Guest Post: The New Price Era Of Oil And Gold

Tyler Durden's picture

Submitted by Gregor Macdonalds of Chris Martenson.com

The New Price Era Of Oil And Gold

"If society consumed no energy, civilization would be worthless. It is only by consuming energy that civilization is able to maintain the activities that give it economic value. This means that if we ever start to run out of energy, then the value of civilization is going to fall and even collapse absent discovery of new energy sources."

~ Dr. Tim Garrett, University of Utah

The New Oil Cycle is Suffocating Economic Growth

There was a time when central bankers used to fight high oil prices with interest-rate hikes. But we are now in a different era with that equation, and central bankers are more likely to lament, as Ben Bernanke quipped in his spring 2011 press conference, that "the FED can’t print oil.” Yes, precisely. At the zero bound of interest rates and with debt saturation coursing through the private and public sector, the developed world faces not an inflationary restraint from oil prices, but rather an additional deflationary barrier. Welcome to the new oil cycle.

In the old oil cycle, new supply of petroleum was brought online to capture rising prices. In the new oil cycle, declines from existing fields neutralize this new supply, for a net global supply gain of zero. In the old oil cycle, recessions benefited large consumer countries like the United States as oil prices fell, giving a boost to the economy. In the new oil cycle, the price of oil falls only for a short time before resuming a higher swing. In the old oil cycle, the developed world set the oil price through swings in its demand. In the new oil cycle, the developing world, with its much lower sensitivity to high prices now sets the floor on oil. Most of all, the new oil cycle caps growth in the developed world. The new oil cycle kills the economies of the OECD nations.

Peak Autos

This week, JD Power and Associates released its 2012 sales outlook for the US light vehicle market. I’m quite thankful that Calculated Risk, the long-time blog on the US economy, keeps an updated chart series of this data, because it will help set the context for JD Power’s outlook and where we are in the current oil cycle. The forecast? For the annual rate of US automobile sales to reach 14 million by the second half of 2012. That would make for a healthy advance in auto sales from the current rate, around 13.25 million. Let’s take a look then at the multi-decade chart for light vehicle sales from 1967-2011.

Anyone familiar with a chart of the US stock market or US employment will immediately spot the long-arc trajectory here that begins in a very familiar place: 1982. That was the dark place, after twin recessions and a rude (but healthy) Volkering of inflation, from which the great bull market in stocks was born. This reflects current discussions of 1) how much the stock market could recover, 2) how much the employment market could recover, and 3) how much wages or real GDP could recover. The JD Power forecast for next year, if it comes to pass, would only restore vehicle sales to levels last seen in the 1990s.

I won’t digress (much) toward the enormous mistake the US has made in continuing to invest billions of dollars in public capital into the Auto-Highway Complex. But let’s at least disabuse ourselves of the notion that automobile transport has been a free-market phenomenon for nearly all developed nations. Both in Europe and in the US, automobile manufacturing has been a key part of the industrial (and political) structure for decades. And I am merely using this sector as a current example of a beloved and favored means to economic growth that no longer works for economies now that we’ve entered the new oil cycle.

In the old oil cycle, higher prices would have triggered new gains in MPG standards from the automobile industry, no doubt unleashing a new round of higher automobile sales. In the new oil cycle, sales of new autos are hampered as car owners hold on tight to existing vehicles. There isn’t enough growth in the wider economy to turn the fleet over. This is precisely the analytical mistake forecasters of future EV sales (electrical vehicles) continue to make when happily predicting broad adoption of electric power. Adoption is glacially slow because fleet turnover is slow. And fleet turnover is slow because the economy has been reduced to a much lower level of operation.

