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World made by hand

Wednesday, September 03, 2008

Over the last two weeks, amongst other reading material, I had the pleasure of reading "World Made By Hand" by James Howard Kunstler, also the author of "The Long Emergency", one of the many very good books about Peak Oil.

Mr. Kunstler's latest effort is a fascinating tale set in a "post-oil" world of the next decade or so which, more than anything else, resembles a 19th century world where only memories and scrap from the 20th century remain.

The book now moves on to three others who have asked for it after briefly discussing its contents. In all three cases, their reaction was the same as my own, something along the lines of, "All things considered, maybe the 19th century was better than the 20th century, particularly in light of how the 21st is shaping up so far".

It really makes you think about things you do every day in a historical context and that maybe, in the broad sweep of time, it's a good thing that the era of cheap energy may soon be over.

The detailed accounts of a how a New York community reverts back to a simpler way of life are engrossing and, while the last hundred pages will not allow you to stop until you've seen it through to the end, they contain some rather shocking developments that, presumably, were a reminder of just how harsh life could be more than a hundred years ago.

But, not surprisingly, the parts of the story that really grabbed my attention when the subject turned to money. When discussing the $5 million purchase of an old high school to house a new group settling in the community, there was this exchange.

"And what the hell is that five million going to be worth in ten years?" Ned Larmon said. "Why five thousand bucks'll barely buy a wagon wheel now."

"Fiat currency: that's what did us in," Fod Sauer said.

"I don't believe there's going to be any U.S. dollar in ten years, way things are going," Jason LaBountie said. "I do almost all barter these days, myself. Unless someone has hard silver."
In this new world, both U.S. dollars and silver serve as money with the relationship between the two being far different than it is today.
"Now, how do you boys propose to pay for your rooms and meals? Paper dollars or real money?"

"Silver coin good enough?" Joseph said.

"We take that here. Two bits each, bed and a meal. One dollar for the horses. Drinks are extra, of course."

Joseph took out a leather drawstring purse and dropped a handful of old quarters and half-dollars on the wooden bar, where they rang musically. Slavin looked impressed. Whatever the other failures of the U.S. government were, it had managed to print an excess of dollars which, combined with the collapse of trade and communication, had severely eroded the currency's value. People always liked silver better, if it was offered. Gold, on the other hand was rarely seen. People tended to hoard it.
Based on the aforementioned $5,000 wagon wheel and room and board at two bits per person (one pre-1965, 90 percent silver quarter each), I'd peg the price of silver substantially higher than it is today.

Anyone wanting to do the calculation, please leave a comment.

This is highly recommended reading and my only regret is that I couldn't get to it sooner.

And, by the way, for those of you who don't already know, Jim Kunstler writes a nice little blog titled, "Clusterfuck Nation".

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MW said...

I believe there was one instance in the book where a character opts for an ounce of gold instead of a half million dollars. Much higher indeed!

Tim said...

I forgot to mention that part. What was funny about that was offering one ounce of gold was just a ruse to get everyone off guard so they could start shooting and, after the bullets stopped flying, they were quick to pick up the gold coin from Currey's still-warm hands.

"What about gold instead of U.S. paper dollars?" Joseph said.
Currey's eyes widened perceptibly.
"What do you propose?" Currey said, obviously relishing the idea.
"Would an ounce satisfy these charges?"
"In lieu of half a million in U.S. scrip?"
"That's right."

The bullets started flying shortly thereafter.

Anonymous said...

Not sure what to make of the recent shortages in retail metal so I bought a big bag of old quarters just in case. Some of the coins had to have been around since the 19th century. The date markings are completely worn off.

Anonymous said...

Kunstler's a hoot!

Son of Brock Landers said...

About 6 months ago you ran a nice set of charts showing CPI using case shiller instead of OER. I think they were courtesy of macromarkets. Could you give an update to that cpi OER substitute number? said...

Kunstler appeared on this past weekend's Financial Sense Newshour broadcast. I was pretty impressed by what he had to say...

Russ said...

Kunstler is defying Gresham's Law with this stuff.

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