video on demand teasing line calls and says feeds now in the palm of your. question on the dot com. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and we've seen the euro hit an eleven month low after a selloff as euro officials warn their crisis solution may be tougher to commit to than thought now the u.s. meanwhile says it will stop producing one dollar presidential points they're going to try and save the money there says it just has a bunch sitting around as it is reportedly but how is money really created or destroyed we'll talk about that and look at if this system is really sustainable meanwhile opec may have a new deal on oil production and the u.s.

may be auctioning the first offshore oil leases since deep horizon spill in the gulf of mexico while kioto may have a new protocol and leaders may be trying to work on solutions to debt and unemployment crises but the big picture are energy the economy and the environment all coming to a point where inevitably something's gotta give growth or prosperity meanwhile in the u.s. the house approved a bill to extend payroll tax cuts that the senate is sure to reject and the president would be expected to veto is this yet another case of nothing gets done in washington same story different day with this lack of political will for long term solutions to the country's problems let alone the short term ones is prosperity possible but politicians are just standing in the way remains to be seen what time's person of the year can do about it take a look at the protester so for now let's get to today's capital account.

what can i say we live in a world where the news cycle looks day to day minute to minute twenty four hours a day looking at today after europe came to an agreement to try to calm everybody down about its debt crisis that happened on friday now several you leaders now that they've gotten home are warning hey it may not be so easy to push these packs through their parliaments now that they're home germany's angela merkel is reportedly facing political turbulence for one threatening her efforts for follow through on the deal you see her there earlier she spoke to parliament in germany

meanwhile it's growing fears that the eurozone crisis will tip europe into recession and slice into global oil demand that opec agreed to maintain its output levels amidst what i just mentioned now opec of course is the organization of petroleum exporting countries and it's responsible for about a third of the world's oil production so that's today but when you step back when you take a look at the big picture frankly are we all screwed i'm sure many of our viewers have watched chris martin since crash course but i did last night and if i wasn't convinced before now and has me i don't know saving up for farmland and thinking about how to purify my own water here's a little snippet if you don't know what i'm talking about as he takes a look at the point we've reached and oil money population species extinction fisheries depletion and forest loss. here is the world you live in it seems like the pace of change is speeding up well that's because it is you have the pace of

change for all of those now he's a ph d. an m.b.a. an economic researcher and futurist specializing in energy and resource depletion he forecasts the housing market among things he had the collapse excuse me years in advance of the crisis he's chris martenson he's also author of this book the crash course the unsustainable future of our economy and our g. and environment and he's here now to answer what can be done about all of this and what we need to be really worried about thank you so much for being on the show first of all welcome to capital account thank you arne pleasure to be here right now on this show we talk a lot about debt and how it's weighing on economic growth and economic recovery and economies in the west i know you talk about debt so what role do you see it as having in our economic problems it's everything if we just look at the economy alone just that one of the i can summarize the entire crisis in just three words too much and that's been my prognosis and diagnosis since probably about two

thousand and eight is when i first concluded that this was an unsustainable level of debt and whether we slide it from the public side of the balance sheet to the private back and forth it doesn't matter there is just too much debt to be sustained under our old economic model which by the way the assurance of growth behind it and so even even without looking at the other two e.'s which you mentioned before the energy environment side of this i think that we have unsustainable levels of debt we were growing debt it far six percent and we were growing nominal g.d.p. at a slower rate that's like a family you know racking up their credit card faster than their incomes are rising sooner or later that ends at will and we'll get to what where you see this ending but i'm curious because one of the reasons that it's allowed for this growth and debt some would argue is that money is not tied to anything real even if the money system i'm curious if that's what this all get. two is our money system unsustainable it absolutely is if you have a money system that's untethered to anything and your money system itself requires

