows:

1.) Financial System Meltdown:

An almost total breakdown of the financial system will occur. This process is already underway as the black hole of a compressive deflationary deleveraging of trillions of dollars of debt accelerates. As the process is geometric the destruction of capital will far outpace the government’s efforts to re-inflate the economy. Bailout after bailout will cause the treasury to print money it really doesn’t have. Initially the flood of “new money”, or what the treasury hopes will pass for money, will have little effect. The deflation will continue.

However, once the forced liquidation of debt and the liquidation and resultant destruction of the value of assets, such as houses, commercial real estate, stocks, art works, collectibles, commodities of all sorts including oil, and even gold, has run its course, the trillions of dollars in fiat money thrown at the deflationary problem will have unintended consequences.

Probably the economy will rapidly move from deflation to hyper inflation as people realize the world over that the flood of trillions and trillions of new dollars has no real value and only postponed the death of large inefficient poorly managed companies. Who can believe that an effective nationalization of our financial system and what’s left of our manufacturing base will in the long run be good for the American economy?

The whipsaw effect of a deflationary economy moving to hyperinflation will be a catastrophe of the first order. People holding only US dollars as assets will be wiped out in a hyperinflationary environment as the paper becomes nearly worthless.

2.) Climate change:

Climate change will continue to take place and will likely not be properly addressed as the financial meltdown will consume most of the US and other government’s attention. The evidence of profound climate change underway is already quite evident, however, many people world wide remain in denial. Probably, it is already too late to reverse climate change. Rather than discuss what is causing it and who should be blamed we badly need to be working out how we, the people of earth, will deal with climate change and develop plans for survival.

In time, as clean drinking water and water for agriculture purposes reach critically low levels, governments will devote more attention to the matter. Then as sea levels rise enough to endanger major cities, like Washington, D.C. and New York City, some sort of action will probably be taken. But for billions of people around the world it will probably be too late. Billions will perish as temperatures, disease, starvation, and resource wars take their toll.

3.) Peak Oil:

The International Energy Agency released a report on the world’s oil fields that contains some shocking numbers about the supply and demand for oil over the near term future. Rather than repeat the full report here review the article “World Oil Fields in Death Spiral”.

The conclusion to the report is that one should not be fooled by the current severe decline in oil prices from the recent high of $147 a barrel. The fall in oil prices is largely a result of the explosive deflationary forced liquidation of all asset classes (margin calls and the desperate need to raise cash) as a result of the financial meltdown. Once that process is completed supply and demand forces will quickly take over and oil prices will explosively move to new highs and far beyond.

The age of cheap oil and cheap energy is over and the prospect of life going on as before, in the golden age of the automobile and petrol intensive agriculture, is non existent. Alternative energy resources will be of some help but will not be nearly sufficient to replace the use of oil. The result will be a downsizing and reorganization of life for Americans and most people of industrial nations in a way that we are not prepared for. To get a feel for what life may be like in the near future review The Daily Grunt at James Howard Kunstler’s website. Warning: It is interesting but disturbing reading.

There are probably additional converging catastrophes of the 21st century that you can think of. However, I will stop at the three listed above. Those three will likely be more than we can handle. In fact we will probably not be able to handle even one out of three, and any one of them left unresolved could do most of us in. It seems like our dramatic advances in technology will ironically force the survivors of these catastrophes to adapt to living a rustic far more simple life, much like our ancestors of a hundred years ago, as the energy to power these technologies becomes non existent or horribly expensive and the technologies fail.

Returning to a far more simple life will probably not be all a bad thing as people will be forced to look after one another and all pull together if they are to survive. A sense of community will develop that will put to shame the me first living habits of people today. No doubt life in the near 21st century will be far from what most people expect. Let’s hope we can successfully adapt to it rather than become a 21st century version of the dinosaur.

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