Deflationary Collapse Ahead?

Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? I think it is something much worse.

Back in January, I wrote a post called Oil and the Economy: Where are We Headed in 2015-16? In it, I said that persistent very low prices could be a sign that we are reaching limits of a finite world. In fact, the scenario that is playing out matches up with what I expected to happen in my January post. In that post, I said

Needless to say, stagnating wages together with rapidly rising costs of oil production leads to a mismatch between:

  • The amount consumers can afford for oil
  • The cost of oil, if oil price matches the cost of production

This mismatch between rising costs of oil production and stagnating wages is what has been happening. The unaffordability problem can be hidden by a rising amount of debt for a while (since adding cheap debt helps make unaffordable big items seem affordable), but this scheme cannot go on forever.

Eventually, even at near zero interest rates, the amount of debt becomes too high, relative to income. Governments become afraid of adding more debt. Young people find student loans so burdensome that they put off buying homes and cars. The economic “pump” that used to result from rising wages and rising debt slows, slowing the growth of the world economy. With slow economic growth comes low demand for commodities that are used to make homes, cars, factories, and other goods. This slow economic growth is what brings the persistent trend toward low commodity prices experienced in recent years.

A chart I showed in my January post was this one:

Figure 1. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

Figure 1. World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data.

The price of oil dropped dramatically in the latter half of 2008, partly because of the adverse impact high oil prices had on the economy, and partly because of a contraction in debt amounts at that time. It was only when banks were bailed out and the United States began its first round of Quantitative Easing (QE) to get longer term interest rates down even further that energy prices began to rise. Furthermore, China ramped up its debt in this time period, using its additional debt to build new homes, roads, and factories. This also helped pump energy prices back up again.

The price of oil was trending slightly downward between 2011 and 2014, suggesting that even then, prices were subject to an underlying downward trend. In mid-2014, there was a big downdraft in prices, which coincided with the end of US QE3 and with slower growth in debt in China. Prices rose for a time, but have recently dropped again, related to slowing Chinese, and thus world, economic growth. In part, China’s slowdown is occurring because it has reached limits regarding how many homes, roads and factories it needs.

I gave a list of likely changes to expect in my January post. These haven’t changed. I won’t repeat them all here. Instead, I will give an overview of what is going wrong and offer some thoughts regarding why others are not pointing out this same problem.

Overview of What is Going Wrong

  1. The big thing that is happening is that the world financial system is likely to collapse. Back in 2008, the world financial system almost collapsed. This time, our chances of avoiding collapse are very slim.
  2. Without the financial system, pretty much nothing else works: the oil extraction system, the electricity delivery system, the pension system, the ability of the stock market to hold its value. The change we are encountering is similar to losing the operating system on a computer, or unplugging a refrigerator from the wall.
  3. We don’t know how fast things will unravel, but things are likely to be quite different in as short a time as a year. World financial leaders are likely to “pull out the stops,” trying to keep things together. A big part of our problem is too much debt. This is hard to fix, because reducing debt reduces demand and makes commodity prices fall further. With low prices, production of commodities is likely to fall. For example, food production using fossil fuel inputs is likely to greatly decline over time, as is oil, gas, and coal production.
  4. The electricity system, as delivered by the grid, is likely to fail in approximately the same timeframe as our oil-based system. Nothing will fail overnight, but it seems highly unlikely that electricity will outlast oil by more than a year or two. All systems are dependent on the financial system. If the oil system cannot pay its workers and get replacement parts because of a collapse in the financial system, the same is likely to be true of the electrical grid system.
  5. Our economy is a self-organized networked system that continuously dissipates energy, known in physics as a dissipative structureOther examples of dissipative structures include all plants and animals (including humans) and hurricanes. All of these grow from small beginnings, gradually plateau in size, and eventually collapse and die. We know of a huge number of prior civilizations that have collapsed. This appears to have happened when the return on human labor has fallen too low. This is much like the after-tax wages of non-elite workers falling too low. Wages reflect not only the workers’ own energy (gained from eating food), but any supplemental energy used, such as from draft animals, wind-powered boats, or electricity. Falling median wages, especially of young people, are one of the indications that our economy is headed toward collapse, just like the other economies.
  6. The reason that collapse happens quickly has to do with debt and derivatives. Our networked economy requires debt in order to extract fossil fuels from the ground and to create renewable energy sources, for several reasons: (a) Producers don’t have to save up as much money in advance, (b) Middle-men making products that use energy products (such cars and refrigerators) can “finance” their factories, so they don’t have to save up as much, (c) Consumers can afford to buy “big-ticket” items like homes and cars, with the use of plans that allow monthly payments, so they don’t have to save up as much, and (d) Most importantly, debt helps raise the price of commodities of all sorts (including oil and electricity), because it allows more customers to afford products that use them. The problem as the economy slows, and as we add more and more debt, is that eventually debt collapses. This happens because the economy fails to grow enough to allow the economy to generate sufficient goods and services to keep the system going–that is, pay adequate wages, even to non-elite workers; pay growing government and corporate overhead; and repay debt with interest, all at the same time. Figure 2 is an illustration of the problem with the debt component.

    Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

    Figure 2. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Where Did Modeling of Energy and the Economy Go Wrong?

  1. Today’s general level of understanding about how the economy works, and energy’s relationship to the economy, is dismally low. Economics has generally denied that energy has more than a very indirect relationship to the economy. Since 1800, world population has grown from 1 billion to more than 7 billion, thanks to the use of fossil fuels for increased food production and medicines, among other things. Yet environmentalists often believe that the world economy can somehow continue as today, without fossil fuels. There is a possibility that with a financial crash, we will need to start over, with new local economies based on the use of local resources. In such a scenario, it is doubtful that we can maintain a world population of even 1 billion.
  2. Economics modeling is based on observations of how the economy worked when we were far from limits of a finite world. The indications from this modeling are not at all generalizable to the situation when we are reaching limits of a finite world. The expectation of economists, based on past situations, is that prices will rise when there is scarcity. This expectation is completely wrong when the basic problem is lack of adequate wages for non-elite workers. When the problem is a lack of wages, workers find it impossible to purchase high-priced goods like homes, cars, and refrigerators. All of these products are created using commodities, so a lack of adequate wages tends to “feed back” through the system as low commodity prices. This is exactly the opposite of what standard economic models predict.
  3. M. King Hubbert’s “peak oil” analysis provided a best-case scenario that was clearly unrealistic, but it was taken literally by his followers. One of Hubbert’s sources of optimism was to assume that another energy product, such as nuclear, would arise in huge quantity, prior to the time when a decline in fossil fuels would become a problem.
    Figure 2. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

    Figure 3. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

    The way nuclear energy operates in Figure 2 seems to me to be pretty much equivalent to the output of a perpetual motion machine, adding an endless amount of cheap energy that can be substituted for fossil fuels. A related source of optimism has to do with the shape of a curve that is created by the sum of curves of a given type. There is no reason to expect that the “total” curve will be of the same shape as the underlying curves, unless a perfect substitute (that is, having low price, unlimited quantity, and the ability to work directly in current devices) is available for what is being modeled–here fossil fuels. When the amount of extraction is determined by price, and price can quickly swing from high to low, there is good reason to believe that the shape of the sum curve will be quite pointed, rather than rounded. For example we know that a square wave can be approximated using the sum of sine functions, using Fourier Series (Figure 4).

    Figure 3. Source: Wolfram Mathworld.

    Figure 4. Sum of sine waves converging to a square wave. Source: Wolfram Mathworld.

