Thursday, April 2, 2009

The Crisis is Energy, not the financial markets!

The idea that the Global Crisis is financial in origin is a catastrophic misunderstanding that is continuing to prevent the creation of a solution. Wall Street, global media and governments are filled with fools who mistakenly think that sub-prime paper was the origin of the problem.

These people have a fundamentally flawed view of reality.

They fail to understand that the growth of the industrial world over the last 100 years was only possible because of cheap energy from oil, not because of "brilliant" financial geniuses and "talented" leaders.

The U.S. property bubble and it's collapse was entirely due to forces driven by energy and the complete failure of governments to use energy from oil to build an energy-sustainable world before Peak Oil caused the current catastrophic crash in global energy markets that is forcing a Power-Down from the unsustainable days of essentially free energy from oil.

The longer the world stumbles along thinking that the problem is with financial markets, the deeper the energy crisis will become and the harder it will be to start to rebuild fundamental infrastructure that could eventually bring back the possibility of new growth.

The world will have to learn how to adapt to the new paradigm of NO GROWTH because global oil production will no longer support it.

Massive debt taken on by the U.S. and other nations during the current crisis will likely cause the collapse of many nations, including perhaps the U.S., unless the economists start to understand that the economy is supported by energy, not the other way around.

This is hard for most people to grasp. For a simple reason.

Everybody alive today has been taught the wrong lesson. We have all been taught, every day of our lives, that energy was "free," meaning that rock oil was so cheap that it was basically free.

That was never true and now we are getting bit by our failure to understand the fundamental nature of natural resources like oil and the necessity of the peaking, depletion and lowered EROEI or net energy on the downside of the curve of production.

If this view of the economy doesn't quite make sense to you, I suggest you watch some of Chris Martenson's videos to learn about the connection between energy and the economy.

No comments: