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Recently, many people have begun talking about the US having a k-shaped economy. In it, a handful of wealthy people are doing very well financially, while many others are falling further and further behind. I expect that the low wages of the majority of workers will soon lead to adverse impacts on businesses, governments, and international organizations. This phenomenon is likely to lead to a very uneven world economic downturn in 2026.
The world economy is subject to the laws of physics. The world economy seems to be reaching growth limits because there are too few easily extractable energy resources (as well as other resources, such as fresh water), relative to the world’s population. The Maximum Power Principle strongly suggests that even as limits are hit, the world economy cannot be expected to collapse all at once. Instead, the most efficient producers of goods and services will be able to succeed as long as resources are available, while less efficient producers will tend to fall by the wayside. Thus, the Maximum Power Principle somewhat limits the speed of the world’s economic downturn.
In this post, I will try to explain the challenges the world economy is now facing. I will also provide some thoughts on how 2026 will turn out.
[1] The k-shaped economy that the US and many other countries are experiencing is an indication that resources are, in some way, “running short.”
Humans all have similar basic needs. They need food to eat, and they need to cook at least some of this food before they eat it. They tend to need transportation services, both for themselves (to get to work) and for goods, such as the food they eat. They also need governments to keep order and to provide basic services, such as roads and schools. All these goods and services require energy of a suitable kind, such as human labor, burned biomass, or fossil fuel energy. They also require arable land, fresh water, and minerals of many kinds.
If there are not enough resources to go around, the easiest way to accomplish this is by creating a k-shaped economy. One example is with farmland. In many traditions, when a farmer dies, his oldest son inherits the farm. Younger children are then forced to find other kinds of employment, such as being a craftsman, farmer’s helper, or priest in a church. Wages for these younger children can easily fall lower than the income of their land-holding older brothers, especially if large families become common. Creating jobs that pay well for all the younger children becomes a problem.
A similar phenomenon has been happening in many Advanced Economies (US, UK, and other countries included in the OECD) in recent years. Parents are doing quite well financially, but their children often have difficulty finding jobs that pay well, even after advanced schooling. Some adult children are also left with educational debt to repay. This is a new type of k-shaped economy.
[2] The world’s current problem is an ever-rising population paired with resources that are becoming ever-more “expensive” to extract.
World population has exploded since fossil fuel consumption became abundant. This has allowed more food to be grown, inexpensive transportation of goods and people, and the development of antibiotics and other drugs.
At the same time, the most accessible resources were extracted first. For example, fresh water initially came from streams, lakes, and shallow aquifers. As the population grew and industrial needs became increased, wells had to be dug deeper and aquifers began to be drained. In some places, desalination now needs to be used. Each of these advances in producing fresh water became more resource-intensive. It became increasingly difficult to gather enough fresh water using human labor alone. Instead, increasing quantities of physical materials, energy supplies, and debt were needed to make the new systems work.
The reason debt was needed to purchase capital goods, such as those required to obtain high-cost water, was because the devices purchased were expected to provide the desired output (water, in this case) for a long time in the future. Securing this future benefit required advance funding, using an approach such as debt. The sale of shares of stock, which are expected to appreciate over time and pay dividends, provides a similar benefit to debt.
A similar issue arises with the increasing extraction of minerals of many kinds, such as copper, tin, uranium, lithium, coal, and oil. Early on, extraction using manual labor and simple tools was sufficient. However, once the easiest to extract resources were removed, capital goods became necessary to make extraction efficient.
Capital goods, such as coal fired power plants, wind turbines, solar panels, and hydroelectric power plants also allowed electricity to be produced, extending the benefits of fossil fuels. Producing these capital devices requires physical materials and energy supplies, as well as debt or the sale of shares of stock for financing.
[3] A major limit on the system seems to be debt and the interest required on the debt.
In an economy, the growth of inexpensive energy supply acts very much like leavening works in making bread; it greatly helps economic growth. With the increasing use of inexpensive energy supply, vehicles can be made ever-less expensively, compared to using much hand labor for manufacturing (literally, making goods by hand). With this growing efficiency, wages rise faster than inflation. In the 1950s and 1960s, young people found that they could marry and live in nicer homes than their parents. Now, the reverse seems to be happening: many adult children are finding it difficult to keep up with the lifestyles of their parents.
Once the inexpensive-to-extract energy supply is depleted, economies tend to add an increasing amount of debt, in an attempt to pull the economy forward. It seems to me that a major limit on the system comes when an economy slows down so much that it can no longer repay its debt with interest.
Political leaders like to believe that growing debt, by itself, will pull the economy forward. In fact, this does work, for a time, as long as interest rates are falling. But falling interest rates stopped happening in 2022.
Of course, all the added debt contributes to the k-shaped economy. The already wealthy disproportionately benefit from debt payments. They also tend to benefit from dividends on shares of stock and from share price appreciation. The poorer people find that an increasing share of their wages goes to paying interest on debt, especially as interest rates rise.
As debt levels grow, governments eventually have a problem with repayment of debt with interest. They need to raise taxes simply to cover their rising interest payments. This is the reason why Donald Trump wants to get interest rates down. Interest payments are rising rapidly, with near-zero interest rates in the rear-view mirror (Figure 3).
[4] Added technology and economies of scale have been adding to the k-shaped economy.
Technology requires specialization. People with more training and higher skill levels tend to earn more than others. Economies of scale encourage the growth of ever-larger businesses. The people at the top of huge organizations tend to earn more than those at the bottom. Also, as international trade is added, low-wage people in the hierarchy increasingly compete for wages with workers from countries with much lower wage scales. Thus, the wages of less-skilled individuals are increasingly squeezed down.
Furthermore, both added technology and economies of scale require added debt. Again, the interest on this debt (and dividends on stock) disproportionately benefits those who are already wealthy.
[5] In a sense, artificial intelligence (AI) is simply an extension of added technology, with a huge need for electricity, water, and debt.
The hope for AI is that it will make our already k-shaped economy, a great deal more k-shaped. The hope is that AI can eliminate a significant share of jobs, with such high profits that the owners of this technology can become very rich. If it works, the wealth will be even more concentrated at the top than today.
I see the need for electricity, water, and debt as stumbling blocks for AI. I expect that, starting in 2026, the AI rapid growth spurt will seize up because it is already using more resources than are available in some areas. I expect that a significant downshift in AI will adversely affect the US stock market and the rate of growth of the US economy. My hope is that the loss of growth in the AI sphere will not, by itself, bring down the US economy–just nudge it toward recession.
