SHOOT: What do you think? Will the economy improve? Where are oil prices headed? There is a poll right now on The Oil Drum. Cast your vote and see what the consensus view is. Vote here.
Some interesting points raised:
Nate Hagens: We can't of course 'create' energy. So this abstract energy gain (money/debt) really has just been a false signal that allowed us to extract resources at pace far faster than would have occured in a debt-free world (or a biophysically tethered system). If people primarily value money as opposed to energy (assuming that we can always buy or substitute oil at 3 cents per kWh to replace $60 per hour labor), then money is what we pursued instead of energy and natural resources, which just became commodity inputs into larger economy.
I calculate that just using Fed Flow of Funds that we are now creating 75 debt dollars for each barrel of oil equivalent of energy consumption nationwide (this is conservative as it doesnt include stock mkt debt nor private debt). This number has been increasing from $10 debt dollars per boe in 1960s - we are servicing our debt by issuing more debt - eventually that hurdle becomes too high to overcome, especially in face of diminished spare capacity right around the corner. I would hypothesize that had we remained on the partial gold standard beyond 1971, that economic growth would have faltered sooner, from a lower level, and the price signals to develop technology to extract at above $75 per barrel and higher might not have occurred.
What would happen if we started to de-lever (as Geithner is so afraid of?) It would give the opposite price signal necessary for energy expansion/maintenance...
As with any levitation act, there is a trick or gimmick. Regarding 'abstractions', there are dozens of books out there now on 'the God Gene' and religious abstraction modules in our brains -many explanations for the phenomenon, but such a tendency towards fundamentalist belief in 'something' is real. To me, in a species that uses predominantly exosomatic energy, we can easily be fooled as to 'what' energy is - ergo if we really were eating 240,000 kilocalories per day, we would KNOW if some of it were 'fake', but since we only eat ~2,500 calories, and the other 237000 is transport, waste, economic growth etc, we don't pay attention to how it gets here - the answer is that our brains (on average) have perceived debt to be an acceptable proxy for real stuff, without realizing it is empty calories (or more correctly, borrowing calories from a poorer future).
I'm still working on the details and implications. It's not all correct but I think it's in the ballpark.
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