Spot The Start Of The End Of The Keynesian Dream

Tyler Durden's picture

Presented with little comment, but while there are numerous reasons for elevated oil prices (from short-term supply disruptions, middle-east tensions, and emerging-market demand) it appears something broke in Q1 2009 between a proxy for world trade (or indeed for ship-building mal-investment in hope-driven excesses continuing) and the cost of fulfilling that demand. After 25 years of credit-driven Keynesian (monetary-to-fiscal-policy reach-around) planning, it would appear it is different this time as the potential for infinite supply of fiat currency clashes with the 'finite' supply of hard assets (crude oil in this case)... Much as we question who gained from Draghi's first year of action in Europe, we suggest this chart clarifies who did not benefit from Bernanke's experimentation...



(h/t Alexander Ac)

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Colombian Gringo's picture

Hang all banksters, now!

Popo's picture

I suspect some angry citizens will start offing them one by one quite soon.  Probably in Greece first, then Spain.  

knukles's picture

Before anybody gets overly excited about all this shit, we should ask Krugman for his expert opinion.

(nuts shriveling, stomach churning)

Beam Me Up Scotty's picture

He has an account here but I haven't seen a post from him for some time.  I am sure its him.  He doesn't like to debate those that disagree with him.

knukles's picture

Paul is an ideologue and thus, does not debate, consider, listen, communicate with, understand or participate.

He's a narrow minded little man exceeding full of himself, spouting, by and large, nonsense.

akak's picture

Not so little a man, either --- have you seen his waistline inflation lately?

He probably has the BLS statistics to prove that his waist size has only increased 2% since high school, though.

SafelyGraze's picture

you're saying that this is the real krugman?

narapoiddyslexia's picture

Of course, it is. It is an exact likeness. And, the comments he makes here on ZH are in line with his blog, here. Think about it...

redpill's picture

Funny, I seem to remember it was all blamed on terrorists, er I mean speculators.

In a way it's true, but it's just that it was the chairsatan speculating on the economies of the western world based on an ultimately self-defeating economic religion.

Miss Expectations's picture

Mark Steyn said they tried to blame it on a "spontaneous movie review."

Everyman's picture

Screw that, drag them behind a pickup until there is nothing left but feet.  These scum deserve a very painful death so NOBODY does this CORRUPT CRAP again!

falak pema's picture

don't forget to empty their pockets first, including their bank accounts via their iphones.

Cult_of_Reason's picture

Mario Draghi, the ECB president, said on Thursday he had agreed to allow the profits to be passed back to Greece, but added he was unwilling to take further measures to help lower Athens’ debt burden, putting additional pressure on eurozone governments to take the hit.

The ECB is by and large done,” Mr Draghi said.

Eurozone faces brinkmanship on Greece


VelvetHog's picture

Fact check:  Oil is not a limited resource.  There is an infinite supply right under our feet.  The problem is that the "libs" and NoBomma won't let us drill for it.  This is what all the good little brainwashed sheep keep reciting.  It must be true.......

Curt W's picture

I have seen pictures of the planet taken from space, it is a finite size.

Infinite supply from a finite source is impossible.

Perhaps you need to research the meaning of infinite.

EscapeKey's picture

Oh god not this shit again.

Please state all available evidence of abiotic oil, and also state the evidence that abiotic replenishes the reserves as fast as our rate of extraction.

Once you've realized there's fuck all evidence of either, you'll realize why the North Sea is considered a mature, aka, tapped resource, and hasn't suddenly sprung back to life.

falak pema's picture

Oh, I had these visions of Maggy Thatcher rising from the waves like Britannica resuscitated, trident and all, declaring : "I'm back, I want my money back and I bring you abiotic oil; as I was blamed of depleting it in the mad rush in the first place; all poppy cock ofcourse as I'm now totally hooked on Abiotic and once my mind is made up nobody can doubt it! "

Wow, wow, Maggie is back and all is well in land of Abiotic idiosyncracy, but that is so British, n'est ce pas?!!!


Flakmeister's picture




The trouble with Thatcherism is that you eventually run out of North Sea Oil...


Copyright 2011  Flakmeister

SafelyGraze's picture

re: evidence of abiotic oil

In September 2009, the rig drilled the deepest oil well in history at a vertical depth of 35,050 ft (10,683 m)

so: what age is the sediment/rock at 10k mbsf (meters below sea floor) in the gulf?

if you image-search for age depth plot mbsf, the results wimp out at a thousand meters. so it's not obvious whether you should imagine the deep oil/gas to date from the current abundant-life era or from the poterozoic era before it

Beam Me Up Scotty's picture

Suck all of the water out of a mud puddle once.  Come back an hour later.  Is it bone dry?  Or is there some more water in the bottom of it?  Is that water there because of abiotic water?  Or is it there because you can't suck 100% of the water out of the mud puddle and all of the surrounding dirt?

