Peak Money: the Shambles from Peak Oil
by Jan Lundberg
12 December 2008
Culture Change Letter #220 - We've outgrown ourselves and we can't crawl back inside. The shell shatters inward as our economy and aggressive culture implodes.
After the peak, it's all down hill from here. Back in the summer, with record oil prices that meant some people somewhere were making a whole lotta money, one might have suspected the peak of funny-money and paper/electronic wealth would happen sometime. Turns out it was weeks away.
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The former supplies of cheaply produced, abundant energy played a major role in inflating wealth over the years. Thus, peak oil brought about peak wealth and peak money. It is no coincidence that we find ourselves at post-peak money and see lower oil prices attained through demand destruction.
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The speculative investment on the housing boom fueled the recent wealth, but the housing boom could not have happened without cheap oil to build and maintain the urban sprawl constructed with "unlimited" asphalt for car-based living. As part of the petroleum feast, agricultural production through cheap petroleum fed suburbanites and almost everyone else.
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Well, my view is a little more complicated than that. In my world people invest in what's around to invest in. Starting in the 80s the US was ten years into its national peak oil. They had to get more foreign energy and they had to consume less of it within their borders. NAFTA was the solution, move the factories out of the USA in exchange for fossil fuels. Mexico was only too happy to play since they were desperate for the good life. Once the factories were exported the US no longer had to fuel them so instant US-centric energy conservation. Mexico's Cantarell oil field complex became the world's second-fastest producing.
But what to invest in when all industry became less native? Well at first the Internet became the target for locally-spent investments but that became overvalued so the dot.com bubble happened. Disgruntled, the US investors looked around for something non-virtual as in "real" as in real estate. Then that became overvalued. Then the house of cards got hit by $147/barrel oil plus Gustav and Ike. Boom for real. We got into crap investments because we were an oil province with declining oil; a shadow of our former selves; a scam.
