Debunking ‘Lower Oil Supply Will Raise Prices’

We often hear the statement, “When oil supply is lower, oil prices will rise because of scarcity.” Now, we are getting to see firsthand whether oil prices really do rise, as oil supplies become more scarce.

Figure 1. Figure from the OPEC Monthly Oil Market Report for August 2019 showing world and OPEC oil production by month.

Figure 1 shows that world oil supply hit a peak in November 2018 and has declined since then, mostly because of a decline in OPEC’s production. So, total oil production seems to be down for about eight months, relative to the peak in November 2018.

Despite this big cutback by OPEC in its oil production, prices have not responded as OPEC had hoped:

Figure 2. Average monthly spot Brent Oil prices, based on EIA data.

In fact, as I write this, Brent oil price is currently quoted as $60.48, which is back in the range of December 2018 and January 2019 low prices. Also, reducing production doesn’t seem to be reducing inventories. Figure 3 suggests that they are now higher than they were before the reduction in oil supply took place.

Figure 3. Figure from the OPEC Monthly Oil Market Report for August 2019 showing OECD commercial oil stocks.

Why aren’t oil prices rising and oil inventories falling, if oil production has fallen?

The basic issue is that the economy is very much interconnected under the laws of physics, because energy is required for every activity that is considered part of GDP. Energy is required for any kind of heat or any kind of movement. Energy is even required for electricity. Without energy from the sun, food can’t grow; without supplemental energy of some kind (such as using electricity to heat an electric stove or burning animal dung or sticks), it becomes impossible to cook food or smelt metals.

One strange phenomenon that arises from the interconnected nature of the economy is the fact that the prices of all energy products (including those not listed on Figure 4) tend to move together.

Figure 4. Comparison of changes in oil prices with changes in other energy prices, based on time series of historical energy prices shown in BP’s 2019 Statistical Review of World Energy. The prices in this chart are not inflation-adjusted.

This strange phenomenon arises because energy products are well-buried within every part of the world economy. A person’s job requires energy consumption. The tasks that governments do, such as building roads and schools, require energy consumption. Both transporting and cooking food require the use of energy products. Refrigerating food requires energy products. These energy uses, as well as many other everyday hidden uses of energy, aren’t things that we can easily cut back on.

Consumers often think, “I will drive less, and that will cut back on my energy consumption.” Unfortunately, in the whole scheme of things, whether or not individuals cut back on their optional use of gasoline doesn’t get the world economy very far. Gasoline accounts for about 26% of world oil consumption, or about 8.7% of total energy consumption, based on the most recent BP energy data. Cutting back on the optional use of gasoline would not reduce total consumption very much. If it were possible to reduce gasoline consumption by 10% by voluntary cutbacks, it would still reduce world energy consumption by less than 1%.

The strange pattern of the price changes shown on Figure 4 indicates that there is something affecting energy prices of many kinds, simultaneously. I would describe this as “affordability.” It has to do with how affordable finished goods and services are to the population in general, much more than it does scarcity. (Economists call this affordability issue “demand.”) If finished goods and services are affordable to a large number of consumers, as they were in 2008 and in 2012 and 2013, prices will be bid up to very high levels (Figure 4). If finished goods and services aren’t very affordable, a drop-off in prices, such as that experienced in November and December of 2018 (Figure 2), is likely to occur.

When OPEC decided to cut back its production of oil in response to the low prices in late 2018, this cutback in oil production didn’t help the affordability of finished goods and services. In fact, this cutback probably made the worldwide total quantity of affordable finished goods and services a little lower. This happened because, with the cutback in oil production, the governments of OPEC countries were able to collect less tax revenue on the smaller quantity of oil that the countries were selling. In fact, this smaller quantity of oil wasn’t even being sold at a higher price.

With lower revenue, governments of OPEC countries are being forced to cut back on funding of new projects such as roads and schools. These projects will use fewer energy products, and the would-be workers will have less money to spend on goods made with energy products. Thus, these cutbacks help to lower the world’s “demand” for oil and other energy products and thus help lower the price of oil.

The fact that the economy is interconnected in this strange way makes shifting prices upward much more difficult than if scarcity were the primary issue. In effect, the whole stack of energy prices in Figure 4 must somehow be made to rise. This is difficult to do because it is the lack of wages of the many poor people around the world that is holding back “demand” for energy products. If, somehow, higher wages could be sprinkled on the many poor workers of the world, including those in India and Africa, then oil (and other energy) prices would tend to rise. With higher wages, these poor people would be able to afford items such as nice homes, cars, and air conditioning, pulling world food and energy demand upward.

One difficulty with rising oil (and other energy) prices: They don’t translate into rising wages.

Rising oil prices tend to cause recessions and layoffs. We can see this from historical data. Average wages, considering layoffs, tend to fall rather than rise during times of spiking oil prices. In fact, the chart seems to suggest that the big increases in average wages tend to occur when oil prices are under $40 per barrel. A growing supply of cheap energy thus seems to be the magic ingredient that shifts wages upward.

Figure 5. Average wages in 2017 US$ compared to Brent oil price, also in 2017 US$. Oil prices are from BP’s 2018 Statistical Review of World Energy. Average wages are total wages based on BEA data adjusted by the GDP price deflator, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Because of this difficulty with spiking energy prices, high energy prices tend not to last for very long. One issue is that regulators quickly raise short-term interest rates to solve what they perceive as “the problem of rising food and energy prices.” Once recession sets in (gray bars in Figure 6), regulators find that they need to lower interest rates and raise the level of debt to stimulate the economy again. With lower interest rates and more debt, major purchases (such as homes, cars, and factories) become more affordable, because purchases bought on credit have lower monthly payments. With greater affordability, food and energy prices again rise, to again encourage more production.

Figure 6. Three-month and ten-year interest rates through July 2019, in chart by Federal Reserve of St. Louis.

So we end up with an endless seesaw of energy and food prices. In fact, the peaks have tended to fall lower and lower since 2008, as can be seen in Figure 7, showing monthly average prices.

Figure 7. Monthly average Brent Oil prices since January 2000, based on data of the US Energy Information Administration.