[6] In 2026, with an increasingly k-shaped economy, I expect that world oil prices will drift lower than today.
“Demand” for oil really means “the quantity of oil that people, businesses, and governments around the world can afford to purchase.” As the economy becomes more k-shaped, fewer people can afford to buy vehicles of any kind. Poor people, in the lower part of the k, are hardest hit. They will tend to increasingly rely on low energy approaches, such as ride-sharing, walking, or using a bicycle. They will tend to buy fewer goods that are transported internationally. Governments, as they begin collecting less in tax revenue from the many poorer people, will be inclined to cut back their spending on new buildings and road improvements. These changes work in the direction of reducing oil demand, and thus oil prices.
It is this increasingly k-shaped economy that has been holding world oil prices down in 2025. I expect that prices will drift even lower in 2026 because of the increasingly k-shaped world economy. There aren’t enough very rich people to hold up oil and other resource demand by themselves.
Oil production will not immediately drop in response to these low prices, although it may start drifting lower in 2027. The US Energy Information Administration is forecasting that world oil production will rise by 1.1 million barrels per day in 2025 and by 1.2 million barrels per day in 2026. These amounts do not seem unreasonable based on new developments that have already started producing higher amounts of crude oil.
[7] The heavier types of oil, from which diesel and jet fuel are disproportionately made, are in short supply now. They are likely to continue to be in short supply in 2026.
World oil production has risen in recent months. When I investigated, I found that the vast majority of the recent growth seems to be in light oil. Thus, the shortfall in diesel and other heavy fuels is likely to continue as in the recent past.
This shortage of the heavy types of oil has several impacts:
a. With a shortage of heavy oil, a fairly strong country, such as the US, is tempted to attack Venezuela, which has the world’s largest reserves of heavy oil.
b. Island nations without their own fossil fuel supplies tend to use a disproportionately large share of diesel and jet fuel, for several reasons: (1) Such islands often burn diesel fuel for electricity. This is an expensive way to make electricity; goods produced with this electricity become too expensive to export. (2) Imports and exports need to be shipped in by boat or by air, again using limited types of fuel supply. Physics tends to push these economies down by making their products expensive to sell elsewhere. Examples of islands with these problems include Cuba, Puerto Rico, Madagascar, and Sri Lanka. Such places tend to be adversely affected by shortages of heavy oil sooner than other locations.
c. Without enough jet fuel, long distance tourism is likely to be reduced in 2026. One issue is the lack of jet fuel for flying planes. Another issue is that an increasing share of the population will not be able to afford long-distance tourism because of the k-shaped economy.
d. Tariffs are a way of discouraging the shipping of goods long distance, to indirectly save on heavy oil. We should not be surprised by their increasing usage.
[8] In my view, deflation is a greater risk than inflation in 2026.
With a k-shaped economy, demand for apartments (especially smaller ones) tends to stay low. As an economy becomes increasingly k-shaped, low-paid workers tend to share an apartment with one or more friends or move in with family members to save money. In a December 23 report, Apartment Advisor writes that the US average asking rent for studio apartments fell by 2.81% in 2025 compared to 2024. The similar comparison for one-bedroom apartments showed a price drop of 1.72% in 2025. In an increasingly k-shaped economy, I would expect this trend toward lower rental prices of smaller apartments to continue and perhaps become more pronounced.
Real estate selling prices may also be an area for downward price pressure. Young people who have not built up equity through prior home ownership tend to find themselves shut out from buying homes. Also, commercial real estate of many kinds seems to be grossly oversupplied in many areas. Given this situation, downward price adjustments seem likely.
Underlying this downward pressure on prices may be some actual cuts in wages. One law firm reports that cuts in wages are becoming increasingly common, especially for employees of smaller companies.
There are precedents for deflation becoming a problem. The US had problems with deflation at the time of the Great Depression. Japan had problems with deflation after its crash in real estate prices in the 1990s, and China (with its real estate price crash) has recently been having problems with deflation.
[9] “Bread and circuses” become more important as the economy becomes more k-shaped.
Many readers have heard about bread and circuses. Before the Roman Empire collapsed, it used bread and circuses to keep its citizens from rioting from a lack of food. The way to prevent food riots is by making sure everyone has enough to eat through food distribution programs, described as “bread.” Providing circuses offers a distraction from the fact that there are not enough well-paying jobs to go around.
Today, with our increasingly k-shaped economies, leaders have figured out that meeting citizens’ basic needs is essential if unrest is to be avoided. Political leaders somehow need to provide food and healthcare to their poorer citizens. They also need to keep people distracted with entertainment. For many years, governments of Advanced Economies have been trying to provide the equivalent of bread and circuses. In the US, legislation providing Social Security for the elderly was enacted in 1935, during the Great Depression. Many other financial support programs have been added over the years. Today’s circuses today are provided through televised entertainment and video games.
A major problem is that the costs of these programs have become more expensive than tax revenue can support. This is especially true of the cost of “bread,” if its cost is defined as including healthcare and pensions for the elderly, in addition to food. Ultimately, these high-cost programs can bring an economy down. The high cost of bread and circuses is thus a second limiting factor, besides excessive interest payments on government debt, (discussed in Section [3]).
[10] Leaders of many countries are already making plans that can be used to deal with shrinking resources per capita.
If there aren’t enough resources to go around, what can governments do to prevent riots? Two obvious choices come to mind:
(a) Tighten controls on citizens to prevent riots. China has been a leader in this area, and the UK and US seem to be trending in a similar direction. In a sense, the Covid requirements of 2020 were practice with respect to restrictions on movement.
(b) Develop a rationing system that can be used, in case of a shortfall of essential goods. Many countries are looking at central bank digital currencies (CBDCs). These are a digital form of central bank money that is widely available to the public. In the US, I expect CBDCs will be rolled out initially as a way for those who are entitled to food stamps to easily access their benefits. If these digital currencies work, CBDCs can easily be expanded into a widespread rationing system. Government leaders will then be able to decide who can afford to buy what, rather than depending on the way the k-shaped economy currently allocates buying-power.
[11] What lies ahead in 2026?