I recently showed data which quantifies the dramatic drop in oil consumption since the 2007 highs in the US economy. As usual, the correlation between economic growth and energy consumption is nearly perfect. The drop in European oil consumption has also been quite pronounced. I might add that in the case of Europe -- which enjoys broad coverage in electrified rail transport -- the reduced oil consumption is more notable. The United States entered the current decade with a lot of discretionary oil demand that was fated to come offline, but that was not the case in Europe. The continent has been weaned from casual oil use for decades, mostly through high taxes. But that did not prevent a new low in consumption post-2006, when prices began to soar -- with predictable effects. Stuart Staniford of the Early Warning blog presents the chart below with the latest data. It’s notable that Europe’s economy, the largest in the world, has shed a million barrels per day (mbpd), from 15.5 to 14.5 mbpd.

The Rescue Myth

Let’s pause here and be as frank as we can be about a rather widespread belief in the Western world shared among economists, policymakers, technologists, and corporations: The price of oil will eventually drop, and the global economy will also grow. Is that right? Well, unless you’ve been living in a cave, OECD countries are currently in the throes of a debt crisis, with at least 15% of the population unemployed or underemployed. Meanwhile, North American oil prices, as measured by the WTI benchmark, have just rejoined Brent at levels at/above $100 a barrel. And Western economies are now supposed to recover from this position? What price of oil are we to forecast, should the vast spare capacity and idle labor of the OECD come back online? I spoke to this issue back in 2009 in a post called Overhead Crush:

A concept that’s key to resource depletion is the higher volatility phase, in which both price and supply start to hit ceilings and floors in accelerated fashion. This tends to appear first during the actual peak supply period, or peak plateau period. The pattern has been seen in previous eras in such things as wood, fish, and whale oil. When the post-peak phase gets underway the price amplitude increases even further, playing havoc with supply and demand. As demand gets killed, and then finally collapses, it causes confusion about supply. But then, as demand returns, any questions about supply are soon answered as demand once again bumps up against the supply ceiling.

Visually, we can think of demand in this phenomenon as being in a kind of contracting triangle. Every time consumption resumes after a previous demand crash, it hits the ceiling at a lower level. This is the point where, if you find yourself living in the age of biomass and wood, you get rescued by coal. For example. This is also the point where, if you are living in the age of oil, it’s less likely you get rescued.

Normalcy Bias and the Problem of Growth

Normalcy bias, rampant in the West, leads most to conclude we’ll be rescued. Some magical combination of new technology, new policies, or miracle energy resources will soon arrive. Even on the conventional end of this spectrum, there is still a generalized belief in the inherent ability of the system to resume growth. In a recent paper from the New America Foundation, The Way Forward (Alpert, Hockett, Roubini), we find eminently reasonable solutions that target the system as it once was, but not the way it’s operating now. While the authors move beyond either purely Monetarist or Keynesian approaches in their solution set, their attention to energy inputs is far too moderate. Only a policy recommendation that foregrounded energy as the primary lever to apply to Western economies, rather than merely including it, would now have resonance. It is the energy-intensity of America in particular that must be confronted, not only in its domestic consumption but in the global energy inputs it commands through its outsourced production. Let's remember that oil, until it is eclipsed by coal, remains the primary energy source of the world, with a 33.56% share (2010, BP Statistical Review).

And now the question: If growth faces nearly insurmountable barriers, absent widespread debt writedowns or even a debt jubilee, then why are German Bunds or US Treasuries currently operating as safe havens? Do Germany and the US not occupy the same economic territory as broader Europe? A demand shock for Asian consumer goods, emanating from a collapsed Europe, would crush Asian demand for the infrastructure goods that Germany produces with such expertise. Global markets are therefore making an enormous mistake. In the midst of a sovereign debt crisis now hitting the developed world, they are pricing the risk as though this were like the 1980s crisis that hit countries in Latin America. But this is not a crisis in which banks in Boston, having lent billions to Brazil or Argentina, write down debt while engines of growth in Japan, Europe, and the US move forward. Rather, this is the endgame of post-war growth in the West.