Monthly average peaks started at $132.72 in July 2008. More recently, peaks have fallen as follows:

  • Peak of $125.25 for the month of March 2012
  • Peak of $109.54 for May 2014.
  • Low month average price of $30.70 in January 2016.
  • Most recent average peak was $81.03, for the month of October 2018.

From this pattern of falling peaks, we can see that the stimulus being used recently (which includes Quantitative Easing in some parts of the world) has become less and less effective at stimulating demand for food and energy products.

It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.

Oil prices can be a problem in two different directions: (a) Too high for consumers or (b) Too low for producers.

From the Point of View of the Consumer. Many people have had the “Ah Ha” moment, in which they have figured out that high oil prices are a problem from the point of view of consumers. In part, they have deduced that these high oil prices may mean that we are “running out” of cheap-to-extract oil. Processes are becoming more complex, and as a result, consumers need to pay more to cover the higher cost of extracting and refining the oil.

But there is a related issue: Higher oil prices are likely to cause recession. If oil prices rise, the prices of many different types of goods and services (such as food, goods transported by truck or airplane, and vacation travel) rise at the same time. Wages don’t rise as quickly, in part because it is the true energy content (measured in Btus, barrels of oil equivalent, or something similar) that the economy requires. If the economy needs to dedicate a larger share of its resources to producing energy products, this is an issue that is akin to growing inefficiency. There are fewer resources remaining (such as human labor, metals, fresh water, and energy products) for investment that might provide goods such as new homes, cars, clothes and air conditioning.

With fewer resources to use, the economy reacts by shrinking back. I think of the situation as being akin to the way a chemist might “make a smaller batch,” if the quantity of one necessary reagent is low. An adequate supply of energy products is what makes the economy operate as it does; if buying an adequate amount of energy products becomes too expensive for consumers, a cutback in the buying of discretionary goods is forced on the economy (Figure 8). Lowering interest rates tends to make the debt repayment portion on new purchases lower, helping to alleviate the squeeze.

Figure 8. Chart made by author in 2010, to illustrate a talk called Peak Oil: Looking for the Wrong Symptoms.

From the Point of View of the Oil Producer. There are oil producers of many kinds, including:

  • Tight oil producers from shale operations,
  • Heavy oil producers in places such as Canada and Venezuela,
  • Producers of oil from deep water such as Brazil and Angola, and
  • Middle Eastern oil exporting countries that seem to have a very low direct cost of oil production.

Strange as it may seem, Middle Eastern oil exporting countries are among the most vulnerable to problems associated with continued low oil prices. The reason why these countries are so vulnerable is because their entire economies are oriented toward oil and gas production. They often have large populations with inadequate income unless the government provides them with handouts or with programs that provide jobs. If these governments need to cut back too much, there is a real danger that the governments will be overthrown. In fact, the population may break down into warring factions. Oil production may stop because of internal disorder.

It is because of issues such as these that the OPEC countries have cut back on oil production, in the hope that prices would rise to more acceptable levels for their countries. Fiscal Breakeven prices, relating to the level of oil prices that are needed so that each government can collect sufficient taxes for its budget, are published from time to time.

Figure 9. Chart published by the Arab Petroleum Investments Corporation (APICORP) giving Fiscal Breakeven Prices estimated to be needed for 2013.

Now that oil prices have been low since late 2014, Middle Eastern countries won’t admit to the true level of oil prices that are needed to operate their countries in the way that they have in the past. Their populations have been rising faster than their oil production, so it is hard to believe that the oil prices that the countries truly need, if they do not cut back on programs, are any lower than the amounts shown in Figure 9. At about $60 per barrel, the current Brent Oil price is clearly far too low for the major oil producers of the Middle East.

Shale and heavy oil producers are often less vulnerable than Middle Eastern producers, because the entities funding their operations (that is, buyers of shares of stock and providers of debt) believe that “of course” oil prices will rise in the future because of scarcity. Because of this, they are willing to provide additional funding, even when a recent owner has gone bankrupt from low prices. Middle Eastern oil producers have less of this benefit. If the money isn’t available for major programs, they are forced to cut back. Growing debt is unlikely to cover more than a portion of the shortfall.

There are other producers in the energy price “stack” in Figure 4 that are vulnerable to collapse or bad outcomes from continued low energy prices. One example is coal producers in China. China seems to be experiencing Peak Coal because of continued low coal prices; while new mines have been opened, they do not act to increase the total quantity produced, because so many mines needed to be closed because they were losing money at current low prices.

Figure 10. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

If the world economy is hoping for China’s increasing demand to pull the world economy forward in the future, it is likely kidding itself. China cannot expect imports to make up for its lack of growth in coal production. China’s lack of adequate energy supplies likely underlies the tariff issue that we hear so much about. There is a need to pull back production of goods from China, if China doesn’t really have the energy resources to continue in the role it has been playing.

The big question is how high oil prices will be in the future

The contention of the IEA and many others is that energy prices can rise arbitrarily high. For example, the IEA showed the figure I have numbered Figure 11 in its World Energy Outlook 2015 .

Figure 11. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much non-OPEC oil can be produced at various price levels.

The big groupings in Figure 11 are

  • Conventional Crude (such as from the Middle East and perhaps deep water like Brazil),
  • Tight Oil from Shale, and
  • Extra Heavy Oil and Bitumen (such as from Canada and Venezuela).

Evidently, in 2015, the IEA believed that $300 per barrel oil prices were not too high to show as a possibility on a chart. With $300 per barrel oil, there would certainly be enough oil. At such a high price, it might be possible to move the city of Paris, France, out of the way and extract the tight oil from shale underneath it!

Unfortunately, in the real world, prices cannot rise this high. Market prices are set by the laws of physics. The economic limit we reach is a price limit that pushes the economy back into recession. We have seen in Figure 7 that this price limit seems to be dropping lower and lower, over time. In fact, I am one of the coauthors of an article published in the journal Energy called, An Oil Production Forecast for China Considering Economic Limits. This 2016 article makes the point that the economic limit we are reaching is a limit on how high oil prices can rise. I am the lead author of Section 2, which discusses this issue at length. If prices cannot rise high enough, the vast majority of the oil that seems to be available based on published reserve amounts and geological surveys cannot really be extracted.

Whether there are ways to raise oil and other energy prices higher than they are now remains to be seen.