growth in order to function so all of those the litany of things that you started this program with talking about all of the things that are of a new cycle right now a lot of those can be tied to the idea that our money system itself is on stable it's actually stable if it's growing growing infinitely growing exponentially forever it can't do that that's the world we live in that's the change that's a foot right now well so then here's the question i have for you because we've seen for the united states despite the concerns you're talking about with this staggering u.s. debt which we've seen the u.s. downgraded as a result of at night on top of that we have all of the economic problems in the united states despite all of that that you see people still going to the u.s. dollar as a safe haven you still see the united states having extremely low borrowing costs now you talk about the exponential nature of this debt so i'm curious have you see this as kind of a calm before the storm that lulls us to sleep before we see some kind of a currency crisis well i think what we're seeing as i call it by the name outside

in from the outside in is what we always see in these crises where you see the weaker member states the with your members of the population those are the ones that get way first and the right sort of progress is towards the center and that's what we're really seeing you know in the e.u. is a perfect example of this a perfect petri dish it started with well ireland and greece from the no seeing portugal and spain italy and it's progressing towards the center and it's actually now dragging down involving french banks german banks and the whole system over there and that of course i think is just another symptom of course people are now in large money managers are migrating to where there is still some stability in the core that's the united states but if you look at the united states fiscal predicament it's exactly the same situation as you see elsewhere it's a losing of stability right now the illusion of stability so dr martin said what is going to be the breaking point and what do you see as replacing. currencies well listen the we have we have too many outstanding debts denominated and incur and see there's only two ways to make that go away one is you default on it and the second

is you pay it back if we agree it can't be paid back under current terms we can default on it but there's two ways to default one is you actually just default on it everybody understands that process you don't pay it back the second is you inflate it away to soft form of default and that is really the direction that i think is most likely history says that's the most likely direction to go but after this we've got a wide open to the idea of the deflation may well sort of rip through the system and do what it's going to do which by the way would probably not be very pleasant so really quickly i want to i want to expand on what you just said why are you convinced after this week that deflation is the path we're on well so the only every analysis i've come across in my own number crunching suggests that europe really needs to print pretty big they're going to have to print somewhere in the vicinity of two maybe three trillion euros in order to solve all of the bad debts that are out there and do what the federal reserve did i think the federal reserve has to go further as well the one point two five trillion dollars of mortgage

backed securities good start it's not nearly enough to take all the bad debts off the books so if we want to have one more cycle on this be our currency system if we want to have it have one more iraq we're going to have to stop all that bad debt it can't be taken on by the private markets at current rates it's going to have to be eaten by central banks that's really the only course of action so so i don't think europe is anywhere close to solve that this point that's interesting you're critical of the current things but yes they have more honestly got to go out with a bang before that's all hits the fan really quickly you say we live in a time where you can't separate what we're talking about which is the economy from the environment and from energy so what do you think is the relationship between these three either and why are they selling or trying to this point well this is where the story really gets fascinating and we live in some of the most interesting times i mean this is a generation the people who are alive today are going to see something that nobody's ever had to deal with before in our entire species. history which is the idea that we're going to have slightly less and less energy on a going forward basis maybe it starts this year maybe it's ten years from now but

historically speaking it's right now and energy is the master resource let's not confuse it look at oil and it's in there were grains and saw all these other things no no oil is the master resource if you don't have oil you don't have any of the other commodities if you don't have those commodities you can't convert them into secondary things and if you can't do that you don't have anything to build your derivatives or your stocks your bonds they have no value so this primary source of well energy itself that is something that there's a tremendous story out there around peak oil which is a lot of people equate with the idea of it being around the mount or the flow rates of the oil that's coming out of the ground that's true part of the story big part of the story as well is the quality of the oil that we're getting how much energy are we getting back out of it and and so i've just seen just an extraordinary story unfolding and in this country the united states unfortunately we still have a lot of mystical thinking going on we've got some really poor analysis going on it gets floated in some of the biggest newspapers out there you know op ed pieces

articles that are still confusing the story enormously but if we back up and ask the question what would we expect the world to look like at a hundred dollar a barrel oil i would submit to you that exactly what we're seeing is what we're getting we are seeing monetary policy that doesn't have traction stimulus efforts that don't seem to have traction we're seeing unemployment rising food stamp use rise all of these things are things that actually i wrote about a few years ago and said this is the world i would predict to see once oil becomes very expensive. so your prediction you're seeing play out i want to get to more of about get more into energy and oil if you could just hang tight for one minute i just want to explain something to our viewers really quickly we'll get right back with you that's dr martens then he is author of the crash course.

