Oops! Low oil prices are related to a debt bubble

Why is the price of oil so low now? In fact, why are all commodity prices so low? I see the problem as being an affordability issue that has been hidden by a growing debt bubble. As this debt bubble has expanded, it has kept the sales prices of commodities up with the cost of extraction (Figure 1), even though wages have not been rising as fast as commodity prices since about the year 2000. Now many countries are cutting back on the rate of debt growth because debt/GDP ratios are becoming unreasonably high, and because the productivity of additional debt is falling.

If wages are stagnating, and debt is not growing very rapidly, the price of commodities tends to fall back to what is affordable by consumers. This is the problem we are experiencing now (Figure 1). 

Figure 1. Author's illustration of problem we are now encountering.

Figure 1. Author’s illustration of problem we are now encountering.

I will explain the situation more fully in the form of a presentation. It can be downloaded in PDF form: Oops! The world economy depends on an energy-related debt bubble. Let’s start with the first slide, after the title slide.

Slide 2

Slide 2

Growth is incredibly important to the economy (Slide 2). If the economy is growing, we keep needing to build more buildings, vehicles, and roads, leading to more jobs. Existing businesses find demand for their products rising. Because of this rising demand, profits of many businesses can be expected to rise over time, thanks to economies of scale.

Something that is not as obvious is that a growing economy enables much greater use of debt than would otherwise be the case. When an economy is growing, as illustrated by the ever-increasing sizes of circles, it is possible to “borrow from the future.” This act of borrowing gives consumers the ability to buy more things now than they would otherwise would be able to afford–more “demand” in the language of economists. Customers can thus afford cars and homes, and businesses can afford factories. Companies issuing stock can expect that price of shares will most likely rise in the future.

Without economic growth, it would be very hard to have the financial system that we have today, with its stable banks, insurance companies, and pension plans. The pattern of economic growth makes interest and dividend payments easier to make, and reduces the likelihood of debt default. It allows financial planners to set up savings plans for retirement, and gives people confidence that the system will “be there” when it is needed. Without economic growth, debt is more of a last resort–something that might land a person in debtors’ prison if things go wrong.

Slide 3

Slide 3

It should be obvious that the economic growth story cannot be true indefinitely. We would run short of resources, and population would grow too dense. Pollution, including CO2 pollution, would become an increasing problem.

Slide 4

Slide 4

The question without an obvious answer is “When does the endless economic growth story become untrue?” If we listen to the television, the answer would seem to be somewhere in the distant future, if a slowdown in economic growth happens at all.

Most of us who read financial newspapers are aware that more debt and lower interest rates are the types of stimulus provided to the economy, to try to help it grow faster. Our current “run up” in debt seems to have started about the time of World War II. This growing debt allows “demand” for goods like houses, cars, and factories to be higher. Because of this higher demand, commodity prices can be higher than they otherwise would be.

Thus, if debt is growing quickly enough, it allows the sales price of energy products and other commodities to stay as high as their cost of extraction. The problem is that debt/GDP ratios can’t rise endlessly. Once debt/GDP ratios stop rising quickly enough, commodity prices are likely to fall. In fact, the run-up in debt is a bubble, which is itself in danger of collapsing, because of too many debt defaults.

Slide 5

Slide 5

The economy is made up of many parts, including businesses and consumers. The consumers have a second role as well–many of them are workers, and thus get their wages from the system. Governments have many roles, including providing financial systems, building roads, and providing laws and regulations. The economy gradually grows and changes over time, as new businesses are added, and others leave, and as laws change. Consumers make their decisions based on available products in the marketplace and they amount they have to spend. Thus, the economy is a self-organized networked system–see my post Why Standard Economic Models Don’t Work–Our Economy is a Network.

One key feature of a self-organized networked system is that it tends to grow over time, as more energy becomes available. As its grows, it changes in ways that make it difficult to shrink back. For example, once cars became the predominant method of transportation, cities changed in ways that made it difficult to go back to using horses for transportation. There are now not enough horses available for this purpose, and there are no facilities for “parking” horses in cities when they are not needed. And, of course, we don’t have services in place for cleaning up the messes that horses leave.

Slide 6

Slide 6

When businesses start, they need capital. Very often they sell shares of stock, and they may get loans from banks. As companies grow and expand, they typically need to buy more land, buildings and equipment. Very often loans are used for this purpose.

As the economy grows, the amount of loans outstanding and the number of shares of stock outstanding tends to grow.

Slide 7

Slide 7

Businesses compete by trying to make goods and services more efficiently than the competition. Human labor tends to be expensive. For example, a sweater knit by hand by someone earning $10 per hour will be very expensive; a sweater knit on a machine will be much less expensive. If a company can add machines to leverage human labor, the workers using those machines become more productive. Wages rise, to reflect the greater productivity of workers, using the machines.

We often think of the technology behind the machines as being important, but technology is only part of the story. Machines reflecting the latest in technology are made using energy products (such as coal, diesel and electricity) and operated using energy products. Without the availability of affordable energy products, ideas for inventions would remain just that–simply ideas.

The other thing that is needed to make technology widely available is some form of financing–debt or equity financing. So a three-way partnership is needed for economic growth: (1) ideas for inventions, (2) inexpensive energy products and other resources to make them happen, and (3) some sort of financing (debt/equity) for the undertaking. 

Workers play two roles in the economy; besides making products and services, they are also consumers. If their wages are rising fast enough, thanks to growing efficiency feeding back as higher wages, they can buy increasing amounts of goods and services. The whole system tends to grow. I think of this as the normal “growth pump” in the economy.

If the “worker” growth pump isn’t working well enough, it can be supplemented for a time by a “more debt” growth pump. This is why debt-based stimulus tends to work, at least for a while.

Slide 8

Slide 8

There are really two keys to economic growth–besides technology, which many people assume is primary. One key is the rising availability of cheap energy. When cheap energy is available, businesses find it affordable to add machines and equipment such as trucks to allow workers to be more productive, and thus start the economic growth cycle.

The other key is availability of debt, to finance the operation. Businesses use debt, in combination with equity financing, to add new plants and equipment. Customers find long-term debt helpful in financing big-ticket items such as homes and cars. Governments use debt for many purposes, including “stimulating the economy”–trying to get economic growth to speed up.

Slide 9

Slide 9

Slide 9 illustrates how workers play a key role in the economy. If businesses can create jobs with rising wages for workers, these workers can in turn use these rising wages to buy an increasing quantity of goods and services.

It is the ability of workers to afford goods like homes, cars, motorcycles, and boats that helps the economy to grow. It also helps to keep the price of commodities up, because making these goods uses commodities like iron, steel, copper, oil, and coal.

Slide 10

Slide 10

In the 1900 to 1998 period, the price of electricity production fell (shown by the falling purple, red, and green lines) as the production of electricity became more efficient. At the same time, the economy used an increasing quantity of electricity (shown by the rising black line). The reason that electricity use could grow was because electricity became more affordable. This allowed businesses to use more of it to leverage human labor. Consumers could use more electricity as well, so that they could finish tasks at home more quickly, such as washing clothes, leaving more time to work outside the home.

Slide 11

Slide 11

If we compare (1) the amount of energy consumed worldwide (all types added together) with (2) the world GDP in inflation-adjusted dollars, we find a very high correlation.

Slide 12

Slide 12

In Slide 12, GDP (represented by the top line on the chart–the sum of the red and the blue areas) was growing very slowly back in the 1820 to 1870 period, at less than 1% per year. This growth rate increased to a little under 2% a year in the 1870 to 1900 and 1900 to 1950 periods. The big spurt in growth of nearly 5% per year came in the 1950 to 1965 period. After that, the GDP growth rate has gradually slowed.

On Slide 12, the blue area represents the growth rate in energy products. We can calculate this, based on the amount of energy products used. Growth in energy usage (blue) tends to be close to the total GDP growth rate (sum of red and blue), suggesting that most economic growth comes from increased energy use. The red area, which corresponds to “efficiency/technology,” is calculated by subtraction. The period of time when the efficiency/technology portion was greatest was between 1975 and 1995. This was the period when we were making major changes in the automobile fleet to make cars more fuel efficient, and we were converting home heating to more fuel-efficient heating, not using oil.

Slide 13

Slide 13

If we look at economic growth rates and the growth in energy use over shorter periods, we see a similar pattern. The growth in GDP is a little higher than the growth in energy consumption, similar to the pattern we saw on Slide 12.

If we look carefully at Slide 13, we see that changes in the growth rate for energy (blue line) tends to happen first and is followed by changes in the GDP growth rate (red line). This pattern of energy changes occurring first suggests that growth in the use of energy is a cause of economic growth. It also suggests that lack of growth in the use of energy is a reason for world recessions. Recently, the rate of growth in the world’s consumption of energy has dropped (Slide 13), suggesting that the world economy is heading into a new recession.

Slide 14

Slide 14

There is nearly always an investment of time and resources, in order to make something happen–anything from the growing of food to the mining of coal. Very often, it takes more than one person to undertake the initial steps; there needs to be a way to pay the other investors. Another issue is the guarantee of payment for resources gathered from a distance.

Slide 15

Slide 15

We rarely think about how all-pervasive promises are. Many customs of early tribes seem to reflect informal rules regarding the sharing of goods and services, and penalties if these rules are not followed.

Now, financial promises have to some extent replaced informal customs. The thing that we sometimes forget is that the bonds companies offer for sale, and the stock that companies issue, have no value unless the company issuing the stock or bonds is actually successful.  As a result, the many promises that are made are, in a sense, contingent promises: the bond will be repaid, if the company is still in business (or if the company is dissolved, if the amount received from the sale of assets is great enough). The future value of a company’s stock also depends on the success of the company.

Slide 16

Slide 16

Governments become an important part of the web of promises. Governments collect their assessments through taxes. As an economy grows, the amount of government services tends to increase, and taxes tend to increase.

The roles of governments and businesses vary somewhat depending on the type of economy of a country. In a sense, this type of variation is not important. It is the functioning of the overall networked system that is important.

Slide 17

Slide 17

There was a very large run up in US debt about the time of World War II, not just in the US, but also in the other countries involved in World War II.

Adding the debt for World War II helped pull the US out of the lingering effects of the Depression. Many women started working outside the home for the first time. There was a ramp-up of production, aimed especially at the war effort.

What does a country do when a war is over? Send the soldiers back home again, without jobs, and the women who had been working to support the war effort back home again, also without jobs? This was a time period when non-government debt ramped up in the US. In fact, it seems to have ramped up elsewhere around the world as well. The new debt helped support many growing industries at the time–helping rebuild Europe, and helping build homes and cars for citizens in the US. As noted previously, both energy use and GDP soared during this time period.

