Low Oil Prices: An Indication of Major Problems Ahead?

Many people, including most Peak Oilers, expect that oil prices will rise endlessly. They expect rising oil prices because, over time, companies find it necessary to access more difficult-to-extract oil. Accessing such oil tends to be increasingly expensive because it tends to require the use of greater quantities of resources and more advanced technology. This issue is sometimes referred to as diminishing returns. Figure 1 shows how oil prices might be expected to rise, if the higher costs encountered as a result of diminishing returns can be fully recovered from the ultimate customers of this oil.

Figure 1. Chart showing expected long-term rise in oil prices as the full cost of oil production becomes increasingly expensive due to diminishing returns.

In my view, this analysis suggesting ever-rising prices is incomplete. After a point, prices can’t really keep up with rising costs because the wages of many workers lag behind the growing cost of extraction.

The economy is a networked system facing many pressures, including a growing level of debt and the rising use of technology. When these pressures are considered, my analysis indicates that oil prices may fall too low for producers, rather than rise too high for consumers. Oil companies may close down if prices remain too low. Because of this, low oil prices should be of just as much concern as high oil prices.

In recent years, we have heard a great deal about the possibility of Peak Oil, including high oil prices. If the issue we are facing is really prices that are too low for producers, then there seems to be the possibility of a different limits issue, called Collapse. Many early economies seem to have collapsed as they reached resource limits. Collapse seems to be characterized by growing wealth disparity, inadequate wages for non-elite workers, failing governments, debt defaults, resource wars, and epidemics. Eventually, population associated with collapsed economies may fall very low or completely disappear. As Collapse approaches, commodity prices seem to be low, rather than high.

The low oil prices we have been seeing recently fit in disturbingly well with the hypothesis that the world economy is reaching affordability limits for a wide range of commodities, nearly all of which are subject to diminishing returns. This is a different problem than most researchers have been concerned about. In this article, I explain this situation further.

One thing that is a little confusing is the relative roles of diminishing returns and efficiency. I see diminishing returns as being more or less the opposite of growing efficiency.

Figure 2.

The fact that inflation-adjusted oil prices are now much higher than they were in the 1940s to 1960s is a sign that for oil, the contest between diminishing returns and efficiency has basically been won by diminishing returns for over 40 years.

Figure 3.

Oil Prices Cannot Rise Endlessly

It makes no sense for oil prices to rise endlessly, for what is inherently growing inefficiency. Endlessly rising prices for oil would be similar to paying a human laborer more and more for building widgets, during a time that that laborer becomes increasingly disabled. If the number of widgets that the worker can produce in one hour decreases by 50%, logically that worker’s wages should fall by 50%, not rise to make up for his/her growing inefficiency.

The problem with paying higher prices for what is equivalent to growing inefficiency can be hidden for a while, if the economy is growing rapidly enough. The way that the growing inefficiency is hidden is by adding Debt and Complexity (Figure 4).

Figure 4.

Growing complexity is very closely related to “Technology will save us.” Growing complexity involves the use of more advanced machinery and ever-more specialized workers. Businesses become larger and more hierarchical. International trade becomes increasingly important. Financial products such as derivatives become common.

Growing debt goes hand in hand with growing complexity. Businesses need growing debt to support capital expenditures for their new technology. Consumers find growing debt helpful in affording major purchases, such as homes and vehicles. Governments make debt-like promises of pensions to citizen. Thanks to these promised pensions, families can have fewer children and devote fewer years to child care at home.

The problem with adding complexity and adding debt is that they, too, reach diminishing returns. The easiest (and cheapest) fixes tend to be added first. For example, irrigating a field in a dry area may be an easy and cheap way to fix a problem with inadequate food supply. There may be other approaches that could be used as well, such as breeding crops that do well with little rainfall, but the payback on this investment may be smaller and later.

A major drawback of adding complexity is that doing so tends to increase wage and wealth disparity. When an employer pays high wages to supervisory workers and highly skilled workers, this leaves fewer funds with which to pay less skilled workers. Furthermore, the huge amount of capital goods required in this more complex economy tends to disproportionately benefit workers who are already highly paid. This happens because the owners of shares of stock in companies tend to overlap with employees who are already highly paid. Low paid employees can’t afford such purchases.