  4. The world economy operates on energy flows in a given year, even though most analysts today are accustomed to thinking on a discounted cash flow basis.  You and I eat food that was grown very recently. A model of food potentially available in the future is interesting, but it doesn’t satisfy our need for food when we are hungry. Similarly, our vehicles run on oil that has recently been extracted; our electrical system operates on electricity that has been produced, essentially simultaneously. The very close relationship in time between production and consumption of energy products is in sharp contrast to the way the financial system works. It makes promises, such as the availability of bank deposits, the amounts of pension payments, and the continuing value of corporate stocks, far out into the future. When these promises are made, there is no check made that goods and services will actually be available to repay these promises. We end up with a system that has promised very many more goods and services in the future than the real world will actually be able to produce. A break is inevitable; it looks like the break will be happening in the near future.
  5. Changes in the financial system have huge potential to disrupt the operation of the energy flow system. Demand in a given year comes from a combination of (wages and other income streams in a given year) plus the (change in debt in a given year). Historically, the (change in debt) has been positive. This has helped raise commodity prices. As soon as we start getting large defaults on debt, the (change in debt) component turns negative, and tends to bring down the price of commodities. (Note Point 6 in the previous section.) Once this happens, it is virtually impossible to keep prices up high enough to extract oil, coal and natural gas. This is a major reason why the system tends to crash.
  6. Researchers are expected to follow in the steps of researchers before them, rather than starting from a basic understudying of the whole problem. Trying to understand the whole problem, rather than simply trying to look at a small segment of a problem is difficult, especially if a researcher is expected to churn out a large number of peer reviewed academic articles each year. Unfortunately, there is a huge amount of research that might have seemed correct when it was written, but which is really wrong, if viewed through a broader lens. Churning out a high volume of articles based on past research tends to simply repeat past errors. This problem is hard to correct, because the field of energy and the economy cuts across many areas of study. It is hard for anyone to understand the full picture.
  7. In the area of energy and the economy, it is very tempting to tell people what they want to hear. If a researcher doesn’t understand how the system of energy and the economy works, and needs to guess, the guesses that are most likely to be favorably received when it comes time for publication are the ones that say, “All is well. Innovation will save the day.” Or, “Substitution will save the day.” This tends to bias research toward saying, “All is well.” The availability of financial grants on topics that appear hopeful adds to this effect.
  8. Energy Returned on Energy Investment (EROEI) analysis doesn’t really get to the point of today’s problems. Many people have high hopes for EROEI analysis, and indeed, it does make some progress in figuring out what is happening. But it misses many important points. One of them is that there are many different kinds of EROEI. The kind that matters, in terms of keeping the economy from collapsing, is the return on human labor. This type of EROEI is equivalent to after-tax wages of non-elite workers. This kind of return tends to drop too low if the total quantity of energy being used to leverage human labor is too low. We would expect a drop to occur in the quantity of energy used, if energy prices are too high, or if the quantity of energy products available is restricted.
  9. Instead of looking at wages of workers, most EROEI analyses consider returns on fossil fuel energy–something that is at least part of the puzzle, but is far from the whole picture. Returns on fossil fuel energy can be done either on a cash flow (energy flow) basis or on a “model” basis, similar to discounted cash flow. The two are not at all equivalent. What the economy needs is cash flow energy now, not modeled energy production in the future. Cash flow analyses probably need to be performed on an industry-wide basis; direct and indirect inputs in a given calendar year would be compared with energy outputs in the same calendar year. Man-made renewables will tend to do badly in such analyses, because considerable energy is used in making them, but the energy provided is primarily modeled future energy production, assuming that the current economy can continue to operate as today–something that seems increasingly unlikely.
  10. If we are headed for a near term sharp break in the economy, there is no point in trying to add man-made renewables to the electric grid. The whole point of adding man-made renewables is to try to keep what we have today longer. But if the system is collapsing, the whole plan is futile. We end up extracting more coal and oil today, in order to add wind or solar PV to what will soon become a useless grid electric system. The grid system will not last long, because we cannot pay workers and we cannot maintain the grid without a financial system. So if we add man-made renewables, most of what we get is their short-term disadvantages, with few of their hoped-for long-term advantages.


The analysis that comes closest to the situation we are reaching today is the 1972 analysis of limits of a finite world, published in the book “The Limits to Growth” by Donella Meadows and others. It models what can be expected to happen, if population and resource extraction grow as expected, gradually tapering off as diminishing returns are encountered. The base model seems to indicate that a collapse will happen about now.

Figure 5. Base scenario from 1972 Limits to Growth, printed using today's graphics by Charles Hall and John Day in "Revisiting Limits to Growth After Peak Oil"

Figure 5. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil”

The shape of the downturn is not likely to be correct in Figure 5.  One reason is that the model was put together based on physical quantities of goods and people, without considering the role the financial system, particularly debt, plays. I expect that debt would tend to make collapse quicker. Also, the modelers had no experience with interactions in a contracting world economy, so had no idea regarding what adjustments to make. The authors have even said that the shapes of the curves, after the initial downturn, cannot be relied on. So we end up with something like Figure 6, as about all that we can rely on.

Figure 6. Figure 5, truncated shortly after production turns down, since modeled amounts are unreliable after that date.

Figure 6. Figure 5, truncated shortly after industrial output per capita (grey) and food per capita turns down, since modeled amounts are unreliable after that date.

If we are indeed facing the downturn forecast by Limits to Growth modeling, we are facing  a predicament that doesn’t have a real solution. We can make the best of what we have today, and we can try to strengthen bonds with family and friends. We can try to diversify our financial resources, so if one bank encounters problems early on, it won’t be a huge problem. We can perhaps keep a little food and water on hand, to tide us over a temporary shortage. We can study our religious beliefs for guidance.