Slide 19

Slide 19

I haven’t found very good records of debt going back very far, but what I can piece together suggests that the rate of debt growth (total debt, including both government and private debt) was similar to the rate of growth of GDP, up until about 1975. Then, debt began growing much more rapidly than GDP.

Slide 20

Slide 20

The big issue that led to a big increase in the need for debt in the early 1970s was an increase in the price of oil. Oil is the single largest source of energy. It is used in many important ways, including making food, transporting coal, and extracting metals. Thus, when the price of oil rises, so does the price of many other goods.

As we noted on Slides 11, 12, and 13, it is the growing quantity of energy consumption that is important in providing economic growth. The natural tendency with high energy prices is to cut back on energy-related consumption. Increasing debt, if it is at a sufficiently low interest rate, helps counteract this natural tendency toward less energy usage. For example, the availability of debt at a low interest makes it possible for more consumers to purchase big-ticket items like houses, cars, and motorcycles. These products indirectly lead to the growing consumption of energy products, because energy is used in making these big-ticket items and because they use energy in their continuing operation.

Slide 21

Slide 21

Many people have been concerned about what they call “peak oil”–the idea that oil supply would suddenly drop because we reach geological limits. I think that this is a backward analysis regarding how the system works. There is plenty of oil available, if only the price would rise high enough and stay high for long enough.

Much of this oil is non-conventional oil–oil that cannot be extracted using the inexpensive approaches we used in the early days of oil production. In some cases, non-conventional oil is so viscous it needs to be melted with steam, before it will flow freely. Some of the unconventional oil can only be extracted by “fracking.” Some of the unconventional oil is very deep under the ocean. Near Brazil, this oil is under a layer of salt. If prices would remain high enough, for long enough, we could get this oil out.

The problem is that in order to get this unconventional oil out, costs are higher. These higher costs are sometimes described as reflecting diminishing returns–more capital goods are needed, as are more resources and human labor, to produce additional barrels of oil. The situation is equivalent to the system of oil extraction becoming less and less efficient, because we need to add more steps to the operation, raising the cost of producing finished oil products. The higher price of oil products spills over to a higher cost for producing food, because oil is used in operating farm equipment and transporting food to market. The higher cost of oil also spills over to the cost of almost anything that is shipped long distance, because oil is used as a transportation fuel.

You will remember that increased efficiency is what makes an economy grow faster (Slide 7, also Slide 37). Diminishing returns is the opposite of increased efficiency, so it tends to push the economy toward contraction. We are running into many other forms of increased inefficiency. One such type of inefficiency involves adding devices to reduce pollution, for example in electricity production. Another type of inefficiency involves switching to higher-cost methods of generation, such as solar panels and offshore wind, to reduce pollution. No matter how beneficial these techniques may be from some perspectives, from the perspective of economic growth, they are a problem. They tend to make the economy grow more slowly, rather than faster.

The standard workaround for slow economic growth is more debt. If the interest rate is low enough and the length of the loan is long enough, consumers can “sort of” afford increasingly expensive cars and homes. Young people with barely adequate high school grades can “sort of” afford higher education. With cheap debt, businesses can afford to buy back company stock, making reported earnings per share rise–even though after the buy-back, the actual investment used to generate future earnings is lower. With sufficient cheap debt, shale companies can create models showing that even if their cash flow is negative at $100 per barrel oil prices ($2 out for $1 in) and even more negative at $50 per barrel ($4 out for $1 in), somehow, the companies will be profitable in the very long run.

The technique of adding more debt doesn’t fix the underlying problem of growing inefficiency, instead of growing efficiency. Instead, as more debt is added, the additional debt becomes increasingly unproductive. It mostly provides a temporary cover-up for economic growth problems, rather than fixing them.

Slide 22

Slide 22

A common belief has been that as we reach limits of a finite world, oil prices and perhaps other prices will spike. In my view, this is a wrong understanding of how things work.

What we have is a combination of rising costs of production for many kinds of goods at the same time that wages are not rising very quickly.  This problem can be temporarily hidden by a rising amount of debt at ever-lower interest rates, but this is not a long-term solution.

We end up with a conflict between the prices businesses need and the prices that workers can afford. For a while, this conflict can be resolved by a spike in prices, as we experienced in the 2005-2008 period. These spikes tend to lead to recession, for reasons shown on the next slide. Recession tends to lead to lower prices again.

Slide 26

Slide 26

The image on Slide 26 shows an exaggeration to make clear the shift that takes place, if the price of oil spikes. When the price of one necessary part of consumers’ budgets increases–namely the food and gasoline segment–there is a problem. Debt payments already committed to, such as those on homes and automobiles, remain constant. Consumers find that they must cut back on discretionary spending–in other words, “Everything else,” shown in green. This tends to lead to recession.

Slide 27

Slide 27

If we look at oil prices since 2000, we see that the period is marked by steep rises and falls in oil prices. In Slides 27 – 29, we will see that changes in the price of oil tend to correspond to changes in debt availability and cost.

In 2008, oil prices rose to a peak in July, and then dropped precipitously to under $40 per barrel in December of the same year. Slide 27 shows that the United States began its program of Quantitative Easing (QE) in late 2008. This helped to lower interest rates, especially longer-term interest rates. China and a number of other countries also raised their debt levels during this period. We would expect greater debt and lower interest rates to increase demand for commodities, and thus raise their prices, and in fact, this is what happened between December 2008 and 2011.

The drop in prices in 2014 corresponds to the time that the US phased out its program of QE, and China cut back on debt availability. Here, the economy is encountering less cheap debt availability, and the impact is in the direction expected–a drop in prices.

If we go back to the steep drop in oil prices in July 2008, we find that the timing of the drop in prices matches the timing when US non-governmental debt started falling. In my academic article, Oil Supply Limits and the Continuing Financial Crisis, I show that this drop in debt outstanding takes place for both mortgages and credit card debt.

Slide 29

Slide 29

The US government, as well as other governments around the world, responded by sharply increasing their debt levels. This increase in governmental debt (known as sovereign debt) is part of what helped oil and other commodity prices to rise again after 2008.

Slide 30

Slide 30

We often hear about the drop in oil prices, but the drop in prices is far more widespread. Nearly all commodities have dropped in price since 2011. Today’s commodity price levels are below the cost of production for many producers, for all of these types of commodities. In fact, for oil, there is hardly any country that can produce at today’s price level, even Saudi Arabia and Iraq, when needed tax levels by governments are considered as well.

Producers don’t go out of business immediately. Instead, they tend to “hold on” as best they can, deferring new investment and trying to generate as much cash flow as possible. Because most of them have no alternative way of making a living, they often continue producing, as best they can, even with low prices, deferring the day of bankruptcy as long as possible. Thus, the glut of supply doesn’t go away quickly. Instead, low prices tend to get worse, and low prices tend to persist for a very long period.

Slide 31

Slide 31

In 2008, we had an illustration of what can go wrong when the economy runs into too many headwinds. In that situation, the price of oil and other commodities dropped dramatically.

Now we have a somewhat different set of headwinds, but the impact is the same–the price of commodities has dropped dramatically. Wages are not rising much, so they are not providing the necessary uplift to the economy. Without wage growth, the only other approach to growing the economy is debt, but this reaches limits as well. See my post, Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

There is some evidence that the Great Depression in the 1930s involved the collapse of a debt bubble. It seems to me that it may very well have also involved wages that were falling in inflation-adjusted terms for a significant number of wage-earners. I say this, because farmers were moving to the city in the early 1900s, as mechanization led to lower prices for food and less need for farmers. I haven’t seen figures on incomes of farmers, but I wouldn’t be surprised if they were dropping as well, especially for the many farmers who couldn’t afford mechanization. Wages for those who wanted to work as laborers on farms were likely also dropping, since they now needed to compete with mechanization.

In many ways, the situation that led up to the Great Depression appears to be not too different from our situation today. In the early 1900s, many farmers were being displaced by changes to agriculture. Now, wages for many are depressed, as workers in developed economies increasingly compete with workers in historically low-wage countries. Additional mechanization of manufacturing also plays a role in reducing job opportunities.

If my conjecture is right, the Great Depression may have been caused by problems similar to what we are seeing today–wages that were too low for a large segment of the economy, thus reducing economic growth, and a temporary debt bubble that tended to cover up the wage problem. Once the debt bubble collapsed, demand for commodities of all types collapsed, and prices collapsed. This problem was very difficult to fix.

Slide 32

Slide 32

When we add more debt to the economy, users of debt-financing find that more of their future income goes toward repaying that debt, cutting off the ability to buy other goods. For example, a young person with a large balance of student loans is unlikely to be able to afford buying a house as well.

A way of somewhat mitigating the problem of too much income going toward debt repayment is lowering interest rates. In fact, in quite a few countries, the interest rates governments pay on debt are now negative.

Slide 33

Slide 33

If the cost of producing commodities continues to rise, but the price that consumers can afford to pay does not rise sufficiently, at some point there is a problem. Instead of continuing to rise, prices start to fall below their cost of production. This drop can be very sharp, as it was in 2008.

The falling price of commodities is the same situation we encountered in 2008 (Slide 27); it is the same situation we reached at the beginning of the Great Depression back in 1929. It seems to happen when wage growth is inadequate, and the debt level is not growing fast enough to hide the inadequate wage growth. This time around, we are also challenged by the cost of producing commodities rising, something that was not a problem at the time of the Great Depression.

Slide 34

Slide 34

If we think about the situation, having prices fall behind the cost of production is a disaster. We can’t get oil out of the ground, if prices are too low. Farmers can’t afford to grow food commercially, if prices remain too low.

Prices of assets such as the value of farmland, the value of oil held by leases, and the value of metal ores in mines will fall. Assets such as these secure many loans. If an oil company has a loan secured by the value of oil held by lease, and this value falls permanently, there is a significant chance that the oil company will default on the loan.

The usual belief is, “The cure for low prices is low prices.” In other words, the situation will fix itself. What really happens, though, is that everyone is so afraid of a big crash that all parties make extreme efforts to avoid a crash. In fact, there is evidence today that banks are “looking the other way,” rather than taking steps to cut off lending to shale drillers, when current operations are clearly unprofitable.

By the time the crash does come around, it is likely to be a huge one, affecting many segments of the economy at once. Oil exporters and exporters of other commodities will be especially affected. Some of them, such as Venezuela, Yemen, and even Iraq may collapse. Financial institutions are likely to find themselves burdened with many “underwater loans.” The usual technique of lowering interest rates to try to aid the economy doesn’t look like it would work this time, because rates are already so low. Governments are not in sufficiently good financial condition to be able to bail out all of the banks and others needing assistance. In fact, governments may fail. The fall of the former Soviet Union occurred when oil prices were low.

