[gg3]

A "dissipative structure" is an entity that gains energy or complexity from a prevailing entropy-flow. For example all living organisms on Earth are dissipative structures, ultimately gaining their energy from the entropy of the Sun.

The end of cheap energy, along with climate change, will create new entropy-flows within human economies. These entropy-flows, such as the decline of certain companies or sectors, will become opportunities for new business entities to arise and prosper. These new business entities will each undergo a period of growth.

Thus, while the economy as a whole shifts into a zero-growth mode, and many entities within it go into contraction or decline, other entities will be experiencing growth up to their own points of maturity.

The challenge for the individual investor is to keep ahead of trends and pick the companies and industries that are on their way up. The challenge for the economy as a whole is to shift away from the notion of value as dependent upon growth, toward the idea of value as retained at maturity. For example, dividends instead of increasing share prices.

As for overpopulation, the simple technical solution is to sterilize everyone after the birth of their first child, and that includes the males, and then also make it a felony to evade paternity. Realistically that's not going to happen, and what we'll see instead resembles nothing so much as the perfectly Newtonian ballistic trajectory of a large object sailing off a high cliff.

[cube]

$this->bbcode_second_pass_quote('gg3', '.')..
The challenge for the individual investor is to keep ahead of trends and pick the companies and industries that are on their way up.
...

[DantesPeak]

$this->bbcode_second_pass_quote('mmasters', 'W')ell if it's any consolation I used to work for Goldman Sachs and I currently work for one of the world's largest banks.

I work in the middleoffice/backoffice so I'm not where the investment decisions are made, but processed. Anyhow through my experience most people inside these places are VERY clueless on the big picture though they like to think they're part of something "important".

I personally think we have a few years of globalization followed by a global depression. Most all investments will be wiped out. Gold will form a huge bubble in the crash and then crash itself at dizzying heights. Best bet is to buy gold and when the disaster hits begin to move towards cash.

[Yvan]

$this->bbcode_second_pass_quote('cube', '')$this->bbcode_second_pass_quote('gg3', '.')..
The challenge for the individual investor is to keep ahead of trends and pick the companies and industries that are on their way up.
...

[AirlinePilot]

I am figuring out right now how to quickly, like within hours, move my assets such as mutual funds, stocks, 401K, into cash. At some point, I will start buying some gold, but like others have stated here I dont believe gold will be a place to be after we start the "depression".

I think once any depression starts, especially one related to the realization that sustainable growth has ended, gold will lose its value. Cash now to get a hold of some things which can help you long term is the way to go. I am slowly working on some things like a library, tools, and ammunition and weapons for these reasons.

I think it should not be catastrophc and quick, but it has the possibility to occur quickly so I'm planning on that. Worst case scenario and If that does not come to pass than Im just well prepared.

Monte's post with that excerpt from the financial guy is just downright frightening and for anyone in here who is deluded into continuing a long term investment strategy it should be a wake up call. Your responsible and the knowledge we have in here, the expertise level, should allow us a modicum of warning and cushion to stay ahead of any ugly events. I'm counting on it.

I'll again mention my concept of "cultural inertia". The inability of most in society to accept and move towards a new paradigm alien to the one we are currently in. One of ever declining resources long term. The problems caused by this IMHO can be as bad as resource depletion itself.

[Jack]

$this->bbcode_second_pass_quote('AirlinePilot', 'I') am figuring out right now how to quickly, like within hours, move my assets such as mutual funds, stocks, 401K, into cash.

[NEOPO]

$this->bbcode_second_pass_quote('Jack', '')$this->bbcode_second_pass_quote('AirlinePilot', 'I') am figuring out right now how to quickly, like within hours, move my assets such as mutual funds, stocks, 401K, into cash.

[cube]

$this->bbcode_second_pass_quote('Yvan', '.')..
To go short you need someone else to go long and once TSHTF no one will be.

[untothislast]

If the news came through that the sun was about to burn out, CERA and its acolytes would tell us that new (and as yet undeveloped) technologies would save us, as we use new hi-tech deep space imaging techniques to look around for an alternative. And of course, let's not forget the 'laws' of supply and demand.