all right it's time now for word of the day where we break down a financial term or concept for our very smart viewer but just perhaps not the financial expert and given what we're talking about with chris martenson fittingly word of the day is exponential function i want to break that down for you and if you follow the work of albert bartlett or one of the more than the really million people who have watched his lecture on you tube even though its description says it's perhaps the most boring video you'll ever see well definitely the most important then you know bartlett has famously said not getting this concept is one of the greatest challenges we face as humans take a listen. i'm i hope the blues i hope to be able to convince you that the greater shortcoming of the human race is our inability to understand the exponential function so what is it let's take a look at the definition the exponential function is used to model

a relationship in which a constant change in the independent variable gives the same proportional change that is percentage increase or decrease in the dependent variable ok so now maybe you can see why understanding this concept is a challenge to the human race ok we can make it pretty simple though if we look at a couple of examples so let's look at credit market debt and you can see year how it is grown exponentially over the past forty years it's what i was just talking about with dr martin and remember what happened in one nine hundred seventy one when you see it rise right there that's when the you lost us went off and woods and the last run of a gold standard and you see that exponential growth now let's take a look at oil depletion this graph behind me shows how as we use more and more of a depleting resource like oil it takes more and more energy to extract the same amount of that resource from the earth it deplete exponentially and because it's

depleting that's why you're seeing the graph going down that's the exponential going down now what's important to understand is when something grows or depletes exponentially things don't really start to heat up until the last few moments so in the case of something like population growth the earth may not feel overpopulated for the first ten thousand years but then in a span of fifty years suddenly it becomes and habitable so when you live in a world that exhibits exponential characteristics like oil depletion which we explain you can't view things from a day to day perspective you have to look at the totality of this system to understand it and that explains why the exponential function is so important. now stick around still ahead here on capital a count with stagnant unemployment and trillions of dollars and debt the u.s. certainly isn't the model country when it comes to economics so why then are some countries looking at it as just that the birds are posing market numbers.

into that only a military making it seems to do the work to bring justice or accountability. i have every right to know what my government should do if you want to know why i pay taxes. but i would characterize obama as a charismatic version of american exceptionalism.

welcome back so as i mentioned earlier opec has come to a deal on oil production and we also see that the u.s. government has begun leasing in the gulf of mexico again for oil production we've seen for oil drilling this is the first time after the deep water horizon oil spill in that gulf now this issue of energy extends a lot further than just this news it is the largest issue one of them that is facing us today and i want to bring chris martenson back into the conversation to

talk about this he's author of crash course and before the break we were talking about how energy is intertwined with both environments as well as the economy you cannot separate them and why and why this issue of energy is so important and i actually want to bring our producer dimitri kofi anna into the conversation because he had a question about just that for you dr martin there so the the expense of function we talk about the resource depletion and specifically oil and natural gas markets are very good at getting goods and resources through the price mechanism but when it comes to the pollution that occurs so quickly and not steadily can markets adjust and can they find an alternative fuel source or is there a place for government or some sort of collective solution that plans ahead looking at the larger picture in your view. dimitris a great question i have concerns about what the market can or can't do if you think about july of two thousand and eight the market said oil was one hundred forty seven dollars a barrel and but a year later it said it was thirty eight dollars