Once there are major debt defaults, lenders will want to wait to see that prices will stay consistently high for a period (say, two or three years) before extending credit again. Thus, even if commodity prices should bounce back in 2017, it is doubtful that producers will be able to find financing at a reasonable interest rate until, say, 2020. By that time, depletion will have taken its toll. It will be impossible to make up for the many years of low investment at that time. Production is likely to continue falling, even if prices do rise.

The indirect impact of low oil and other commodity prices is likely to be a collapse in our current debt bubble. This collapsing bubble may lead to the failures of banks and even governments. It seems quite possible that these indirect impacts will affect us most, even more than the direct loss of commodities. These impacts could come quite quickly–in the next few months, in some cases.

Slide 35

Slide 35

Stocks, bonds, pension programs, insurance programs, bank accounts, and many other things of a financial nature seem to be very “solid” things–things that we can expect to be here and grow, for many years to come. Yet these things, directly and indirectly, depend on the ability of our system to produce goods and services. If something goes terribly wrong, we may find that financial assets have little more value than the pieces of paper that represent them.

Slide 36

Slide 36

I won’t try to explain Slide 36 further.

Slide 37

Slide 37

Slide 37 illustrates the principle of increased efficiency. If a smaller amount of resources and human labor can be used to create a larger amount of end product, this is growing efficiency. If more and more resources and labor are used to produce a smaller amount of end product, this is growing inefficiency.

The other part of the story is that simply automating processes is not enough. Instead, the economy must also produce a sufficiently large number of jobs, and these jobs must pay high enough wages that the workers can afford to buy the output of the economy. It is really the health of the whole interconnected system that is important.

Slide 38

Slide 38

Our low price problems are here now. That is why we need very cheap non-polluting energy products now, in large quantity, if there is any chance of fixing the system. These energy products must work in today’s devices, so we aren’t faced with the cost and delay involved with changing to new devices, such as cars and trucks that use a different fuel than petroleum.

Slide 39

Slide 39

Regarding Slides 39 and 40, we are sitting on the edge, waiting to see what will happen next.

The US economy temporarily seems to be in somewhat of a bubble, now that it does not have QE, while several other countries still do. This bubble is related to a “flight to quality,” and leads to a higher dollar, relative to other currencies. It also leads to high stock market valuations. As a result, the US economy seems to be doing better than much of the rest of the world.

Regardless of how well the US economy seems to be doing, the underlying problems of rising costs of producing commodities and prices that lag below the cost of production are still present, making the situation unstable. Wages continue to lag behind as well. We should not be too surprised if the economy starts taking major downward steps in the next few months.

Slide 40

Slide 40

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.
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1,595 Responses to Oops! Low oil prices are related to a debt bubble

  1. dolph9 says:

    Here’s my response to everybody here who thinks that you matter. That people matter.
    Every single person reading this post…and yes that includes you, Fast Eddy, your worth to the global system is 1 out of 7.3 billion. That is your value in the matrix.

    This is why I know not to really take it seriously when doomers shout, jobs will be lost! People will die! People will starve! Who will work, who will consume?

    The world can lose 50% of all human beings alive on this planet today, and still have 3.6 billion people to work and consume in the global economy. We could lose 85% of people alive today, and still have 1 billion left to work and consume in the global economy.

    Think about it, some perspective is needed. Everything that you think is important, just isn’t. Wherever you are right now, take a look around. Everything you see around you can disappear, and humanity would march on. The majority of our cities and infrastructure can be abandoned to decay, and civilization would not miss a beat.

    We are all so self-important. At exactly the time that our value to the system as a whole has never been lower!

    Interesting, isn’t it? I didn’t say it would be easy, I just said it would be the truth. Clearly you people have not taken the red pill.

    • Ed says:

      This is why it is clear there is no elite in control. If they were they would kill off 6 billion to make the world less polluted, to make the existing FF last longer.

      • psile says:

        I agree, there’s no one in control. The TPTB, they’re just trying to survive, like the rest of us. It’s just that their actions carry more weight.

      • Fast Eddy says:

        As has been explained 1000+ times… reducing the population would solve nothing.

        Already oil companies are slashing capex because they cannot make money because demand for oil is dropping…

        If you removed 6B consumers from the equation — what do you think would happen to the price of oil?

        That would cause an instant deflationary death spiral.

        And if you were an Elder… how would you kill off 6B people anyway?

        • Javier says:

          Bioweapon. Quick. “Clean”. Relatively low cost. Infrastructure intact. Short holiday in underground bases when things get too close for comfort. Vaccine for the chosen ones.

          In all seriousness, I’m not sure 6B could be “let go” that easily. The only modern day advantage for such a plan is rapid, non-stop global travel. After that, it depends on how competently you can isolate the infected and develop countermeasures.

          Other than that, it’s famine. Billions of people crammed into hundreds of cities with no idea how to grow their own food waiting for the next delivery truck to arrive. Again, it’s hard to imagine on a global scale, but given a suitable crisis, numbers would dwindle at a steady pace if that supply dried up.

          There may actually be a fair amount of resilience within our species now that mitigates such population reduction events. I guess a nuclear winter type scenario would be the most devastating, but rather messy, don’t you think?

      • Pintada says:

        Yes Ed, there is no one in control.

        I am visiting today to post this because I read (twice) it and find it very important. A must read as they say.

        View at Medium.com

        The slant of the investigative report is toward loss of civil liberties, and the hypocrisy of the governmental leaders of the EU and US. I immediately thought of Fast Eddie, et. al., who seem to be a tad paranoid to me. The article really says it all regarding the people who have power over their little corner of the world but otherwise are certainly NOT in charge. And it supports Gail’s overall thesis.

        So what do we know?

        Putin wants a pipeline through Syria that he can control.
        The US and EU want a pipeline that Putin cannot control.
        The Turks hate the Kurds.
        Radical religious people can find an excuse in the bible, torah or koran to do anything that they want including, murder, rape, etc..

        So, there are no people in charge, because anarchy – by definition – requires that there be no-one in charge.

        And the pending carnage in the middle east and the inevitable loss of freedoms at home just go to support the idea that anyone that has a little power is doing everything to find and steal that last drop of half-way affordable oil.

        • Fast Eddy says:

          No one is in control?

          So QE just happened by itself…

          ZIRP just happened by itself…

          Banks just started to lend 750k to part time gardeners … nobody told them to do that…

          Likewise 30% of the auto market is comprised of people who are not likely to repay their loans… that just magically happened ….

          Berlucsoni and Papadnreaou just decided to quit and be replaced by Goldman Sachs dictators — nobody threatened them…

          Of course someone is in charge — if nobody was coordinating a centralized response to the end of growth — we would have collapsed over 10 years ago…

          The owners of the Fed are in charge — they pull the levers — they make the decisions…

          How amusing that people think nobody is in charge — yet the world eagerly awaits the decision on whether to raise interest rates — every single month … because a slight movement upwards or downwards can set off tsunamis around the world….

          Who makes that decision? Your elected reps?


          The owners of the Fed. aka the Elders.

          How much more obvious can it be?

          • Pintada says:

            Are you conflating the concept of someone actually making all the decisions that cause everything that happens on the planet with the fact that there are people in charge of large (to us) organizations – organizations that on a world stage are by no means “in charge”.


            Are you saying that the Fed runs the world? Ridiculous paranoia not supported by any facts.

            The Fed does not control the economy of China. The Fed does not control the scarcity, or existence of oil in Kazakhstan. The Fed does not control ISIS, or Iran. The Fed does not even control the US economy. The proof of that was apparent in 2008 and is about to become very clear again soon.

            How much more obvious can it be?

          • Pintada says:

            “I am saying the owners of the Fed run the world ….”

            Aaaahh, … so … Good for you, Fast Eddie.

    • bandits101 says:

      So dolt you continue to create strawmen to burn. Name one person who claimed they individually matter. Nobody has claimed they even collectively matter. We have constantly pointed out that we are in a predicament. It is YOU that is claiming the PTB will create inflation and hyper-inflation. It is you that stupidly says there is no and has never been deflation.

      Now you are on some insane rant about cities disappearing and civilization marching on…..like what the hell has that to do with the price of fish………………….

      • dolph9 says:

        My argument is that we face a stair step, slow burn, slide down in which the managers of the matrix perform one large triage operation to keep the essentials working while shedding noncritical components.

        The argument of people here is “the entire global system collapses tomorrow”.

        Who do you think is right?

        • Fast Eddy says:

          “My argument is that we face a stair step, slow burn, slide down in which the managers of the matrix perform one large triage operation to keep the essentials working while shedding noncritical components.”

          That is not your argument — it is your opinion.

          An argument is backed by facts — an opinion is a feeling.

          It has been explained many times to you why it is not possible to have BAU lite. You either are incapable of understanding the reasoning — or you are stuck in Koombaya Warp and do not want to get it…

          Because Mr Cognitive Dissonance has taken over your brain and he will not let you get it — because getting it will result in mental anguish — and a desire for Abilify — because the implications of getting it mean you are a dead man walking.

          You will note that Mr CG at one point had taken over my brain — I used to think we could live in a steady state world — I’d have my fishing boat — hydro power — food — kinda like living in Little House on the Prairie in BC …. then I came to my senses — kicked CG in the ass — and returned to reality.

          There is hope for you too. We are trying to help you…

          But of course if you are unable to deal with reality then best you remain under the protection of Mr Cognitive Dissonance…. for many that is the better alternative.

          The reality of the situation we are facing is grim … even ‘putrid’

          FYI: nobody outside FW gets my real take on reality — not friends, not relatives, not even my wife. I have no desire to convince them that the Apocalypse is imminent…. what purpose would it serve?

        • Pintada says:

          “… the managers of the matrix perform …”

          So, you think there is someone in charge. Who is that? The Illuminati, the Masons, the Jews? Who is in charge?

          “The argument of people here is “the entire global system collapses tomorrow”.”

          Please post a quote from someone that said that. How do you know that that person speaks for me? I think that the entire global system will collapse as does our esteemed host. But no-one said tomorrow.

    • doomphd says:

      “The majority of our cities and infrastructure can be abandoned to decay, and civilization would not miss a beat.”

      Please define your “civilization”. What type of civilization are you envisioning that has no infrastructure and most cities? No sanitation services, no food or fresh water distribution above small township levels? You also state “the majority of cities”, which implies that some remain in tact. How so without the infrastructure? And without that, trade?

      Are you thinking of a Jim Kunstler “World Made by Hand”? Hardly a proud civilization worthy of textbook entry. What you and JHK describe is a scavenging society, perhaps lawless, with little to no trade. On the contrary, the previous civilization (ours) will have missed many beats.

    • Fast Eddy says:

      What are you on about now? Your positions are becoming increasingly confused….