We're in totally new territory here, so why there should be any note of arrogant complacency escapes me. Whatever perils have beset humanity before now - wars, economic collapse, disease, financial scandal - once the smoke has cleared, the resources have always still been there in the ground, to get back to normal. This - whatever resource you care to name, is no longer the case. We're running low on all fronts.

The message coming through from the financial organisations - and therefore their government stooges - is to tell you that there's no cause for concern. If you're to keep your nose to the grindstone, and keep on consuming all that 'stuff' they need to shift to keep their own wealth topped up, it's the only message they dare give out.

Despite the 'no cause for concern' propaganda, the actions ultimately speak louder than the soothing words. I don't see the current desperate geopolitical developments in Iran, Iraq, Afghanistan and Africa as any sort of indication that governments and corporations are particularly relaxed about our energy/natural resources nightmare. Do you?

[eastbay]

Airline Pilot,

Almost anyone can quickly move money to and from 'cash' in a 401k by pointing and clicking. I'm not entirely certain how to get my actual hands on the fund at this time, plus there will be a substantial penalty for doing this. If this house of cards can wait six more years I can withdraw it without the penalty, only the income tax. So at this point that's my strategy.

However, by moving quickly to cash, I assume you mean the actual paper stuff which one can place in a box secreted in a corner of the closet. There is an awesome responsibility and risk (we all know what the primary risks are ... fire, theft, inflation, DHS, DEA ) associated with keeping and defending a substantial sum of cash. It's downright dangerous, in fact.

This thought has crossed my mind a thousand times in the past few years, and I still don't know what the correct answer is: Where is the best place to secure wealth when entering an economic downturn for which there is no historical comparison? At this time I'm in land/house property (35%), cash in a bank (20%), hard assets (5%) and a 401k (40%), but this situation has me somewhat freaked out. Things could unfold and morph rather quickly and unexpectedly because there is no historical precedent. Inflation? Deflation? Property crash? 401k meltdown? Oil price skyrockets? Oil price collapses? There are so many interesting boogymen lurking around these days it's downright maddening and it's tough to know what's the best path.

[Rock_solid_bacon]

Money was worthless in Katrina. You guys have no idea what is about to happen here. A fortress house with blacked out windows would be nice, you should have all precut 3/4 inch plywood fit already for each window BEFORE they break your windows. Be ready to sofet off the slider doors with 2x6 and plywood. Covered windows should have several 1 inch holes at eye level.The front ones should have shotgun holes in them already just to make them think.and plague warning signs out front would be good. Lock the gate. I would get a home geiger counter. 9 out of ten may not survive the first month. If you find some people shot in the street, drag them over to your front gate and lay them there.

If you're in the city, just try and get out at night, its possible you could make it, but unlikely. All in all this discussion is quite mordant.
Don't worry, be happy.

Ok that was sarcasm, for peak oil all you have to do is take a bit of cash out so you can do well if the banks shut down for a day or two, and have a few frozen TV dinners. The oil companies should have ethanol or hydrogen online in a week.

[Rock_solid_bacon]

Anyway, money is not a big problem for this event.

[Jack]

$this->bbcode_second_pass_quote('eastbay', 'W')here is the best place to secure wealth when entering an economic downturn for which there is no historical comparison?

[eastbay]

Thanks Jack. But this only reinforces my concerns that it may be very difficult to prepare for this disaster as one 'could' have survived by preparing or not preparing for earlier economic depressions.

Of course in anticipation of the later stages one could gather and try to hold a few tradeable possessions and commodities. Ammo, weapons, medicines, food, coins ... etc... that's been discusses here countless times already. I'm refering to the initial transitional period where it may be possible to increase ones position to, for example, acquire a larger parcel of land on which one can effect food, water, and shelter. I believe we're now in that initial period meaning it's now time to get serious about preparing for the unknown. So what's the best strategy? Crazy question, I know.

Oh, and there likely will not be a second opportunity.

[Jack]

$this->bbcode_second_pass_quote('eastbay', 'I')'m referring to the initial transitional period where it may be possible to increase ones position to, for example, acquire a larger parcel of land on which one can effect food, water, and shelter. I believe we're now in that initial period meaning it's now time to get serious about preparing for the unknown. So what's the best strategy? Crazy question, I know.