Incubus's picture

Sounds like we need better suckers.

akak's picture

Infinite abiotic oil is an acerebral theory.

Jack Burton's picture

Only so many tiny sea creatures died over a finite period of time and collected in places that were well capped by overbearing layers that allowed oil formation. Any damn fool knows this. The oil formation conditions were limited by these factors.

Some fool always posts about infinite oil or the crazy scheme of fast growing oil right under our feet. Chemistry, physics and geology, not to mention time itself has LIMITED the oil formed to a finite level. The anti science whack jobs need to either give us evidence of STFU.

I bet they NEVER present evidence for their infinite oil, because there is NONE. So stupid, so utterly demonstably false, yet they just keep parroting this mime as if saying it enough times will over come the laws of physics. Get this straight once and for all, The Laws of Physics have the last say, and they are the same everywhere in this universe. But they clearly do not pertain in the minds of the anti science wishful thinking crowd.

Infinite oil? Give it up!

redpill's picture

Whether it is there or not is a moot point (I agree with you that it's not), but the more immediate point is that regardless of what "theory" of oil is correct, the oil we can easily get to is becoming scarce.  Of that we have very definitive evidence.

It makes more sense to leverage nuclear/nat gas alternatives in the short term, and keep pushing commercial fusion in the long term with a focus on converting our liquid fuel demand to electricity and upgrading the electric grid at the same time.  Whatever you believe, the above strategy is going to be the most economical.

The.Oracle's picture

You make your trades thinking oil is unlimited, and Obama could pump infinite amounts except he won't let the US military machine drill for it. I'll make my trades like its finite. Then we'll have this discussion again in a few years, mmmk?

Bicycle Repairman's picture

We had the discussion 35 years ago and you were wrong.

You may not like historical facts, but they are facts nevertheless.

falak pema's picture

the only true human endeavour which is unlimited is printing money; until we reach the wall of no return and we enter Weimar territory. We have that exemple.

We also have 1929 and fall out.

But it seems we need a repeat of both, and we want to skate on the thin ice of the return of totalitarian ideology, both oligarchy neo-feudal as jacobin and government central, in this conundrum that can truly bring down western civilization.

lets watch this film play out.

EscapeKey's picture

We "need" a repeat as there's no end to human stupidity.

I mean, fucks sake, 15% of voters in Greece votes either for the Nazis or Communists.

Even Denmark has a communist party, drawing upwards of 8% of the popular vote.

Some people refuse to learn from history. Not just useful, but fucking stupid useful idiots. The historic evidence is right there, and yet, they hide behind a concrete wall of ignorance.

Anyway, the point with regards to money printing -> it's always the easiest political option to print money.

captain_menace's picture

"Infinite"?  I do not think it means what you think it means.

Seasmoke's picture

1997 was a great year......i miss it

urbanelf's picture

They printed too many ships.

mkhs's picture

The chinese don't know the meaning of overcapacity.

Long-John-Silver's picture

Perhaps they are planning ahead for the time when they will need that extra capacity to haul back our worthless dollars for use in dollar powered power plants.

e-recep's picture

Today they are learning what it is. And they are learning it the hard way.

disabledvet's picture

"Elastic demand vs INelastic demand, BITCHEZ." Here's a primer in case you all want to learn something important for the first time in you life:
and what is a Giffen good you ask? It is called a BAD good:
"as the price RISES people want MORE of it." so let us not confuse say...oil, or natural...which are clearly Giffen goods (hence why you can never store enough of them) and "mere gold" which is imply "conspicuous consumption"...even, indeed ESPECIALLY if done "inconspicuously"....since no one consumes oil "inconspicuously" at all. Apologies for calling oil an "inferior good" of course...but truly it is, since we use it for so very little actually. Not nearly as little as we used gold for of course....

Wakanda's picture

Great chart!  Even without a PhD in economics I "get it".

bugs_'s picture

that serfdom hangover at the end of the road is a doosie

Mister Ponzi's picture

I would call it Keynesian wet dream...

sablya's picture

It's called "too many ships!" Duh.

swissaustrian's picture

However, overcapacity of a service industry (shipping) compared to commodity demand (oil) isn't the best proof of monetary debasement. In other words: Newly built ships aren't consumables like oil.

Winston Churchill's picture

The Jaws of Hell , on a chart.

oldfruit1's picture

TYLER you are misleading the readership AGAIN ?! .. BDI has been crushed largely as dry freight rates have collapsed following massive ship building programs & overcapacity being created by shipping lines. When credit was easy they borrowed and commissioned new ships which keep coming on line .. and the freight market cannot absorb all this supply.

Amaterish analysis tyler which doesnt help credibility.


EscapingProgress's picture

This isn't even a problem. Just print more oil.