      Of course I do not matter — the Elders would be more than happy to have me take a bullet (from a ‘terrorist’) if it furthers whatever agenda is on the table at the time. https://en.wikipedia.org/wiki/Operation_Northwoods

      They do not care if I have a job or am in the gutter —- but they do care if billions of people do not have jobs because the means their system – known as BAU – collapses…

      I still have not heard back on what you call it when oil goes from $147 to $40…. is that not deflation?

      There is nothing wrong with admitting one is wrong — most recently I have gone 180 on GMO — I was completely wrong to be criticizing Monsanto…. no shame in that….

      • dolph9 says:

        I already made my point. Oil $11 to $40 dollars, an increase of more than 3 times. Inflation.

        $147 was a bubble. Bubbles bursting is not deflation.

        • Fast Eddy says:

          “In economics, deflation is a decrease in the general price level of goods and services.”

          I am struggling here…. you say that all governments have to do to escape deflation is print a lot of money.

          Strange — they have been printing astronomical amounts of money (tens of trillions) over the period covered by those graphs — they continue to print enormous amounts of money…

          Yet there continues to be deflation.

          Are you going to tell me that 1+1 = 7 next?

          • Fast Eddy says:

            Oh and btw — yes inflation is generally the trend over time — nobody is disagreeing with you on that point…

            However this time is different …

            See the commodity price index — it is falling even though the presses are running hard…

            When the end game comes the presses will be roaring red hot as the Elders do ‘whatever it takes’ but unfortunately gravity will win out over money printing …. and the commodity index will completely collapse….

            There are limits to what money printing can accomplish — at some point it will not stimulate — at some point it will just blow up the machine…. see Japan — surely by now they would have experienced hyper-inflation … but nope … they get a slight bit of inflation then they crash back into deflation/recession — if Japan was not able to sell products into relatively strong foreign markets — their machine would have blown up long ago…

            At some point the layoffs and bankruptcies will accelerate like a snowball down Everest …. and demand for everything will just vapourize.

            And that my friend is what is referred to as a deflationary collapse of the economy.

            Exactly what Bernanke was referring to in his paper over a decade ago — exactly what he and his predecessor fear and are battling …. a battle they are losing.

        • Pintada says:

          Aluminum was so rare and so highly prized that only kings could own it. Now, I find that it just is too much trouble sometimes to recycle an AL can. It has gone down in price tremendously.

          Whale oil was the king of lamp oil sales for many years. Do you know anyone that would pay any amount for a gallon of the stuff. It is in fact worthless. One of the reasons that oil was first drilled for in PA was that whale oil was becoming very scarce (expensive).

          Inflation/deflation happen over a period of time. You can pick a price for something at a certain time to support your argument. I can pick the price for the same commodity at a different time to defeat your argument. Boring.

          • bandits101 says:

            Great point….Well said. Some fine new faces here, very knowledgeable such as yourself and psile, Van Kent and others. OFW is coming along in leaps and bounds. Here we for the most part are preaching to the choir.

            I wonder if I would have been better off not knowing. Over the past ten years or so I’ve made a lot of changes to my life, even though I know deep down it will all be in vain. I certainly don’t think inflicting my doomer views on the blissfully ignorant is advantageous to them at all. I don’t think knowing myself has been an advantage. Probably the survivors after the initial collapse could very well wish they had not survived.

            • psile says:

              “I wonder if I would have been better off not knowing.”
              There has to be someone around to say “I told you so”. Cheers!

            • Pintada says:

              Thank you. I’m not sure your praise is always deserved in my case, but i do enjoy the site.

              Regarding your second paragraph … yup, me too.

        • psile says:

          The Fed, the ECB, the Bank of Japan, the PCB are all fighting off deflation with MOAR and MOAR money. Supporting financial markets artificially with all that it takes. They are doing God’s work to keep life grand for us in the imperium! As soon as the latest and greatest credit bubble implodes though you can be sure there will be even MOAR! But will it be enough? We’ll then see just how many billions are out swimming naked, to paraphrase Warren Buffet.

      • Fast Eddy says:

        He already has…

        Without the Green Revolution I would not likely have been born… without GMO I would definitely not be here clattering away on my laptop — because without cheap food civilization would have ended by now….

        Hail Monsanto — Hail the Elders — Hail Exxon!!!

        The givers of life. The givers of comfort. The givers of civilization.

        Screw Scott Nearing and Joel Saladin — the hypocritical/misguided proponents of ideas that would lead to collapse — starvation — suffering.

        • MJ says:

          Now Eddy, it does this mean Eliot Coleman is in that camp?
          “Nature is the most elegantly designed system,” Coleman said, going on to propose his theory that nature’s “flaws” are actually in man’s understanding of nature, not in nature herself. I began to get a sense of the greater mythology that governs Coleman’s practice. It seemed that if only we work with nature, instead of trying to control her, then we, too, could match the success of Coleman’s approach. “This mountain doesn’t have a top!” he exclaimed, reminding us that there is always more to learn.
          Coleman segued to the heart of his story: He told us that he turned part of his 40 acres of rocky, woody land, with an initial soil pH of 4.3, in the harsh conditions of Maine, into a 1½ acre farm that yields $120,000 worth of produce a year. “Of course organic farming can feed the world,” Coleman said. The audience was dumbstruck; it was almost as if Coleman was responding to that feeling in the room when he said, “The word ‘impossible’ scares people off of things that if they tried, they’d realize weren’t so impossible

          Perhaps if we just apply ourselves it could happen…of course, with the current setup that is very unlikely to occur because folks like to push buttons than soil.

          • Fast Eddy says:

            In a similar vein Joel Saladin bangs on about how he gets 10X more return out of his land than an industrial farmer… as if the industrial farmer is an idiot …. (good on Joel — not everyone can do that…)

            What he fails to explain is that he is selling his untainted meat to very high end shops — places where yuppies pull up in their Teslas after sipping low fat lattes down the street and reading the latest propaganda in the New York Times…. after having a shower in their rain drop solar heat powered bathroom with Italian marble floors….

            To pick up Joel’s meat that has been fed on the most succulent pure grasses — where the animals have been massaged and enjoyed aromatherapy in their custom built stalls…. where soothing classical music is played to ensure their meat remains stress-free, tender…and full of culture

            “Oh Daphne the beef is so incredible!!! Wherever did you acquire this? It’s from Joel Saladin’s ranch — this cut was raised on nothing but Beethoven…. and it was only $150/kg! — you must provide me with the address of the shop — I’ll have Jeeves run down first thing Monday to place an order — we’ve got Jamie Dimon and his wife coming to our Martha’s Vineyard home next weekend for a BBQ — it would be exquisite if we could honour him with a meal of this quality”

            Meanwhile — down at Wally’s World Bo Peep is digging through the Pink Slime discounted Beef section at $1/kg struggling to work out how many kg she can afford on her remaining $5 of food stamps….

            The thing is…

            Joel is not selling to Wally’s World — because his meat it too expensive for all but the 1%…. or at the very least the 5%…

            Organic farming is labour intensive — if you don’t believe that then put your boots on and come out here and spend the next 5 hours with me digging out thistle and twitch…..

            People here in NZ will not work for less than NZD25 per hour to do this kind of work…. 5 x 25 = $125….

            Organic farming cannot feed the world.

            Just as it is not possible to sell oil at the necessary $100+ per barrel (break even point) because people cannot afford oil at that price….

            Do you want to feed 7.5B people? Or do you want epic endless global famine?

            If the former then you NEED industrial farming — you need to be pumping aquifers dry — you need to be spraying round up and tordon — you need to be mixing tonnes of urea fertilizer into the soil (killing it).

            This is the ONLY way. If not for industrial farming Thomas Malthus’ predictions would have come true decades ago…

            “Of course organic farming can feed the world,” Coleman said. The audience was dumbstruck.

            Utter naive ignorant bullshit.

            You cannot feed 7.5 billion people using organic farming methods.

          • MJ says:

            I remember Eliot Coleman saying in a video that flowers was a very good product line because folks wouldn’t think twice of putting down ten or twenty dollars for a buncj , but would haggle and pinch pennies over his veggies!
            Just goes to show our messed up values

    • Isn’t it interesting they attack you for similar generalist message as mine, but for some reason they are pretty silent about most of the bullet points and examples voiced why COG style command economy will likely maintain some legs to prolong specific functions of current civilization (and on regional/block basis), why unemployment or failed companies, no stock/bond market, end of debt based global trade, all doesn’t matter for the mid term of cannibalizating the existing infrustructure and resources within the world of less.

      I guess it’s on their part chiefly because of the sheer horror from (un-)realization that humanity won’t be spared by some miraculous single crash collapse event, but the decay will rather present itself in step way fashion as protracted and utmostly cruel tortura on personal basis for at least many decades.

      • dolph9 says:

        Right, exactly.

        Apocalypse makes us feel important. Like we are witnessing some grand event, like we are a part of something important.

        We aren’t important, and there is no apocalypse.

        Doesn’t mean I’m a peak oil “nihilist”. I’m a peak oil existentialist. We have one life to live and are living at the peak of the oil age. Live the life that you want to live, enjoy whatever you can enjoy before it all goes to pot.

        • Fast Eddy says:

          “like we are witnessing some grand event”

          I don’t like the term grand — grand makes it sound as if collapse is a wonderful exciting event …. kind of like a big parade… or the coronation of a king… of the second coming of Jesus….

          When the electricity goes off — permanently —- when the grocery stores’ shelves are emptied – permanently —– when the petrol pumps offer up nothing but air — permanently…

          There are many words to describe that moment — crisis, disaster, quandary etc… (surely grand is not one — unless you are living such a miserable life that you welcome the end of civilization)

          I prefer Apocalypse — or Holocaust — because those words describe not only the immediate manifestation of collapse —- they also take into consideration the much more dire implications — the billions starving… the violence…. the disease… the tonnes of radioactive materials spewing into the environment….

          For those who prefer a religious connotation — Hell would perhaps be a more appropriate term.

          Hell on earth. That is what coming — when the money printing pushes on the string.

        • mylittlepony says:

          “Live the life that you want to live, enjoy whatever you can enjoy before it all goes to pot.”
          hear hear- now your talking- and this does not necessarily advocate a gluttonous hedonism eithor. In the revelation that all that we thought is is a illusion one eithor shrinks into nothing or tries to find a new way.

      • xabier says:

        That life might become – for many or most – a perpetual ‘Berlin 1945’, or ‘St Petersburg 1918’, dominated by the obsessive quest for food and shelter, albeit within the context of the remaining elements of a civilized structure, is very unpalatable. I am not surprised that anyone shies away from contemplating that.

      • Fast Eddy says:

        How do you maintain a command economy — without energy?

        How do you maintain martial law without energy?