Why don’t standard models forecast low oil prices in the future? 

Economists have put together a simple model of how the economy works. In their model, there are always substitutes. The only thing that goes wrong seems to be that prices rise, if there isn’t enough supply. These rising prices encourage greater supply and substitution. The type of chart a person typically sees is a Supply and Demand curve as shown in Figure 12.

Figure 12. Supply and Demand model from Wikipedia.
Attribution: SilverStar at English Wikipedia CC BY 2.5 (, via Wikimedia Commons

They have never considered a situation where energy products are deeply buried within essentially all goods and services that are made. If there isn’t enough supply, a “smaller batch” of the world economy is made. We think of this as recession, but it can take on other forms as well:

  • Depression
  • Wars
  • Epidemics
  • Defaulting debts; falling prices of assets
  • Failing governments and intergovernmental organizations
    • Collapse of the central government of the Soviet Union in 1991
    • UK’s decision to leave the European Union
  • Increasing conflict between political parties and between countries
  • A reduction in globalization
  • Ultimately, the collapse of a civilization

Economists have not understood the connection between physics and the economy. There is a need for a sufficient quantity of affordable energy products every moment of every day. In fact, we seem to need a vastly increased quantity of inexpensive-to-produce energy supplies right now if we are to fix the world economy’s problems from an energy point of view. The “lower interest rates and more debt” way of hiding problems seems to be reaching an end point. If nothing else, interest rates today are close to as low as they can go.

Is the economy approaching a singularity?

In physics and math, a singularity is a point at which a function takes an infinite value. We end up with a situation that seemingly cannot exist. It is like dividing the number 1 by the number 0. No matter how many times that the number 0 is added together, it will never equal 1.

The economy seems to be reaching an equally strange situation. It is not a situation where we are running out of oil; it is a situation of too much wage disparity, and this wage disparity makes the prices of many commodities too low for producers of these commodities. For example, farmers cannot afford to pay their mortgages. And prices for all fossil fuels and many metals are too low for companies extracting these materials to make an adequate profit for reinvestment and taxes. The problem is not simply low oil prices.

This situation of excessive wage disparity is related to globalization, with many workers around the world earning very low wages, so that they cannot afford goods such as homes and cars. It is related to the increased use of robots substituting for manual labor. It is also related to wage disparity within countries as jobs become increasingly specialized.

As this situation plays out, energy prices fall when common sense would seem to suggest that they should rise. In fact, the problem of falling prices extends to more commodities than fossil fuels and food; it extends to minerals of many kinds, including copper and aluminum.

In such a situation of falling commodity prices, we can expect many related problems. For example, governments of countries that depend on the revenue of these exports may fail, leading to Balkanization of these countries in some cases. A wide range of debt defaults can be expected, leading to failing financial institutions that need to be bailed out. Rapidly changing relativities among currencies are likely to put markets for derivatives at the risk of failing. Needless to say, stock markets are likely to be adversely affected. So-called renewables will quickly fail because they are currently dependent on fossil fuels for repairs and the electric grid. In fact, it is hard to see any aspect of the world economy that can continue unaffected.

How does what appears to be an approaching calamity play out?

Perhaps it is fortunate that we don’t really know. Collapses of early economies seemed to take many years, typically over 20 years. Today, the world economy depends on global supply chains and the electric grid. The financial system is also very important. It is hard to believe that the overall system can stay together for many years, but perhaps, in parts of the world, it can. We just don’t know.

Given how connected the economy seems to be, and how widespread the problems seem to be at the singularity we are reaching, it almost appears that there is a plan behind what is happening. From what we can observe, there seems to be some literal higher power behind all of the energy flows that we observe in the universe. This literal higher power seems to have put into place all of the laws of physics. This literal higher power seems to also be behind all of the self-organizing elements within the universe, including humans, ecosystems and economies. I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.


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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1,469 Responses to Debunking ‘Lower Oil Supply Will Raise Prices’

  1. It's different this time around....NO says:

    The stable genius strikes again!
    The tariffs ‘eliminate all remaining economic gains from the administration’s deregulation actions’
    The $2,031 number is higher than other estimates because tariffs keep increasing.
    In May, the New York Fed estimated a $831 cost to households from tariffs. J.P. Morgan estimated that tariffs that went into effect on September 1 would cost American households up to $1,000 per year. Additional tariffs on China went into effect on October 1, and more tariffs are set to kick in on December 15.
    “If all tariffs threatened by the Trump administration are imposed, combined with the current tariffs in place, the annual cost to U.S. consumers would be $461.1 billion and the cost for the average household would be $3,614,” the report stated.

    Trump should seek another running late for re-election! What is Pence going to do now!?

    • Robert Firth says:

      Ah yes, the NY Fed and JP Morgan. Committed globalists who serve the ultra rich elite and despise the common worker. Now they would never, never, fudge the numbers, would they?

      • It's different this time around....YES says:

        Of course not, the economy is strong and no recession is expected this year or next, as far as they can see. Trariffs, like deficits, don’t matter none. It gets paid for by somebody else!
        Actually, from what I see, living is getting cheaper everyday!

        Life is good and there are plenty of pawn shops and Dollar stores taking the place of retailers closing up!

  2. rjsigmund says:

    your first graph shows global oil supply…this table from the same report show global oil demand estimates for 2019:
    you’ll note that third quarter demand is 2 mbpd, or 2% greater than July’s supply.

    • The third quarter demand figure in the report might be characterized as a guess. Or maybe wishful thinking. The thing we know for sure is prices. They fell in July and August.

