Reading the newspaper these days often feels like an onslaught of one crisis after another—storms causing severe flooding, droughts ruining crops and driving up food prices, wildfires destroying thousands of homes. In the midst of these immediate and dramatic stories, the global financial crisis of 2008 can feel like old news. But a new video animation by Doing It Ourselves illustrates why the financial crisis—and the flawed system it’s rooted in—should still be major concerns for all of us today.
The video, “What the Economic Crisis Really Means – and what we can do about it,” begins by explaining the roots of the economic crisis in our fractional reserve banking system. By this system, banks are able to lend out almost all of the money we deposit in them to other people and businesses. As the video explains, “when you put $100 in one bank, they lend $90 of it to someone else, who then puts that $90 in their bank. Now there’s $190 where there used to be $100. That $90 lent out will also be deposited and $81 lent again.” Because of this lending system, over 99% of the “money” in our economy has been created as debt and exists only as numbers in the digital world.
The fractional reserve system works fine, fueling increasing amounts of money and economic growth…but only if the economy keeps growing. Without continual growth, we can’t keep paying back debts on all that borrowed money, and that’s where we’ve run into problems. As we all know, Earth is finite, and so are its resources. A growing global economy fueled by cheap oil can’t go on forever.
According to Doing It Ourselves, the total debt owed to banks and investors across the globe is already about 150 trillion dollars—money we simply don’t have. As they say, “this is the world, we’re not about to get bailed out by aliens.”
So, assuming they’re right and no aliens will come to save us, what’s next? Doing It Ourselves admits that major economic downturns in the past “have not been happy times,” and it’s likely that this one will be the biggest yet due to our resource struggles. But they also note that humans are an incredibly ingenious species, and we’ve been developing ways to live without an industrial economy for decades now. We know about better ways to farm, better ways to conserve energy, better ways to design currencies and build communities and manufacture goods. We’re not guaranteed a peaceful and successful transition away from our current economic system, but we might just be able to have one if we take steps now to get there.
Watch the video to take the first step, share it with your friends to take the second, and we’ll work from there.
Doing It Ourselves aims to broaden understanding of the debt crisis and peak resources and encourage action for the sake of personal preparedness, happiness, and ethical living. To learn more about the organization, visit www.doingitourselves.org.