And it would seem that even 'safe haven' bond markets have started to price in this reality. As Morgan Stanley shows in this chart of recent action in German Bunds, the price advance (and thus the yield decline) in bunds has started to slow as the recognition phase gets underway on system-wide EU debt. 

(chart courtesy of Joe Wiesenthal at the Business Insider)

The developments in Germany’s “safe-haven” status were addressed by Ambrose Evans-Pritchard on November 17:

Andrew Roberts, rates chief at Royal Bank of Scotland, said Asia's exodus marks a dangerous inflexion point in the unfolding drama. "Japanese and Asian investors are for the first time looking at the euro project and saying `I don't like what I see at all' and fleeing the whole region." The question on everybody's mind in the debt markets is whether it is time to get out Germany. The European Central Bank has a €2 trillion balance sheet and if the eurozone slides into the abyss, Germany is going to be left holding the baby."

(Source)

The Vulnerability of Having Sovereign Debt As Your Core Asset

All across Europe, the sovereign debt of EU nations forms the core asset base of key institutions critical to systemic cohesion. This debt is a call option on future growth -- a call option that most assumed would never decline so catastrophically in value and that could presumably always be rolled over. In the old oil cycle, such sovereign debt problems were merely a function of profligacy. In the new oil cycle, a debt crisis is no longer solvable with growth. Devaluation or jubilee are the only options. The loss to society will be borne most directly by those who hold sovereign debt as their savings. But in our present situation, it will not be a sub-set of the West that bears the loss, but the entirety of the West. The time of Containment is over.

Gold's Critical Role at This Time

The recognition of dim, future growth has only now begun to unfold. In an earlier report, I explained that the framing of gold prices as insurance against future inflation was, at least for now, wrong. Instead, gold continues to trade along the contours of growth’s terminal phase and the unpayable debt now left in its wake. This impending instability, or discontinuity if you like, is what will drive the gold price over the next few years, along with policy maker’s response(s) to our decline.

In Part II: Understanding Where Gold & Silver Go From Here, I offer two distinct price pathways for gold, specifically in light of the great threshold that we’re now crossing in developed-world debt saturation and the end of growth. These two price pathways will be greatly influenced by how policy makers and central banks respond to this final phase of the crisis. In addition, I also offer a view as to silver’s relationship to gold along the two pathways I define. Timing is of the essence, because oil prices have just punctured the great reflationary recovery of 2009-2011.

Click here to access Part II of this report (free executive summary, enrollment required for full access).

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paarsons's picture

I call bullshit.

Higher interest rates will crash commodities through the floor.

You can't keep the FED window at zero forever.

http://fucklloydblankfein.blogspot.com

Bring the Gold's picture

I call bullshit on your constant pimping of your blog.

paarsons's picture

Well, I call bullshit on your bullshit.

So there.

And fuck all you motherfuckers who keep giving me minus ones.

http://fucklloydblankfein.blogspot.com

slewie the pi-rat's picture

a re-tooled celente troll like you doesn't get to call nothin on nobody, asswipe

in fairness, your original comment is not as bad as usual, imo...

TheSilverJournal's picture

"New prices"..are we measuring in ounces yet?

The Monkey's picture

Keep on at it Tyler.  The 1970's bore "Energy Ant" - lessons for the Elementary school aged on alternative fuels - and articles and stats that showed world crude stocks depleted in 2000.  Here we are in 2011, another major commodity top.  After a decade boom in Houston, should we really expect another?  Seriously bro.

 

knukles's picture

Energy Ant.
Z'at like political Moon Cricket?

Snidley Whipsnae's picture

I have a problem with this sentence... "In the old oil cycle, such sovereign debt problems were merely a function of profligacy. In the new oil cycle, a debt crisis is no longer solvable with growth."

Too many assumptions that have not been proven...

This same set of assumptions was plastered all over The Oil Drum site years ago... and if I went there today I would see the same.

