04 - THE FOUR MAJOR THREATS

THE FOUR MAJOR THREATS

Introduction

Our industrialied civilisation is full of social systems and complex machines that are both a blessing and a curse to humanity:

Our health care and public pension system is a great invention to distribute wealth and services among people of need and over time, but because we have taken it for granted for the last 70 years, no one realises that it is completely broken due to demographics and will lead to a financial disaster, and no one is willing to lose the privilege of having such a great social system, so we continue as is with added public deficit at the cost of future generations.

Fossil fuels have empowered machines to do the hard mechanical work for us, providing great comfort in our daily lives, but they emit carbon dioxide which is changing the climate at an unprecedented rate, leading to major climate changes and biodiversity problems.

Electric vehicles emit no carbon on the road while you drive them, but they emit tonnes more CO2 to make them, consume more fresh water and use much more chemicals to refine the raw materials compared to regular ICE vehicles. The pollution and energy consumption is just moved somewhere else, but it is still there at almost the same level.

Data centres have made internet information available anywhere, anytime. AI will even do the digital generative tasks for us, adding to the kind of "machines" that do the work for us. But they consume a huge amount of fresh water and electricity to run, and our daily lives are completely dependent on internet, from socialising to signing a document or contract or any financial transaction.

What I am trying to say is that there is no ultimate technology or system that has only advantages and no disadvantages. Over time, we seem to see similar trends: More machines using more energy, global warming and its effects, declining birth rates, financially unbalanced systems becoming more and more in deficit. So I have come up with 4 negative effects of our society that are actually linked and explain why our world is approaching a major crash with reality.

Setting aside the risk of nuclear weapons wiping out entire regions forever and the limited but non-zero risk of AI taking control of our world and exterminating humanity. These are 2 potential major threats to the future of humanity. Apart from these 2 existential risks, which may or may not happen, I believe there are 4 major threats that will absolutely happen at some point and which pose an existential risk to our industrialised civilisation and to humanity. These 4 threats are:

Our dependence on fossil fuels, the mainstay of our modern lifestyle, a finite resource that will eventually run out and in the meantime is causing drastic climate change.
Climate change, environmental degradation, more frequent and violent natural disasters, diminishing access to fresh water.
National debt, which will lead us into social poverty, loss of public services quality, and loss of purchasing power through inflation.
And the biggest one and most pressing issue no one is talking about: The demography, an ageing population with a low birth rate and a shrinking workforce, which will lead to the collapse of our economy and social welfare.

In fact, these are not risks or threats at all, but actual problems and issues that are occurring right now and will intensify in the future, with major consequences for the well-being of our society.

I will discuss each threat in more detail in dedicated chapters. This is just an overview of the situation of each threat, why it is a major problem and what the consequences are. This chapter is intended to give you an overview and insight into the 4 crises. We will go into depth on each threat in a separate chapter.

The threats below are listed in order of criticality, with the first one being the least critical and the last one being the most critical in my opinion.

Threat #1: Our dependence on fossil fuels

Whether we are deliberately moving away from fossil fuels, or whether we have no accessible fossil fuels, one thing is certain: There is a finite amount of fossil fuels, and we are burning them at a non-renewable rate, so the resources are depleting very rapidly. There are between 200 and 300 years of coal resources at the current rate of consumption, available almost everywhere in the world, so I am not worried about that. Natural gas will last at least until 2150 at our current rate of consumption. Then it could start to get bad. 2150 is quite far in the future, we are talking about a few generations. The most pressing problem is oil. Conventional oil peaked in 2007 and production has been falling ever since. Shale oil has accounted for 80% of the growth in oil production since 2008, but its production will plateau and might decline in the coming decades.

New oil reserves will have to come from deep offshore, the Artic, or from countries with unstable political leaders at the top, putting humanity at risk of temporary oil shortages and price spikes like during the oil shocks of the 1970s and 1980s.

We may not run out of oil until 2100, but we will run out of cheap, abundant and affordable oil in the next century. This will pose a threat to our current civilisation, because we are a society based on fossil fuels. Nobody wants to go back to the way of life of the Middle Ages, with animal power and agriculture providing 70% of the jobs.

Oil (and gas to a lesser extent) is the most efficient and largest source of energy in our modern civilisation. Oil is powerful, dense, easy to transport, cheap and storable. Oil is the perfect energy source, except for the CO2 emissions it produces. Any other energy source is less efficient, more expensive, less convenient to transport and store, and less powerful for our modern society. Oil and gas are the holy grail that allows us to have buildings, roads, electrical appliances and to move quickly. Oil and gas are everywhere in our daily lives: From plastics to food to transport.

When current US shale oil production declines in, let's say, 2050, watch out for the next big crisis: $200 oil barrel, recession, inflation, etc. EVs are expected to reduce oil demand slightly if anything, but there is no viable alternative for the big trucks, excavators, cargo ships and planes that are at the heart of international trade, globalisation and leisure and business travel. We owe our high standard of living to oil, and without it we would return to a medieval lifestyle.

