Is a debt-based monetary system compatible with oil depletion?
Yes
15%
[ 38 ]
No
84%
[ 202 ]
Total Votes : 240
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Message
Liamj Intermediate Crude
Joined: Dec 08, 2004 Posts: 921 Location: 145'2"E 37'46"S
Posted: Wed Dec 29, 2004 8:17 pm Post subject: yes.
Great topic, excited to learn that Hubbert was so far ahead.
Will peak oil mean high prices &/or economic collapse? Some real world evidence is Ugo Bardi's study of whale oil market in 19thC US - http://energybulletin.net/3338.html
A quote: "A somewhat surprising result is that the inflation corrected prices remained approximately constant after the peak despite the progressive depletion of whales."
Counterintuitive, but lifes like that;) I think the oscillations in whale oil price curve likely to be repeated, trending up.
Issues with availability rather than price seem to get mention when people reminisce about 1973&79, wonder if that not a function of less interlocked markets in past.
Higher transport prices alone must mean demand destruction, but prob at some multiple of current b4 unmistakable. Consider what higher costs, a loss of consumer confidence (as shocked drivers scramble for cash) & a saturated credit market could do to the more leveraged & globalised businesses. I see no overnight global collapse, but a contracting supply of high quality energy has to finish the growthist economic myth.
Our economic system became incompatible with real world long ago, if you consider the cultural imperative to go forth, multiply, and damn the consequences. The resulting depletion of natural capital is still accelerating, 150yrs after we discovered the best fire starter going, and the many faces of this problem (of which peak oil is one) are all relevant: this is a deep cultural maladaptation with a galaxy of symtoms.
Cheap energy has helped hide unpleasant realities (like exhaustion of local resources, urban sprawl) for decades, and we know which way that tide is turning.
Time for cogniscenti to earn easy credibility by nailing their steady state colours to the mast, or might that be Un(insert nationality here)?
Yes, all during the years of demand destruction until we used up all that gain. Jevon's Paradox. The growth came from the energy acquired through conservation and energy efficiency. We did more with less. And your data is for per capita, not overall use. According to your data source, U.S. energy consumption has increased by more than 28 percent-about 21 quadrillion Btu-during the last 25 years. Total energy use declined four consecutive years-from 1980 to 1983... during a depression.
See here: http://www.eia.doe.gov/emeu/25opec/sld019.htm _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Last edited by MonteQuest on Thu Dec 30, 2004 5:36 pm; edited 1 time in total
Joined: May 19, 2004 Posts: 892 Location: San Francisco, California
Posted: Wed Dec 29, 2004 10:32 pm Post subject:
MonteQuest wrote:
Our only source of abundant energy in the near future is conservation and efficiency.
This is consistent with your reference to Jevon's paradox. I agree. However, it seems to me that we have a lot of room for increased efficiency. We could go on for years that way.
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When that is gone, any more comes off the top of the remaining standard of living.
Well, I hope it comes off the top of the standard of living of the rich first.
Our only source of abundant energy in the near future is conservation and efficiency.
This is consistent with your reference to Jevon's paradox. I agree. However, it seems to me that we have a lot of room for increased efficiency. We could go on for years that way.
Yes, that is what worries me. If during this time, there is not a paradigm shift in our world view, we will make it even worse for those who follow. Increasing efficiency comes at a price, increased entropy. For a short term utility, we make an even bigger mess that we will have to deal with someday. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Hmm...Two pages of post and yet no one has addressed the topic of this thread. Answer this question with your post next post :
1.How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found? _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Joined: Oct 12, 2004 Posts: 1647 Location: Davis, California
Posted: Wed Dec 29, 2004 11:11 pm Post subject:
MonteQuest wrote:
Hmm...Two pages of post and yet no one has addressed the topic of this thread. Answer this question with your post next post :
1.How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found?
lol because there isn't an answer. Much like how can cancer survive in the body while growing exponentially. It can't. Something stops its growth (either death of the host or immense damage from chemo/radio therapy). _________________ Joseph Stalin "It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything. "
Hmm...Two pages of post and yet no one has addressed the topic of this thread. Answer this question with your post next post :
1.How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found?