I don’t think any of us know for certain. The general direction of the world economy seems to be toward contraction, but some parts of the world economy will fare better than others.
Europe looks increasingly like it is an “also-ran” behind the US and China in the world economy. I expect its resource use will continue to shrink back in 2026, indirectly benefiting the United States and the rest of the world. I am hoping that with cutbacks in oil usage by island nations and Europe, and the resulting lower world oil prices, the United States will be able to avoid the worst of the recessionary tendencies looming in 2026.
There are some reports that AI, as it is being applied in China, is providing major success in reducing the cost of coal mining in China. If this is true, it may allow China’s economy to grow in 2026, despite downturns in many other countries.
I am fairly certain that AI, as it is being developed in the US and Europe, cannot continue its recent exponential growth trajectory, and I expect this to become obvious in the next few months. This shift seems likely to pull down US stock market indices. Here again, I am hoping that despite this issue, the US will be able to avoid the worst of the world’s recessionary tendencies.
I don’t expect a world war in 2026. For one thing, no country has adequate ammunition capability. I think civil wars and wars against nearby countries are more likely.
It is possible that the EU will collapse in 2026, leaving the individual countries on their own.
At some point in the future, I expect that the central government of the US will also collapse, in the manner of the Soviet Union in 1991. States will likely regroup and issue new local currencies; the new combined governments will likely provide much more limited benefits than the US government provides today.
Many people think that different leadership will change the current trajectory, but I am doubtful about this. Most of the world’s problems are “baked into the cake” by resource shortages and by too high a population relative to resources. Keeping immigration down is one way of trying to keep resources and population in closer balance.
All in all, I expect a very uneven world economic downturn in 2026. Economies will continue to become more k-shaped. Governments will do their best to hide problems from the public. Stock markets will likely not do well in 2026, if they can no longer count on AI for an uplift.
The Greenland argument has legs, because during World War 2, when the Danish mainland was occupied by the 3rd Reich,
UK stole Iceland from the crown in Copenhagen, which could do nothing.
The proper thing was to abolish the Icelandic government after the war, let the ‘leaders’ spend the rest of their lives as traitors in a Copenhagen prison, and restore the island back to the Danish crown.
But UK did not do so.
Since there is a precedent of stealing Danish island, Trump does not feel it is wrong to steal Greenland, which did not have enough pop to have its own ‘history’.
If EU does not want USA to take Greenland, it should invade Iceland, remove its government and restore it back to Danish rule.
Why stop at Iceland?
As the tallest people in Europe (prior to the arrival of all those Maasai), the Danes are gonna rise again!
https://qph.cf2.quoracdn.net/main-qimg-ca9e44033985d2f3ee1700c36c8ca247-pjlq
Map pinched from here:
https://www.quora.com/What-was-the-largest-territorial-extent-of-the-medieval-Danish-Kingdom
Like Ivanislav posted below battery tech is rapidly improving :
This is a massive claim. If Verge Motorcycles is actually delivering solid-state batteries in production vehicles in early 2026, they have effectively beaten the entire global automotive industry to the punch.
https://electrek.co/2026/01/05/verge-unveils-370-mile-electric-motorcycle-with-solid-state-battery/
A couple of weeks ago Scrooge was complaining again about surplus people
But it was this surplus that gives us this innovation. EVs will put a lot out of work so I guess surplus people is more of a problem now. Or maybe not; Even with far fewer people the Roman’s had to deal with surplus barbarians.
In any case It’s going to be a convoluted path to doomsday.
We will see in a few months whether motorcycles with these batteries are really ready to be marketed.
According to Donut Lab, its production-ready all-solid-state battery has an energy density of 400 watt-hours/kilogram and can be fully charged in as little as five minutes for as many as 100,000 cycles, without having to limit charging to 80%. By comparison, some of the top-tier traditional Li-ion batteries available today have an energy density of around 250-300 Wh/kg and can last for up to 5,000 full cycles, while limiting the maximum state of charge to 80%.
What’s more, extreme temperatures have little to no effect on Donut’s solid-state battery, with the startup claiming its product retained over 99% of its capacity at temperatures as low as -22°F (-30°C) and as high as 212°F (100°C).
The ability to work in cold temperatures is important for many parts of the world.
I’ve been meaning to post this for some time now, finally got around to it:
Steve Hanke (senior economist in the Reagan administration) on Dec 20th, pre-Venezuela-attack, discusses how he was tasked with preparing a plan since August to counter dedollarization trends. One of the aspects was to put Venezuela on the dollar. He also touches on stable-coins as a source of demand for Treasurys.
“What would it look like? Replacing junk currencies with the dollar. Prime candidate: Argentina […] My idea would be full dollarization and dollar-based currency boards. Now, get to Venezuela. I am the chief economic advisor to the Unity Democracy group that is the opposition – dollarization is step number one if you get in power. The first thing you’re going to do is get rid of the Bolivar.”
The relevant section is H:MM 1:05-1:10, or 5 minutes starting from the linked timepoint
https://youtu.be/w6fjrwtztfA?t=3941
So if this is the case, it’s not just about the oil, but about dollarization and holding on to reserve currency status.
Hey, alright, like I said, stablecoin as new national currency.
That said, there is no “holding on to reserve currency status.” The dollar is the reserve currency of this civilization and the only thing that will end that is the end of the civilization. All ‘dedollarization’ has merely been in service of creating regional and bilateral financial redundancies ahead of the global collapse of globalization. And, other countries taking on USD stablecoins as their new national currency isn’t “dollarization” because that is a separate (another) dynamic from relying on the petrodollar for international transactions. The dollarization of Bretton Woods 2 is financial neocolonialism. Countries fully going onto stablecoins as their new national currency, for Phase 2, is financial colonialism. Two different things, structurally. With the latter being the Hand engaging in a GENIUS Act of reverse engineering.
The pre-existing VZ utter dependency on stablecoins is imo why the VZ military stood down. If they refused to then the GENIUS Act gave the Treasury the authority to ban all stablecoin usage in VZ and it would suffer total hyperinflationary Collapse. Which makes stablecoins the Trojan horse. Which is why I was so excited to realize what stablecoins meant. It meant the DA was complete insofar as a thumbnail sketch can be called complete. Before that realization there was no technical framework for the financial transition into the national socialisms beyond knowing that it must involve Treasury -based digital Lincoln Greenbacks..