        BAU is collapsing because we are out of cheap to extract energy.

        Do you think that it would be as simple as putting guns to the heads of petro engineers and oil workers at the well heads and refineries and ordering them to continue to produce gasoline?

        What about the computers and all the other high tech gear involved? Do you just put a gun to the head of the JIT global supply chain and insist that it continue operating?

        Gail – you may as well shut down the blog — we have found the solution!!!!

        • That’s silly, few hours after our posts and you are again picking and choosing sound bites not the whole picture. So again I do repeat, in this game of global triage, and readjusted global trade along more direct barter like relationships and less advanced debt/credit instruments, he who is able to selforganize and cooperate on such basis will secure advantage being able to carve for himself more of the compostable remains from current BAU, i.e. bits of infrustructure, resources, knowhow, .. On the other end of the spectrum countries and regions with “zero/or very limited” propensity to both vertically integrate on domestic front and enter such foreign deals quickly will just desintegrate into even lower levels of complexity. That’s how history always worked throughout these shifts and will do it now again. That’s our major crossroad just coming into view, what’s going to happen say after that in the next round towards 2040/50 is a different and likely even more darker story.

          • bandits101 says:

            It could happen like that in the beginning and your last paragraph is by far, not dark enough. In the past, collapses were more or less local. There enevitably was something else to plunder, the world was a big place for half a billion people or so. Forests to burn, oceans to kill, mountains to level, rivers to dam, wars to wage, lakes to pollute, FF’s to exploit and an atmosphere and climate to change.

            I just think there will be just too much to triage. With climate change, ocean acidification, break down of the food chain and economic collapse, the world of hurt that is coming will simply overwhelm us in many ways, known and unknown.

          • psile says:

            This is already happening & does so because BAU hasn’t ended yet. The question remains how is command control and communication going to hold for more than a short time after BAU implodes to allow this situation to continue?

          • doomphd says:

            “That’s how history always worked throughout these shifts and will do it now again. That’s our major crossroad just coming into view, what’s going to happen say after that in the next round towards 2040/50 is a different and likely even more darker story.”

            You have the darker story part correct. The 2040/50 timeline is a real stretch. We can gauge the rate of BAU collapse now with charts and graphs extending back only a few years to months. Everything I’ve seen points to an acceleration of bad news across the board, even in the used-to-be slower climate change arena. Guy McPherson’s rather extreme views may prove correct.

            I’ve not wasted my time listening to US presidential politics, but when I read a synopsis, I discover plans among the top GOP candidates (minus Trump) that include military moves to threaten Russia, and the top Democrat candidate, Clinton urging a Vietnam-type slow escalation of events in the MENA. They are ether truly clueless or are cynically offering up a WWIII solution to our economic woes, thinking perhaps a Great Depression-WWII redux. However, things could quickly get out of hand.

            Anyway, the scale and timing of these events appears measured in months to years, not decades.

            • mylittlepony says:

              Im not sure any of these candidates are actually human. Rest assured no candidate will get elected who is not a big fan of war regardless of political orientation. Like the monopoly board all paths lead to go.

      • Stilgar Wilcox says:

        “….humanity won’t be spared by some miraculous single crash collapse event, but the decay will rather present itself in step way fashion as protracted and utmostly cruel tortura on personal basis for at least many decades.”

        WofH, that is also my take on collapse. There is a scene in a Star Trek episode when the captain of another ship that looks like a 6′ alligator says to Kirk, “Stop, I shall be merciful.” Meaning he would kill Kirk quickly. Unfortunately our species is too good at using what is available, so we will endure a long descent of diminishing returns. Even if there is a run on the banks, or even a new currency, new government, we will do whatever it takes to hit the reset button so we can compete against the top .001% for whatever resources are left. We will do that because that is our nature. But rest assured, greed and it’s accompanied cackling laughter by those pulling the strings will not stop all the way down.

      • Pintada says:

        You are a big fan of the ArchDruid. So am I. The difference between us is that I think that he can be wrong. I guarantee you in fact that some of his ideas MUST be wrong.

        He has never, ever offered any proof whatsoever that his theory of a slow decent is valid.


        Because it is in the future and therefore unknowable.

        • Pintada says:

          Sorry. The above was for world/dolph.

        • Pintada says:

          Comments by worldofwhatever and dolph read as if they are Mr. Greer – the Arch Druid. Perhaps one of them is he.

          Have you ever tried to get a straight answer from the Archdruid on a question about his theories? I did, and my comments were very quickly erased. He controls his site, and the comments section there with an iron fist. That is fine, it is his site after all. But what it leads to is a comments section that is really just a series of fan letters. If you are a fan, you feel right at home of course, but if you are trying to see reality forget it and go elsewhere.

          Mr. Greers theories fall apart completely and irrevocably if you point out that there are black swans. There are things that can happen that would collapse the existing systems and render humanity extinct overnight. Astroids, Comets, a methane clathrate eruption, etc. can happen and (especially in the case of the methane hydrate eruption) may be inevitable. Mr. Greer will not acknowledge that fact. The examples that I gave were on the top of my head. The real black swan that takes us out may be waiting in the wings and at this time may be unrecognizable.

          Mr. Greer gets his theories from history – which is completely valid. The problem is, he always goes back to Rome. His main theory can be summarized as, “Rome collapsed over a period of several hundred years, therefore, all large civilizations collapse, and that collapse always takes several hundred years.” Poppycock!

          “At their height in the late eleventh century, the Chaco Anasazi dominated forty thousand to fifty thousand square miles of the scrubby, semiarid Four Corners region. … It took these Anasazi farmers more than seven centuries to lay the agricultural, organizational, and technological groundwork for the creation of the classic Chacoan period, which lasted about two hundred years—only to collapse spectacularly in a mere forty.”

          Stuart, David E. (2014-05-08). Anasazi America: Seventeen Centuries on the Road from Center Place, Second Edition (Kindle Locations 278-279). University of New Mexico Press. Kindle Edition.

          The fate of the Anasazi is just one example.

          • doomphd says:

            The curve of Chacoan cultural growth and collapse described by Stuart (7 centuries of growth and increasing organizational complexity, followed by a 40-year collapse, probably from prolonged regional drought) resembles the Seneca Cliff, and describes many natural systems in overshoot, such as the St. Mathews Island deer population growth over time.

        • Pintada says:

          So, for WorldofWhatever and Dolph, I will forgo my TV time tonight. Lets take a short trip into the Archdruids mind. You can reach your own conclusions as to his alleged infallibility.

          He is writing a fictional account in an effort, he says, to make the inevitable future understandable. To provide a vision of the future toward which his faithful can aspire. The story is set in Toledo 50 years hence. (I have a lot of pent up frustration. I didn’t realize how much.)

          I will cover my concerns about his steampunk utopia in several paragraphs.

          1. Utopia – you bet. There is no war, no disease that he mentions, no bigotry, in fact there are no problems of any kind that have not been solved or that are insolvable. The people are free, healthy, well fed, and happy. The government is well organized, and efficient. Of course, outside the small area that runs itself per the great mans belief system things are not so pretty, but that is their problem.

          2. The small nation of The Lakeland Republic imports nothing. It imports no oil. There is no oil in that part of the midwest, never was any. (instead of saying “that part of the midwest” in the future, I will simply say “Ohio” from now on) And yet, they run railroads. It is clear that Mr. Greer wants us to assume that the diesel-electric locomotive that takes his protagonist to Toledo runs on biodiesel. Sorry that is not possible. If they don’t have mineral diesel, they cannot have large quantities of biodiesel since it takes lots of the former to produce a little of the latter.

          3. Steel – Again, no iron ore in Ohio, never was. The assumption he expects us to make is that all the rail, the rolling stock, the locomotive, and all the other things that makes up his utopia is steel from scavenged remnants of our economy. I’ll grant that there is plenty steel in Ohio, and that it will be salvageable, IF: you can run an acetylene torch. I have never tried to cut a railroad rail without an acetylene torch. Have you? How would you do it? Hack saw? No, the availability of a hacksaw blade presupposes that there exists sophisticated metallurgical capability, which brings us to … .

          4. Coal – No coal in Ohio, never was. How does one melt all the scavenged steel that is used to build the railroads? Without copious amounts of coal burned very efficiently one does not melt steel. Period.

          5. Electricity – All the electricity for Toledo is made from methane recovered from manure. NO! Without Masterblaster it cannot work and he is in Bartertown and will not be leaving. (Well, maybe if you agreed to put him in charge, you could lure him away. Maybe.) You true believers will point to all the methane produced during sludge digestion in all the big sewage treatment plants. Its great that they do that, but if you actually read those articles they always have the line, “enough methane to power most of the requirements of the treatment plant”. Not enough to power the treatment plant and 100 homes, MOST of the power for the plant itself.

          6. Pavement – all the streets in Toledo are paved. With asphalt? Not without oil. With concrete?

          7. Concrete – the buildings in Toledo are mostly new. They are not built from concrete since it takes lots and lots of natural gas or coal to turn limestone into lime. No lime, no concrete.

          8. Lumber – the buildings in Toledo are mostly new. Those buildings are not made of wood either. There are no forests in Ohio and even if there were, how is the wood gathered and processed? Even if there were forests and it was possible to make the lumber, the entire area of Ohio would be cleared in just a few years.

          No, worldofwhatever and dolph, people that do not subscribe to the wishful thinking of the Arch druid do not think that they are somehow special. They generally are not so afraid of collapse that they are delusional. In reality, we admit that under perfect circumstances there might be pockets where collapse takes many generations. The challenge is to get JMG to admit that he could be unable to see the future.

          I wonder what the fundamental difference is between JMG’s steampunk utopia and a techno utopia? Is there a difference?

        • Pintada says:

          Is there a real difference between followers of the Archdruid and singularitarians? For those that don’t know what either of those are:



          1. Neither admit the existence of the laws of thermodynamics. Concrete without coal or natural gas? No problem! Take a diffuse energy source like sunlight and create a concentrated energy source with no tradeoff? No problem! Mary Odum did have a detailed review of emergy which is actually just an extension of thermodynamics invented by her father. Now I guess you would need to buy the book. ( http://prosperouswaydown.com/policies-for-descent/ ) They used to teach thermodynamics in college. Any good chemistry or physics department had extensive thermodynamics courses. Apparently, no more.

          2. Neither will admit the existence of AGW. In one case it simply can’t happen because the machines will fix it. In the other, it is something that might happen in the deep future – nothing to see here (sound familiar, Gail). The Arctic is melting, the fires in Indonesia wouldn’t exist without AGW, the drought in Syria wouldn’t exist without AGW, the California drought wouldn’t exist without AGW, the current monster el nino wouldn’t be as severe without AGW, the drought in Brazil wouldn’t exist without AGW (and rampant forest destruction), the shells of krill would not be thinning without AGW, … ( – I could go on- ) . AGW exists, it is having profound effects now, and just insisting that you like to go to the mall will not make it go away.