'Oil depletion' is the answer to every wiggle in the price of crude? What about dollar devaluation and export of inflation to Saudi Arabia and other major oil exporters? What about major specs in oil futures? Oil and PMs are the two most manipulated commodity classes in the world.

When oil hit $147 per bbl, predictions were rampant that peak oil had been reached and that oil was headed above $300 per bbl. Meanwhile, tankers loaded with crude were sitting in the Persian Gulf with no buyers. I was short and made a few bucks while the major shorts made billions. Suddenly the longs posting on The Oil Drum disappeared. Go figure...

SRSrocco's picture

HIGH OIL PRICES HAVE NOT BROUGHT ON MORE OIL PRODUCTION

Trying to forecast where a peak of production or what the price will be is just about impossible.  That is why we finally see the peak in the rear view mirror.  The world has gone from paying $10-$30 barrel oil from 1999-2004, to paying $80-$100 in the past 2-3 years.  Global production has been FLAT since 2005.

The natural decline rate from exisiting oil fields is 9%.  New fields are just keeping current production from falling.  The more TAR SANDS, DEEP SEA and SHALE OIL that comes online the lower EROI - energy returned on invested comes with it. 

EROI VALUES:

DEEP SEA = 8-10/1

SHALE OIL = 4-5/1

TAR SANDS = 2-4/1

This sort of LOW GRADE OIL does not have the sort of EROI to allow our Advanced Economies to continue.  Sure, it adds supply and gives us the ILLUSION that we can continue living the SUBURBAN LEECH AND SPEND ECONOMY here in the USA forever, but we are closer to a collapse than few realize.

Interest rates are meaningless in the last stages of a FIAT CURRENCY FRACTIONAL RESERVE GLOBAL BANKING SYSTEM which controls the markets today.

Gold and Silver have been heading into an EXPONENTIAL TRAJECTORY due to the fact that the Fiat System is heading in the exact opposite direction.  Soon the price of these two precious metals will turn abruptly higher and head straight towards the moon.

Time to be in physical bullion unless you would like to get the MF GLOBAL ENEMA.

 

BigJim's picture

Someone help me out here, please.

It seems pretty clear we've hit peak oil, and consequently, oil prices must go up. Even if you believe in abiotic oil, the production statistics show the supplies are not being replenished as quickly as we are using them up.

We need oil for a lot of things.. but we also use a lot of it in applications when other sources would do just as well. I know oil is a key ingredient for plastics and fertilizers, but Liquid Natural Gas is just fine for powering ground vehicles, for instance.

Now, I keep hearing about trillions of cubic meters of new Natural Gas deposits coming online through new drilling methods (fracking), and less dangerous nuclear technologies like Thorium. Can these not aleviate our problems, at least for several decades? Yes, we still need oil, and it will still eventually run out, but if a lot of our energy will be coming from alternate sources, won't that time be pushed way into the future? And I know the arguments about EROI values, but if it's possible to get energy more cheaply by one method (say NG) to extract energy in a more convenient form (ie crude), then does bad or even negative (within reason) EROI really matter? Yes, civilization requires cheap energy... but does it need cheap oil?

Someone has remarked here on ZH that a lot of the new 'trillions' of cubic meters produced by fracking are illusory, claims made by drilling companies hoping to get bought. I can't believe some serious research hasn't been done on this whole area - can anyone point me to some good sources for further reading?

GMadScientist's picture

This is a solvable human behavioral problem, but so is trying to talk someone out of mainlining crank.

For many uses, oil has few substitutes. No solar-powered tractors or plastics made from natty gas on the horizon.

www.theoildrum.com

 

BigJim's picture

I agree we need oil for a lot of uses... but that's not the same as saying that the bulk of oil is presently used for purposes only oil can fulfill. Though it might well be - my point is, I don't know. Is it?

Why couldn't we run tractors on LNG? It works for cars/trucks/busses, no?

