http://www.mckinsey.com/insights/econom ... leveraging
The above mentioned link talks of one of the inter-related structural deficiencies in our whole economic edifice. In a post peak oil world how can our credit based economic systems continue to function? If debt is so ubiquitous in the world, how can it be maintained and perpetuated in a world of shrinking primary energy resulting in contracting economies. The answer is it cannot. The whole notion of lending is based on the inherent faith in being paid back and with interest. So, in shrinking economies that faith will be shattered. When that faith is shattered then that itself will reduce economic activity vis-a-vis the halt in lending. The lack of liquidity will be like an express train into insolvency and deflation. So-called quantum easing seems to me to be the chosen weapon to fore-stall this massive disturbance. It obviously will fail because money cannot replace energy or economic production and activity. By the way we already are seeing it's (QE) limitations not to mention it's danger of causing inflation. At some point like all the bubbles and ponzi like activity inherent in our economic machinations, the bubble will burst and the game will be over.