      • rjsigmund says:

        certainly OPEC’s 3rd quarter demand figures can be characterized as a guess, but they are an educated guess…OPEC consults reports from the IEA, Platts, Argus, ‎the U.S. EIA, CERA and Petroleum Intelligence Weekly before they make their estimates, so i’d consider them as reasonable as any…& probably moreso than any other the others, because OPEC must maintain credibility if their reports are to be taken seriously…

        i agree with your premise, that supply has little impact on prices, but i would suggest a corollary that demand also matters little… i am interpreting your post to suggest that you think affordability, a stand in for demand, is the crucial factor for oil prices…that’s a misunderstanding common among those with an economics education, because it’s assumed to be true without further investigation…the fact is, none of the agents of the physical supply or demand for oil have much of an influence on its price; neither the producer, the refiners, nor the buyers of the final products…oil prices, moreso than prices for any other commodity, are set by speculators in New York, London, and other financial centers where oil contracts are traded, simply because their influence is so much greater than any party handling the physical commodity….on most days, the electronic trading in oil contracts on NYMEX exceeds the weekly physical production and movement of oil by more than a hundredfold; and as a result decisions by those oil traders has a much greater impact than oil’s supply, demand, or affordability….sure, those traders take supply and demand data into account when they’re buying or selling, but from my observations of the oil market over the past half dozen years, factors such as the latest tweet by Mr Trump have a greater impact on oil than any of those things economists believe about price…

        • The models of economists do not have turning points in them. There are no limits. It doesn’t matter who OPEC consults with, the organizations all base their views on the assertion that demand can and will expand indefinitely.


    GE Investigates new wind turbine collapse in Brazil

    On Tuesday, a GE wind turbine fell to the ground from its tower at the Delta 6 wind farm in Brazil’s northern Maranhao state. A worker is being treated for injuries.

    Two months ago another turbine made by GE collapsed in Brazil when its tower broke in half. There have been three such collapses of GE wind turbines in the United States this year.

    By my count, that comes to five GE wind turbines collapsing during 2019, for no apparent reason. We know that GE has been having financial difficulties. Has it been cutting corners in the specifications for its wind turbines?

    • Robert Firth says:

      Gail, thank you for the heads up.

      I followed a few references, and it seems to be the problem is not with finance, but with engineering. Here is a quote from a news feed:

      “Reports indicate that blade detached from the turbine due to strong winds topping 100 km/h, which caused the turbine to lose stability and crash. Wind speeds in the area usually range between 8 and 12 meters per second.”

      The physics implies that it was the force on the turbine that collapsed the tower. But note
      how it is reported: two different units for the resistance and the force. Giving the impression that a resistance of 100 km/hr can easily resist wind speeds of 12 m/sec.

      Do the math: 12 m/sec is 43 km/hr, so a wind twice as strong as the “usual” is within 16% of the structural limit. Not a safe margin, given the unpredictably of weather. So, once again, the problem is not finance, but Hubris.

      • But if they had built stronger towers, with safer margins, it would have taken more materials and thus would have cost more. Their engineers should have been looking carefully at the margins they were building in.

        • hkeithhenson says:

          “stronger towers, with safer margins,”

          From the stories, my guess would be poor quality control, particularly the welding or possibly the quality of the steel plate used.

          It is really amazing to see one of those windmill towers being manufactured. Takes *one* guy and a huge bending machine.

      • Another issue affecting revenue is the shift toward providing wind and solar only though auctions, with the lowest cost bid winning. If a company wants to win auctions, it needs to keep prices to a minimum. The way a company keeps prices to a minimum is by cutting safety margins to a minimum and buying metals from other suppliers at the lowest possible bid (and not checking too closely that products bought from others really meet strength and other requirements).

        A person would expect both wind and solar quality to drift downhill, when supplies are provided under auction. Lifetimes would likely shorten. The share of devices that need to be replaced would likely rise.

        • Robert Firth says:

          Good point. I remember a similar problem when I worked for UK Ministry of Defence. Technical procurement was based on tender, and the tenders submitted when through a two step process. The first step verified that what was tendered would do the job. The surviving bids then went to the second step, which selected the one believed most cost effective.

          The potential contractors gamed this system in a simple way: they submitted a technically adequate proposal to step one, and then covertly substituted an inadequate, but cheaper, one for step two. Which, of course, the bean counters of step two didn’t notice, having no technical expertise. (Of course, they were a higher pay grade than those with technical expertise, for precisely that reason. Ah, the good old English caste system).

          This scam was pulled in a procurement for the organisation I worked for, so a colleague and I documented the bait and switch in detail, and escalated it to a senior official in Procurement Executive who had a head on his shoulders. For once, a happy ending.

  4. Senecas Cliff says:

    GE purchased their windpower business, including all the designs and blueprints, from Enron when Enron went bankrupt. Enough Said.

  5. Yoshua says:

    The European hit number one is…well there is not one…since no one is European.

    We are some European on this site…but we are strangers to one another.

    We Europeans are a bit strange… well…who isn’t.

    Anyway…this post was about nothing…just something that crossed my simple mind

    • Kowalainen says:

      Actually all Europeans share the main parts of the genome with the Kostenki man.

      “Scientists have sequenced a 37,000-year-old genome. The results show that present-day Scandinavians are the closest living relatives to the first people in Europe.”

      “Actually, he is closer to Danes, Swedes, Finns and Russians than to Frenchmen, Spaniards and Germans”

      “Previously the impression was that our forebears lived in separate populations and had children within the group, instead, Willerslev now paints a very different picture consisting of one large meta-population.
      A meta-population consists of several populations which mate with each other.
      The meta-population is connected through the neighbour’s neighbours, consisting of people who generally resemble each other a lot, but who also have their own unique traits.
      “It was a huge, complex network, and not separate branches that lived in isolation,” says Willerslev.
      He believes the Europeans must have been one enormous meta-population stretching across Europe, the Middle East and Central Asia.”

      Behold you late comer into the history of Europe. Bow upon the true rulers of Europe.

      • Sven Røgeberg says:

        Interesting! From the article (dated 2014): «The Swedish scientist Pontus Skoglund from Harvard University, who was not involved in either Willerslev’s new study or that of Reich, published in September, also finds it quite convincing.

        “It’ll be interesting to see more tests done, and as a field we need the time to digest these conclusions. But for now, it looks as though it may well be true, in which case it is an extremely important result,” says Skoglund.»
        Are there news about how the work in this field is developing?

        • Kowalainen says:

          European ancestry, and shift from hunter-gatherers to more advanced civilizations incorporating agriculture and farming technology is being traced back to Göblecki Tepe. Dating back to 10th millennium BCE.

          Let me state that again: 10th millennium BCE.