The net result of greater wage and wealth disparity is that it becomes increasingly difficult to keep prices high enough for oil producers. The many workers with low wages find it difficult to afford homes and families of their own. Their low purchasing power tends to hold down prices of commodities of all kinds. The higher wages of the highly trained and supervisory staff don’t make up for the shortfall in commodity demand because these highly paid workers spend their wages differently. They tend to spend proportionately more on services rather than on commodity-intensive goods. For example, they may send their children to elite colleges and pay for tax avoidance services. These services use relatively little in the way of commodities.

Once the Economy Slows Too Much, the Whole System Tends to Implode

A growing economy can hide a multitude of problems. Paying back debt with interest is easy, if a worker finds his wages growing. In fact, it doesn’t matter if the growth that supports his growing wages comes from inflationary growth or “real” growth, since debt repayment is typically not adjusted for inflation.

Figure 5. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

Both real growth and inflationary growth help workers have enough funds left at the end of the period for other goods they need, despite repaying debt with interest.

Once the economy stops growing, the whole system tends to implode. Wage disparity becomes a huge problem. It becomes impossible to repay debt with interest. Young people find that their standards of living are lower than those of their parents. Investments do not appear to be worthwhile without government subsidies. Businesses find that economies of scale no longer work to their advantage. Pension promises become overwhelming, compared to the wages of young people.

The Real Situation with Oil Prices

The real situation with oil prices–and in fact with respect to commodity prices in general–is approximately like that shown in Figure 6.

Figure 6.

What tends to happen is that oil prices tend to fall farther and farther behind what producers require, if they are truly to make adequate reinvestment in new fields and also pay high taxes to their governments. This should not be too surprising because oil prices represent a compromise between what citizens can afford and what producers require.

Figure 7. Illustration indicating that the world has already reached a point where no oil price works for both oil suppliers and oil consumers.

In the years before diminishing returns became too much of a problem (back before 2005, for example), it was possible to find prices that were within an acceptable range for both sellers and buyers. As diminishing returns has become an increasing problem, the price that consumers can afford has tended to fall increasingly far below the price that producers require. This is why oil prices at first fall a little too low for producers, and eventually seem likely to fall far below what producers need to stay in business. The problem is that no price works for both producers and consumers.

Affordability Issues Affect All Commodity Prices, Not Just Oil

We are dealing with a situation in which a growing share of workers (and would be workers) find it difficult to afford a home and family, because of wage disparity issues. Some workers have been displaced from their jobs by robots or by globalization. Some spend many years in advanced schooling and are left with large amounts of debt, making it difficult to afford a home, a family, and other things that many in the older generation were able to take for granted. Many of today’s workers are in low-wage countries; they cannot afford very much of the output of the world economy.

At the same time, diminishing returns affect nearly all commodities, just as they affect oil. Mineral ores are affected by diminishing returns because the highest grade ores tend to be extracted first. Food production is also subject to diminishing returns because population keeps rising, but arable land does not. As a result, each year it is necessary to grow more food per arable acre, leading to a need for more complexity (more irrigation or more fertilizer, or better hybrid seed), often at higher cost.

When the problem of growing wage disparity is matched up with the problem of diminishing returns for the many different types of commodity production, the same problem occurs that occurs with oil. Prices of a wide range of commodities tend to fall below the cost of production–first by a little and, if the debt bubble pops, by a whole lot.

We hear people say, “Of course oil prices will rise. Oil is a necessity.” The thing that they don’t realize is that the problem affects a much bigger “package” of commodities than just oil prices. In fact, finished goods and services of all kinds made with these commodities are also affected, including new homes and vehicles. Thus, the pattern we see of low oil prices, relative to what is required for true profitability, is really an extremely widespread problem.

Interest Rate Policies Affect Affordability

Commodity prices bear surprisingly little relationship to the cost of production. Instead, they seem to depend more on interest rate policies of government agencies. If interest rates rise or fall, this tends to have a big impact on household budgets, because monthly auto payments and home payments depend on interest rates. For example, US interest rates spiked in 1981.

Figure 8. US short and long term interest rates. Graph by FRED.

This spike in interest rates led to a major cutback in energy consumption and in GDP growth.

Figure 9. World GDP Growth versus Energy Consumption Growth, based on data of 2018 BP Statistical Review of World Energy and GDP data in 2010$ amounts, from the World Bank.

Oil prices began to slide, with the higher interest rates.

Figure 10.