Sean7k's picture

Your assuming a smooth transition to a new energy paradigm. In a present with extrordinary energy requirements, it is more reasonable to assume that the supply will be uneven and driven by large disruptions.

This is not a recipe for growth. Consequently, the author has a valid thesis. Will it remain so? I doubt it. 

Man did not crawl out of the primordial ooze to die from energy depletion when many alternatives exist- the biggest being the conservation and more efficient use of existing supplies coupled with new sources of energy being brought online. Thorium reactors are very interesting, but will require a sales job for the public after Fuckyoushima blows another gasket.

Sean7k's picture

You might want to revisit the supply/demand channel chart in the article.

topcallingtroll's picture

Agree.

Bankers wont kill fiat in a hyperinflation. They would lose their source of power and control.

A mild deflationary bias is highly possible the next ten years. Or slow growth will feel like deflation.

Gold wont do great in that environment, but then norhing will.

TheSilverJournal's picture

A miild deflationary bias isn't an option. The options are to allow depositors to lose their money or to keep the game going until hyperinflation. I don't think it's quite time yet, but it's certainly possibly the banks could break tomorrow. My guess is we have a few month at the least and a few years at the most until the banks break or until hyperinflation.

trav7777's picture

jeez you act like if they killed the FRN they wouldn't be back the next day with FRN2

bankers don't care.

Snidley Whipsnae's picture

Bingo! +1... They gotta fractionalize something Trav, else their franchise is dead... paper hanging azz holes...

Here is a good one from Bill Bonner...

"The bond holders want to know if the Euro-feds are going to bail them out…the Euro feds want to know if the Chinese are going to bail them out…and the taxpayers want to know how long their pension checks will keep coming.

Angela Merkel gave an answer yesterday.

“If politicians believe the ECB can solve the problem of the euro’s weakness, then they’re trying to convince themselves of something that won’t happen,” she said in a speech.

The question she was answering was when the ECB would step in to buy more bonds and bail out the bondholders. Apparently, that’s not a question worth asking, she says.

What the Germans really want to know is whether the Greeks and Italians can act like Germans. What the Greeks and Italians want to know is when the Germans are going to stop acting like Germans.

And what the French want to know is where to get a good piece of fois gras and a good bottle of Bordeaux."

Read more: More Questions Emerge as the Debt Crisis Continues http://dailyreckoning.com/more-questions-emerge-as-the-debt-crisis-continues/#ixzz1ePIaQ2Q8

TheSilverJournal's picture

Either:

1) The ECB's structure changes so they can issue Eurobonds and print in order to hold yields down.

or

2) Yields keep going up and eventually the countries default over the weight of high interest payments, causing the Euro to fail which would break all the banks in the western world. 

Option 1) will be chosen and Eurobonds and printing will commence because without printing, Germany and every other European country will suffer a significant devaluation returning to their old currencies because the debt that would have to be wiped off, the US banking system would break, and bankers and politicians would much of their control of the printing presses. They can stay in control longer by dragging the game out through hyperinflation.

http://www.cnbc.com/id/45374981

On Wednesday, the European Commission will propose two laws that will lead the way to Eurobonds and infinite Euro printing.

BigJim's picture

I'm inclined to qgree. TPTB seem to have a lot more to lose through immediate deflation and consequent rolling defaults across the entire planet. Ergo, they must print, even if that means hyperinflation will be the eventual result.

Having said that... our economies are now entirely dependent on how governments/central banks behave. Most people will lose their shirts, not because they're stupid, but because they don't have insider knowledge of what these entities will do. If you're an insider, you can make a killing either way, because you know what's coming, and hence whether to go short or go long. That, to me, is the key weakness in assuming the bastards will print.

 

trav7777's picture

good time to be a chosen

vnguru's picture

The Futures Crude, and gold prices going down at this time. I belive that they will continue decrease in next 2 week. the War in Libya has stoped. So, the price of crude oil will be stable in next time. However, I don't know how the gold prices can increase crazy like that. besides, the currency converter also has many change.