          “The imposing stratigraphy of Göbekli Tepe attests to many centuries of activity, beginning at least as early as the Epipaleolithic period. Structures identified with the succeeding period, Pre-Pottery Neolithic A (PPNA), have been dated to the 10th millennium BCE.”


          The history books have to be rewritten. Our history is significantly older and more technologically advanced than what we know today.

          For all engineers and scientists dwelling here, what does those “devices” appear to be?


          • The first of the articles mentions that Jerico was roughly contemporary to the Göbekli Tepe. Shouldn’t it be included, too? Admittedly, there were nicer carvings at the Göbekli Tepe.

            We also know/strongly suspect that there are cities buried under the Sahara Desert.

          • Pintada says:

            “For all engineers and scientists dwelling here, what does those “devices” appear to be?”

            A scam?
            A joke?
            Random junk?


          • Robert Firth says:

            Electricity in Ancient Egypt? The Great Pyramid an anticipation of Tesla’s wireless power scheme? Great science fiction. Well, no, bad science fiction, by Leigh and Walt Richmond.

            There is a perennially hilarious US based TV show called “Ancient Aliens”. Anything we cannot explain was created by aliens. Even competent rulers were aliens in disguise (one program even claimed that about Nefertiti). Another attributed the Antikythera Machine to aliens, even though Poseidonius described similar machines as having been invented by Archimedes of Syracuse. (But maybe he was a space alien)

            My alternative explanation is that these strange artefacts were built by hedgehogs. After all, we have ample evidence for the existence of hedgehogs, and none for the existence of space aliens, so my theory is surely far more plausible, …

      • Yoshua says:

        A follow up on that article. Some 7 thousand years ago a new mix took place. Pretty much what is taking place today.

        “The new findings have shown the researchers that the Europeans are the descendants of at least three population groups; the original hunter-gatherers, farmers from the Middle East, and the new Northern Euroasiatic population group.

        They are able to prove that groups in our prehistory were much more genetically diverse than Europeans are today.

        “Present-day Europeans are surprisingly genetically homogenous. There is not one genetic component that is only found in certain populations,” says Krause. “7000 years ago, farmers and hunter-gatherers really were genetically different peoples.”

        The genetic differences have also been reflected in appearance, with fossil DNA now bringing to light Central European hunter-gatherers with dark hair, dark skin, and blue eyes (a combination that is practically non-existent today) and farmers with dark hair, brown eyes and light skin and also hunter-gatherers in Sweden with a “European look” of light skin and blue eyes.”

        • Xabier says:

          Fascinating. Unlike migration into Europe today, those distinct groups – farmers and hunter-gatherers – were intelligent and highly competent in their own spheres, not unskilled and imported by the owners of capital to keep up demand in a failing economic system……

          • DJ says:

            Those arriving today seems more than capable of surviving and reproducing in europe.

            • doomphd says:

              largely undoing the result of the victory at the gates of Vienna and the lucky break earlier when Kubla Khan decided Europe was not worth conquering.

            • DJ says:

              Imagine that- in one generation the gregory clark capitalism enabling gene could be wiped out from europe along with the natural resources required for progress.

            • hkeithhenson says:

              “capitalism enabling gene”

              Wasn’t one gene, whole bunch of them for qualities such as intelligence, literacy, numeracy, willingness to put off rewards and drive to work long hours. Not long ago there was a UK study that found a bunch of genes associated with economic success.

            • Ed says:

              DJ is right the new immigrants are better at reproducing. They win the evolution game.

            • Kowalainen says:

              Ed, did ants “win” the evolution game because there are more ants than humans on earth? There are an estimated amount of 100 trillion ants on earth.

              What has been achieved with the unfettered mass immigration is to grow the total GDP at the expense of GDP/capita. It is beneficial for the thoroughly corrupt and nepotist Swedish state and their cronies in the big business interests. The deluded and thoroughly brain washed homeowners believing the hoax of the welfare state, their homes perpetually increasing in value, continuing, I repeat that, continuing to voting for the erosion of their own liberty and prosperity. The Stockholm syndrome never leaves the sect members, which is the offspring from despots and their lackeys, which has become Sweden.

              The true “Swedish” story speaks a different story. For example, look at the USD vs the SEK over a 10-year period and now prepare for the irreversible plunge as the municipalities in Sweden have to borrow to finance their obligations, mostly as welfare payouts to unemployable immigrants and their large families.

              Swedish readers with some savings denoted in Swedish currency should immediately shift their assets to USD. When sh1t hits the fan over in Gretaland, it’s going to be bad. Look; nobody will care about the IKEA furnished, mass produced Potemkin facades in the soulless villa suburbs. Inhabited by equally soulless worker drones of the supposedly “perfect” Swedish socialism as marketed by the Swedish Institute.

              How I will laugh at the unfolding tragicomedy.

            • When I visited Sweden, I remember hearing about the idea that we could change the world economy to a circular economy, pretty much like a perpetual motion machine. In fact, the people “pushing” this view really believed the plan could happen.

            • hkeithhenson says:

              There is no reason why an economy that recycles materials will not work. On a very large scale, that happens for all the living things on earth and has been deeply considered for space colonies.

              Of course, it takes energy to grow food and reprocess everything else. But do keep conservation of mass in mind.

            • Recycling very often takes quite a bit more energy than mining new supplies and using them directly. So it needs big subsidies. This is something people don’t understand. By the time we are working with todays complex equipment, the various scarce metals are used in such tiny quantities, often in alloys, that the process of getting materials back is horribly expensive. Unless a tax in put on this equipment when it is sold, there is essentially no way to fund this recycling process. This is one of the big issues that is missed in EROI analyses.

            • hkeithhenson says:

              “So it needs big subsidies.”

              Or very cheap energy, or more efficient ways to sort out the mixed trash.

              “no way to fund”

              Not yet. But as far as I know, nobody has asked the engineers for a cheap solution. It can’t be that hard when you considered the natural processes that made ore deposits in the first place.

            • I heard a talk about this issue once. The dispersion of the metals in the devices we have created adds a whole new set of issues that must be solved in order for the minerals to be used again. There is no reason to believe that the cost of getting these minerals back will be inexpensive. For example, one of the solar panel articles said that the only way that it was possible to identify which panels included which minerals was by looking up the serial number in a data base. I am sure that reprocessing phones and computers comes close to having the same issue. Many of the minerals are toxic to humans. There are lots of details to be worked out. It is not a “one size fits all” solution.