Figure 11 indicates that the popping of a debt bubble (mostly relating to US sub-prime housing) sent oil prices down in 2008. Once interest rates were lowered through the US adoption of Quantitative Easing (QE), oil prices rose again. They fell again, when the US discontinued QE.

Figure 11. Figure showing collapsing debt bubble at the time US oil prices peaked, and the use of Quantitative Easing (QE) to stimulate the economy, and thus bring prices back up again.

While these charts show oil prices, there is a tendency for a broad range of commodity prices to move more or less together. This happens because the commodity price issue seems to be driven to a significant extent by the affordability of finished goods and services, including homes, automobiles, and restaurant food.

If the collapse of a major debt bubble occurs again, the world seems likely to experience impacts somewhat similar to those in 2008, depending, of course, on the location(s) and size(s) of the debt bubble(s). A wide variety of commodity prices are likely to fall very low; asset prices may also be affected. This time, however, government organizations seem to have fewer tools for pulling the world economy out of a prolonged slump because interest rates are already very low. Thus, the issues are likely to look more like a widespread economic problem (including far too low commodity prices) than an oil problem.

Lack of Growth in Energy Consumption Per Capita Seems to Lead to Collapse Scenarios

When we look back, the good times from an economic viewpoint occurred when energy consumption per capita (top red parts on Figure 12) were rising rapidly.

Figure 12.

The bad times for the economy were the valleys in Figure 12. Separate labels for these valleys have been added in Figure 13. If energy consumption is not growing relative to the rising world population, collapse in at least a part of the world economy tends to occur.

Figure 13.

The laws of physics tell us that energy consumption is required for movement and for heat. These are the basic processes involved in GDP generation, and in electricity transmission. Thus, it is logical to believe that energy consumption is required for GDP growth. We can see in Figure 9 that growth in energy consumption tends to come before GDP growth, strongly suggesting that it is the cause of GDP growth. This further confirms what the laws of physics tell us.

The fact that partial collapses tend to occur when the growth in energy consumption per capita falls too low is further confirmation of the way the economics system really operates. The Panic of 1857 occurred when the asset price bubble enabled by the California Gold Rush collapsed. Home, farm, and commodity prices fell very low. The problems ultimately were finally resolved in the US Civil War (1861 to 1865).

Similarly, the Depression of the 1930s was preceded by a stock market crash in 1929. During the Great Depression, wage disparity was a major problem. Commodity prices fell very low, as did farm prices. The issues of the Depression were not fully resolved until World War II.

At this point, world growth in energy consumption per capita seems to be falling again. We are also starting to see evidence of some of the same problems associated with earlier collapses: growing wage disparity, growing debt bubbles, and increasingly war-like behavior by world leaders. We should be aware that today’s low oil prices, together with these other symptoms of economic distress, may be pointing to yet another collapse scenario on the horizon.

Oil’s Role in the Economy Is Different From What Many Have Assumed

We have heard for a long time that the world is running out of oil, and we need to find substitutes. The story should have been, “Affordability of all commodities is falling too low, because of diminishing returns and growing wage disparity. We need to find rapidly rising quantities of very, very cheap energy products. We need a cheap substitute for oil. We cannot afford to substitute high-cost energy products for low-cost energy products. High-cost energy products affect the economy too adversely.”

In fact, the whole “Peak Oil” story is not really right. Neither is the “Renewables will save us” story, especially if the renewables require subsidies and are not very scalable. Energy prices can never be expected to rise high enough for renewables to become economic.

The issues we should truly be concerned about are Collapse, as encountered by many economies previously. If Collapse occurs, it seems likely to cut off production of many commodities, including oil and much of the food supply, indirectly because of low prices.

Low oil prices and low prices of other commodities are signs that we truly should be concerned about. Too many people have missed this point. They have been taken in by the false models of economists and by the confusion of Peak Oilers. At this point, we should start considering the very real possibility that our next world problem is likely to be Collapse of at least a portion of the world economy.

Interesting times seem to be ahead.



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 Low Oil Prices: An Indication of Major Problems Ahead?