But aren’t stable coins only stable as long as the US dollar is stable?
Maybe that is not an issue. They seem to be primarily used where great instability is feared.
Who really runs Zerohedge ?
They don’t seem to say.
If it isn’t dollarization, maybe we should call it stabilization?
I agree that the link you give is an interesting section of video. It has to do with the US wanting to maintain its status as the world’s reserve currency.
One way is through finding markets for US Treasuries.
It mentions that the largest sources of demand for Treasuries now are:
1. J. P. Morgan
2. China
3. Stablecoins – Because they are required to be backed by US Treasuries.
Another way to keep dollar trade up is by encouraging other countries to substitute the US dollar for their currently unstable currency. Venezuela is a possible new country to transition in this direction. The other person on this video suggests adding Cuba as well. It is the sanctions and current Cuban government that have prevented such a change.
“For the last hundred years, we
20:42
have mined all the high-grade silver
20:43
that was near the surface. We picked the
20:45
low-hanging fruit. Now we’re having to
20:47
dig deeper, process more rock, and use
20:49
more energy just to get the same amount
20:51
of metal. Grade degradation is real. In
20:54
2005, you might get 15 ounces of silver
20:56
per ton of rock. Today, you’re lucky to
20:59
get 4 ounces. This means you have to
21:01
mine three times as much rock to get the
21:03
same ounce of silver. And mining rock
21:05
requires diesel. It requires
21:06
electricity. It requires labor. It So,
21:09
as energy prices rise, the cost to mine
21:12
silver explodes.”
This is the AI guy. I think we need to look at other information, as well. A December 5, 2025 article says:
https://www.bullionbox.com/bank-of-america-predicts-gold-and-silver-to-skyrocket-by-2026/
Bank of America’s Global Research division has released one of the boldest forecasts in today’s precious-metals market: gold reaching $5,000 per ounce and silver climbing to $65 per ounce by 2026. This call, coming from one of the world’s largest financial institutions, signals a major shift in how Wall Street views hard assets, inflation, and global financial stability.
$65 per ounce is nowhere near $309. We need to verify, before we trust this AI stuff.
Isn’t silver at $82 an ounce right now??
Silver does seem to be around $82 now.
We should probably be watching it.
This article says
https://markets.financialcontent.com/stocks/article/thenewswire-2026-1-6-silver-price-forecast-2026-the-oregon-group-and-anthony-milewski-examine-whether-silver-can-reach-150
The Oregon Group, a commodities and critical-minerals research platform, has released a new silver price outlook analyzing whether silver prices could reach $150 per ounce in 2026, amid tightening supply, rising industrial demand, and renewed investor interest in precious metals.
https://www.youtube.com/watch?v=L8c9AEM5XIo
Venezuela Takeover Changes Everything for California Gas Prices (11:16)
131,813 views Jan 5, 2026
From the transcript:
2:02: “Eight days ago, something happened that got almost no media attention, but will devastate California’s fuel supply. The San Pablo Bay pipeline, which carried 100,000 barrels of crude oil daily from Bakersfield to Northern California refineries for 70 years, shut down permanently. The company operating it was hemorrhaging $2 million every single month with no way to stop the bleeding. Operating costs ran 8 million monthly while revenue topped out at 6 million. 18 straight months of losses totaling $36 million finally broke them. This pipeline was the lifeline connecting California’s oil fields to its refineries. Without it, the remaining Bay Area refineries must find alternative crude sources or dramatically reduce production. Every alternative costs substantially more and takes weeks to arrange. Some refineries have no viable alternatives at all. The infrastructure that kept Northern California’s fuel supply flowing for decades became worthless overnight. Think about the timing. Philip 66 closed its Los Angeles refinery earlier this month. Valero shuts down Venicia in April. Now the pipeline supplying the remaining Northern California refineries has vanished. California is losing 20% of its refining capacity in just 4 months while the infrastructure supplying what’s left collapses simultaneously. This is unprecedented in American energy history.”
There is another (AI) video claiming that Arizona and Nevada oil prices will skyrocket if California prices skyrocket, because those states get the majority of their oil by pipeline from California. I don’t know whether or not this is true, but it certainly looks like it might be true.
https://www.youtube.com/watch?v=k-MGw6yoOb8
San Pablo Bay Gas Pipeline FORCED To Shut Down Due To Issues! (10:57)
40,968 views Dec 24, 2025
This article doesn’t look like an AI generated video. I would agree with what it says.
This is another AI video. Some things it says may be right, but other things may be wrong. It does say that restrictive California regulations will prevent Venezuelan crude from being used by Northern California refineries, even if it becomes available.
This is the story of Europe pushing itself down through higher prices on imported goods from countries with lower carbon taxes. This indirectly benefits the US, China and most of the rest of the world because European citizens will be able to buy fewer goods and services. Their standards of living will drop, leaving more of the goods and services available for the rest of the world. The story as written does not explain this however.
https://oilprice.com/Energy/Energy-General/EUs-Carbon-Border-Tax-Goes-Live-and-Trade-Partners-Are-Not-Amused.html
On Thursday, January 1st, the EU carbon border adjustment mechanism entered into effect with the goal of improving the competitiveness of European goods manufacturers against non-EU companies operating in laxer emissions reduction frameworks. China was the first to threaten retaliation. It won’t be the last.
The carbon border adjustment mechanism, or CBAM for short, was devised to remedy the unintended effects of the world’s most stringent emission-reduction standards for the industrial sphere, namely, sky-high costs that make the end product uncompetitive. This became especially painful for European makers of things such as steel and cement, where the biggest competitor is China—which does not have anything resembling the emission reduction requirements of the EU, so its steel and cement are very cheap, and buyers prefer them.
In other words, in order to boost the competitiveness of European steel and cement manufacturers—and electricity generators, too—the European Union made sure that cheaper imported steel, cement, and electricity are not that cheap anymore. China and India are unhappy about—and there are things they can do that will not help the competitiveness of European businesses.
None of this would have occurred if Europe ignored John Hay’s so-called Open Door Policy to carve China among themselves
At that time UK controlled the area around Canton, France controlled the area bordering Indochina, Germany took Shantung (the Tsingtao beer), and Russia and Japan were vying for northern China. (Italy, Turkey and Austria were not in a shape to compete)
The European powers should have showed a middle finger to USA, telling it that it already had an entire continent (Latin America) as virtual colonies, so it should shut the f up regarding China.
https://futurocienciaficcionymatrix.blogspot.com/2026/01/una-revision-de-los-300000-millones-de.html?m=1
Looks like it will take a long time to ramp up oil production in VZ
I would agree. Innovations are needed to reduce the cost of extraction and processing.
