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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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Sun, 11/11/2012 - 13:05 | Link to Comment Colombian Gringo
Colombian Gringo's picture

Hang all banksters, now!

Sun, 11/11/2012 - 13:09 | Link to Comment Popo
Popo's picture

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

Sun, 11/11/2012 - 13:34 | Link to Comment knukles
knukles's picture

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

(nuts shriveling, stomach churning)

Sun, 11/11/2012 - 16:01 | Link to Comment Beam Me Up Scotty
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.

Sun, 11/11/2012 - 20:17 | Link to Comment knukles
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.

Sun, 11/11/2012 - 20:20 | Link to Comment akak
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.

Sun, 11/11/2012 - 22:47 | Link to Comment SafelyGraze
SafelyGraze's picture

you're saying that this is the real krugman?

Mon, 11/12/2012 - 09:10 | Link to Comment narapoiddyslexia
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...

Sun, 11/11/2012 - 14:28 | Link to Comment sotto
sotto's picture

And then in the U.S.

Sun, 11/11/2012 - 13:13 | Link to Comment redpill
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.

Sun, 11/11/2012 - 13:51 | Link to Comment Miss Expectations
Miss Expectations's picture

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

Sun, 11/11/2012 - 15:36 | Link to Comment Everyman
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!

Sun, 11/11/2012 - 16:35 | Link to Comment falak pema
falak pema's picture

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

Sun, 11/11/2012 - 13:09 | Link to Comment Cult_of_Reason
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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


Sun, 11/11/2012 - 13:19 | Link to Comment VelvetHog
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.......

Sun, 11/11/2012 - 13:24 | Link to Comment THX 1178
THX 1178's picture

Where is the evidence?

Sun, 11/11/2012 - 14:02 | Link to Comment Curt W
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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.

Sun, 11/11/2012 - 14:52 | Link to Comment jimijon
jimijon's picture

This guy says it's growing.

Sun, 11/11/2012 - 15:44 | Link to Comment Hobbleknee
Hobbleknee's picture

Abiotic oil.

Sun, 11/11/2012 - 15:52 | Link to Comment EscapeKey
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.

Sun, 11/11/2012 - 16:29 | Link to Comment falak pema
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?!!!


Sun, 11/11/2012 - 19:10 | Link to Comment Flakmeister
Flakmeister's picture




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


Copyright 2011  Flakmeister

Mon, 11/12/2012 - 00:11 | Link to Comment SafelyGraze
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

Mon, 11/12/2012 - 08:47 | Link to Comment Flakmeister
Flakmeister's picture


Sun, 11/11/2012 - 16:04 | Link to Comment Beam Me Up Scotty
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?

Mon, 11/12/2012 - 09:51 | Link to Comment Incubus
Incubus's picture

Sounds like we need better suckers.

Sun, 11/11/2012 - 21:00 | Link to Comment akak
akak's picture

Infinite abiotic oil is an acerebral theory.

Sun, 11/11/2012 - 18:48 | Link to Comment Jack Burton
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!

Sun, 11/11/2012 - 22:10 | Link to Comment redpill
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.

Sun, 11/11/2012 - 14:15 | Link to Comment Diet Coke and F...
Diet Coke and Floozies's picture

Here is a fact check video for ya.

Sun, 11/11/2012 - 14:56 | Link to Comment The.Oracle
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?

Sun, 11/11/2012 - 22:45 | Link to Comment Bicycle Repairman
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.

Sun, 11/11/2012 - 15:50 | Link to Comment falak pema
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.

Sun, 11/11/2012 - 15:55 | Link to Comment EscapeKey
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.

Sun, 11/11/2012 - 16:04 | Link to Comment captain_menace
captain_menace's picture

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

Sun, 11/11/2012 - 13:28 | Link to Comment Seasmoke
Seasmoke's picture

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

Sun, 11/11/2012 - 13:32 | Link to Comment urbanelf
urbanelf's picture

They printed too many ships.

Sun, 11/11/2012 - 13:37 | Link to Comment mkhs
mkhs's picture

The chinese don't know the meaning of overcapacity.