Some people believe that it is possible for groups of survivalists to continue, given adequate preparation. This may or may not be true. The only kind of renewables that we can truly count on for the long term are those used by our forefathers, such as wood, draft animals, and wind-driven boats. Anyone who decides to use today’s technology, such as solar panels and a pump adapted for use with solar panels, needs to plan for the day when that technology fails. At that point, hard decisions will need to be made regarding how the group will live without the technology.

We can’t say that no one warned us about the predicament we are facing. Instead, we chose not to listen. Public officials gave a further push in this direction, by channeling research funds toward distant theoretically solvable problems, instead of understanding the true nature of what we are up against. Too many people took what Hubbert said literally, without understanding that what he offered was a best-case scenario, if we could find something equivalent to a perpetual motion machine to help us out of our predicament.

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About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

1,514 thoughts on “Deflationary Collapse Ahead?

    • In a world dominated by human density, you bet your ass that energy density matters!

  1. The Dow seemed to have a 500 point swing today! Up 250 points early and down 250 points in afternoon because of the “employment’ picture and a possible fed rate hike! Crazy times and every financial move is on the razors edge!


    It didn’t take long for Madrid to hit back, this time with a barely veiled threat from the Ministry of Defense that a military intervention in Spain’s north-eastern province would not be needed “as long as everybody fulfils their duties.”

    A good example of how — when BAU collapses — if there is anything left to fight over — the fight will be local — centralized control will end because ‘military intervention’ requires petrol…. and there won’t be any once strategic reserves are gone….

    • The Spanish Army – and the Legion with its Arab troops – did a lot with just bayonets in 1936 to 1939. No tanks needed for killing civilians and women and children, believe me.

      I believe the Romans were reduced to paying soldiers in beans? So there you go: knife in hand, paid in beans: a soldier!

      Every year, another threat from the Generals in Spain: pretty dumb idea to tell the soldiers they are ‘upholders of the Constitution’, rather than protectors against foreign aggression, which is their proper role in society.

    • Had a nice discussion along these same lines with a local acquaintance today whom I think I finally convinced that we’re about to be in some deep shit. The main question – just as it always is – is how fast does it all go down? If BAU goes down over the period of months or years locally (and we happen to inhabit a VERY strategic location), then it will be reasonable to expect some continuity in operations. If it happens much quicker than that, all bets are off of course.

      My points were likewise, soldiers owe their allegiance to entities far away and in economic terms that may or may not be meaningful at the time. They can pretty much be relied upon to renege on their oaths once they realize that.

      • I talk to a number of people as well that feel that financially this country is in a lot of trouble. They don’t connect it to energy though. If I feel a person may be receptive to more in depth discussion I mention how energy and resources are what power the economy and they are subject to diminishing returns. Surprisingly a lot of people have an Ahhh Haaa moment. Then the next question is what is the solution. Which there really isn’t one. And that leaves them perplexed.

        • “Then the next question is what is the solution. Which there really isn’t one. And that leaves them perplexed.”

          I think alternatives and electric cars are the answer. It is new products with new innovations that are possible, which keeps people employed, and it isn’t up against the diminishing returns wall.

          The current problem as I see it, the financial markets aren’t really sure what is going on. You have China with like 10% renewable added, and they are increasing the efficiency of everything. The US, Britain, EU, all have pretty much done the same. So we are using less energy which creates a glut and drops prices, then other commodity prices drop, because the energy input costs less.

          So deflation in a way.. but I am still going with a disruptive market correction, because we are still innovating and have new products that are worth buying. Not ot mention the GDP was up 2.5% in the US last quarter, mostly driven by consumer spending. Globally, it is probably more of deflation and recession. When you look at Russia, Venezuela, etc. they are all nailed because of low oil prices.

          • What I have shown is that alternatives need to be really cheap and essentially self-financing–the users can generate such great profits that there is no problem with maintaining the grid. The alternatives you are talking about don’t meet these requirements.

            All of our economies are “nailed” because of low oil prices, and by low commodity prices in general. The US isn’t any different from anyone else. I noticed today that Iraq is planning to close down oil operations, except for maintenance, as of the beginning of 2016, because of low oil prices. The article, “Iraq Warns Oil Companies of Spending Cuts,” is behind the WSJ pay wall, but you may be able to get it by Googling the title.