  1. Baby Doomer says:

    The estimated oil prices needed to balance domestic budgets of selected OPEC members in 2019

  2. Uncle Bill says:

    Anyone else here gasped as the coverage of just deceased President Bush was presented as a nice, kindly, old chap…all the reflections of his past helping others…creating a “kindler, gentler America’s.
    Well, living during his term of office and public service, I know the other side that is NOT revealed in the press today.
    So does Dimitry Orlov…
    He writes in his latest entry….
    “Which is not to say that this topic is worthy of too much discussion either; rather, it is simply irritating, like an itch that wants to be scratched, because no matter what sort of orb happens to be in command, their responsibilities remain the same. These include:

    1. Making sure that the dollar-based wealth pump, which drains countries around the world of their savings and keeps them in perpetual debt peonage, keeps running

    2. Attending to the care and feeding of the military-industrial complex, which always needs terrorist dictatorships to arm and new, undefended targets to bomb back to the stone age

    3. Perpetuating a sham democracy which grants the wishes of business lobbies and oligarchs while doing its best to ignore everyone else

    4. Catering to the needs of certain privileged ethnic groups—the Anglos and the Jews, essentially.

    These, along with keeping the prisons full and making sure that the rich keep getting richer while the poor stay poor, are bipartisan concerns”.
    From his website Club Orlov
    Yes, indeed, not to say they are all evil through and through, but criminals, no less, in light of humanity.
    The unfortunate aspect as a citizen of the United States, I benefit directly from their dirty deeds and am an accomplice to the fact.
    It is what it is.

    • zenny says:

      I will go out on a limb and say rooftop parties are A OK and rock throwing parties are cool

    • xabier says:

      Every elderly politician who dies in the US is being used in the media as stick to beat Trump with, by people who wouldn’t know ‘patriotism and decency’ if it wacked them in the face.

    • Chrome Mags says:

      “3. Perpetuating a sham democracy which grants the wishes of business lobbies and oligarchs while doing its best to ignore everyone else”

      As Lilly Tomlin use to say on ‘Laugh In’ (1968-73 TV show), “And that’s the truth.”

    • Rodster says:

      The problem with Dmitry’s line of thinking is that he believes these dirtbags (rightfully so) are only synonymous with the USA. History has shown that for centuries these ruthless killers and war criminals can come from any parts of the world. Give any individual enough power and it can and will corrupt them.

    • Tim Groves says:

      I never liked any of the Bushes, but GWH was my least favorite. Mostly I think it came down to that ugly mouth. True, it’s wiked to bad-mouth people on account of their looks. But all the same, I can never look at George Snr. without wincing.

      When you’re the POTUS, crimes against humanity go with the territory. When he signed off on that sort of thing, he was only doing the job he was selected to do.

      September 11, 1991 was a defining moment for GWH Bush. It was the day he waxed Churchillian in defense of all those little premature Kuwaiti babies who’d been evicted from their incubators. Amid all the eulogies,the hagiographies and the hero worshiping, I’m surprised that on the lambebrain media they aren’t playing this nostalgic clip over and over.

      • Dan says:

        Well in addition to make believe babies being ripped from incubators – He brought in a lot of cocaine then filled prisons with those who bought and sold it. He was a true psychopath and the apple didn’t fall far from the tree.

        I just hope the only thing to eat in hell is brocoli.

        Speaking of psychopaths I thought the tweet monster said all was good yesterday – looks like no one is buying.

        Adonis may be right this time with his 12/18/18 call. I hope not but things are certainly getting wobbly.

      • zenny says:

        Yea that was his job…The kid IMHO is just as guilty as him…she needs a cold floor

    • Tim Groves says:

      On the other hand, I reckon America dodged a bullet when it rejected Michael Dukasis.

    • The war on Christmas, and the attempt to promote diversity everywhere. Why can’t we just have pluralism, rather than wipe out what we have?

      • xabier says:

        I agree, Gail; it’s really a raw power-struggle and cultural replacement, masquerading as virtuous ‘diversity.’

        I rather like Xmas: even though I’m not a Christian: in western Europe, a festival of eating, drinking, hospitality, and warmth in the middle of Winter has very old roots.

        Although there is that little problem of realising you might like to kill most of your relations after a few hours of exposure to them, which I gather Americans occasionally experience at Thanksgiving….

      • Third World person says:

        Why can’t we just have pluralism, rather than wipe out what we have?

        haha gail this was also said also by native americans
        but Christopher Columbus did not listen

        this was also said by Aboriginal Australians
        but Captain James Cook did not listen

        • bacteria don’t have ears

          they wiped out the native peoples, no one was aware what was happening

          • jupiviv says:

            Germs killed a lot of them and then the white man finished them off.

            • Lastcall says:

              In many cases the effect of disease was not immediate. The initial contact was often with remarkably healthy people. Go read Weston Price.