I count at least 6 assumptions embedded in the question which, to my mind, have yet to be proven:
a) The monetary system is based upon infinite growth.
b) The "world" is finite.
c) New economic growth requires more energy.
d) Growth in total energy (including but not limited to oil) will peak.
e) Failure to meet "demand" is a problem.
f) No viable replacement will be found.
If the assumptions haven't been settled, why bother with the question?
Hmm...Two pages of post and yet no one has addressed the topic of this thread. Answer this question with your post next post :
1.How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found?
The answer is of course: it can't. People will lose their jobs and won't be able to afford to pay their debts & mortgage. The banks will either provide debt forgiveness or they will throw people on the streets.
All of the economic trends of the past 35 years are explained by energy prices. The economy adjusted itself after the 1970s energy crisis by pushing a supply of cheap labour: women in the workplace. There was a brief period of prosperity in 1998 when oil prices were at their lowest when adjusted for inflation. The economy is adjusting right now by searching for the cheapest labour possible in China and India.
I enjoyed this thread very much. It has summed up my feelings on peak oil & economics quite nicely. _________________ "A slave is one who waits for someone to come and free him." -- Ezra Pound
Joined: May 19, 2004 Posts: 892 Location: San Francisco, California
Posted: Thu Dec 30, 2004 1:15 am Post subject:
JohnDenver wrote:
a) The monetary system is based upon infinite growth.
I am not certain whether this is the case. Or to put it as a question, can the monetary system survive without growth?
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b) The "world" is finite.
The Earth is finite: that is quite clear. It follows from this premise that the Earth's resources are finite. On a site devoted to peak oil, we can safely take finite fossil fuel resources as a premise as well. Finally, it has been well established in other threads that we do not have a "new oil," as Richard Smalley puts it. Although we may find one, this thread takes as a premise that we will not.
In addition, it's reasonable in a peak oil site to take as a premise that total available energy will decline in the future. Perhaps we should substitute "a world of declining available energy" for "a finite world."
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c) New economic growth requires more energy.
Actually, MonteQuest clearly specified that new economic growth requires either more energy or more efficiency through conservation. However, eventually we reach a point of maximum efficiency, at which time we do require more energy for more growth. You can make more with less but you can't make more with nothing.
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d) Growth in total energy (including but not limited to oil) will peak.
See above. This is not the thread to debate whether oil/total energy will peak.
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e) Failure to meet "demand" is a problem.
It is a problem if a contracting economy is a problem. Once all opportunities for increased efficiency have been exhausted, available energy must increase or the economy will contract. If, as MonteQuest has suggested, the economy cannot survive without growth, then that's a problem.
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f) No viable replacement will be found.
Again, not the thread to discuss whether this will happen. The thread takes as a premise that we will not find the new oil.
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If the assumptions haven't been settled, why bother with the question?
Most of the premises have been settled for the purpose of this thread. The only one worth debating is "assumption a," that the monetary system is based on infinite growth.
Nonetheless, if that question is also not subject to debate, then I'm in the same position as 0mar. This question,
Montequest wrote:
How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found?
has no answer. The monetary system cannot function given all of the premises that MonteQuest provided.
1.How can a monetary system based upon infinite growth...
To elaborate a little on this one, consider prison monetary systems. By this I mean prisoners spontaneously adopting a means of exchange, like opium or cigarettes. These systems function regardless of the prison population, or the amount of contraband flowing into the prison. So why do you need growth for it to function? Adopting a medium of exchange, borrowing/lending at interest, making money more abstract... those are things which people do spontaneously. They don't even need a "system". I don't see how that's going to collapse, under any circumstances.
Joined: Oct 27, 2004 Posts: 220 Location: Queensland, Australia
Posted: Thu Dec 30, 2004 3:53 am Post subject:
John Markos,
I love your quote "Well, I hope it comes off the top of the standard of living of the rich first", I must assume it was said with some form of humour. The grossly rich will literally just move to where S*%# will barely hit the fan. Or if they are silly enough to sit around being visible maybe they will lose something off the top French style.
