The more I think about it the more I think that for one, the banking system will not surrender itself to the effects of peak oil.
Put simply, oil is a powerful thing and the privatized central banking system is a powerful thing, but put together they are more powerful than the sum of the parts.
This is why I believe preservation of both of these will be seen as vital until there is some at least marginal replacement for oil, such that the status quo can continue.
Peak oil, aside from the threat it is, can be a powerful tool too. Much like how the crash of 1929 was a great tool. People to this day still believe that the Great Depression was caused by the crash which is a nothing but a well supported myth. The stock market crash drained 3 billion from the economy but it was the FED in the 3-4 years following the crash that constricted the money supply of the US by 1/3. This drained 30 billion from the economy and is what really caused the Great Depression. It was engineered with the crash of '29 as a pretext.
As history does tend to repeat itself this is my best guess what will happen:
Peak oil will emerge as a real threat in the years to come in full public view. However it will be used as another pretext to constrict the money supply once again. The markets will go nuts as the money supply is tightened and people bail into gold. Gold soars to unbelievable heights, a worldwide depression ensues which is then attributed to natural causes (peak oil). The world as a whole generally embraces a gold standard for a number of years. Things don't improve. Gold crashes as the world is sold a bill of goods on a new "world currency". Things improve and perhaps at this point a marginal replacement has been found for oil to help drive the "world economy". If one isn't found, that's ok, we'll all be forced to accept new ways of living but the world bankers will still manage to reap immense profit from installing a world system regardless, and at the end of the day, it is the next best thing.
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The "Peak Oil Depression"
The "Peak Oil Depression"
by mmasters » Mon 02 Oct 2006, 11:39:13
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Re: The "Peak Oil Depression"
by DantesPeak » Mon 02 Oct 2006, 12:02:43
I do agree that the Fed was very tight in the months before and after the market crash of 1929. The fact that they had been raising interest rates fast on stock market loans -prior to teh crash - is often overlooked.
The US went back to its traditional inflationary mode in 1932 and 1933 when Roosevelt greatly devalued the US dollar by 75%. At that time, most US cash money was controlled by the Treasury - and not the Fed.
I also agree that effects of PO are deflationary economically, but are mostly inflationary otherwise. Inflation and negative eocnomic circumstances can exist at the same time - in fact with inflation the economy would fall even faster than with deflation (buying pwer falls faster with inflation).
I strongly think the future will bring huge devaluations in the US dollar, as the electronic banking system can now facilitate very fast 'printing' of electronic money. However I do thing there is a small possibility of a deflationary crash - like the period of 1929 to 1932 in the US.
The US went back to its traditional inflationary mode in 1932 and 1933 when Roosevelt greatly devalued the US dollar by 75%. At that time, most US cash money was controlled by the Treasury - and not the Fed.
I also agree that effects of PO are deflationary economically, but are mostly inflationary otherwise. Inflation and negative eocnomic circumstances can exist at the same time - in fact with inflation the economy would fall even faster than with deflation (buying pwer falls faster with inflation).
I strongly think the future will bring huge devaluations in the US dollar, as the electronic banking system can now facilitate very fast 'printing' of electronic money. However I do thing there is a small possibility of a deflationary crash - like the period of 1929 to 1932 in the US.
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Re: The "Peak Oil Depression"
by MrBill » Tue 03 Oct 2006, 03:49:15
I am not an economic historian, but this is what I know of the crash in 1929 and the subsequent depression.
Up until that time most recessions had to do with over capacity and bubbles. Therefore, the traditional thinking was that recessions were inevitable to bring supply and demand of real goods and services back into allignment.
Money supply was not a standard tool used by the Treasury to smooth the business cycle, so booms and busts were routine.
What exacerbated the US depression after the bust in 1929 were the Smoot & Harley tariffs which were protectionist. Up until that time at the end of the last century and up until 1929 the major economies of the world had been integrating and growing through trans oceanic trade. And the US was growing fastest of all as a brand new continent and its new place in the world.
Protectionism sent many other economies into retreat. Plus you had Weimar Germany in an economic funk due to crippling war reparations foisted on them by the Treaty of Versailles.
If you notice the policy adjustments in the wake of the Tequilla through the Asian and Russian crises as well as the Argentine debt default you will see that the world's central bankers having learned from the Depression, and to a lesser degree from Japan in the 1990's, that they needed to add liquidity to avoid economic contangion. This worked the trick, and kept at least a few world growth pillars stable, while those countries at risk recovered.
However, not satisfied to rescue economies from the brink of disaster the Fed and others tried to micro-manage slowdowns and avoid all pain all together. Like a cure for everything medicine. So after the Dot.Con bust, and then 9/11, the Fed was quick to cut rates and add liquidity. But different causes, different after-effects. And, of course, we all know what happened. Incredible asset price inflation as well as global imbalances caused by the US' current account deficits being monetized into Chinese growth and commodity prices as well as California real-estate to name just a few examples.