            • hkeithhenson says:

              “lots of details”

              Agree on that point!

              But most of the minerals we want to sort out came from hydrothermal deposits (i.e., hot, high pressure, saltwater). The process continues to this day with the “black smokers” that vent hot water full of minerals near the ocean ridges.

              It might take locating the reprocessing systems deep in the ocean to get the pressure. But the main point is that the chemistry looks feasible and the energy requirements don’t look excessive. Also, as far as I know, this has never been presented as a design to cost project.

            • i look in my recycling bin and the reason for subsidy becomes obvious.

              every 2 weeks, a huge truck comes along and carts way mostly fresh air

            • recycling stuff in the deep oceans

              that has to be one of the best headbangers yet

            • Kowalainen says:

              The populace will believe anything the state shoves down their throats. Just about any slogan, and PR gimmick such as Greta, will do perfectly as fine. As long as the message is of Sweden’s supposed superiority.

              The only thing circular in Sweden is the soulless masses of pretentious backslappers placed in the circumference around the hub of a deeply corrupt state.

              Gail, would you agree that Sweden is a bit creepy in the sense that Tim Pool portrayed?

            • I don’t think I would go quite that far. People are pretty much the same the world around. They try to find solutions, however they can, even if they have to perform a great stretch to get there. Most of them don’t really understand the story too well themselves, so they are willing to believe that someone’s model of how the economy works will be perfectly suitable.

            • Dennis L. says:

              Is it possible that not having children leaves couples with less skin in the game? Feminists are so gung ho on careers but at the end of a lifetime of work, it was still a job and upon reflection I find the most satisfying part was the relationships with people with whom I worked. With luck, children go on forever, at retirement and within a few years most people go their own ways be it living in a different state, spending winters in the south(assumes a northerner), etc.
              Jobs are also so intense, clinicians here seem to have 50 hour weeks as full time and anything there after is unpaid overtime. That is a heck of a pace when the fifties approach or pass. Grandchildren can for the most part be sent home with their parents, a true part time job.
              Is it possible that the apparent and reported decline in happiness among Western women and probably men has resulted in a loss of enthusiasm for the civilizations that produced those opportunities?
              Dennis L.

            • doomphd says:

              “It might take locating the reprocessing systems deep in the ocean to get the pressure.”

              somebody needs to introduce Keith to a pressure cooker, shown elsewhere on this post commentary.

              also, not all ore forming processes are hydrothermal. some ores come from evaporate deposits, ancient lakebeds, etc. some, like chrome, come from igneous concentrations of minerals at the bottom of frozen magma chambers.

            • hkeithhenson says:

              “pressure cooker”

              Going into the deep ocean is just a cheap way to get pressure. Pressure lets the water get hotter without boiling.

              Pressure vessels are a major expense.

              Otherwise, I agree with you about ore formation.

            • doomphd says:

              “Pressure vessels are a major expense.”

              their cost would be trivial compared with the expense of doing anything in the deep ocean. there, you have to keep high-pressure, corrosive fluids (especially hydrothermal vent fluids) from entering the equipment. you have to use titanium if you expect to do business there for any length of time.

        • Sven Røgeberg says:

          Thanks, Yoshua! Do you have reference?

        • aaaa says:

          or maybe it is just appeal-to-genetics bullshit science

    • Thanks! This is a Robert Rapier article. He says, “Regardless, probably the only thing that can arrest the current slowdown is a spike in oil prices from current levels.”

      Right! If the prices are too low, producers stop producing!! This is the issue.

      • Rodster says:

        Dubai and the UAE are basically in recession and housing sales have slumped massively from low oil prices. Investors in shale are beginning to walk away due to low oil prices.

        • Harry McGibbs says:

          “Oil producers and their suppliers are cutting budgets, staffs and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.”

          • I looked up information on real estate in the Permian Basin, to see to what extent real estate is being affected. This article from August 1 says Midland Experiencing Housing Shift.

            “The oil and gas industry is slowing a bit and people are moving so raised supply and lower demand there is that you know shift that we were talking about,” said Pruitt.

            Now Pruitt said community member’s house hunting in Midland can expect more for sale signs to pop up and stay up for a longer periods of time.

            Back at the end of 2018, houses were sitting on the market on average of 33 days.

            Now houses can be expected to be listed for an average of 64 days. A change from even last week, which was 52 days.

            • Harry McGibbs says:

              I knew a fellow here on Islay who did well selling property in Alberta. The market crashed badly less than a year after oil prices crashed and he was back here by late 2015.

              The apocalyptic wildfires there that year in BC and Alberta probably didn’t help.

        • Harry McGibbs says:

          “Dubai is closer to emerging from a prolonged bout of deflation even as business conditions turn worse. Prices were “broadly unchanged” in August after output charges declined in each of the past 15 months, according to IHS Markit.”

          • Inflation/deflation makes a huge difference to an economy. Debt in the country’s own currency needs to be paid back in the stated amount, even with deflation. Thus, a housing downturn make repaying home loans very difficulty for many buyers.

            It is hard to keep track of deflation on a country-by-country basis. Part of it has to do with relativity of the local currency to the dollar.

  6. It's different this time around....NO says:

    Good Morning, another Day another Doomer Story, how nice

    World’s Worst Bad-Loan Mess Set to Worsen on India’s Cash Crunch
    Rahul Satija and P R Sanjai

    Bloomberg September 7, 2019

    World’s Worst Bad-Loan Mess Set to Worsen on India’s Cash Crunch
    (Bloomberg) — Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.

    A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the clean-up of its lenders.

    Moody’s Investors Service to Credit Suisse Group AG. warned that more loans may sour in the Asian nation’s banking system. More than 2.4% of total loans in India’s banking system may be under stress on top of the 9.6% bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows. Italy, on the other hand, has nearly halved its ratio to 8.5% in the last three years.

    The failure to slash stressed assets is undermining India’s efforts to revive economic growth that has cooled to a six-year low. A cash crunch in the shadow-banking sector that started with the collapse of IL&FS Group last year and the delays in the bankruptcy process are adding to the challenges faced by banks as they seek to tidy up their balance sheets.