Joined: Oct 12, 2004 Posts: 1647 Location: Davis, California
Posted: Thu Dec 30, 2004 4:00 am Post subject:
JohnDenver wrote:
MonteQuest wrote:
1.How can a monetary system based upon infinite growth...
To elaborate a little on this one, consider prison monetary systems. By this I mean prisoners spontaneously adopting a means of exchange, like opium or cigarettes. These systems function regardless of the prison population, or the amount of contraband flowing into the prison. So why do you need growth for it to function? Adopting a medium of exchange, borrowing/lending at interest, making money more abstract... those are things which people do spontaneously. They don't even need a "system". I don't see how that's going to collapse, under any circumstances.
To put that in context, cigarettes can be seen as an influx from the outside (aka must be produced). You cut off the cigarettes by tougher restrictions (aka import only 10 cartons a day instead of 20) and prices (and probably violence) goes up as well.
The same can be said with oil but with oil, the stakes are much higher. The system operates as long as there is a surplus or as long as demand is met. What happens when demand isn't met for a substantial period of time? We simply don't know, because economics isn't a science. It makes no predictions. We can conjecture recessions, depressions etc etc, but truly we don't know what happens.
As for economic steady state with a growing population:
You can have this obviously. However, if there are 2 million jobs (and by defination of a steady state, the number can not rise, indicating zero growth) and 2 million people that can do these jobs, then everyone is happy and the state continues happily. However, if you have 4 million or 6 million or 8 million people, then guess what happens. You have 2, 4, 6 million unemployed people. Confidence in the government decreases. There are riots and violence. Either the government falls or installs a massively oppressive state to quell these millions of people. _________________ Joseph Stalin "It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything. "
Every dollar in circulation, save the coins in your pocket, is money borrowed at interest from somewhere. Money is created when someone borrows it, no other way. If everyone tried to pay off all their debts, the money would run out before it was completed. Why? Because no new money had been created to pay the interest on the money already lent. In order to fuel this pyramid, the economy has to grow, jobs have to be created and infrastructure has to be built. Money for capital investment has to be borrowed to fund this. No GDP growth has ever occurred without an increase in energy use, primarily electricity. If you reach a point where you cannot consistently increase the energy consumed, you cannot grow the economy and create the money to pay off debts. The whole house of cards comes down. Our only source of abundant energy in the near future is conservation and efficiency. When that is gone, any more comes off the top of the remaining standard of living. There will be new mouths to feed, and people to employ. Our share of the pie will get smaller and smaller. In the past, we grew our way out of these holes, we won't be able to do that this time around. Growth won't be able to occur to meet the demands of our debt-based monetary system. Maybe it will, but what if it doesn't?
I looked at that thread again and I did contribute in a minor way and I for the most part supported Viper and VMA. But here goes....
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Every dollar in circulation, save the coins in your pocket, is money borrowed at interest from somewhere. Money is created when someone borrows it, no other way.
Pure semantics as i said in the old thread: There is a "polite fiction". The central bank pretends to hold government debt and the government pretends to pay it back.
Money is fundamentally created by central banks. They've got the keys to the "printing presses". The central banks are however under the control of the central government. When the central bank determines that there is a need for more money in circulation they just go and buy some government bonds. They pay for those bonds with freshly minted money and the government goes and has a field day buying goods and services with this new money that they know in their heart of hearts they'll never have to repay.
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If everyone tried to pay off all their debts, the money would run out before it was completed. Why? Because no new money had been created to pay the interest on the money already lent.
Yes all the debts (except the government debt held by the central bank) could be repaid. They could be repaid if the banks took their interest in kind. But I'm being serious here. The banks use the interest they make on the money they lend out to fund their business activities. They SPEND the money buying goods and services supplied by the very people they lend money out to.
