In Part 1, I talked about how there is a close tie between the amount of oil consumed and the number of people employed. US oil imports have been dropping, and there are strong indications that they may continue dropping–world supply is flat, and China, India, and oil exporter are taking a larger share of the total. It appears to be almost impossible to ramp up US oil production by a very large amount, so with smaller and smaller imports, it is likely that US oil consumption will continue to decline, and with it the number of people employed in the US.
The problem is that our financial system cannot stand a very high unemployment rate–perhaps double today’s unemployment rate, or greater. If there is very high unemployment, people will default on their debt, and banks and insurance companies will fail. There appears to be a very high probability that the financial system as a whole may fail.
Some of you may have seen the show Prophets of Doom on the History Channel (Wednesday, Jan. 4). What I am talking about is very much related to the collapse scenarios discussed on that show, although I would not necessarily describe things exactly the same way that participants on that show described things. Also, the ideas I am presenting are my own. Presenters on that program would likely have somewhat different ideas.