So just like the run up to the crash in 1929 we have a bubble like economy caused by over speculation and global imbalances, and at the same time protectionism in the US is on the rise. We may very well see some of the same types of fall-out?
However, these imbalances are not quite like the over-capacity problems of the past that caused recessions. At least in this case the over-capacity is in Asia and not in the USA or Europe for example. The excesses that do exist are more in the form of debt from over borrowing and inflated house prices. And it is not clear to me that protectionism can help unwind domestic price bubbles, but it can sure spread the contagion to Asia where the real social unrest is likely to occur with uncertain outcomes. Like extreme nationalism stemming from economic chauvinism. These things are not to be taken lightly in my opinion.
But to be fair many economic writers in papers and magazines have been writing about these excesses for a long time now, especially the over indebtedness of consumers and sky high housing prices that were defying reality. You may be right. Some bankers may profit from the decline, as anyone else that prudently managed their affairs and did not get caught up in the bubbles. However, it was public information for all to see that wanted to see it. No conspiracy, but perhaps a wish to avoid economic pain at all costs. But at a high price.
Up until that time most recessions had to do with over capacity and bubbles. Therefore, the traditional thinking was that recessions were inevitable to bring supply and demand of real goods and services back into allignment.
Money supply was not a standard tool used by the Treasury to smooth the business cycle, so booms and busts were routine.
What exacerbated the US depression after the bust in 1929 were the Smoot & Harley tariffs which were protectionist. Up until that time at the end of the last century and up until 1929 the major economies of the world had been integrating and growing through trans oceanic trade. And the US was growing fastest of all as a brand new continent and its new place in the world.
Protectionism sent many other economies into retreat. Plus you had Weimar Germany in an economic funk due to crippling war reparations foisted on them by the Treaty of Versailles.
If you notice the policy adjustments in the wake of the Tequilla through the Asian and Russian crises as well as the Argentine debt default you will see that the world's central bankers having learned from the Depression, and to a lesser degree from Japan in the 1990's, that they needed to add liquidity to avoid economic contangion. This worked the trick, and kept at least a few world growth pillars stable, while those countries at risk recovered.
However, not satisfied to rescue economies from the brink of disaster the Fed and others tried to micro-manage slowdowns and avoid all pain all together. Like a cure for everything medicine. So after the Dot.Con bust, and then 9/11, the Fed was quick to cut rates and add liquidity. But different causes, different after-effects. And, of course, we all know what happened. Incredible asset price inflation as well as global imbalances caused by the US' current account deficits being monetized into Chinese growth and commodity prices as well as California real-estate to name just a few examples.
So just like the run up to the crash in 1929 we have a bubble like economy caused by over speculation and global imbalances, and at the same time protectionism in the US is on the rise. We may very well see some of the same types of fall-out?
However, these imbalances are not quite like the over-capacity problems of the past that caused recessions. At least in this case the over-capacity is in Asia and not in the USA or Europe for example. The excesses that do exist are more in the form of debt from over borrowing and inflated house prices. And it is not clear to me that protectionism can help unwind domestic price bubbles, but it can sure spread the contagion to Asia where the real social unrest is likely to occur with uncertain outcomes. Like extreme nationalism stemming from economic chauvinism. These things are not to be taken lightly in my opinion.
But to be fair many economic writers in papers and magazines have been writing about these excesses for a long time now, especially the over indebtedness of consumers and sky high housing prices that were defying reality. You may be right. Some bankers may profit from the decline, as anyone else that prudently managed their affairs and did not get caught up in the bubbles. However, it was public information for all to see that wanted to see it. No conspiracy, but perhaps a wish to avoid economic pain at all costs. But at a high price.
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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Re: The "Peak Oil Depression"
by Doly » Tue 03 Oct 2006, 03:58:12
$this->bbcode_second_pass_quote('MrBill', 'H')owever, it was all public information for all to see that wanted to see it.
That's all very well an good, but the amount of things that Mr. and Ms. Average can do to protect themselves is pretty limited, even if they are aware that there are bad signs in the economy.
For example, let's suppose that a) you rent and b) you are worried about your job security in the face of a recession. There isn't much you can do in the current circumstances except 1) pray you won't get unemployed, 2) try like crazy to find a safer job (difficult) and 3) expect the government will help you out if you do get unemployed. I mean, is there any other option for a person in those circumstances?
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Re: The "Peak Oil Depression"
by MrBill » Tue 03 Oct 2006, 04:13:33
$this->bbcode_second_pass_quote('Doly', '')$this->bbcode_second_pass_quote('MrBill', 'H')owever, it was all public information for all to see that wanted to see it.