    “When the economy decelerates like this we will see non-performing loans go up,” said Saurabh Mukherjea, founder of investment advisory firm Marcellus Investment Managers Ltd. “You’ll see more bad loans come through as we approach the first anniversary of IL&FS meltdown.”

    Yes, indeed, I agree we will see more bad loans… Surprise… surprise….
    Pressure building

  7. Pingback: Oil prices and the coming financial 'Ice Age' - Resilience

  8. It's different this time around....YES says:

    Did Verld is kaput nutso…
    Americans are trying to get Denmark’s negative-interest mortgages
    BERLIN – Two weeks ago Jyske Bank, Denmark’s third-largest bank, shocked the world by offering mortgages with a negative interest rate. Put simply, the bank would effectively pay customers to borrow money. It’s a bit more complicated than that, however, as borrowers have to pay fees that offset the savings.

    The news got loads of attention, as people struggled to wrap their heads around being paid for something they are supposed to be purchasing. Consumers around the world wanted in on the action.

    The weekend following the negative mortgages announcement, Jyske Bank received 80-90 inquiries from Americans who wanted these viral mortgages.

    It’s all been rather amusing for Jyske Bank and its housing economist Mikkel Høegh, who has had to deal with all the attention.

    “What I have said to the Americans is that they have to have a Danish property to get such a loan,” Høegh told Yahoo Finance in an email. “Some of the Americans then asked if I could help them buying a property in Denmark. I can’t with that but we can help them with the funding if they get the house.

    Won’t be long now before the wheels fall off!

    If someone told me this would ever happen I would call the MAD!

    • Robert Firth says:

      “Put simply, the bank would effectively pay customers to borrow money. It’s a bit more complicated than that, however, as borrowers have to pay fees that offset the savings.”

      What a beautiful scam! Instead of making their profit over the 20 or 30 year life of the load, they make it up front. And can then bundle the mortgages and sell them to a greater fool, so pocketing 100% of the profit and transferring 100% of the risk.

  9. Kurt Cobb (whom I know from the US Association for the Study of Peak Oil) has a new post up called, Oil Prices and the Coming Financial Ice Age. In it, he puts together my recent posts with the work of financial strategist Albert Edwards.

    This is the way the post ends.

    Now, here’s how Tverberg’s thinking hooks up most directly with Edwards’. Tverberg writes: “It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.” Edwards sees debt creation as becoming a less and less potent way to create economic growth in a debt-saturated economy. Tverberg goes to what she believes is the heart of the matter claiming that added debt cannot seem to provide oil and other energy sources at cheap enough prices for the economy to flourish. The financial Ice Age seems central to the views of both.

    And, both Edwards’ and Tverberg’s outlook lead to the same result, a crash in the world economy that will be difficult to turn around. For Edwards there is the possibility that after a long retrenchment period, economic conditions could return to what passes for normal. For Tverberg, however, her thesis suggests a permanent alteration of conditions for modern societies in which energy insufficiency becomes a feature that limits and even stops economic growth.

    If either one is correct, look for an economic tsunami in the not-to-distant future.

    The whole post relates to this issue. He uses the word “Tverberg” 11 times in the post. I think he did a good job.

    • It's different this time around....YES says:

      Thank you! Think this was also posted on PO News also…
      If either one is correct, look for an economic tsunami in the not-to-distant future.
      I’m not going to sleep too soundly at night for now on……doesn’t appear this can will be kicked down the road for much longer.
      The sad part is those in charge seem not to have an idea how to act, just react.

    • Chrome Mags says:

      Gail, that’s a link to an article on peak oil dot com on the topic you just posted.

    • Harry McGibbs says:

      Wow. I wonder if will publish it…

    • Robert Firth says:

      “Edwards sees debt creation as becoming a less and less potent way to create economic growth …”

      Debt has never been a “potent” way to create economic growth. Just ask John Law. Investment creates economic growth, and thrift creates the wealth to be invested. And since it is the investors who bear the risk, they were (not always, but usually) prudent in their choices.

      Debt only works if it is not repaid, but rolled over, passed on to a greater fool, inflated away, or repudiated. And debt, like heroin, only creates a need for more and more debt.
      Which is where we are now, faced with the addict’s dilemma: rehab, or death.

      • Kowalainen says:

        An increasing money supply (and energy) is essential to circulate the increasing and nowadays enormous output of industrial civilization. It is quite natural that once resource limits hit, increasing money supply will achieve absolutely nothing in terms of prosperity increase.

        Money is simply an accounting scheme for enabling production and consumption at an unprecedented rate in human civilization. The real drug is the attachment simple minded people has to accounting and the goods and services this system has produced. Wishing to go back to the gold standard is the true heroin injection of nostalgia and hopium for a sustainable future.

        Take for example Apple which uses an estimated amount of 30% of all gold cumulatively produced in the world. The remainder of industrial civilization uses the rest and more as they dip into the supposedly existing gold vaults.

        Going back to the delusion of a gold standard implies scraping off the gold plating of mostly electronic devices. Yes, good luck with that enterprise restoring the world into a ‘sustainable’ feudal system of centralized brutalism and dominance scheme.


        • hkeithhenson says:

          ” 30% of all gold cumulatively produced in the world.”

          Fascinating. Do you have a pointer to an authoritative source? This has implications for space mining.

          • roughly 130000 tons of gold exists in the global system

            it underpins much of our financial system one way or another

            space mining brings back (or finds) a million tons of gold

            value of world gold drops about 90%

            (and that’s if they find just one gold bearing satellite)

            • hkeithhenson says:

              ” a million tons of gold”

              It’s not that easy. Mining the asteroid 1986 DA over 24 years would give about 500 tons of gold a year. On the other hand is about a million times larger asteroid so a scaled-up mining operation there could swamp the gold market. Gold is mined down to 3 ppm on earth. Asteroids are around 1 ppm. There is no reason to think we will find higher grades.

            • Kowalainen says:

              Keith, if we have your satellite system driven by PV’s or perhaps by tapping into the energetic plasma sheath surrounding the sun using its extreme voltage differential to drive enormous currents for powering microwave generators aimed at mining sites in the asteroid belt or on earth, it is possible to transmute simpler elements in the periodic table into gold by nuclear processes.