It is not just innovation it is price of oil, infrastructure, political instability, corruption etc
Agreed!
But that is what money printing is for. The collateral has been had.
Fall of a ~legend, Kunstler seems to be getting increasingly off the rocker in his political rants, now claiming Cuba-VZ-CHN paid America’s left-left aka the meager-power-genuine one to some apparent non existent effect of (un)importance within the US polit system.. anyway..
Well, his ME angle coverage in recent yrs provides the answer.
PS the energy angle covered a bit more rationally..
https://www.kunstler.com/p/badass
The allegation that James Kunstler makes is this one:
The capture of Nicolás Maduro is driving the Lefty-left batshit crazy for a very good reason: it portends the extinction of their financial life-support, since Señor Maduro used his country as a money laundry for the Chinese Communist Party (CCP) and, in turn, cartel drug money, to funnel gazillions through Cuba to America’s Democratic Party and its political satellites. Not even George and Alex Soros can fill that hole.
For a nearly failed state, Cuba has been able to exert undue influence on US political life through the decades. Mayor Karen Bass of Los Angeles was trained-up in Marxist revolution there in the 1970s and traveled to Cuba many times during her stint in Congress. Reps. Ilhan Omar and Pramila Jayapal dropped into Havana during the last election year. NGOs such as the Center for Democracy in the Americas act as distribution nodes for money that comes through Cuba and supports Lefty-left activists around the USA. Don’t be surprised if a lot of this laundered money ended up in the bank accounts of US congresspersons and senators, too. Remember this when you watch them howl on your screens.
Alas, Communist Cuba is about to expire of strangulation.
I would agree with the “expire of strangulation.” Cuba has gotten its oil from Venezuela for a long time. Without oil, its lights go off. In return, Cuba sends trained medical people to Venezuela.
I don’t know about the allegations in the first two paragraphs I quoted. We know that the World Economic Forum used to provide training for politicians, in the direction of the views widely held in Europe. Basically, quite liberal. Whether Cuba has been funneling money to the Left-left is not something I know about.
JHK seems to have sources that many of us are not privy to. I am willing to give him the benefit of the doubt.
Yeah, Kunstler is a phony. He probably always was.
I first learned about peak oil back in the early 2000’s on clusterfxxck with Kunstler as the host. It was a good group. It was an early heads up. Not sure how to explain what is going on now.
I explained what is going on now with JHK but Gail refused to publish it. What’s going on with him now is just what was going on with him then, just magnified.
Run> yes, as I look back at the mid-late 2000s, Kunstler had one of they key commentariats on the PO scene for a while then.. He used to publish like 2/3 on the subject, civilization critique tangents and only ~1/3 articles on politics-social issues.
As the “early-imminent threat” of PO vanished into financial crisis and later new wave of tech investment mania (CBs print fest), he left the topic almost completely, perhaps also due new publishing deals concerning other topics.
PO commentariat completely left the site .. also because silly heavy handed censorship etc.
As of a maybe a year and a half ago on his substack he still had about three peak oil people. JHK wasn’t censoring that I could tell, because he didn’t kick me out even though I was deconstructing his bs. Those three folks were good minds and they seemed happy that someone like them had entered the room. I wondered what the hell they were still doing there in that cesspool. Then I took off.
I have read many of Kunstler’s books and am disappointed in the right wing turn in his politics. I will give him credit that compared to the people he associates with now he seems sane by comparison. I listened to a podcast he did with Dave Collum and Tom Luongo, and he was the only one who didn’t sound like a Qanon conspiracy theorist.
Well we all know what his pedigree is and his dad was a diamond trader and he himself was always an inveterate Zionist. Toxic brew. So he sniffed out the alt- right political winds that the Hand was fanning, and so chased the likeminded Zerohedge audience after Zerohedge shed it’s indie skin and showed its true colors whereupon all the good commenters began to take off.
Zionism is a hell of a drug.
I really liked James Kunstler’s 2005 book, The Long Emergency: Converging Crises of the 21st Century..
I have talked to him in person and corresponded with him, but not recently. He has been “plugged in” with peak oil people for a long time. He interviewed me once or twice, in audio recordings that aired online.
JHK been a POS from the very beginning. And that’s the part of himself he chose to parlay.
Beg your pardon Gail for the premature allegation.
If Phase 2 world GDP drops 80pc, and current VZ capacity is able to be maintained and VZ gets to keep as much of it as it does now, that would still be a huge win for the US. That’s really what this is about imo. Canadian tar sands surface mining equals about the same amount of production as VZ production and surely surface mining will go away pretty quickly because it’s completely reliant on diesel powered heavy equipment.
It just gets funnier as the hours pass. The justice department now admits that the “cartel de los soles” was a Yankee fiction.
They now owe a lot of compensation to the families of those fishermen that were murdered, just to convince the monged out US population that murder was really gods work.
I wonder how many of the monged out will ask the next obvious question, because Maduro has just become the boss of an admitted fiction. I’ll guess zero, as there’s a fair amount of BS excuses for the desperate to cling on to.
https://www.nytimes.com/2026/01/05/us/trump-venezuela-drug-cartel-de-los-soles.html?searchResultPosition=1
If they keep this up even the white scribe class might notice that everything they believe is in fact fraud and then realise, they are next on the menu. Then again, no historical evidence of that ever happening.
So the claims that this whole operation was about drug dealing was fiction.
We live in a world, with lots of strange narratives cover up what is really happening.
This is a link to an article that is not behind a pay wall that talks a bit about the issue.
https://www.news18.com/world/what-is-nicolas-maduros-cartel-de-los-soles-and-why-labelled-it-a-terrorist-organisation-ws-kl-9810467.html
Of course , they were fisherman boats .
Its the society of the spectacle for the peasants
In fact, with a CIA puppet government, it will be easier to move cocaine, as is currently happening in Ecuador.
What happened to the poppy cultivation in Afghanistan ?