At some point, even if a barrel of oil were to sell for $500, there will simply be a moment when all the physically accessible oil is simply exhausted and already consumed. Any finite resource that is constantly being consumed will eventually run out. Oil and gas depletion in the long run will cause suffering and pain, hyperinflation and wars as countries try to access and secure the resource.

The most pressing problem is not the depletion of oil and gas. It is that despite all our efforts to reduce our dependence on fossil fuels to stop climate change, we have failed to reduce our consumption of fossil fuels. Our civilisation is totally dependent on fossil fuels. Whether solar, wind, electric vehicles or any other new technology claims to be changing the world and moving us away from fossil fuels, the reality is that we are using more and more fossil fuels every year. 2024 was a record year for oil consumption, gas consumption and CO2 emissions. Whatever the COP summits of the past, whatever the promises that the world is changing, whatever the media would have you believe, the facts are irrefutable: We are absolutely dependent on an accelerating consumption of fossil fuels every year to run our societies.

For all the advertising and public praise of "energy transition" and "electrification", the reality is that cargo ships and trucks depend on oil for transport, and cement, plastics, fertilisers, steel, semiconductors and raw materials depend on coal and gas to be manufactured. There is not a single commercial-scale production unit of any of these pillars in our civilisation without burning fossil fuels. Unless proven otherwise, our world runs on fossil fuels for about 75% to 85% of our primary energy. This was true in 1980, in 2000 and in 2024. Nothing has changed, and our dependence on fossil fuels is not going to end any time soon, which means the environmental impact is not going to change for the foreseeable future.

This leads us to the threat number 2...

Threat #2: Climate Change

There are plenty of studies, articles and scientific evidences about global warming. At this point, if you are a global warming denier, you are denying science altogether. There is no denying that climate change is accelerating due to the burning of fossil fuels. Limiting global warming to +1.5°C, as agreed in the Paris summit in 2015, is already unachievable. +2°C by 2050 is a given. All signs point to +2.5°C or +3°C before the end of the century. That means more frequent and more intense droughts, floods, huge wildfires, hurricanes and other natural disasters. It also means massive climate migration, and cities are not prepared to accommodate mass migrants. The cost of reconstruction after natural disasters will be huge, and insurance companies will start to refuse to insure areas. Climate migration will become a mass problem in the coming decades. If 200 million people in Bangladesh suffer from flooding and temperatures above 45°C, an entire population will move to neighbouring countries. How can such a large wave of climate migrants be accommodated?

Some of the less talked about effects of climate change are rising ocean temperatures and acidity, which threaten the entire fish ecosystem and the temperature regulation of the Gulf Stream. What about wildfires destroying forests and their ability to absorb CO2 naturally? Or the permafrost melting and releasing methane, a gas 20 to 30 times more devastating to the planet than CO2? There is also the issue of biodiversity, we have lost 80% of insects in the last 30 years. It seems that nobody cares about biodiversity, but Mother Nature is a fine balance of species living in harmony and complementing each other. Who knows the long term consequences of the collapse of biodiversity?

But for me, the 2 less talked about effects of climate change are chemical pollution and access to fresh water. We are already seeing in thailand, Uruguay and Barcelona that access to fresh water, a basic human need, is becoming very complicated. In Montevideo (Uruguay), tap water is salty because freshwater reservoirs have been depleted and have had to be refilled with sea water. In Thailand and Texas, we have seen restriction on residents on fresh water consuption for home use and agricultural use.

Only 3% of the planet's water is non-salty and geologically accessible to humans. If we continue to pollute our rivers and soil with chemicals, where will we find fresh drinking water? This is going to be a bigger problem than global warming, in my opinion, and sooner. And all the ongoing electrification (electric vehicles, solar panels, AI data centres, chip manufacturing, electrical power plants, etc...) increases the demand for more fresh water consumption, further depleting our reserves. Before the world is affected by rising temperatures and drought for crops, we will face a fresh water crisis. And the struggle for access to fresh water will generate protests, political wars and civil unrest. The fine balancing act of allocating fresh water between industry, power stations, agriculture and human consumption will soon become a very heated debate.

Threat #3: Government Debt

The USA and Europe have a debt-to-GDP ratio of over 100%, and the ratio is rising every year. The USA had a 7% budget deficit in 2023, in a year when their economy was booming with 3.5% GDP growth. What if there is another Covid-19 pandemic next year? Or another war to finance?

Governments are printing money and spending like there is no tomorrow. It is a vicious circle because once a population is used to receiving benefits, tax credits, subsidies and bonuses, the government is somehow compelled to spend at least the same amount in subsequent years.