    Well, investors in the world equity markets shouldn’t start doing a victory lap just yet (based on recent market upticks due to stimulus talk and or action). The Dow was up most of the day until it couldn’t remain inflated and then did a gradual swan dive, deflating -239 points. Since all the other world stock markets take their cue from the US, expect them to dump whenever they open, tonight or tomorrow.

    This is typical ‘bear market’ behavior, in which after a lot of stocks get sold and the indexes are way down, investors (many with no more sophistication than a cab driver) dip back in like they have these past few days thinking there is room to make money on a the upswing. The problem with a bear market, and it hasn’t necessarily proven it is one yet, but if it is, then the recent upswing was just a temporary burst of optimism. My guess is it is definitely a bear market with lots of room to the downside.

    Something to watch is the last 2 minutes of each trading day. It either goes up a lot or down a lot because those trades are made by computers that were programmed earlier in the day to make all those trades in that brief period of time. One day I checked and in the last 2 minutes the Dow dumped 50 points – in 2 minutes?!?! My theory is those are the big boys, i.e. the one’s that know where things are headed. They don’t set a computer to make x thousands of trades worth billions of dollars in those last moments of trading based on a prayer. So looking to end of day trading trend and lately it’s been bear.

    Oil price on the other hand seems stable right where it is.

    • Roadster, Fantastic piece of work and thank you for posting. This explains very simply and to the point. Will make copies and share this article to others so they can ignore.
      Says what Gail is writing, but in a different style.
      Hope others take note.

      • I looked at Charles Hughes Smith’s article. I agree that he makes good points about why prices will remain low for a while. I disagree with him, however, on whether prices will bounce back up, once supply drops–in other words, this is just a “head fake”. I think the economy is too much damaged, and the debt problems too severe for more than a small bounce up to occur–certainly not enough to get and hold production up. CHS also seems to have more faith in the possibility of low prices being less damaging to low prices than I think they are.

  4. Dear Gail,
    it is getting still harder to get oil and coal out of the ground. Can you with your mathematical/statistical capacity figure out how much energy is left to use for the world with low production prices (before 1972 approx, 20 USD/barrel) and how much energy is left to use with high production prices (say 80 USD/barrel)?
    With net energy I mean production minus energy invested in production. Therefore, the net energy must be higher with low prices (little energy/money invested) compared to high prices (much energy/much money invested).

    • I am far more worried about how much debt it takes to get oil and coal out of the ground than how much energy it takes to get oil out of the ground.

      The amount of oil that will be left in the ground looks like it will be virtually all of it, regardless of whether the oil price is $80 per barrel of $20 per barrel. The problem is that the system is very close to breaking.

      The whole idea of net energy, and various amounts that will be available at different prices is badly flawed, in my mind. It sounds like an engineer trying to figure out what the system looks like, when the system is governed by different factors than the engineer really understands. Charlie Hall is currently quite unhappy with me, BTW.

  5. Outstanding analysis:

    Perhaps the most accurate description of the current crisis over gas, oil and pipelines that is raging in Syria has been described by Dmitry Minin, writing for the Strategic Cultural Foundation in May 2013:

    “A battle is raging over whether pipelines will go toward Europe from east to west, from Iran and Iraq to the Mediterranean coast of Syria, or take a more northbound route from Qatar and Saudi Arabia via Syria and Turkey. Having realized that the stalled Nabucco pipeline, and indeed the entire Southern Corridor, are backed up only by Azerbaijan’s reserves and can never equal Russian supplies to Europe or thwart the construction of the South Stream, the West is in a hurry to replace them with resources from the Persian Gulf. Syria ends up being a key link in this chain, and it leans in favor of Iran and Russia; thus it was decided in the Western capitals that its regime needs to change.

    The Guardian reported in August 2013:

    “Assad refused to sign a proposed agreement with Qatar and Turkey that would run a pipeline from the latter’s North field, contiguous with Iran’s South Pars field, through Saudi Arabia, Jordan, Syria and on to Turkey, with a view to supply European markets – albeit crucially bypassing Russia. Assad’s rationale was ‘to protect the interests of [his] Russian ally, which is Europe’s top supplier of natural gas.’”

    Much of the strategy currently at play was described back in a 2008 U.S. Army-funded RAND report, “Unfolding the Future of the Long War”:

    “The geographic area of proven oil reserves coincides with the power base of much of the Salafi-jihadist network. This creates a linkage between oil supplies and the long war that is not easily broken or simply characterized. … For the foreseeable future, world oil production growth and total output will be dominated by Persian Gulf resources. … The region will therefore remain a strategic priority, and this priority will interact strongly with that of prosecuting the long war.”