              What happened, IMHO, is that once the indigenous peoples were dislodged from their foods, lands, beliefs, and began living in squalor and became malnourished by eating the poor foods they were introduced too, then the epidemics began.

              The flu outbreak after WW1 was surely a direct result of poor health and compromised immunity. The disease was merely latent.

        • Why can’t we have some countries that specialize:

          (1) Producers of energy products and minerals
          (2) Producers of goods from those energy products and minerals
          (3) Producers of high value services (education, medicine, financial products, government services) using goods produced by others

          It doesn’t look to me as though it works that way. The system as a whole starts producing too little, and all of the parts of the system get squeezed. No one has enough exports to pay for their imports.

          The US comes close to having some of all three.

        • Tim Groves says:

          Aboriginal population of the mainly English-speaking North American territories:

          1492 Total USA + Canada 2~3 million

          2017 USA 6.7 million, Canada 1.6 million, total 8.3 million

          Aboriginal population of Australia:

          1770 300,000~1 million (estimated)

          2016 798 365

      • Dennis L. says:

        Again, the book “Blueprint” by Plomin.
        If he is correct and my understanding of him is correct, DNA actually shapes much of the nuture that is around us, DNA is a self organizing process and its only goal is replication. Jung dealt this with his intrinsic vs extrinsic ideas an the intersection being what we call morality. However, if the extrinsic is a result of the intrinsic it is a circular argument and the nature which surrounds us is a necessary condition but not a sufficient condition. An example would be amerIndians, everything was in place, Europeans put it together, used it and the amerindians all but vanished.
        Humans according to some on this sight have been around for 400K years, betting against them is probably not a good bet, we will go on and where and how is anyone’s guess.
        It would be interesting to see how many of the ultimate doomers on this site have children. Those without children might be said to be lacking in self organizing genetic completeness. DNA looks for replication, non replication is a dead end literally and figuratively.
        Is the idea of self determination a myth? We humans have constructed a number of them to make it through the day.

        Dennis L.

        • Curt Kurschus says:

          Any species that so transforms its environment as to be uninhabitable by itself without having another friendly environment to move to can only be headed for extinction unless that transformative process is comprehensively reversed.

    • Third World person says:

      haha homo sapiens not going to get extinction
      over war on Christmas

      but through plastics/chemicals on bodies of homo sapiens

  3. Chrome Mags says:


    If you click on that link it will show yesterday’s stock market indices, but not today’s, because the market is closed today in mourning for GHB. But I don’t remember the stock market being closed before for any reason other than a holiday. I’m wondering if after that 800 DOW drop they wanted to cool the markets and used GHB as an excuse.

  4. Baby Doomer says:

    Huge Human Inequality Study Hints Revolution is in Store for U.S (Kohler 2017) Nature

    • Duncan Idaho says:

      “Interestingly, it’s the people of France who are going apeshit at this moment in history and not the much more beaten-down Americans. For all the deformities of the EU, France still maintains a general quality-of-life so far above what is found in the US these days that we look like some left-behind evolutionary dead end here in this wilderness of strip-malls and muffler shops. They live in towns and cities that are designed to bring people together in public. They support small business in spite of the diktats of Brussels. They maintain an interest in doing things well for its own sake. The French are rioting these days not simply over the cost of diesel fuel but because they’ve had enough impingements on their traditional ways of life and seek to arrest the losses.”

  5. Duncan Idaho says:

    “Americans, by contrast, seem to passively accept their new status as world-class losers. You can deprive them of whatever is meaningful, whatever makes life worth living, and sell them depressing simulacra to replace those things, and they never notice. Even the revolts ongoing in this land only seek to make relations between us worse, for instance the new super-Puritanism that wants to criminalize the most elementary mating ceremonies, like asking for date, or even paying attention to someone of the opposite sex. This is what the Democratic Party, formerly the party of the working people, has dedicated itself to all year. That’s your “Resistance.” They’ve managed to ruin one of the few consolations for being on this planet.

    Maybe you’all have had enough of that foolishness. Maybe when Christmas is over something will turn in that old proverbial widening gyre, and the anarchy loosened by that turn will not be “mere.””

    • Baby Doomer says:

      Kuntsler reminds me of “Make David Chapman”..The way he now rails every week against the democratic party..

      Isn’t funny how sometimes the biggest fans can flip, and become the biggest detractors..