That's all very well an good, but the amount of things that Mr. and Ms. Average can do to protect themselves is pretty limited, even if they are aware that there are bad signs in the economy.
For example, let's suppose that a) you rent and b) you are worried about your job security in the face of a recession. There isn't much you can do in the current circumstances except 1) pray you won't get unemployed, 2) try like crazy to find a safer job (difficult) and 3) expect the government will
help you out if you do get unemployed. I mean, is there any other option for a person in those circumstances?
We all start from different positions at different times. The main thing is to make as much from what you have. It is not complicated. It does take discipline.
- Save as much after tax income as possible.
Set aside your savings before paying out anything each month.
Invest in safe securities.
Do not speculate.
Do not take on consumer debt.
Pay down non-consumer debt.
Do not buy no money down, no interest consumables you do not need on credit.
Save a 20% deposit on a small apartment or home.
Pay off your mortgage as soon as possible.
Read the financial newspapers and other serious magazines so you do know what is going on.
Do not take vacations you cannot afford.
Re-train so that you do have the skills needed to find a new job.
Get married and stay married so you have two incomes in the family.
Avoid the expense of divorce.
Put off having children until you can afford them.
Only pay cash for whatever auto you have to buy.
Make your own coffee.
Pack your own lunch.
Take public transport whenever possible.
Take control of your life.
Stop whining.
Then after you have amassed some savings you can start to invest balancing risk against reward. I get the feeling that some are using the distant threat of peak oil as an excuse for not taking control of their lives?
The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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Re: The "Peak Oil Depression"
by yesplease » Tue 03 Oct 2006, 05:59:12
That's a damn thorough write-up Mr. Bill.
The only thing I would add is to accumulate additional skills at a reasonable rate. Quite a few "skilled" laborers charge big bucks for what really amounts to a menial job that you can figure out how to do yourself at your leasure for a fraction of the cash the professional would charge. You also have greater incentive to complete the job properly, something that I've found out first hand, another person may not ave. The term professional only means they're getting paid to do something, not that they're particularly adept at it.
The only thing I would add is to accumulate additional skills at a reasonable rate. Quite a few "skilled" laborers charge big bucks for what really amounts to a menial job that you can figure out how to do yourself at your leasure for a fraction of the cash the professional would charge. You also have greater incentive to complete the job properly, something that I've found out first hand, another person may not ave. The term professional only means they're getting paid to do something, not that they're particularly adept at it.
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Re: The "Peak Oil Depression"
by mmasters » Tue 03 Oct 2006, 16:07:06
$this->bbcode_second_pass_quote('', 'M')oney supply was not a standard tool used by the Treasury to smooth the business cycle, so booms and busts were routine.
Altering the money supply is the primary mechanism of causing booms and busts pure and simple. It was first known to be discovered by goldsmiths in europe hundreds of years ago. Goldsmiths stored gold for their clients and issued reciepts for them which came to be used for trade. Soon after, the goldsmiths started creating extra reciepts. They found over time, working collectively to create extra reciepts would cause a boom, then destroying them later on in the same manner would cause a bust. At the end of all this they could buy people's assets for pennies on the dollar and subsequently buy more gold. The EXACT same cycle of monetary expansion and contraction has today become known as the "business cycle"
$this->bbcode_second_pass_quote('', 'I')f you notice the policy adjustments in the wake of the Tequilla through the Asian and Russian crises as well as the Argentine debt default you will see that the world's central bankers having learned from the Depression, and to a lesser degree from Japan in the 1990's, that they needed to add liquidity to avoid economic contangion. This worked the trick, and kept at least a few world growth pillars stable, while those countries at risk recovered.
The last century has been an unprecedented time of economic growth worldwide and the banking system has rode the wave as well as helped steer it. Recessions instead of depressions were found to be a better way to stay on the ride (in addition to keeping the world booming, competative and maintaining people's trust in the economic system).
$this->bbcode_second_pass_quote('', 'Y')ou may be right. Some bankers may profit from the decline, as anyone else that prudently managed their affairs and did not get caught up in the bubbles.
Think about somebody on the level of Trump or Soros, perhaps they lose half their wealth in a depression directly. On the other hand, they can pick up distressed assets and businesses for practically nothing and become many times more wealthy. It's only easier for the banks...
It's about consolidation of wealth and power.
The central banking scheme is probably the greatest racket of all time and has had nearly unlimited funding for centuries. Granted it may not go the depressionary route as I'd earlier argued, but I'd put my money on some grand scheme being played out with relative precision.
Last edited by mmasters on Tue 03 Oct 2006, 20:23:15, edited 1 time in total.
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