          3. Both groups have formed a cult around a wise father figure. In the case of the singularitarians, Ray Kurzweil.

          4. Both have created a mythology to make the members feel superior. In the case of John Michael Greer, people who “don’t get it” are just scared of what is going to happen, or so wedded to their tech that they can’t face the future. The singularitarians point to what has happened and extrapolate that into the future in a vacuum and if you point out that continued growth (you can put in anything other than growth) might cause problems, they say, “The machines will fix it.” and, “Malthus was wrong, therefore you are wrong.”

          In both cases, they have replaced reality with a myth.

  2. MJ says:

    Another bites the dust
    Norwegian oil company Statoil announced on November 17 that it was pulling out of Arctic Alaska. In a press release, the company said that its leases in the Chukchi Sea “are no longer considered competitive within Statoil’s global portfolio.” Statoil will relinquish 16 leases in the Alaskan Arctic in which it was the lead operator, and it will exit a further 50 leases in which it partnered with ConocoPhillips. The company also plans to close its office in Anchorage, ending a seven-plus-year saga in Alaska with little to show for it.

    And more
    Shell’s campaign did not turn out well. On September 28, 2015, after a summer of drilling in its Burger prospect in the Chukchi Sea, Shell called it quits. The Dutch company said in a statement that it found oil and gas, but the volumes “are not sufficient to warrant further exploration.” Due to its poor results and the high costs of drilling, Shell would “cease further exploration activity in offshore Alaska for the foreseeable future.”

    Senator Murkowski is right that the Obama administration put the nail in the coffin for Arctic drilling when it canceled future lease sales in October 2015. But it did so only because, unlike 2008, there was almost no interest from the industry.

    The Russians with the Chinese
    However, access to technology is not the only, or even the largest, problem standing in the way of Russia’s Arctic ambitions. The collapse of oil prices is arguably much more damaging. With Brent crude trading at less than half of what it was in mid-2014, Arctic drilling is simply unprofitable. The main Russian oil firms—Rosneft, Gazprom Neft, and Novatek—will likely delay 29 oil projects because of low oil prices, several of which are located in the Arctic. Gazprom Neft’s Zapadno-Tambeyskoye, for example, is a field located on the Yamal Peninsula. The project may not come to fruition until at least 2023, more than six years behind schedule. Rosneft will defer drilling the Pobeda field, the 2014 discovery it made with ExxonMobil, by a few years as well
    Producing oil and gas from the Arctic has turned out to be a lot more difficult than many realized

  3. Jeremy says:

    The theme of zero point energy / free energy comes up occasionally. Maybe if Nikola Tesla had lived longer, he’d have cracked it. John Hutchison is a Tesla fan (Google “The Hutchison Effect”). I believe Andrew Johnson (a Yorkshireman) mentions him in this oldish video:

    I think the universe is so weird and wonderful that accessing this energy should be possible in theory, but it would do us no good, because we’d continue to dig up the Earth and make things out of it, thereby ruining the environment even more and unto death.

    All the same, Johnson does have some interesting things to say. He claims that global warming is occurring on other planets in the solar system, and he therefore thinks it is all due to solar activity. Consequently, he thinks that the burning of fossil fuels is NOT the cause of global warming on Earth. However, this does not make him a straightforward climate denialist. (I prefer “denialist” to “denier”, which always makes me thing of “40 denier”, etc., and pantyhose and such mundane stuff). Johnson thinks that we should reduce our burning of fossils fuels because they do definitely cause pollution and therefore harm wildlife and the environment, and also because they harm human health, causing asthma, cancer and various other diseases and conditions. So, unlike climate denialists, he thinks we should eliminate the burning of fossil fuels, where possible. Interesting to hear the opinions of somebody who falls between two stools. On other issues, e.g. 9/11, also the supposed suppression of free energy, and even weather control, he can come across as something of a conspiracy theorist. Personally I do believe the official story of 9/11 is far for the whole truth, but we dealt exhaustively with 9/11 in comments on a previous post, so I’m not wishing to trigger any more comments on it, only to proclaim my lack of naivety with regard to that subject.

    • Bandits says:

      “He claims global warming is occurring on other planets in the solar system” see all the denialists have is lies. The amount of sophisticated messing devices placed on Earth is quite a feat. So “he claims”….. That idiot can claim what the hell he likes, it does not alter the FACT that increasing greenhouse gasses in the atmosphere causes global warming.

      • Fast Eddy says:

        Please advise what the options are that we can implement now to stop this dreadful global warming.

        • bandits101 says:

          Please advise what the options are that we can implement now to stop this dreadful economic collapse.

          • mylittlepony says:

            War it will be my child- our species knows nothing else.

          • Fast Eddy says:

            Please advise what the options are that we can implement now to allow us to continue to extract oil to the very last drop.

            • bandits101 says:


            • bandits101 says:

              Why do you continue to condemn (as I do) those that think there are solutions…..electric cars, windmills, solar, BAU lite, catabolic collapse, steady state economy and many others. You refer to this as kumbaya syndrome.
              I react the exact same way to global warming denialist’s such as you.

            • Fast Eddy says:

              Why do I condemn them?

              I thought I made this clear when I drove them over the cliff a few weeks ago with what surely has to be described an epic tirade that left their jaws hanging from torn tendons….

              To summarize — these clowns have their own playgrounds that the gravitate to — where they banter like monkeys about solar panels and thorium and EVs and other save the world bullshit…..

              Try dipping your foot into those pools of ignorance and participating — you will be run off like a heretic at a bible school….

              In fact I was kicked off of Peak Prosperity the one time I stopped in to read a thorium hopium article — the site manager did not appreciate my exposing the guest as someone with conflicts of interest (i.e. he had a hopium fund — ahem — a thorium fund — that he was raising money for) — I was not allowed to poke holes in thorium — which is about as easy as popping balloons with a cigarette… nope — that was not allowed — debate was not allowed — delete delete delete…

              FW is the anti-christ of the RE world — the vast majority of participants here have already been through the stages of awareness that there is nothing that can save us — that renewable energy is a load of horseshit….

              It is the only place one can touch down and find mostly like minds… people who are interested in discussions of the situation we are facing without wasting key strokes on pointless drivel …. the one place where most people who are uncertain — will absorb the facts about issues like RE and say – hey — that makes sense — RE is hopium BS… let’s move on

              Of course there are some who will never acknowledge the facts – they will attempt to impose the Peak Prosperity mindset on FWers — like a Jehovah’s Witness door knocker they will keep pounding and pounding and pounding and trying to get you to join the club

              Let me tell you a Jehovah story — I had had a big night back in my Hong Kong days — was crashed on the sofa on a sunday afternoon recovering — and bing bang bong goes the apartment door bell at 2 in the afternoon — try to ignore it — bing bang bong it goes over and over and over…..

              God damn — this better be important — I open the door and there’s the feeble bugger and a woman … yes what do you want? and how did you get past the main door without buzzing up? — we are here to offer you salvation —- which was met by a blast of expletives and threats to call the police and have them arrested for trespassing — needless to say the lift couldn’t come fast enough from them….

              So why do I condemn the RE ‘Jehovah’s’ — there’s your answer. There ain’t no salvation. There is no talking reason to such people. The only thing they understand is a get along with a swift kick in the ass…

              As for Global Warming — I am not a denialist. You burn up billions of tonnes of oil, gas and coal and there are going to be some very bad results…

              My true position if you must … is that I am apathetic…. AGW is a non issue.

              Because there is:

              a) nothing we can do about it that will not collapse civilization (are you ok with collapsing civilization? — I am not)

              b) because civilization is going to collapse long before the most dire impacts of AGW.

              Once again — feel free to lay out the solutions that we should be deploying if you were the king of the world and wanted to stop AGW.

              Just fill in the blanks please:

              1. _____________________
              2. ____________________
              3. _______________________
              4. ______________________
              5. _______________________

      • Jeremy says:

        > That idiot can claim what the hell he likes, it does not alter the FACT that increasing greenhouse gasses in the atmosphere causes global warming.

        What I find interest is that he still advocates the same measures as people (like me) who DO believe greenhouse gases cause global warming. He says fossil fuels are pollutants that destroy the environment and human health, therefore they should be replaced with clean energy. Having people coming from different sides to push for clean energy is surely all for the good. The anti-pollutant argument is a good stick with which to beat the denialists. There’s just an outside chance that Johnson is right, but I’d still prefer to get rid of FF just in case – and also because they ARE pollutants. etc. FE would say, “And replace them with WHAT?” Johnson, of course, believes that “zero point energy” has already been discovered and is being suppressed. This John Hutchison guy is a strnage character – the CIA went to Canada and dismantled and took away his lab equipment, with the collaboration of the Canadian government. He went on to work on some secret projects for the military-industrial complex.

        This is all presented for speculation and entertainment only. I keep an open mind but don’t really know what to think. We all know that things go on behind closed doors – we just can’t always be sure of what.

        • MM says:

          In the real world nothing is “opressed” if it makes a big buck. You send some ten people in, raid the house and kill the engineer. Than you make “the device” yourself. That is far more logical even for an evil coal cabalist that wants to blow the world up with CO2 because maybe god will not come and save him so it is better to get some richess before.

          • Jeremy says:

            “In the real world nothing is “oppressed” if it makes a big buck. You send some ten people in, raid the house and kill the engineer. Than you make “the device” yourself.”

            Suppressed, not oppressed. Think about it. Oil is a vast worldwide industry, with massive assets that support pension funds, the US petrodollar, the military-industrial complex and all the rest. So some little guy comes along with his little gadget, that will sell for maybe $50 or $100, and produce far more energy than it costs. At the very least, you’ll be able to heat your home and light it. And your little device, once bought, will last a few years. Then maybe your little guy finds a way to upscale, and run machines in factories with his upgraded device. You, meanwhile, are “big oil”. This little guy has the power to make a lot of your vast operation worthless. The value of all that oil, sitting in wells and waiting to be produced, will be decimated, or worse. You still have the power – at the moment. Do you act? Do you send in your thugs, the Mafia, the CIA? Maybe you don’t even need to do that. Just find the little guy, buy his device, make him rich enough to keep quiet – then keep the device suppressed. Failing that, get some establishment scientists to rubbish the science. Watch Johnson’s film – some of this is hinted at. Listen to Johnson ask a real small entrepreneur about what happened to his marvellous energy device that he demonstrated a few years ago. The guy hums and hahs, dismisses his own former work and enthusiasm with weasel words. The implication is that somebody has got to him and either paid him off or frightened him. I say “implication” because I don’t know. I’m just keeping an open mind. After all, the Egyptian pyramids were built in 20 years, but nobody knows how. Some engineers estimate it should have taken 600 years. So what did those ancients know that we didn’t?

