The “lightweight” version of history taught in most public schools, will probably show that “The Golden Age” for the USA ended in 2000 with the Tech Bubble. It will then tell how economic momentum and clever bookkeeping, allowed us to coast forward for a couple of years.
As a resident of this era, your higher though processes have probably not noticed its end. Mostly because you're busy just trying to get through life, but also because of some very fancy footwork by the federal reserve and some pretty blatant fraud by government agencies that report statistics.
Here is a link to help you understand why you haven't noticed the end (you can skip the first part if you want, and just scroll way down to the chocolate cake).
I'm tempted to start this blog by elaborating on how we got ourselves into this mess, but I will leave it for now. It's pretty must just the same old reasons: greed, politics and self delusion.
But what we all want to know is, what will happen next??????
I wish I had a simple answer for you, but the reality is we are walking a tightrope between two economic extremes. They may manifest themselves in the more destructive form of depression and hyperinflation or they may show up as recession and inflation. The federal reserve, congress and the American people will be the deciding factors.
However, there are some certainties:
Gas prices will continue to follow their erratic path upward. Demand has simply exceeded supply. So until the economy tanks, don't expect any relief. You can blame the oil companies, OPEC and the government (and they all do get part of the blame), but the biggest culprit will be found by looking in the mirror. The refusal of the American people to accept that they ran out of oil in the 1970's is the root cause. Don't expect any technical fixes from ethanol, hydrogen and alternate energy. Those are pretty much part of the whole “greed, politics and self delusion” paradigm.
Food prices will also rise. Mostly because everything is grown elsewhere in the world, then flow, shipped and trucked to us. Only a small percent of people get their food from local sources.
Beyond those two points, it all depends on whether we go inflationary or recession.
Inflation: From the looks of things, the Federal Reserve has chosen inflation. They keep printing money, while the government keeps adjusting the economic indicators to make it look like we are not experiencing inflation. Here are a couple of links if you want to see how they are doing it.
http://www.financialsense.com/fsu/editorials/2007/0416.html
http://www.shadowstats.com/cgi-bin/sgs?
Much like the pre great depression stock market, this depends on keeping the public fooled into business as usual (keep borrowing money for houses and cars). All we need is some event to start a panic, and we end up on the other side other tightrope.
On the positive side, inflation makes all that foreign debt worth less. On the negative side it also makes your taxes go up and your social security check worthless.
Recession: Gas shortages, terrorist attack, bad hurricane season, war or someone peeking behind the wizards curtain, it really doesn't matter. People will stay home and not buy things, but especially they will not buy big things like cars and houses. Unemployment will rise, and we will start having riots.
The Final Certainty is shortages:
Regardless of inflation or recession, eventually there will not be enough oil to meet demand, or it will be so expensive you can't afford it. Both scenarios lead to the same destination. It's just the speed and route that are different. Ultimate we will start to experience shortages. First it will be gasoline, then food, then electricity, then clothing..... Well, you get the idea.
In the short term, the gas shortage will follow this script:
PRE-EVENT
1) Up to now, mostly Eyewash: Calls for research, Compact florescent bulbs and drilling on those tiny (on a percent basis) patches of untouched North American land and sea.
2) Currently: Calls for conservation and higher CAFÉ standards, always to be implemented sometime in the future. Congress and the president know what is coming, but lack the intelligence and will to minimize the impact.
POST-EVENT
1) Nothing to see here, just move along! Lots of speeches with fake outrage and blaming the oil companies. Meanwhile prices spiral up, but no useful actions are taken. Everyone hopes the monster just goes away like it did before.
2) Weak Rationing! Either by tax increases or the alternate day license plate scheme. Also return of the 55 mph speed limit.
3) Strong rationing! Using either coupon or smart card. Limits on how much you can buy. Speed limit lowered to 50 mph
4) Government, agriculture and food/fuel transport use only.
5) Re-alignment of society.
When I say “Re-alignment of society”, I don't mean real life road warriors doing Mad Max interpretations. Other modern societies have experienced the loss of oil supplies and survived. The still have police and armies. Unfortunately they also had (and continue to have) massive society wide starvation. The two country that come to mind are Cuba and North Korea. During the Cold War the were supplied with, essentially, a free unlimited supply of oil. When the Soviet Union collapsed, their mechanized, oil powered, centrally managed farms, ground to a halt. It was and is the main factor for making life in those countries even more unpleasant then it was during the cold war.
Why?:
Surplus energy is the difference between a complex civilization, and a bunch of isolated tribes. You must produce enough surplus energy, beyond mere subsistence levels, if you want a complex civilization.
Politicians, scholars, stock brokers and a host of others, do not really contribute anything essential to a society. But once you reach the point where you have enough to survive, humans always want more!!!
First it was silk and spices from the far east, to stimulate the senses. Then books to stimulate the mind, and newspapers to link you to the outside work. Not long after that, you wake up one morning in a "service" economy run by lawyers and accountants. All this occurs because you have enough of an energy surplus (food), to feed all the hair stylists and news anchors.
When fossil fuel was discovered, humanity gained an enormous bonanza. It had a far greater energy density than draught animals, food or wood. They call it “horsepower” for a reason. We now had an enormous surplus of energy. Until it started to run out!
If you don't believe we are running out of cheap oil, then ask yourself these questions. Why are we drilling for oil in such inhospitable places like the arctic and the deep ocean? Why do we keep financing terrorism, by buying oil from people who want to kill us?
Understanding:
To truly understand what is coming, we need to understand how much our lives currently rely on oil and gas!!!!
Food: Diesel tractors plant and harvest it, natural gas provides the fertilizer and oil based pesticides keep it healthy. Then diesel powered trucks and trains bring it to you.
Clothing: Wear cotton? See the entry on food. Wear synthetics? Then you are wearing petroleum.
Shelter: Live in a wooden house? See the entry on food. Live in a steel, concrete or brick house? Then you live in house made with oil and gas.
Heat: If you heat your house with oil or gas, the answer is obvious. If you use a heat pump, then you should know that the coal and nuclear fuel are transported to the power plant by truck and train, as are the people who operate the power plant.
After thoughts:
Like the great depression, the reality the publics perceives of , "when the troubles started", is kind of false. What the American public perceives as the “start”, is really just the point where it starts to effect them personally. The reality is that the end of the “Golden Age” was in 1970's with the peaking of oil production in the lower 48 state, and the 1973 OPEC oil embargo. We have just been living off the stored economic fat of the country since then. We have maximized this stored fat, by increasing productivity with computers. (Remember playing “telephone tag” at work, back before email).
Meanwhile, a compliant news industry distracted us with assorted fluff and mindless cheer leading. While assets and jobs left the country, and massive dept was accumulated.