Sun, 11/11/2012 - 13:43 | Link to Comment Long-John-Silver
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.

Sun, 11/11/2012 - 17:31 | Link to Comment mkhs
mkhs's picture

Floating wheelbarrows?

Sun, 11/11/2012 - 16:23 | Link to Comment e-recep
e-recep's picture

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

Sun, 11/11/2012 - 13:33 | Link to Comment disabledvet
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....

Sun, 11/11/2012 - 13:44 | Link to Comment Wakanda
Wakanda's picture

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

Sun, 11/11/2012 - 14:05 | Link to Comment bugs_
bugs_'s picture

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

Sun, 11/11/2012 - 14:24 | Link to Comment Mister Ponzi
Mister Ponzi's picture

I would call it Keynesian wet dream...

Sun, 11/11/2012 - 14:27 | Link to Comment sablya
sablya's picture

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

Sun, 11/11/2012 - 14:31 | Link to Comment swissaustrian
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.

Sun, 11/11/2012 - 14:37 | Link to Comment Winston Churchill
Winston Churchill's picture

The Jaws of Hell , on a chart.

Sun, 11/11/2012 - 14:41 | Link to Comment oldfruit1
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.


Sun, 11/11/2012 - 15:07 | Link to Comment EscapingProgress
EscapingProgress's picture

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

Sun, 11/11/2012 - 15:18 | Link to Comment q99x2
q99x2's picture

Looks like QE causes inflation and collapse of world goods and services. That is more than enough proof for me. Arrest Bernanke now.

Sun, 11/11/2012 - 15:24 | Link to Comment linrom
linrom's picture

China uses more oil; China builds more ships!

Wen Jiabao family meet the Onassis family.

Sun, 11/11/2012 - 15:46 | Link to Comment max2205
max2205's picture

I keep telling you that high crude is the deal the US made with Saudi to play war in the middle east

Sun, 11/11/2012 - 16:02 | Link to Comment e-recep
e-recep's picture

best chart ever.

Sun, 11/11/2012 - 18:18 | Link to Comment Herdee
Herdee's picture

Nice looking "spread trade" between those two sectors.It's a totally different type of trading and a type of trading that most traders are unaware of.You can learn about "spreading" by reading a book by a very smart trader named Courtney Smith.His book is called Futures Spread Trading:The Complete Guide.You can Spread trade just about anything against something else and make money on the difference,ie:Long one -Short two

Sun, 11/11/2012 - 20:43 | Link to Comment MrSteve
MrSteve's picture

Time for everyone to remember that the Panama Canal has been / is being renovated to handle bigger ships, much bigger ships.

Check this site, for instance.

Google your idea about Panama Canal and you might get facts to inform your own thinking, the best kind to do.

For instance, I could chart honey bee hive collapse counts against the FRB's balance sheet expansion and you would have yet another meaningless chart, no?

A Newton-Einstein level of basic reality is that correlation does not imply causation. Remember that when you see any chart proposing causation, such as honey bee population and FRB trillions of QEasy money.



Sun, 11/11/2012 - 20:53 | Link to Comment indygo55
indygo55'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."

It is a plausable and pretty well documented theroy, in Russia that is. You probably call it fossil fuel as well. But when you find oil at 13KM down, way below any fossils and way below where anyone else has drilled you have to at least give it pause. There would be a great number of people who would benefit from the truth (should it be true) being hidden for as long as possible.

Read below:


Sun, 11/11/2012 - 22:23 | Link to Comment SKY85hawk
SKY85hawk's picture

Re: Avoiding the Fiscal Cliff

Why is everyone saying the legislated changes must be stopped? 

At the same time the media say spending must be reduced and 'revenue' increased!


These fearsome changes have been needed for many years.  Something has to change in the way politicians buy votes and voters acquire 'benefits'.


Finally, I wonder why few pundits try to remind people that Keynes said the additional debt must be paid back during the good times.

Remember "Surpluses as far as the eye can see" in 1999-2000?


We have only ourselves to blame for the irresponsible abuse of the Public Checkbook!. 


I look forward to your howls of denial!

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