    In this context, the report identifies the divide and conquer strategy while exploiting the Sunni-Shiite divide to protect Gulf oil and gas supplies while maintaining a Gulf Arab state dominance over oil markets.

    “Divide and Rule focuses on exploiting fault lines between the various Salafi-jihadist groups to turn them against each other and dissipate their energy on internal conflicts. This strategy relies heavily on covert action, information operations (IO), unconventional warfare, and support to indigenous security forces. … the United States and its local allies could use the nationalist jihadists to launch proxy IO campaigns to discredit the transnational jihadists in the eyes of the local populace. … U.S. leaders could also choose to capitalize on the ‘Sustained Shia-Sunni Conflict’ trajectory by taking the side of the conservative Sunni regimes against Shiite empowerment movements in the Muslim world…. possibly supporting authoritative Sunni governments against a continuingly hostile Iran.”


    • Well it is indeed ‘The Long War’; it might take its place alongside the Hundred Years War, Thirty Years War, the War to End All Wars, and the Great Patriotic War……if there is anyone left to recall any of this, which one doubts.

      • The Long War will be fought within the context of the Long Emergency. In fact, will be a symptom of the Long Emergency. There will be no winners.

  6. The following suggests the stimulus after 2008 have not worked to the extent expected due to persistent structural causes. I wonder if the people that write these type of articles will eventually realize the structural problem is due to diminishing returns.

    Wolf Richter

    “To the never-ending astonishment of our economists, global growth has been much weaker since the Financial Crisis than before it, despite enormous global stimulus from years of extreme central-bank monetary policies and record amounts of government deficit spending.

    This should not have happened, according to our economists. Fiscal stimulus and expansionary monetary policies beget economic growth, which beget even more economic growth. That’s the theory. And that’s precisely what hasn’t happened. All it did was inflate asset prices. But the global economy has been a dud.

    “If we calculated global growth with China’s true growth rate and not the official rate, global growth in the second quarter of 2015 would be only 2%,” figured Natixis, the investment bank of France’s second largest megabank, Groupe BPCE.

    This “sluggish growth, close to a recession, is due to persistent, structural causes; we therefore use the term ‘structural recession’ to show that it does not have a cyclical origin,” the report explained. It’s not caused by normal cyclical fluctuations, but by “persistent structural problems that are specific to each region.”

    • The stimulus of 2008 “worked” for those who it was intended to work, which is to say those in the financial and investment community whose investments it was meant to re-inflate. There has been no “real growth” in the interim, since no “real growth” is possible in a world of diminishing energy returns. I know it’s helpful to rephrase this as we turn it over and over in our minds, but Gail has really covered all this ad infinitum.

    • “The following suggests the stimulus after 2008 have not worked to the extent expected due to persistent structural causes. I wonder if the people that write these type of articles will eventually realize the structural problem is due to diminishing returns.”

      I agree it is diminishing returns. However, it does appear to be solvable.
      If you look at California’s GDP it has grown 10% since 2009, or 5% from the peak before the dip..

      They have increased manufacturing, and exports. They supposedly have a surplus in their state budget. I read somewhere it was essentially all the states who did the renewable energy were economically doing better then the ones who keep fighting it. I am not going to and poke through the data to verify it.

  7. Gal, so sad that you felt the need to delete all my posts. I have been all over the UK net with the new insight that it Is an act of aggression to accuse one of immorality and that it should be retaliated in kind. So sorry if that did not reflect well on you but everyone else heard it clear. So sorry for you that you personally felt the need to delete all my posts.

  8. Now you know where bankers rule.

    • UN Votes For New Debt Rules But UK, US Try To Block (Jubilee Debt Campaign)

    The United Nations General Assembly has voted to accept new rules to guide sovereign debt restructurings. At a vote in New York on Thursday evening, the set of nine principles were adopted with 136 votes in favour, just 6 against and 41 abstentions. However, implementation of the principles is in doubt as the majority of international debt is governed by US or UK law. Both the US and UK were amongst the just six countries which voted against. The other four countries which voted against were Canada, Germany, Israel and Japan.

    • UK, US, Israel the axis of usury evil in the world with the losers of WWII the toads Germany and Japan. Canada well Jan what up with that?

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