There’s a first time for everything. It’s mission creep on the US coup. Think about the literary nature of the Hand: coup breed coup. The road to America First national socialism runs through the neoliberals becoming anti- imperialists. The road through Conservative anti-imperialism has already been adequately traveled. It’s the triangulation dynamic I’ve always talked about.
Nevermind the Kabuki theater Fitz. What did you expect? Spare us the faux humor.
What we’re all dying to know is how you have processed what happened the other night in Caracas as the VZ actions were beyond diametrically opposed to your heroic expectations.
Ah, of course, yes – the first art of war: deception. Appear weak when you are strong!
Well played VZ says Fitz.
Has this Chavez video done the rounds in the west?
https://en.mehrnews.com/news/240496/Ch%C3%A1vez-s-video-goes-viral-predicting-US-abduction-of-Maduro
Nothing new under the sun it would seem.
The Chavista have now been joined in their calls by many opposition supporters(ooops).
Today the interim president meets representatives from China, Russia and Iran in the presidential palace and just a couple of hours before, heavy gunfire was reported in the area. I wonder who caused that, as the narrative appears to be falling apart. There are videos of injured soldiers who claim to have fought off an attempted beach landing, so expect lots of “military suicides” or “operational accidents” to trickle through in the US over the next few months.
Anyway, who’s next up for a kidnapping and…. Well not much else it would appear.
Columbia seems obvious as Petro is openly calling out the obese pedophile, then there’s Nicaragua and I see Brazil is the favourite for some.
I’ll go for Mexico, as I’ve seen that plan and just to push the US they did this
“According to a new constitutional reform from April 2025, Mexico will no longer permit foreign intelligence gathering without explicit authorization. This measure targets U.S. agencies—DEA, CIA, and the like—which have operated with a sizable footprint in Mexico for years”
https://themindness.substack.com/p/the-plan-for-us-drone-strikes-in?utm_source=profile&utm_medium=reader2
Hold up though, the US is now trying to start up talks with Iran again and Benzion Mileikowsky junior has asked Putin to inform the Iranians that he really really really doesn’t want any trouble, so 100% Iran next(like debt, you always need a bigger show to hide the embarrassment of your last failure).
This all reminds me of something
“So imagine the future as it will actually arrive, & not as the think-tanks assure:
Dawn over the Gulf, where Iranian radars go silent for an hour, then erupt in fire.
A massacre of materiel & men without precedent in U.S. military historyWhat follows is Black Sunday…”
“As CENTCOM reels, the Caribbean ignites:
Venezuela, having prepared in Silence, unleashes its own blow:”
“At the same Time:
Beijing, smiling, then proceeds to close the trap:”
Hmmmm, sounds fun, but a bit hollywood, which isn’t the Chinese way.
They seem wise enough to dig channels, rather than attempting to build useless walls.
https://youtu.be/ZXLJDX9ZdsQ?si=QwB7t_ISE2cm-Rw7
An empire dissipated into an ocean of meaningless slop, eating itself.
Beats holywood hands down.
Yeah, yeah, I read the same thing about Syria before Assad fell, that Russia could respond to attacks on its refineries with indirect attacks in Syria on US interests, and look what happened.
That could have happened if Russia had done its job and taken Kiev in 2022, but it screwed up and is now stuck in a never-ending war of attrition.
This Ecuadorian guy has good information and predicted that Putin was going to abandon Maduro weeks before it happened.
Apparently, Trumpstein threatened tactical nuclear strikes if they didn’t release him, and the generals were bribed …
>> Putin was going to abandon Maduro weeks before it happened.
I don’t like his take. How is Putin in Russia supposed to protect Maduro from Russia? The entire Venezuelan military stood down. 5000 MANPADS and none were used? This is on Venezuela. And what is Maduro doing with a Columbian security detail? That just speaks to how fractured Venezuela is. Venezuelan officials and military were bought off or coerced – they had more than enough anti-aircraft systems to make it a bloody affair.
I dont know if YouTube can generate english subtitles for spanish speaking videos for you to understand
Of course they were bribed , but Putin gave maduro the thumbs down weeks before the attack and the people protecting him were not columbians , they were cubans .
The principal judas is Diosdado cabello
Yeah, typo about Cubans/Colombians, I did know. Doesn’t affect my point though.
Never ending attrition – lets define it ?
These massive concrete defensive lines (interlocked into chain of pre- existing cities) made larger perimeter across UKR and were build chiefly post ~2014. During “limbo time” when RU had fallen into that ~DE/EU negotiation (~Merkel’s intentional fake) promise of eventually granting real compromise in the ethnic blended regions.
Meanwhile, EU/US must now post 2022 print +100B for direct UKR budget y/y to keep even slow-mo surrender alive – so the end of [conventional phase] is approaching.. Plus issuing further additional material aid packages. Also, EU member states are now revoking aid paid to (pendler – tourist aid seeking) refugees – further stress in the overall $ituation.
The human losses on the ongoing fronts are way asymmetric like 1:15-30x even per western analytics.. Forced conscription hunters are openly attacked by public now.. Most entry points for material import from west have been nixed, bridges, rail, in the north or southern route to UKR.. likely even token access to the sea will be denied.
It’s a new gen of conflict actually, UKR forces mostly stay put, in first engagement partially destroyed by inbound glide bombs, then residual force killed by drones. And only after that RU ground forces deployed into largely undefended territory..
What comes after this end of [ conventional phase ] is anyone’s guess; it could be anything on the scale of total surrender to border-line guerilla low intensity war for decades..
Obviously, anything can happen on the escalation route, like someone providing long range missile to provoke targeting EU-proper / US- xyz in retaliation and off to the races..
We don’t have enough cheap energy to keep fighting battles across oceans. Also, we need to manufacture, whatever we manufacture, closer to home. The self-organizing system is telling Putin what action to take.
Yes we do… have cheap energy how do you think we can ship half a million people around the country just gor football games
To relate Syria to Venezuela is a bit of a leap and one I would avoid, as it’s a much bigger leap than you seem to think and you could end up landing in a stinking pile of BS(you might even end up President of the United States of America and you wouldn’t want that to happen).
“Apparently, Trumpstein threatened tactical nuclear strikes if they didn’t release him, and the generals were bribed …”
You believe that?
A nuke on Caracas, which is exactly how far from the nearest US based(Trinidad I guess), or how that affects the most important thing, the whole reason for the US’s very existence, corporate profits and control.
Here’s something you can actually verify.