Sean7k's picture

Can you say gold backed Rentenmark? They sold it in 1923. Big con job- bigtime result.

FeralSerf's picture

It's Tyler's fault.  He doesn't let us give anyone -2 or -100.

solgundy's picture

here's another one , you MF'er

Freddie's picture

Has the Tyler(s) allowed us to blog pimp here?  I have multiple blogs I would like to pimp if this is okay. 

topcallingtroll's picture

Yes

But blog pimps are even lower than trolls.

Dont debase yourself cutie.

GMadScientist's picture

Depends on the blog. The Turd is a fine counter-example.

No one complains about the hot streetwalkers.

infinity8's picture

I call bullshit on "if society doesn't consume energy, it's worthless". - huh?

infinity8's picture

Sorry, "If society consumed no energy, civilization would be worthless." - still Wha? What the fuck planet am I on??

tmosley's picture

Consumption of energy is a means to an end.  You could burn everything willy-nilly, and it wouldn't provide more "purpose".

Stupidity.

topcallingtroll's picture

If you have no energy to use for purpose or waste then civilization will feel like it is over.

I dont want to go back to 1920's style per capita energy use. I like my energy slaves. They do a lot of work for me.

infinity8's picture

Is it so hard to imagine energy used for a purpose now? Personal energy? Recyclable (we DO have the technology now)? No wonder the mess we're in. . .

GMadScientist's picture

Row row row your generator...

jez's picture

And what about uncivilized people like me? Are we not allowed to consume energy too? In consuming energy, do the uncivilized add or subtract from the sum total of "civilization"?

The nation demands an answer.

steve from virginia's picture

Estimable Gregor Macdonald has excellent explanation, paints a nice sketch of world to come. Here is more detail:

- the economy must be able to afford to bring oil to market. Right now the price that the economy can afford is dropping while the cost of bringing new expensive crude is increasing. Why? Because the producers all wanna live like piggish Americans, as seen on television. The point where the two numbers are the same happens to be right where we are now! As economic price drops the available fuel will also drop.

Opec cutting production won't help, because this won't put dollars/yen/euros into anyone's pockets. The outcome is shortages. These will be:

a) permanent,

b) taking place in China right now. Don't say you weren't warned.

- Credit shortage is the consequence of high oil prices since peak oil took place in 1998!

"1998? That's crazy!"

- Not on this planet! Maximum oil available relative to paying demand was in 1998, real or relative price has risen since. The high price has been met/amplified by increased credit from banks and now sovereigns. Now, the credit lines have run out. Now what?

- Credit crisis is energy conservation by other means. The Eurozone is in the process of becoming car-free starting with Greece, Spain and Portugal. The EU will be joined over the next few years by the rest of the world.

The world has been wasting fuel for decades for zero return and has lied to itself about it quite convincingly. Now the 'stupid' party is over.

Car = target practice.

dark pools of soros's picture

lets just burn it faster and get to the next chapter

Seer's picture

"Right now the price that the economy can afford is dropping while the cost of bringing new expensive crude is increasing. Why? Because the producers all wanna live like piggish Americans, as seen on television. The point where the two numbers are the same happens to be right where we are now! As economic price drops the available fuel will also drop."

Economies of scale in reverse!

Ain't going to be pretty...

GMadScientist's picture

Sure, have all the energy you want. but we get to pick the form...hint: it'll mostly be kinetic.

Melin's picture

"Society," or more precisely, individuals, cannot consume zero energy.  Every organism on the planet has to make a living (or parasitize those who do) and that takes energy. 

The level of specialization in a civilization depends on the availability of energy.  If you had to scrape two sticks together for warmth, you may find you've burned the only tool you had to dig the grubs for your evening meal.  If you discover, produce and utilize more efficient sources of energy, you get to spend time doing other, far more interesting things.  And (and this is the best part), you get to trade with other individuals who've also specialized producing interesting, useful things. 