            • wish I’d thought of that

            • hkeithhenson says:


              Perhaps I should not be so negative, but this looks to be *really* unlikely. It’s worse than a million dollars worth of energy for $100 worth of gold. E=mc^2 Sorry

              But if you have a neutron star that you dump into a black hole, that does make planetary masses of gold. I don’t think you want to be very close when this happens though.

            • Kowalainen says:

              Norman, we are grateful having you as the arbiter of status-quo and eventual doom from a collapse which will not happen – can not happen.

              Norman, now imagine a world of synthetic, silicon ‘brains’ encoding most of, if not all of human ingenuity with these devices connected to each other using radio waves and light beams traveling in fibers made of glass and in the ether. It is an enormous man made networked system of interconnectedness. All the encoding is written and executed in machines by several completely new languages of syntax and semantics never seen in any previous civilizations.

              Even to me, that sounds like pure science fiction. Yet here we are. The irony I am reveling in is utterly and totally the elephant in the room and you fail to see it walking up and down your computer screen.

              Yes Norman, what is your conclusion from our hypothetical discussion 100 years ago?


            • This sounds like science fiction to me as well. I think Norman is right.

            • can we leave this nonsense please?

              there can be many and varied opinions, on a wide range of subjects on OFW, and they are interesting to many of us to varying degrees
              —but this is coming close to the level of a debate on whether the earth is flat or spherical, or whether said earth is 10k years old etc.
              and as such is getting a bit embarrassing even to try to form any kind of discussion around it.

              for the simple reason—there can be no discussion about the merits of what is being proposed or suggested above as some kind of science based theory or practicality.. No matter what level of “proof” is offered.

              Google flat earthers or Ken Ham to understand what I mean about ‘proof’

              I’ve tried humour, and I have avoided being dismissively rude–because everyone is entitled to a point of view

              But this is childish nonsense and has no place here.

            • unless of course it is one colossal windup—in which case I applaud your dedication

            • Kowalainen says:

              Keith & Gail,

              Elements will be transmuted using high-energy plasma devices. It is already done. Just crank up the voltage and current until the new elements are formed all over the periodic table.

              Black holes and neutron stars… Mm, yeah.. 😉

              Now that’s some proper science fantasy. Zero division garbage in and Hawking fairy tale out.

            • hkeithhenson says:

              ” already done.”

              No doubt about it, but not practical.


            • I have sold my gold shares in anticipation of the coming glut

          • Kowalainen says:

            Keith, google is your friend.

            “Josh Centers, from TidBits, estimates that each gold watch will contain 2 troy ounces (62.2 grams) of gold. So, based on the estimated sales figure, he concludes that Apple will need 746 tons of gold a year, or about 30% of the world’s annual production.”

            That is the Apple Watch alone. Take into account all other technical usage of gold such as ENIG gold plating of printed circuit board.


            It is a delusion to believe that there exist any ‘gold reserves’ to revert back to when the collapse, which will not happen, does not happen.

            It’s all used up in technical applications. The economic utility of gold in modern electronics far exceeds that of storing it in vaults.

            • DJ says:

              “may soon”

              “plans to start”

              “by his estimate”

              More chauvinistic software encoded google bullshit.

            • called:

              wish science
              wish economics
              wish politics

              very common among the great thinkers of this world

            • Robert Firth says:

              The average weight of an Apple Watch is about 40g. If it contains two ounces of gold, Apple have discovered Cavorite.

            • DJ says:

              This seems to be about a jewelry watch, maybe weighing 100g.

              Easy to steal, melt it and still worth $3000.

              Discontinued sep-16, according to same google who said they planned to soon may by estimate use up a third of all gold .

            • DJ says:

              If everyone bought their mistress a gold necklace every christmas we would soon use up all gold.

              Provided mistress doesn’t sell necklace and buy an eWatch .

        • Robert Firth says:

          Kowalainen, I respectfully disagree.

          In classical economics, money served two purposes: as (1) a medium of exchange and (2) a store of value. Modern economics looks only at the first, and ignores the second: why else would country after country try to increase the rate of inflation, ie to help destroy the ability of money to be a store of value?

          Now, almost anything can be a useful medium of exchange, because it requires only symmetrical agreement between buyer and seller. Cowrie shells, coffee beans, vending machine tokens, pieces of paper with pictures of important people, dead or alive. But a store of value can only be something that the owner believes will be accepted in the unknown future, when perhaps cowrie shells will not be much appreciated.

          And what might that store of value be? Behind your argument is Modern Monetary Theory, and John Maynard Keynes. Behind my disagreement is four thousand years of history.

          • Kowalainen says:

            Robert, it is a misinterpretation of the accounting scheme which is fiat money. Then the second misinterpretation is that money itself has value. It has none. It is a symbolic representation of actual and maybe possible transactions within the economy. Most money is also not used for circulating goods and services, it is used for shifting old ‘stagnated’, inert money into the hands of a more forward looking stewardship. Hence the desire to shift back into a gold backed currency where the value is ‘eternal’. But the gold you might ask, well let the Joker tell you where it is by the analogy of his pen in this scene.

            The petrodollar placed the Energy, with capitol E into the accounting scheme. Thus we are now executing all transactions within a pure energy based economy where every transaction of significance is denoted in USD – Petrodollars.

            Thus every time the CB’s cuts the rate, they effectively demand more energy to be put into the system for increasing the amount, denoted as fiat currency which is the Petrodollar, of production of goods and services which can be circulated and produced using petroleum as its primary tour de force.

            Let’s read the words from late M King Hubbert:

            “The world’s present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.

            The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance.

            The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed.

            Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and according to one of its most fundamental rules, it must continue to grow by compound interest.”

            -M King Hubbert

      • DJ says:

        Die from overdose or withdrawal symptoms

      • We have lots of other promises besides debt. We now have derivatives, for example. Government pension schemes tend to be unfunded promises. Prices of shares of stock and prices of homes give the illusion that they can be sold, and the value be used to buy goods and services made with energy. That is temporarily true, but is not true in general. Far more promises have been made than can really be paid for with the actual resources in the ground. Diminishing returns is a huge problem.

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