[MrBill]

I think post peak oil depletion will drive up returns on capital not vice versa.

Especially if I define capital as all tradable assets and not just the narrow definition of money.

At least that is what has happened in the past. Monetizing the means of production through rents, tariffs and other streams of income.

The industrial revolution, as Cube pointed out, happily coincided with the rise of stock markets due to a new source of cheap energy. But this shifted some of labor's share of the economic gains as surplus labor could leave under-employment on the land and seek higher value work in the factory. Specialization of labor increased productivity and therefore living standards. Same as in China today.

Take away a primary source of energy, petrolem, and two things happen. One it makes other sources of energy more expensive in real terms. Forget dollars and conventional measures of nominal value. The basic measurement of value is either the cost of labor or the value of an agricultural surplus.

Secondly, it creates surplus labor due to less economic output and more unemployment.

As you have less energy overall this means that surplus labor will be put to work to fill the void left by less energy. Look to the developing world for examples of a mixed economy using both labor and energy. Of course, living standards have to fall to a new equilibrium.

More expensive alternative energy taking into account EROEI (hydro, nuclear, solar, wind, geo-thermal, bio-fuels, accessible coal deposits, etc.) as well as less energy due to depletion (petroleum & nat gas) mean that the cost of everything goes up in real terms, like food, while the value of labor goes down. More units of labor to buy energy. More to buy or grow food.

Meanwhile the remaining means of production - that energy which is renewable, those factories near to reliable supplies of energy as well as the land to grow food - become more expensive. While transport is by water or rail. So anything stranded away from main transport hubs becomes more expensive or less depending on whether you are buying or selling as the case may be due to the cost of transport or lack of transport.

Unless you are talking about end stage post peak oil depletion where there is little or no energy in any form. I think we are still a long way from that end game.

Until then those who own the means of production, and can charge rents, collect tariffs and other income streams, will have the chance to monetize the value of their real, hard assets. As there is so much surplus labor and not enough energy or food for everyone. As would be the case if you have post peak oil depletion (say 2030) within the same time horizon that population is still growing (say 9.5-10 billion by 2050). The return on capital will rise not fall.

When a stock market crashes it wipes out existing paper profits. But markets rarely go from their zenith to zero overnight. Everyone who sells early or even mid-fall retains some value from their sale, while at the same time they reduce their risk and eventual loss if markets do go to null in nominal terms.

The assets remain for the last man standing who then buys them at a fraction of their original value. That new value should be the present value of future returns earned by rents, tariffs or other income streams whether that is measured in a new currency other than dollars, gold, bushels of wheat or milk cows.

Even if it is argued here that the title of the asset changes, say by foreclosure by the bank, the asset remains. It is passed onto a new owner who has a vested interest to earn a return on his investment. If only to make sure he receives a portion of the harvest for allowing landless laborers the privilege to farm on his behalf.

Yes, assets can be seized by the government or bandits. And existing landowners can be lynched by mobs. But the real, hard assets remain and have intrinsic value. However, the new owners whoever they are still have a self-interest to earn a return on their assets.

If there are no financial intermediaries anymore and every man must work for himself then anyone that wants or needs to borrow against their future labor will pay a hefty price for it. For example the seed needed to plant a crop or the cost to fund the import of basic staples not grown or produced locally (think of The Spice Trade).

The cost of capital goes up as the level of trust in a community goes down. If there is little or no government and no legal means of enforcing contracts then the cost of capital goes up a lot. So those that have capital, the means of production, can charge as much as the market will bear.

And the market exists because the basic needs of that surplus labor that must to be fed, clothed, housed and paid a nominal wage for their efforts have to be met. By the landowner if he needs productive labor. By labor themselves if they want their family to survive.

So for those reasons I think the return on capital will increase and not decrease post peak oil depletion as the cost of everything except labor goes up in value and the efficiency of existing capital markets disappear. However, this will not protect the nominal value of existing investments in the wrong type of assets, and is no guarantee that assets will not be confiscated by government or by non-market forces.