Politicians want to be appreciated and re-elected, so they borrow and spend more money than they receive in taxes, simply to satisfy the current population and endear themself to the public opinion. The problem is that as we need more and more debt to pay for all sorts of spending, interest rates will rise and an increasingly large part of the government budget will go to paying the interest on the debt, just the interest, not the debt itself. Every year we pay a bigger part of the public budget for the interest on the debt. In the next few years we will have to spend more money on interest repayments than on education, the military or social welfare.

All the solutions to this problem are terrible: Drastic budget cuts on roads, hospitals, health care, pension scheme, etc. Or hyperinflation to dilute the debt. Who will be willing to lend money to Europe or the USA if we have a 5% budget deficit every year? Well, a lender will only accept if you promise 8% or 10% interest rate, which will happen and make our budget spending even more complicated. If no private lender, investor or institution, is willing to lend money to an untrustworthy government, the central bank will do it, and that is printing money, creating money out of thin air, and it leads to inflation. When our past debt can only be serviced by new debt, this is called a debt trap.

All this "free" money spent on Covid or the so-called energy transition is debt that the government will pass on to the next decades and generations. Every civilisation has ended in collapse with hyperinflation due to depleting resources and growing debt. We are definitely on that path. The consequences are terrible: civil war, riots, criminality, social unrest, because purchasing power will slowly erode and money won't buy you anything. Public institutions like schools and hospitals will run out of tax payer money. Government debt is very technical and not talked about in the mainstream media because people are unwilling or unable to understand the situation. But the situation is as bad as global warming and we will face the drastic consequences sooner than global warming.

In some countries, such as the US and Canada, in addition to government debt, there is also an alarmingly high and unsustainable level of household debt (student loans, mortgages, car loans, consumer credit, etc...), which adds to the national debt and puts even more pressure on the necessary future economic growth of the household. This is a typically North American problem, as Europeans tend to be less affected and not trapped in high levels of consumer debt.

The national debt is growing every year because of the public deficit. Deficits occur every year when our society spends more on public money than it takes in on taxes, and this trend will accelerate in the future because of our demographics and the low birth rates of the last 40 years. We used to run out of babies, now we are running out of young workers and taxpayers, while the retired population is growing and demanding benefits and support, making demography the biggest driver of the public debt spiral.

The mother of all issues is the demography.

Threat #4: Demography

My grandparents had 8 children. My parents have 2 children. I have one child and unfortunately I am probably done reproducing. My personal situation is similar to the trend of the last 50 years in our advanced civilisation: Many baby boomers retiring, fewer people in the 30-55 age group, very few young people under 30 due to low birth rates, and an abysmal number of people born after 2015.

The consequences are disastrous: the elderly require more medical and social care and are not productive for society, putting the burden on the shoulder of a shrinking active population. In the 1960s, there were on average 5 workers for every retired person. Today the ratio is 1.8 workers to 1 retired person! The pension system is collapsing. All 3 possible solutions to fix the pension system are hard to swallow and are rejected by the population: Increase taxes on the working population. Reduce public pensions and state benefits when you retire, or postpone the retirement age.

People think it is a given that we will retire at 65 and get enough money from the state to live until we die in our 90s. But in fact the balanced system that has worked since the Second World War is no longer balanced and does not work at all. There is no money for pensioners because not enough people are working and paying taxes. We have to make public deficit and national debt to sustain a pension system and public health care system that was not design to support so many over 60 years old. Soon, not even infinite money will solve the ageing crisis. As the labour force shrinks, there will simply not be enough doctors, nurses, ambulance staff, health care workers and elderly care staff to support a growing over-60 population, no matter how much money is thrown at it.

Every potential new law to reform the system is met with protests and social unrest. The reality is that we have no choice: We haven't had enough babies in the last 40 years and especially in the last 10 years, and now we won't get the pensions our parents did. In 2040 and beyond, for every 2 people retiring, only 1 young person will enter the workforce. How can a society keep running in those conditions? I predict that the pension system will turn into a bonus subsidy of about 1000 euros a month, and each elderly person will have to finance his or her own pension or go back to live with his or her children or grandchildren, who will take care of the elderly. There is no magic solution. We are living longer and we have fewer workers, how can the pension system work as it is now? People are foolish to think that what worked 20 years ago will work in the decades to come.

Nothing lasts forever.

The Egyptian empire collapsed, then the Roman empire collapsed. There are still Italians and Egyptians on earth today, so I am not saying that mankind is going to die out. But the fall of the Egyptians, the Romans, the Incas or the Mayans was extremely painful, with a lot of destruction, suffering, famine and poverty, with a huge drop in the standard of living and quality of life. I expect the same to happen to all industrialised countries in the 21st century.

We will discuss the 4 threats in more detail in the next chapters. For me, these are not threats or risks, but issues with unavoidable consequences that we started to feel since 2020 onwards. The crises are here to stay and will only get worse and bigger. Nothing can stop the collapse of our industrialied world. There is no solution to resolve it peacefully, the only thing we can do is to postpone the crisis and make it bigger in the coming future.

Next chapter: 05 – OUR DEPENDENCY ON FOSSIL FUELS

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