    • zenny says:

      The Americans I work with are doing better in all areas except health care.

  6. Chrome Mags says:


    I don’t put this on here for any other reason than to point out as the world economy grows emissions continue to rise. In 2018 they are projected to rise 2.7% over the previous year. That’s huge!!

    “A booming global market for cars has helped drive CO2 emissions to an all-time high in 2018, say researchers. The main factor in the near 3% rise has been coal use in China, driven by government efforts to boost a flagging economy. But emissions from cars, truck and planes using fossil fuels continue to rise in all parts of the world. Renewables have also grown this year, but are not keeping pace with the CO2 rise. The research, carried out by the Global Carbon Project (GCP), says that this year’s “strong” rise is projected to be 2.7%.”

    • Unfortunately, the growing emissions go with the energy use that is needed to keep the world economy going. Stop using fossil fuels, and we have a huge problem. Look at the GDP growth of the countries with the shrinking emissions.

      • Artleads says:

        A lay assessment: Emissions are one thing. Not planning better what services were provided to produce them, or how better to design the flow of emissions, would be something different. I’m assuming that particulates in the air caused by emissions don’t, by themselves, lead to GDP growth.

      • Chrome Mags says:

        Oh, I understand that completely. It’s just another unsustainable shocking metric. If you go to that link and see which countries are contributing, look at other. It’s huge and makes me wonder if that includes deforestation.

    • Sven Røgeberg says:

      From the article:
      Despite the gloomy picture on cars in 2018, the future is not so solid for the internal combustion engine.
      While they were rare 10 years ago, there are now three million plug-in cars in use globally.
      Norway will stop selling cars that are not electric in 2025. The UK, France, the Netherlands and India say they will stop before 2040.
      Car manufacturers are responding to the fork in the road. Volkswagen says it will launch its last generation of petrol and diesel cars by 2026.
      The move has been welcomed but many think it is not fast enough.
      “We simply cannot wait nearly a quarter of a century to phase out the cars warming our climate and making our air toxic,” said Rosie Rogers from Greenpeace.
      “People living in polluted cities and facing climate change-related disasters deserve better than that.”
      «Where’s the good news here?
      The overall growth in green energy has not been enough to keep pace with the rise in emissions – but that bald headline masks some significant progress, say experts.
      The costs of renewables continue to plummet. Morocco, Mexico, Chile and Egypt are now producing solar energy for three US cents or less per kilowatt hour. That’s cheaper than natural gas.
      More than 50% of new electricity generating capacity being installed right now is green. Wind and solar are doubling every four years. Coal is going backwards in most of the developed world.»

      • And the rise in renewables/complexity seems to be pushing the overall system toward collapse. That is the detail that people don’t think about.

        Does this US pattern of fuel use for electricity generation look at all sustainable?

        Does the rise in renewables look like it is likely to make a big difference in the next 20 years? Is natural gas making a sustained push upward? What do the financial statements of the nuclear power plants look like? How many of the natural gas companies supporting this plan have junk-rated debt? How well is General Electric doing? How many coal companies have filed for bankruptcy?

        Doesn’t the image look a whole lot like a system headed for “crash and burn”?

  7. Baby Doomer says:

    US and China risk full-fledged trade war as Trump sees he can win

    Investing guru Jim Rogers draws parallels with 1930s collapse of world economy

    “When the U.S. economy gets bad in the next year or two, Trump will come back with a real trade war,” Rogers predicted. “He thinks he can solve America’s problems with a trade war. He’s wrong.”

    One possible scenario for a full-fledged trade war is that the U.S. imposes high tariffs on every single product. This could push the U.S. into a trade war with other countries as well, stoking the flames of protectionism worldwide.

    “People stop buying as much, whether cars, refrigerators or anything. People stop building factories. People stop investing because they’re worried about their economy,” he said.

    “Nobody has [ever] won a trade war. … Trump doesn’t know history, or doesn’t understand history.”

    Rogers is raising the alarm over the possibility that history will repeat itself. “In the 1930s, we had a trade war, started by America, which led to economic collapse and a shooting war,” he said.


  8. Baby Doomer says:

    If Iran can’t export oil from Gulf, no other country can, Iran’s president says

    Iranian President Hassan Rouhani made an apparent threat on Tuesday to disrupt other countries’ oil shipments through the Gulf if Washington presses ahead with efforts to halt Iranian oil exports.


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