a barrel and maybe neither of those numbers were exactly true one of the things that markets are not very good at is allocating capital across decades and markets have never had to deal with the prospect of depletion that we're facing right now so i think markets are critically good at lining up buyers and sellers as things currently stand so supply and demand get balance but what about the longer view this is something that i think requires a longer view and whether that longer view comes from private individuals or from corporations themselves or from countries out of the government level or maybe even at the global level this is something that i think is well beyond our normal market mechanisms to deal with and here is why a market in every energy transition we've gone from wood to cold cold oil so on those all took forty to fifty years if we're in peak oil right now and we said sake of argument we want to transition from oil to natural gas that would take forty to fifty years if we wait for normal market forces to get going on that we do not have that long we might have ten years we might have five years we have

a fraction of what the market would normally now if they i think that calls for some other kind of solution so then speaking about that kind of solution and speaking about the role of government how do you have governments for a comprehensive solutions to the three a's because it seems that there are examples where they choose one at the expense of another and to give an example we just saw canada pull out of the kioto treaty and one of the things that's happened for them as that they've seen emissions increase far above the levels in one thousand nine hundred seventeen percent above them because tar sands development so you could argue that canada here is choosing tar sands which is energy and also ties in with the economy of course at the expense of environment so how dealing with realities can governments come up with some kind of a comprehensive plan that doesn't exclude one of these important factors in. the first thing is we have to get the story right i believe that we have to have all three e's the economy energy and environment in one spot as you've said because we squeeze on the balloon as we squeeze on energy maybe the environment balloon pops

out and and as we squeeze on that you know the economy suffers and so we have to look at all three together we really have to understand the nature of the predicament that we're facing it's an extraordinary challenge it's going to not going to be solved with policy tweaks or or some slight you know fuel tax increase or anything like that we need extraordinary substantial changes in our story here's a very quick example we currently burn a lot of hydrocarbons to heat water right by that we have electric water heaters or gas water heaters or oil water heaters but we're burning coal or natural gas or oil in those three examples we don't have to do that some countries have figured out the sun does this extraordinary job of heating hotter does it perfectly well and we could do that in this country that would allow us to prevent the use of burning of hydrocarbons for doing something as simple as heating water preserving those hydrocarbons for other uses and the most important thing that gets us is time and he gives us time to figure out how we're going to transition ourselves into whatever this new future is and that's the thing that i've mostly been arguing

about is we have to get the story right ok dr martin sen i don't know how closely you follow washington but washington can't get anything done it doesn't same they can't get there i agree on how to tie their shoes it doesn't seem they certainly can't come to agreements on short term solutions it really does the theme that there is any political will for them to look at any kind of long term solutions so in reality do you think we'll think any solutions like you're talking about are this kind of comprehensive approach you know if you go to my web site you'll find that i exclusively dedicate my time to helping corporations individuals communities figure out how to respond to what i think are an inevitable set of possibly very disruptive changes coming because i share that view that the odds of washington d.c. coming to some sort of a comprehensive understanding and then to a reasonable. set of intelligent responses to that seems small enough to me that we can all hope that happens but hope alone is going to be a terrible strategy in the story so then if you could pinpoint one place where you think that this this incentive and ability for change is going to come from where

do you see it at this point you know well it has to come from something like occupy wall street it comes from a groundswell of individuals saying listen we've looked at the future we don't like we're headed the status quo is no longer good enough every single challenge the status quo whether it was the environmental movement civil rights movement labor rights women's rights whatever you happen to care about all of those came from the outside in kicking and screaming washington didn't dream up a single one of those we fought them all tooth and nail so this is just another story where i think it's up to people who say well here's the direction we choose to go and if enough of those do that washington will follow that's how that helps their model and i have to ask dr martin said in the meantime what are you doing to prepare because some of the things that you're talking about are pretty bleak i mean they have me a little terrified and i talk about kind of doom and gloom stuff every day. well thank you i guess so. well what i talk about is that the idea here is that we each need to consider the idea first of all that the future could be very different from