            And the big oil people – they just can’t bring themselves to believe that all this fine work they’re doing (which is incidentally making them rich and providing them with a living) is polluting the world and causing global warming. That’s just human nature for you.

            I remember watching a news item on the BBC news, circa 1979 or 1980, in which a man had built a car that ran on water. And he was driving it around Australia. I often wonder what became of that man and his car. That’s not to say that a water-powered car would be harmless. Entropy would still be involved, and with potentially millions of them around the world, there would be some adverse effects for sure.

            • Van Kent says:

              Yes, there are many things conventional science doesn´t understand or can properly explain. That´s actually the beauty of science. Some years ago if somebody would have mentioned Ice Age civilizations, science would have deemed them totally bonkers. Yet here we are http://www.smithsonianmag.com/history/gobekli-tepe-the-worlds-first-temple-83613665/?no-ist

              The only real question marks I have are, where in darnations are IMF and BIS OTC SWAP profits going? I can´t see raw materials and commodities disappearing anywhere, so they are not flowing in to the real economy. And secondly, someone could explain to me with real world physics how the twin towers came down. It would seem that someone has some pretty impressive behind the curtains tech.

            • Jeremy says:

              @ Van Kent:

              Thanks for the link:


              The vimanas, the airships/spaceships described in the ancient Indian texts, are also a mystery. The myths say that they used mercury as fuel and scorched hillsides when they took off. They also had weapons: the myths seem to describe radar and also laser and nuclear weapons. One text describes how when you travel in a vimana up into the blue sky and beyond, you end up in space, which is black but illuminated by twinkling stars. How did the ancients know that space was black when you had a blue sky on Earth?

              As for 9/11, look at the videos of Dimitri Khalezov on YouTube, and also the work of Dr Judy Wood. They reach different conclusions, but Andrew Johnson thinks that TPTB are happy for different theories to be propagated, because then the proponents argue with one another – a fortuitous version of “divide and rule” – thereby keeping the pressure off TPTB.

    • psile says:

      Apparently to others, it’s all the Club of Rome’s fault for concocting this nasty “hoax”. People don’t want to deal with reality because they are invested in the future. As a member of the human race, you are not permitted to throw in the towel and give up hope for a bigger and brighter tomorrow. Humans are natural-born optimists and it’s exactly that optimism which has brought us to our predicament.

      • Fast Eddy says:

        Doph is in that camp …. he cannot imagine that there is no future….

        Why not just believe in god? He promises eternal life….

        • psile says:

          I’d rather worship Exxon, oh deliverer of all things cornucopian….

          • Fast Eddy says:

            Perhaps in the post collapse world the barbarians will worship the Exxon logo — and they will sacrifice goats and pray to the logo believing that some day the god Exxon will return to the earth … and bring with him the blood of life…. the black tarry stuff known as oil…..

            Oh Exxon … you are the bringer of food and warmth and automobiles and trains and planes… and light… and AC and medicine… and plastic and all things good and wonderful … you through your son BAU are the redeemer… Oh Exxon please deliver us from the Apocalypse that we are living .. we pray that you will send BAU down from the heavens once again to deliver us from evil … ahhhhh — men…..

            I wonder if I can buy some Exxon paraphernalia online and store it in the garage … and if I make it through … my new gig could be head of the cult of Exxon (official title could be The Keeper of the Petrol Pumps) … wouldn’t be so bad to be the master of the entire world …

            And don’t anyone get the smart idea of hoarding BP logos — or Total … or any others…. you are the enemy sent by Satan … I will send out my legions to smash your logos and pumps …there is only one true redeemer —- he is the god Exxon — and his son BAU…. and I am their Earth rep.

  4. Fast Eddy says:

    The End Of The Recovery, In One Chart

    One of the questions on analysts’ minds lately is whether stock prices can keep moving up when corporate sales and profits are falling. But the same can be asked about the overall economy. Why would companies hire more people if they’re selling less stuff? The answer is that they probably won’t. As the chart below — put together by good friend Michael Pollaro — illustrates, business sales and employment have tracked closely since at least the 1990s. When sales have fallen, companies have responded with less hiring and more firing.

    But for the past year sales have declined while reported employment has risen. Unless this relationship no longer holds, one of these lines will have to change course very soon. And since sales are beyond anyone’s control, it’s a safe bet that employment will be the one to give.

  5. Fast Eddy says:

    And now even the wealthy are hurting…

    Swiss Luxury Watch Sales Collapse Description: “2015 has been one to forget for the watchmakers,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. As Bloomberg reports,

    Swiss watch exports had their biggest decline in six years in October, led by a 39 percent slump in shipments to Hong Kong, the industry’s largest market.

    Shipments declined 12 percent to 2 billion Swiss francs ($2 billion), the Swiss customs office said in a statement Thursday.

    Exports to the U.S. dropped 12 percent.


    Its luxury yachts have featured in four James Bond films and it has celebrity fans including Sir Roger Moore and Formula 1 boss Eddie Jordan, but Sunseeker is still making a loss.

    The Dorset-based boat maker, which was bought two years ago by Chinese property developer Dalian Wanda Group, recorded sales of just £196 million in the year to December 2014, compared with £341 million for the previous 17 months.

    However pre-tax losses widened from £26million for the 17-month accounting period to £39.1 million for 2014, meaning the company has not made a profit since the year ending July 31, 2012.


  6. dolph9 says:

    Clearly I have touched a nerve, so let me do it again.
    I and many others have put forth here, in many posts, our vision of what we actually see coming over the next several decades, and it isn’t pretty. But nonetheless we have attempted to use what we know to come to a forecast about what is going to happen.

    So, this is my challenge to you fast collapsers, who insist that any day now, everything is going to be unavailable. Come up with your own vision of what is ahead, put a timeframe on it, and actually post it here. That way, we can begin to compare these things as time marches on.

    1) If the electrical grid worldwide is going down, when will that happen? A day, a month, a year from now? Post a prediction when you think all electricity, everywhere on this planet, is going to be gone forever.
    2) If you think there is going to be no fuel available, anywhere on this planet, what is your timeline for that?
    3) If you think every single grocery store on this planet is going to be completely bare, what is your timeline for that?

    If you think we are all going extinct, again, go ahead and list some mechanisms and how this actually takes place.

    You need to start to make some predictions, some forecasts. I’ll be waiting. Let’s move this discussion forward and have a “doomer forecast competition”. A little competition is a good thing, right? And if you aren’t willing to put down a forecast, doesn’t that prove your own lack of confidence on how this will play out?

    • mylittlepony says:

      My dolf baby you have become awfully adversarial. One could even question your motives. There is a lot to be said for your underlying argument but your method of presentation reveals much.

      Myself I see it this way. Despite clear and convincing arguments that collapse should have occured it has not. That is a fact. It doesnt mean that the model is wrong. Since BAU is continuing it is a fact that it can continue. Hence I prepare for both, collapse and continuation of BAU.

      Now wasnt that much easier instead all of that challenging and desire to butt heads like a couple of rams?

    • Van Kent says:

      2016 Q1 ECB goes in to negative interest rates
      2016 Q2 FED goes in to negative interest rates, marketed as the “new normal”
      2016 Q3 California draughts continue and the record El Nino event reduces crops globally
      2016 Q4 China closes stock markets (again), devalues money
      2017 Q1 Greece defaults, left hanging by the ECB
      2017 Q2 IMF gives out huge amounts of SDR:s
      2017 Q3 California small farmers decimated, and globally countries are left with record low on grain reserves
      2017 Q4 What ever emergency measures are left Japan, ECB and FED implement them. Debt marketed globally as “this is the new normal; never pay back the principal”
      2018 Q1 Because the 1,4b Chinese population can not be adequately provided with food, the Chinese make a move on the petrodollar
      2018 Q2 Unable to be sure of the petrodollar the US treasuries become volatile
      2018 Q3 The mystery buyer of US treasuries from Belgium exposed
      2018 Q4 US consumption tanks, therefore global consumption tanks
      2019 Q1 The Perfect Storm, corporation bankruptcies, interesest rates soar globally, international banks floored by derivatives, all monetary transactions stop, payrolls don´t come
      2019 Q2 SHTF
      2019 Q3 every single grocery store on this planet is completely bare
      2019 Q4 all electrical grids worldwide are down
      2020 Q1 fuel reserves depleted worldwide
      2020 – 2030 new virulent strains emerge, one after another
      – 2100 Wet bulb temperatures spread from the equator both north and south, rising sea levels combined with really bad and unpredictible weather makes farming or animal husbandry difficult.

      In the long run, extinction, no, walipinis in Argentina, Chile and New Zealand are possible. The Northern Hemisphere has too many unknowns, temperatures can soar or fall by +/-6C within one decade, at any time, to be counting on the northern hemisphere to remain habitable by our species. Think of Mediterranean temperatures in Norway followed at some point by a small or large Ice Age. Not exactly nice weather. But Argentina, Chile and New Zealand walipinis look promising, at least as far as we can say today. Certainly some preservation of knowledge, of potash and soda production to make glass, would be nice. http://energyskeptic.com/preservation-of-knowledge/

      • dolph9 says:

        Thank you for at least having the guts and taking the time to post a prediction. You are the only one to do so thus far.

        I have long made known my forecast: slow burn, continued wars, capital controls, etc. until the 2030s or thereabouts, and then increasingly rapid breakdown in the world system with likely complete collapse of the dollar and with it the american empire, followed by racial/civil war in america and breakdown of global trade into regional blocs, with some areas doing better than others, industrial decay and abandonment, etc. I actually think some fuel and electricity will be available to survivors for as far as the eye can see, beyond 2050. It matters not, in my opinion, whether there are 8 billion or 1 billion people on this planet, or any number in between. Less than 1 billion? Ok, now you are getting into small enough numbers than you can question the viability of industrial civilization which depends on a critical mass of humans for specialization and complexity. I don’t think anybody reading this will live long enough to see the transition to this post industrial scarcity world.

        Where is Fast Eddy? Does anybody else want to chime in? Anyone? Bueller?

        • psile says:

          Don’t be a twat. Many have posted timelines and predictions. Do a search.

        • Fast Eddy says:

          This will be your last Christmas with turkey and presents… how’s that for a prediction.

          This is based on the fact that corporate profits are declining (or some might say deflating…) + commodities have collapsed (deflated) + China appears to no longer be able to carry the global economy.

          Unless the Elders have further tricks up their sleeves — we get a deflationary collapse in the coming year.

          • Kurt says:

            Well, slightly more people will be without turkey and presents, but so what? I’ll check back with you next Xmas and see how you did.

