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The Fallout From Humanity
June 16, 2010
Humanity has spent the better part of three centuries stripping, mining, extracting and converting the resources of the earth for its needs and desires. This mad dash for resources and fortune has, potentially, done irrevocable damage to the land, sea and air. There may be debate over the measurement of such impact. However, one would be hard-pressed to find a single scientist, environmentalist or journalist who would deny some consequence of mans actions.
It is with immense anxiety that today’s youngest human cohort looks onto what they will soon inherit. It is with trepidation and uncertainty that they march toward their inevitable rendezvous with the fallout from humanity. Although the environmental impact of such recklessness becomes more apparent with each passing day, what will be the economic consequences? How will world economies be fundamentally altered in the near future? Will the crises of today, like the ongoing savings and loan bailouts, stock market gyrations and ever-lasting tensions in the Mideast seem like trivialities?
An Inventory of Today’s Society
In order to begin to attempt sizing the scale of potential future economic catastrophe, one needs grounding in today’s economic realities. Today, the world economy operates on an immense and highly integrated global supply chain. Raw materials, consisting of food, energy, metals and minerals are extracted from one part of the world, transformed into an end-consumer product another part of the world and consumed in, yet, another area. The life-blood of this intertwined economy revolves around energy, primarily, derived from fossil fuels. Then, energy is employed in the extraction, conversion and transmutation of countless metals and minerals. These metals and minerals are then employed in the efficient production of food and potable water.
As humanity has become more and more efficient in this process, resource depletion has accelerated. Although there are nascent efforts to convert the global economy toward one supported by renewable resources, the fact remains that little headway has been made. Further exacerbating the situation has been the exponential explosion in worldwide population. According to Wikipedia (http://en.wikipedia.org/wiki/World_population), the population of the world has increased from 2 billion in 1927 to over 6 billion humans today. Worse yet, It is projected that the population will increase to over 10 billion in about 50 years.
Increasingly Exposed Global Supply Chain
When one combines dramatic and sustained population growth with an ever-stretching, global supply chain, risks to humanity increase correspondingly. As important, the less slack in the supply chain, the more susceptible humanity is to disruption to it.
A recent example of supply chain shock occurred with the explosion of the Eyjafjallajokull volcano in Iceland. The resulting ash cloud affected parts of European air travel for less than a couple of weeks. Even though, a portion of the earth was affected and only air travel (rail, truck and naval travel still operable), it created tremendous chaos, far from the impact zone.
Business people could not get to meetings. As a result, deals and other transactions were delayed. Certain materials could not get to their destinations, resulting in production delays in other parts of the world. Some foods and flowers could not get to Europe in time, resulting in sporadic shortages, shorter shelf lives and increased prices. According to the Guardian Newspaper, tourism and airlines were financially impacted. Could one imagine what would occur if a black swan event, like the Icelandic volcano occurred at a global level, or on a sustained basis at a regional level?
It is unfortunate. However, this is the situation that is being bequeathed to the next generation of humanity. The black swan event is not an F5 hurricane, 9.0 earthquakes, or stock market crash. The event is one which is clearly in front of us, if we choose to look. It is the non-renewable resource depletion.
Worldwide Resource Depletion a Reality
Many members of the media have provided volumes of coverage to peak oil. What few people may realize is that oil is just one of many resources, which are becoming increasingly scarce. Many of these resources are so intertwined within peoples’ lives that they take for granted their increasing scarcity.
An example would be silver. It is hard to believe that this precious metal would appear on any endangered resource list. It seems like it is everywhere: in jewelry, humidifiers, medical equipment, silverware, traditional film and much more. According to Investment U (http://www.investmentu.com/investment-research/play-the-silver-shortage.html), the total stock of above-ground silver has plummeted to an estimated 200 million ounces. They went on to contrast this amount with the 2 billion ounces that only the United States had in 1950. Further data from the Silver Institute (http://www.silverinstitute.org/supply_demand.php) corroborates this claim. The Silver Institute reports that net silver supplied dropped by an astounding 86% in 2009. One of the reasons was a reduction in available scrap silver supply.
A common myth regarding silver is its permanence. Although it is one of the periodic elements and cannot be broken down into more base materials, it can be combined with other elements to form compounds. It is within these compounds that silver gets trapped and rendered unusable. Many industrial applications use silver in minute quantities. These tiny quantities of silver get “trapped” within these industrial applications, resulting in their loss from the marketplace. Although it is technically possible to separate silver from the other materials within these compounds, the cost is outlandishly high (think hundreds to thousands of dollars per ounce). The net result is a steadily decreasing supply of useable above-ground silver. As described earlier, silver demand is no longer being met by primary production. The gap gets filled through recycling of scrap silver. Unfortunately, the availability of scrap, at current price points, is rapidly disappearing.
It would not be unreasonable to assume a continuation of this trend, punctuated by a fall-off in primary production. What happens if silver stocks disappeared? The natural tendency of economies is to increase the price, while simultaneously introducing substitutions. In the short-run, the increase in prices would reduce industrial demand. However, silver is also viewed as a precious metal and currency alternative. Although an increase in price would lead to a reduction in industrial demand, it would lead to a corresponding increase in investment demand. It is unclear how much the increase in investment demand would offset the reduction in industrial demand. However, there would be a hugely tangible impact, continuing a spiral of rapidly increasing prices.
Resource Depletion Impacts Humanity
Because silver is a primary element, it also has certain qualities which are unique to it. An example would be silver’s antimicrobial properties. One would be hard-pressed to find another element that performed in an equally superior manner. These unique qualities make substitution more difficult. In some applications, it would not be possible at all. The grim possibility, for humanity, is the prospect of elimination, of certain products, from society.
All products are created with the purpose of generating utility or usefulness to society. The benefits may be tangible or intangible. The utility may be small, like a toy action figure. It may also be extraordinarily high, like a solar panel. Regardless of the silver product, its loss will take utility away from society. Imagine a world without antimicrobial bandages or telescopic mirrors or solar panels. Each product has an impact on humanity. When something as fundamental as a periodic element grows scarce, the repercussions on society become acute, painful and potentially permanent.
Cascading Effect Closer to Reality
If enough of these fundamental resources collectively enter the declining phase of their production curve simultaneously, the impact on humanity can be catastrophic. Unfortunately, silver is not the only critical resource that is quickly growing more scarce. Below is a list of key resources, which are expected to reach critical depletion levels in less than 50 years.
Resource Years until Resource Exhaustion
Indium 13
Silver 29
Antimony 30
Tin 40
Oil 41
Lead 42
Gold 45
Zinc 46
Source (http://makewealthhistory.org/2010/01/12/peak-everything-global-resource-depletion-rates/)
As is easily apparent, resource depletion is fast becoming a worldwide reality. The generation being born today will enter a world of increasing development constraints. They will arrive at the dawn of the downfall of humanity. The actions that are taken by today’s leaders and world citizens will determine whether humanity enters into terminal decline or evolves to a more harmonious state of being.
This is the fundamental issue that all world leaders should confront and, jointly, solve. Undoubtedly, history’s chroniclers will describe this time as the crucial inflection point for humanity. It remains to be seen whether they celebrate us as pioneering evolutionists or castigate us as the destroyers of humanity. Will the right choices be made? The clock is ticking. | 