Less than a month before the pedo sent his ships, China announced a 4bn US dollar bond offering, but it came with lower yields than US bonds.
When orders were received, they amounted to 118bn. We need to ask why a lower yield was so popular(doesn’t the US treasury have to buy it’s own because they are so popular?).
“The Chinese bond issuance in Hong Kong represents something far more significant than a successful fundraising exercise. According to analysis from JP Morgan and the World Gold Council, this wasn’t about raising capital at all; China has over $3 trillion in foreign exchange reserves.[^3] This was a proof of concept, a demonstration to the world that an alternative to the dollar system isn’t just possible, it’s already here and functioning.
Consider the mechanics: China raises dollars through bond sales, then uses those dollars to finance Belt and Road Initiative projects across developing nations. But here’s the twist, they’re structuring repayments in renminbi (RMB), not dollars. It’s financial judo, using the opponent’s strength against them. Take Argentina as an example. Since 2023, Argentina has been repaying portions of its International Monetary Fund debts using RMB obtained through currency swap agreements with China.[^4] The dollar goes in one door and exits through another, while the RMB quietly expands its footprint.”
https://substack.com/@dilligafido/note/c-195040251?utm_source=notes-share-action&r=7c6fx
We also need to remember that on the morning of the terrorist kidnapping a Chinese delegation landed in Venezuela and feel free to investigate the hundreds of similar situations that have been going on inbetween.
There’s a whole lot still unrevealed and many more moves to make(how’s the price of aluminium looking in the US today?) before we can even begin to understand just the Venezuela part(the two most important short term things haven’t happened yet).
Russia is an irrelevance concerning this situation. You might as well ask what Burkina Faso think they are doing. Anyone that thinks Putin gave a thumbs down(how theatrical) and that meant anything is not thinking, rather being willingly led.
This whole thing is being dressed up as something it is not and would have been considered an embarrassment not that long ago.
https://substack.com/@ahnafibnqais/note/c-195782940?utm_source=notes-share-action&r=7c6fx
All I’ve witnessed so far, is glaring desperation, as the many cuts take their toll, whilst constantly being told by westerners that each cut is irrelevant(no movie ending, no understand). I surely can’t be the only that sees the cumulative effect of all these cuts, these small channels so quietly and skillfully dug.
I’m not unaware of the shift in discourse. The little steps. That first step from domination we can see in the 3 way split story now gaining traction with those who not long ago were screaming domination. Bad news, that’s not going to happen, but the good thing about the first step, is that it offers the possibility of another and who knows where that could lead.
It’s normally flat on the face, but they tried at least.
Almost forgot, “the Ecuadorian guy”, is he in Ecuador?
Brutal government, that would snatch and torture anyone with a voice going off topic. Unsurprisingly President Noboa is a good friend of the pedo in chief as well.
Did you see Maduro’s “we will win” signal to the Chavista(or was that a fake)?
LOL. You justify your political bargaining with structural Collapse by hewing to anti-imperial, dedollarization fantasy. You get your political ideas from what you think is the cutting edge of substack – and you have links to prove it!
Yet the reality is structural.
“It’s financial judo, using the opponent’s strength against them.”
You have got to be shitting me Fitz. That is pretzel logic lipstick on a pig desperation. That’s desperate! If China could actually dedollarize they wouldn’t need to run their financial shell game through dollar bonds in the first place.
Maybe try not to get all of your ideas from people who know nothing of structural Collapse huh? Because that makes for a fiat old ways worldview.
At least a ‘Hollywood’ systems analysis is a .. systems analysis.
Yeah, yeah, I read the same thing about Syria before Assad fell, that Russia could respond to attacks on its refineries with indirect attacks in Syria on US interests, and look what happened.
That could have happened if Russia had done its job and taken Kiev in 2022, but it screwed up and is now stuck in a never-ending war of attrition.
This Ecuadorian guy has good information and predicted that Putin was going to abandon Maduro weeks before it happened.
https://www.youtube.com/watch?v=Z51IGqD9Yr4&t=1
Apparently, Trumpstein threatened tactical nuclear strikes and the generals were bribed …
The second video is a parable about a wise man who sat near a river. When it unexpectedly rose, nearby residents tried to build a wall to contain it, but the wise man kept asking, “Where will the water go?” Later the wise man suggested building a narrow channel to a low field, where the water would do little damage. That approach worked. We need to work with nature, in the beliefs of Tao.
In the US, we have built a lot of hydroelectric dams. These work for a while, but then, if a dam breaks, widespread flooding tends to take place. We have distorted our understanding of which parts will stay dry from flooding, in a storm.
Great man, Hugo.
True presence of a leader and a genuine smile for any and all(unless you hurt his people). Turned the most unequal nation on the continent into the most equal, achieved huge strides in all necessities and would personally die for you or your children.
If his videos aren’t on Venezuelan tv regularly, I’d oust Rodríguez, but so far she gets a bye and her latest statement backs that view. Take note of the agricultural situation, as you have mentioned it before. Impressive numbers, everything considered. Venezuela was doing very well in certain sectors(no matter how much the western media claim the opposite).
https://www.telesurenglish.net/venezuelas-acting-president-denounces-kidnapping-and-reaffirms-national-sovereignty/
I see the potential for another “prosperity guardian” just over the horizon and then on to Iran, who are now openly talking in the same language as Petro. It’s starting to look almost like everyone is seeing weakness and so fancying their chances of grabbing some glory.
I bring it up and you guys poo-poo it. It’s coming either way. There will be bumps in the road, but civilization isn’t going to collapse globally any time soon, barring MAD or some other idiocy:
https://x.com/AssaadRazzouk/status/2008189927411060981
“The “Range Anxiety” era is ending: CATL just confirmed Sodium-ion batteries are hitting the mass market in 2026
>500km (311 mi) range
>175 Wh/kg density
>Works in freezing cold (-40°C)
Lithium isn’t replaced; it’s getting a cheaper, tougher partner”
It is clear now that we live in the intellectual 3rd world. Yes, here we do hypersonics, icebreakers, and the closed loop nuclear system, which is pretty good. But China rules STEM. The CO2 system to use waste heat is also impressive although at first glance the Carnot efficiency is very low. The thorium cycle, which is now going to happen. Replacing the western automobile and airplane industries will be an afterthought, although the latter necessarily requires 50/50 Russian help. Russia will build new cities in Siberia to use the coal fields there, and this is the way it is going to be (China rules STEM) for at least 20 years.
