Citizen Action Monitor

Representations of what we think we own, including money, are created from thin air – Nate Hagens (4)

What we really own is rooted in this one-time pulse of highly concentrated ores and energies.

No 2287 Posted by fw, June 2, 2018

To access links to all other posts in this series, click on the Tab titled “Where Are We Going? by Dr. Nate Hagens” in the top left margin. 

“Then we have the relationship of stocks versus abstractions. Money is created from thin air. Money comes into the banking system with no relationship to the underlying resources underpinning it. This has been true since the gold standard stopped in 1971. So, when money is created there’s no reference to how much oil or energy or land or these other things [material resources] that we have. … Our representations of what we think we own are created from thin air, where what we really own are tethered to this one-time pulse of these highly concentrated ores and energies.” Nate Hagens

In part 1 of this series, Dr. Hagens emphasized that things in our world are not black and white, they’re gray. Moreover, people take pro and con positions on things along a continuum.  In his talk, Hagens is going to “suggest 40 of these continuums that will have  bearing on our collective future.” He is presenting his 40 continuums in five categories: The Economy; Human Behavior; The Environment; Our Culture; and Individual.

In yesterday’ post, part 3, titled, Think about it — No natural resource energy stocks are renewable on human time scales  — the second continuum of the first of Hagens’ five categoriesThe Economy — Dr. Hagens explained the difference between energy stocks and flows, emphasizing that we are consuming geologic stocks like they are inexhaustible energy flows such as rivers, rain, sunlight, wind.

In today’s post, part 4, Hagens points out that what underpins modern economies is not money, but depletable fossil fuel energy stocks, among other mineral resources. Money is merely an abstraction of sorts created by commercial banks out of thin air. Moreover, our money supply and credit continue to increase with no reference at all to our one-time, geologically-based stock endowments. This is Hagens’ third continuum of his first category, The Economy.

For those who may wonder why I am presenting each of 40 short continuums in separate posts, my experience is that Dr. Hagens’ challenging content is best taken in small doses. As well, printed text is a way to slow down his rapid-fire, spoken delivery style.

There is a brief bio-sketch about Dr. Hagens at the bottom of this post, along with a link to his website.

Below is the embedded video of Hagens’ 60-minute address, followed by an 18-minute Q&A session. My transcript of Pt. 4 runs from 11:14 to 12:10 minutes. The transcript has been edited for enhanced clarity and readability.

Alternatively, a video of Hagens’ talk, along with a “loosely related” essay on the talk, are available by clicking on the following linked title. This version, published by Resilience, also includes excellent readers’ comments, including responses by Hagens.

NOTESelected parts of the Resilience.org essay are included in my transcripts, bracketed as [Resilience Supplement].

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Where are we going? by Nate Hagens, Resilience.org, May 8, 2018

TRANSCRIPT (from 11:14 to 12:10)

[THE ECONOMY]

11:14[Continuum 3: Stocks vs Abstractions] — Then we have the relationship of stocks versus abstractions. Money is created from thin air. Money comes into the banking system with no relationship to the underlying resources underpinning it. This has been true since the gold standard* stopped in 1971. So, when money is created there’s no reference to how much oil or energy or land or these other things [material resources] that we have. And yet money is created from paper, actually linen, and it takes very little energy and resources to create. [*gold standard – a monetary system in which the standard economic unit of account is based on a fixed quantity of gold].

stocks vs abstractions

11:52Our representations of what we think we own are created from thin air, where what we really own are tethered to this one-time pulse of these highly concentrated ores and energies.

*****

[Resilience.org Supplement] — Stocks vs Abstractions – Stocks (oil, copper, phosphorous) typically follow predictable (gaussian) curves that rise, peak and decline. The amount of these ‘stocks’ we access has generally been increasing for over a century but has now started to decline in many cases (oil quality, iron ore grade, copper overburden etc.).  But our supply of money and credit continues to increase with no reference to the area of the curve remaining for these one-time natural stock endowments.  (Globally it took over $4 of new debt to add $1 of additional GDP in 2017). We can print money, but we cannot print energy, only extract it faster with borrowed money.

*****

Dr. Nate Hagens

About Dr. Nathan John Hagens – Hagens, 51, worked on Wall Street at Lehman Brothers and Salomon Brothers for 10 years before closing his own hedge fund in 2003 to develop a systems synthesis approach to the human predicament. At present, Dr. Hagens is a professor at the University of Minnesota where he teaches a systems synthesis Honors seminar called Reality 101, A Survey of Human Predicament. The readings and lectures cover literature in systems ecology, energy and natural resources, thermodynamics, history, anthropology, human behavior, neuroscience, environmental science, sociology, economics, globalization/trade, and finance/debt with an overarching goal to give students a general understanding of how our human ecosystem functions as a whole.

Visit Nate Hagens’ personal website at The Monkey Trap.

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