            • Fast Eddy says:

              When the electricity goes out — food becomes a problem for everyone.

              Roasted rat for Christmas dinner anyone?

      • Pintada says:

        Van Kent;

        A ballsy post, and I congratulate you. Unfortunately, I can assure you that every point is wrong. You have fallen into a trap in that no matter how smart you are, you cannot predict the future. No one can.

        There are two that I know are too optimistic, because they have already happened.

        2016 Q1 ECB goes in to negative interest rates
        I can’t find a good reference, but many EU countries have entered NIRP already.

        2020 – 2030 new virulent strains emerge, one after another – you missed that one by about 4 years

      • Kurt says:

        Well, you are essentially relying on food shortages to kick things off. Not gonna happen. California has been through droughts before and they have more water than you think. China is having no major issues feeding its population either. So, I’ll check back with you on that one. Also, the Perfect Storm scenario basically seems to come out of nowhere. Heck, you could argue that the Perfect Storm could occur next week. Care to make a wager on your prediction of 2019 Q3? Didn’t think so.

        • Van Kent says:

          Kurt, yes, in this scenario I expected fraudulent economic numbers from the central banks and some truly excessive money printing. Think of Enron, that will be the measure of reliability of our official economic indicators from here on out. What finally collapses the house of cards in this scenario is some sort of real world constraints like food shortages, that finally starts a faster pace of collapse.

          Because US consumption is what holds the global economy together, today, the logical break in this balancing act of the cards, would be a real threat to the petrodollar. The only thing that makes US capable of this http://www.usdebtclock.org/ is the petrodollar that keeps the dollars in demand despite its ridiculousness.

          If the petrodollar goes, then US is immediately stuck with a printing press working on overdrive, but nobody wanting the toxic currency. Hence, US consumption tanks, global consumption tanks, collapsing the house of cards.

          China is a good actor to move against the petrodollar, because they really have f-ckd up their environment http://yaleglobal.yale.edu/content/china-dark-side-growth all farming requires water and if over 70 percent of lakes and rivers in China are polluted, and nearly 40 percent of those rivers are deemed “seriously polluted”, thats going to become an ever increasing problem for the Chinese.

          China is also a big fishing nation and world’s oceans and seas have many fishstocks overexploited and depleted http://worldoceanreview.com/en/wor-2/fisheries/state-of-fisheries-worldwide/ trouble on all fronts to China.

          About the El Nino

          Well, the California drought seems to be a big deal for Californians.

          Well, actually Fast Eddy might be right, The Baltic Dry index looks dismal. The real world indicators show that you are absolutely right, the Perfect Storm could occur next week. Thanks for pointing that out Kurt. Cheers!

        • Fast Eddy says:

          “Care to make a wager on your prediction of 2019 Q3? Didn’t think so.”

          What is this – grade 3?

          Nobody cares to wager on this because nobody can know with any specificity when the end will come — the most anyone can do is make an educated guess.

          And as has been pointed out in the past — if someone does take your stupid bet — and wins — what are you going to pay them with and how? Fedex won’t exist so betting a case of beans is pointless.

          • bandits101 says:

            Kurt has a point. Prior to 2008 I was of the opinion that it would go down something like this……..oil would become scarcer so naturally more expensive (this was the common assumption at The Oil Drum) countries that needed to import oil would feel the affects first, the oil exporting countries would need to trade oil for food and so on. Rationing in developed countries would be instituted to maintain order in essential services. A debilitating black market would develop, developed countries would break down along polititical, ethnic and religious lines. There would be no money for big sporting events or aid for the affects of natural disasters, runaway devaluation would ensue with riots and people on the move, shanty towns and finally mass starvation and disease. A world war I thought was inevitable.

            That’s roughly how I envisioned events unfolding. Every year I thought, that will be the last US Masters or Olympics or Superbowl. I thought all I had to do was store some food and when the bear began to chase, I only had to outrun the other person.

            To this day whenever Christmas comes around or there is big sporting event, I wonder if it will be the last. I’ve been wrong for over seven years now. For how much longer can I continue being wrong. I know collapse is coming but now I realise I can’t assume anything, the timeline, how events will unfold and what tricks the PTB can pull out of the proverbial hat.

  7. Don Stewart says:

    Dear Gail and Others
    I stated that Tim Garrett needs a thermodynamic model of oil in order to make some educated guesses about future oil supplies. Here is an example from BW Hill, posting at Peak Oil today:

    ‘2012 was the energy half way point; the point where it required as much energy to produce petroleum, and its products as it delivered to the general economy. It was also the point where the general economy could never again acquire all the petroleum produced. That indicates that prices will long term continue to fall, and inventories will increase until production is shut-in to compensate. The petroleum industry is now in its shut down phase.
    This will directly affect the monetary/ financial system that allows for the present Petroleum Production System to function. As prices fall oil exporting nations will find their currencies coming under increasing stress. This will continue until they fail, and their sovereign wealth funds, that the Western banks have invested heavily into, along with them.
    The ending of the oil age, and the pursuant crisis that will follow is likely to be best ascertained from the on going activities of the FX markets.’

    Now, first, a caveat. Hill’s model may be wrong, in which case his model is misleading him. But assuming that his model is right, then he is able to deduce some things about the petroleum market and also figure out some knock-on effects such as foreign exchange trends and government collapses. Needless to say, social turmoil and economic collapse are also in the picture. I am pretty sure Hill is correctly drawing inferences from his model…which doesn’t guarantee that the model itself is correct. Tim Garrett needs a thermodynamic model which is similar if he is going to intelligently predict the future of emissions.

    Don Stewart

  8. robertsinclair says:

    Firstly all currencies are borrowed into existance. The dollar is not money but borrowed token currency. Interest rates are at a fed- contrived rate, which has no relationship to supply and demand.
    We are at a point where as the interest rates reach zero, as they are for the banks, asset prices rise to near infintity. So as the currencies rush into the hyper inflating assets they leave the productive energy consuming manufacturing industries. Energy consumption falls along with prices. So the only direction for interest rates is up,( unless, of course, we have a complete state control of the economy cashless society etc) and the asset prices affected by these investments is down.When this happens assuming that we go back to some sorts of capitalistic economy, and interest rates reflect, once more, the market, business men will be, once again, able to assess whether their capital is best used in productive investment, or whether to leave it in cash. As interest rates rise productivity will rise and enterprises which are currently operating below marginal efficiency will close or restructure.
    So the only way to measure eroi is to measure against capital, to do that, all debt has to either written off or realined to a gold and or silver standard. To talk of ever increasing debt to finance energy, is furthering the insolvency issue.
    Prices are decided by choice of the best use of capital. Borrowing should be over a term with a return to private investors who have lent the money. Not ever increasing borrowing on energy to create some sort of phantom growth. Growth comes from the most efficient use of a assets, and energy and the division of labour (or best use of existing capital to effect maximum output over input). If ever increasing energy, and borrowing for the same, is required then insolvancy is close at hand.

    • psile says:

      Well, this is a nice scenario, but what we’ll get is war instead. The drums are already beating.

    • I am afraid we are at a situation where ever-increasing debt is needed to stay even–we have, in fact, been at this point since about 1975. We need very, very cheap energy to make the economy, without greatly increasing debt. We have been able to keep the system going temporarily with more and more debt. But ultimately, we cannot run a system that was built to run on $20 oil on higher-priced oil, or on higher-priced energy products of any kind. It hasn’t been working for a long time. We have tried globalization, and running up debt in the developing world, and that is no longer solving our problem either.

      • Fast Eddy says:

        “We have tried globalization”

        Isn’t it interesting that the men who orchestrate BAU have been introducing policies for decades now — all aimed at dealing with the pernicious effects of the increasing costs associated with energy extraction…

        As you have indicated they thought up and implemented globalization … and 99.99% of the people on the planet are oblivious to the fact that globalization is directly related to the energy issue…

        This war that has been waged on multiple fronts — is coming to an end.

        The think tanks are running out of options…

  9. MJ says:

    Like Everything Else, Alternative Energy Requires Cheap Oil
    Ironically, alternative energy needs oil to replace oil
    n February, at Resilience, Frank Kaminski reviewed The World After Cheap Oil by three Finnish energy analysts. The book ranges from the looming shock to an unprepared world to the climate crisis dependence on oil has helped foment to evaluating alternative energy sources. Kaminski singles out two unusual features of Peak Oil that the authors cover. First, the “energy trap.”

    It can be summarized thus. Once world oil production begins to decline and the resource goes from being abundant to scarce, the oil that would be needed to reduce society’s dependence on oil is no longer available. This is because, as noted earlier, alternative energy sources sorely depend on oil just for their current production, not to mention the massive build-outs required to make them the dominant fuels. In a world of scarce oil, every ounce of it we possess will have to meet essential needs before those of alternative energy. The trap will become ever more acute the further we move along the depletion curve, since the sacrifice required to invest in renewables will have to come out of an ever-shrinking pie.

    • Exactly! And we have to keep the renewables repaired, as well as the electricity transmission lines. To keep the electricity transmission lines repaired, we need to keep the roads repaired. This requires workers and trucks. We can never really stop our reliance on oil, with or without renewables.

  10. Kurt says:

    Slow collapse? All right, I’ll take a crack at it. First, the history of the human race when you get right down to it is “I’m going to kill you and take your stuff.” It has been some time since we have faced that gritty truth given MAD. We are actually in the midst of a slow collapse. The emerging nations are being jettisoned and are going back to extreme poverty — South America, Africa, and soon to be India. The demand for oil will continue to decrease bringing the price down so that Fast Eddy’s favorite scenario, BAU can continue in the developed nations for quite some time.
    Any nation that has a problem with that will be slowly eliminated. Wake up!!! This isn’t about the failure of a financial system and this isn’t Rome. This is hardball. Eventually, USA, Russia, Europe, China, Japan and a few other nations will be living pretty much as we do now. Everyone else will be starving. But, when I was growing up, that was BAU and I don’t think the developed countries will be morally conflicted in the least.

    • mylittlepony says:

      Good summary!

    • dolph9 says:

      I think this is possible, but you have to ask a question:
      Are we going to allow them to starve?

      So far the answer is no. Every threat of starvation, disease, etc., is met with massive aid pouring from the industrial nations, and do gooders like Bill Gates, Bono, and others.

      Will we have the guts to eliminate these voices from the discussion?

      • Kurt says:

        If it doesn’t show up on the TV, it just doesn’t matter. When was the last time you heard anything about Africa? Gates and Bono are just a salve for the conscious. The amount of money that they are spending is equivalent to a millionaire throwing a dime to a homeless person.

      • Fast Eddy says:

        When collapse hits — Bono and Gates will be needing food aid too….

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