Duno if you saw this post to you on the last page about 50/50 off-books work, but I’d be curious about your take because it has implications for Russia’s future development and innovation across the economy:
>> drb, I would imagine that works at smaller scales / for local businesses, but it hinders the development of large enterprises; if one tries to use the same tactics at large companies, you will be discovered and then either be extorted by authorities or have your business taken by them. Agree?
Largely I agree, and it is why I will keep the lamb business small no matter the success. But things are changing and there are opportunities. Example, if we were to make a larger lamb business in collaboration with the Saudis, for export, many of the regulations could be skirted. Selling abroad, you do not have to pass russian requirements, and also having only central asian employees on temporary visas will cost less in taxes. I think it is likely that they will review the law and change things once the war is over.
Also, there are generous grants and loans for small business (a lot less now, but when I arrived and for the first year yes). You can’t navigate the system without experts, but it is not as bad as you think it is.
Wonderful! I thought lithium was great when it came along. The charge lasts weeks or sometimes even months. And soon with new added ingredients! Supercalifragilistic! Progress never stops! (Until it does, but not for a while yet).
“Lithium” went through a lot of iterations since the ~mass consumer adoption 1/4 century ago; different versions of the chemistries tried along. If cared for properly ~20-30yrs longevity is not a problem even for the oldest stuff as we can witness around.
In terms of automotive and possibly grid scale / local power bank application obviously the more recent variants come forward, it ~almost achieved parity in some very narrow-specific apps with the grid or oil..
Next? We don’t know much about the real details on sodium-ion, meaning real cycle life, say in car application 150-250-500k km per 20-30yrs or less / more? And at what price (is it possible to easily retool the existing factories?), any rare-earth albeit minuscule% in the mix somehow etc?
Would China restrict export-licensing deals now.. ?
And obviously even in the most optimistic variant it still won’t (can’t) be 1:1 replacement for all the grid or all diesel/(nat)gas out there.. because the scale-up would be tied to other e-tech availability – resource acquisition chain.
>> And obviously even in the most optimistic variant it still won’t (can’t) be 1:1 replacement […] because the scale-up would be tied to other e-tech availability – resource acquisition chain.
Sounds like a lot of hand-wavy “China can’t or won’t scale technology and manufacturing” argument despite them doing just that across all industries.
Huh?
The quotation clearly relates to near/ever likely hood of e-transport replacing the sheer extent of today’s oil global infrastructure in full (aka the whole spectrum of tonnage and climate zones etc.) Gail and others mentioned that logical concern numerous times as well.
This is PO/resource depletion aka over-all information skeptic – first principles – forum..
–
Besides we have been discussing that [ sodium-ion ] novelty numerous times already.
And if I recall it correctly even re-posted or commented on Q3-Q4 CHN msm/biz PR – as they issued then some details like assembly line rewamp not likely to be huge issue, pricing more or less staying same (keeping same profit margins as per legacy lithium production).. etc.
We are simply not there yet even for the introductory phase of production – to make definitive calls, that’s all..
While the battery direct response is under moderation..
Yes, CHN strategically opted for using less oil per produced output in factories & pop expenditures, hence gigantic rail network, subways in regional cities, EVs, ..
Yet, the amount of diesel, gasoline, natgas, coal, uranium needed by the economy (incl. exports) could perhaps slowly grow or even stagnate, but NOT realistically to be replaced by [ sodium-ion] short term, midterm, quite likely not even substantially longterm..
If EVs can get the price down, the range up, and the electricity supply high enough that people can keep the insides of their cars warm in cold weather without depleting the batteries quickly, they might work. But we still have a problem with providing enough electricity for EVs, except in parts of the world with either good coal or natural gas supplies.
The problem is going to be Cu.
Dennis L.
“The topology is circular at every node. Nvidia’s investment creates GPU demand. GPU purchases create cloud capacity. Cloud capacity commitments validate CoreWeave’s debt financing. Debt financing enables more GPU purchases. As Fortune documented in December 2025 examining the arrangement’s mechanics, “All money Nvidia invested in CoreWeave came back as revenue.” The circularity is not hidden. It is disclosed in SEC filings and credit agreements. But the financial analysis treating Nvidia’s revenue growth as reflecting organic datacenter demand does not adjust for the self-referential component. The measurement framework cannot distinguish manufactured demand from commercial adoption. . . .
Princeton’s Center for Information Technology Policy published research in 2025 documenting that “GPU hardware is being essentially given away” in certain hosting arrangements, with providers prioritizing utilization over pricing to maintain competitive positioning and avoid stranded capacity charges. The research identified multiple cloud providers offering H100 capacity at rates below their own cost of capital, accepting losses to maintain utilization metrics and market position. The behavior is consistent with hardware whose economic value is declining faster than accounting useful lives recognize… “?
https://substack.com/home/post/p-183558351
Meaning this is a bubble by any conceivable metric right?
Agreed!
The President of Columbia is daring President Trump to get him like he did Maduro.
Petro. “Come get me, coward, I’m waiting for you here.”
https://x.com/dom_lucre/status/2008223522519208443
“Never let a day go by”.
It looks increasingly like, on one level, the Hand is making use of reverse psychology by having the Trump admin be so explicit about VZ oil. Everyone is so accustomed now to not believing the government and, thus, opting for the one layer deep controlled opposition narrative, that many alt- people are say that this is not about the oil but about defending the dollar. As I’ve said many times, the dollar needs no defending now that we’re on the doorstep of dollar deflation. Even some people here think that this is as much about defending the dollar as it is the oil, given that we have our doubts as to how much VZ production can be raised. It’s functional reverse psychology manifested by the self-organizing feedback loop of distrust in government. And it helps further mask peak oil even though peak oil is well masked already by the fact that US production has supposedly hit new highs right before Collapse.
Yes, for quite some time Donald’s every sentence about oil incl. proviso ala
“..btw.. did you know.. we /US have the most oil on the planet.. ”
“.. plenty of beautiful oil there..”
..
.
That’s even for an elementary school peak-oiler red flashing alert right there.., he is evidently briefed in some ~limited capacity about the issue (perhaps only about the global blending-sourcing problem); also often times pauses himself and immediately jumps from oil to the (rear earth) minerals domain too..