the past and once we really embody that i try and get people to think about how we can become more resilient in our lives and so this process actually scary at first can actually be actually an incredibly good process i consider myself quite fortunate i love the life from leading right now a very high quality of life and i use a lot less stuff and i'm a lot less dependent on critical systems simple example energy i can keep my house three different ways and i need less energy than i used to that's an example i think of what not only makes perfect economic sense but it makes environmental sense and it makes energy sense there are steps people can take that are actually sensible across every dimension but what you have to be willing to do is something slightly different than maybe your neighbors are doing yeah make some sacrifices be different i'm out of time but really quickly i'm just curious if you see a place for solutions that could have major upside but that haven't been fully developed something like nuclear fusion that people see as maybe i having infinite possibilities or whether you see already established forms of alternative energy as the solution well no alternative energies are not going to be

a magic bullet in this case i don't believe because this will be the first time if we go from oil to alternative energy we're going to be going from a more concentrated to a less concentrated form of energy we've never done that it takes a lot more capital a lot more planning a lot more sharing so that's that's going to be i think there's an incredible story of growth there purpose incredible jobs we will make the transition do we do it elegantly or somewhat clumsily as time ticks away the chips are falling on the clumsy side of the table and just one moment that nuclear fusion well you know i again i have some hopes but we are very far away from actual implementation on that particular technology they've they're you know they're just skirting with unity breaking out that magic but one unit of energy and get one back out that would be nice but again that gives us electricity we are facing a liquid fuels. all right dr martens i really appreciate you being on the show thank you so much that was chris martenson author of the crash course thank you posts.

all right before we go we had to bring you this story and i want to bring our producer dimitri coffee innocent as well as shanna dano in the control room who has been multitasking like no other in this episode we have to thank her so much but we got to talk about this ok nuria we're being we have had on this show in the sense that we've had his tweets on this show because he has a rather aggressive twitter at times and he took to twitter to question gold's recent price action and he asked whether gold may reach two thousand dollars an ounce he tweeted gold at seven weeks low down to sixteen thirty five where is two thousand deer gold bugs and you may remember

a beanies delts of gold stemming way back to two thousand and nine take a look at this is gold here have real legs is fifteen hundred possible things like that no it's not possible. so he said no it's not possible so dimitri why is he so aggressive on this he's so arrogant and dismissive of people who believe that gold dare to believe the gold is not in a bubble so i guess the rest of us have been buying gold six hundred six i've been buying says six hundred i haven't bought any since one thousand i've been waiting for a correction corrections are good they happen in bull markets they shake out the scared investors the people who are in for the long term but what are the rest were supposed to panic and run run because no because of a seven week low oh my god i mean no real doesn't understand he doesn't get it you never get he never got it you don't think it's gotten to the flesh in the housing bubble good for him but you know i'm sorry he doesn't trade he doesn't trade because he's scared isn't always doing well full disclosure never knows you ogle own gold dimitry that's right and i'm proud to say i don't go and brother sale and

these corrections are healthy they're good i wanted to i want to see a drop that's good because you want to see price drop so that you can buy why would i want to buy high levels i want to go down because i think it's in a bull market it's not a bubble it's absurd you know whatever well and a lot of the people that we interview or some of them someone like them roger if he's gold going to two thousand and ten year if he thinks more short term it's due for a major correction because or how long it's been going up and it's been on the right sure and i can promise that jim rogers and mark father both believe that gold is going to well above two thousand just knows the buyers talking about make big predictions but i'm sure both of them think it will go away above that but yes corrections are good in one thousand seven hundred got cut in half during his balrog so that's completely normal quickly shannon is near our being a bully. i'm not sure if he's a bully maybe on twitter yes all i can say is that man is obsessed with twitter and he's obsessed. he's not the only one all right let's not get personal here are

right we're fair to everyone out there for our show thanks so much for tuning in free to follow me on twitter at lauren lyster until we give you a fresh show tomorrow from everyone here at capital account have a great night and you can go to our youtube channel youtube dot com slash capital account to talk to us in the meantime. publisher is the same of jargon just for you go to another one of the old words to the pretty lady agencies all powerful financial bullies for profit or necessary evil is watching governments and companies i mean grossly stumbled. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harpur welcome to the big picture.

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