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In order to fuel this pyramid, the economy has to grow, jobs have to be created and infrastructure has to be built.
Its more like a bicycle than a pyramid. The economy has to keep on chugging along, if everyone stops there is a crisis in confidence and a run on the bank. The economy doesn't have to grow and recessions and depressions are examples of times when the economy (and financial system) continued to function even as the economy failed to grow. Again.... the money supply doesn't have to increase to provide the money to repay the interest because the banks spend the money they make on salaries, dividends, etc. The person who takes out a loan has to repay more than he borrowed but that just means that he has to provide more goods or services to the economy (perhaps even directly back to the bank) than could be bought using the original loan. He pays for the convenience of having the money right now, nothing more.
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No GDP growth has ever occurred without an increase in energy use, primarily electricity.
I don't disagree that it is hard to grow an economy without an increase in energy. I'm just pointing out that this statement stretches the truth. My primary beef is with the lump of money fallacy that states we need to continually grow to be able to pay the interest on the debt. This is just dead wrong.
Money is fundamentally created by central banks. They've got the keys to the "printing presses". The central banks are however under the control of the central government. When the central bank determines that there is a need for more money in circulation they just go and buy some government bonds.
Yes, they do, at interest from the government. Then the central banks utilize fractional reserves to lend the money into circulation.
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Yes all the debts (except the government debt held by the central bank) could be repaid. They could be repaid if the banks took their interest in kind. But I'm being serious here. The banks use the interest they make on the money they lend out to fund their business activities. They SPEND the money buying goods and services supplied by the very people they lend money out to.
And where does the money come from to pay the interest to the bank? It is borrowed at interest from somewhere.
Quote:
Its more like a bicycle than a pyramid. The economy has to keep on chugging along, if everyone stops there is a crisis in confidence and a run on the bank. The economy doesn't have to grow and recessions and depressions are examples of times when the economy (and financial system) continued to function even as the economy failed to grow. Again.... the money supply doesn't have to increase to provide the money to repay the interest because the banks spend the money they make on salaries, dividends, etc. The person who takes out a loan has to repay more than he borrowed but that just means that he has to provide more goods or services to the economy (perhaps even directly back to the bank) than could be bought using the original loan. He pays for the convenience of having the money right now, nothing more.
Yes, recessions and depressions. What has to happen to grow out of either one? An increase in the money supply and and increase in energy use. What if that can't happpen? And where does the money come from to pay the borrower for his increased services? It is borrowed at interest from somewhere. If money can only get into circulation by borrowing it, then how can any other money get into circulation if it is not borrowed?
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I don't disagree that it is hard to grow an economy without an increase in energy. I'm just pointing out that this statement stretches the truth. My primary beef is with the lump of money fallacy that states we need to continually grow to be able to pay the interest on the debt. This is just dead wrong.
It is impossible to grow an economy without an increase in energy use. That is what grow means, increase, use more, consume more, etc. This has never happened and can't without an increase in energy use. Why? 1st & 2nd law of thermodynamics.
Dead wrong? Then please tell me how it is done. And finally, you never addressed the topic or issue at all. Why not? It's one thing to debate how it works, it's another to explain how it will work in a depleting resource world. Tell me how it can work. _________________ A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.
Last edited by MonteQuest on Thu Dec 30, 2004 5:42 pm; edited 1 time in total
1.How can a monetary system based upon infinite growth in a finite world function when the ever increasing required energy for new growth declines, fails to meet demand, and no viable replacement is found?
What else can a species do? As was pointed out, the underlying issue is population growth in a finite world. If a species is successful it grows. When the limit to growth - imposed by the least abundant critical resource - is reached, the population crashes.
There are too many variables to fathom how it will happen or when it will happen or what will trigger it or how governments will respond to a triggering event. The only thing we really know is that it will eventually happen and when it does no government or monetary system or economist will have anything that remotely resembles a solution.
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But I'm being serious here. The banks use the interest they make on the money they lend out to fund their business activities. They SPEND the money buying goods and services supplied by the very people they lend money out to.