Can you see how nice an non-energy-starved civilized society might be?

infinity8's picture

Don't try to tell me that a civilization that has to procure their "energy" in more difficult/inconveniewnt ways than our modern-day world is "worthless". If anything, that energy is worth "more", because it's better appreciated. Snap out of it man. And, I would say that "discovering" more efficient sources of energy could be Quite interesting. /nerd

Melin's picture

I guess I misunderstood.  I thought you were suggesting civilization could survive without energy.

Melin's picture

For "a civilization that has to procure their "energy" in more difficult/inconvent ways...that energy is worth "more", because it's better appreciated."

It's not "worth more," it's more expensive. It takes more of everyone's time/labor to produce. That's why individuals within societies set about making it easier, and therefore cheaper, to obtain. Everyone gets a little freer with every btu produced.

infinity8's picture

It's more expensive to people who won't /can't use their own bare hands to do anything. It's more satiisfying and valuable to those who are not helpless. Are you a "park shark" who circles forever wasting fuel until you find a spot right next to the closest handicap space?

Melin's picture

It's not an inability to use your own hands.  It's how do you want to spend your time and how well have the individuals within your society developed their own skills so that you can trade with them for mutual gain, mutual benefit.

I can fell trees, chop firewood, fish, plant, harvest and build serviceable handmade tools.  I can also manage a database for an international company.  It isn't stupidity or laziness that keeps others from learning to sharpen a chainsaw (or hatchet as I'd guess you'd prefer), it's the fact that our society has advanced enough so that they don't have to spend all their time merely surviving. They get to pursue their happiness and learn anything they wish and put their knowledge to work trading with other like-minded, civilized individuals.

infinity8's picture

First, fuck off with the hatchet remark. Next, it IS stupidity and laziness that keeps people from learning righty tighty. Lastly, why can one not pursue their happiness and learn anything they wish if they also have to chop some fucking wood?

steve from virginia's picture

We Americans and our wannabes don't have a civilization, there is nothing civil about what we endure, a 'pop culture'.

Why are Obama/Krugman/Merkel/Japgov/Bernanke/etc. failures? They aren't real, they are actors reading from a script. None of the economists alive to day 'makin' policy' could carry Keynes' jock strap. Obama is to Churchill as the eagle is to a tsetse fly. We turn our back on 'competence' we want people who fit the 'Central Casting' idea of celebrity politicians and money managers.

Our economy destroys value. It substitutes score keeping -- currency/money -- for value. The axle around which all this turns is the automobile. Look around you and ask yourself why everything sucks, particularly 'new' things? Because these things are substitutes for all the capital that has been destroyed, for the value that has been lost. Part of that capital is energy.

We've run out of value to destroy, we are in the (short) cannibalism phase. No other civilization has ever had our waste, they were too smart ...

The West had a well-developed civilization but WWI put an end to it, the first war of humans versus machines and their 'owners'. Not surprising if you think about it: Federal Reserve, Income tax, Gilded Age all happened @ the same time an entire European generation was annihilated.

Some value ... right?

Husk-Erzulie's picture

Great comment man.

Reminds me of (I think it was HPD) who pointed out that WW2 lobotomized, or rather it was the final thrust of the ice pick, the two most advanced cultures on the planet, Germany and Japan.  These fucking wars have cost the human race much more than we know.  As a civilization we are way behind where we should be and losing ground across the board.

trav7777's picture

yes, the aftermath has empowered a lot of people whose ethos should have been destroyed.

For it is the love of money that is the root of all evil.  This is a 2000 year old observation and you'll have to recall the region of the world he was evangelizing in.

Melin's picture

Do you object to individuals whose lives never require them to chop some wood?  You seem to view it as a moral achievement to have to do so or to want to do so or simply to have done so. 

Are you saying that people should know how to live as if our civilazation were far less advanced?  Why?