Here’s the latest reader question – which is more a commentary – along with my reply!
K writes: I’d like to introduce you to an interesting article and blog – if you don’t already know about it – they’ve reached a conclusion similar to your own, but come at it from a “the economy as energy” perspective:
“It’s only fair to note that the authorities very probably don’t anticipate like-for-like replacement of ICE cars with EVs, but they can hardly tell voters that car ownership is set to fall markedly.”
There are others (intelligent, thoughtful writers such as Gail Tverberg, JM Greer, etc.) who also have similar conclusions. It’s worth the trip down this particular rabbit hole. While they don’t dispute (out of PC necessity?) the climate warming narrative, they certainly don’t agree government or the renewable energy quacks are going to solve anything at all.
The issue is not that the cost of energy is rising, but that the energy cost of energy (especially oil) has now risen past the point where the surplus is sufficient to maintain economic growth in first (and second) world economies. Thus the financialization and monetary gimmickry of the past decade or two.
ECoE continues to rise, so much of the remaining oil is going to stay in the ground, and in all likelihood nothing will replace it. Their model accounts for a surprisingly large number of the issues you yourself have observed and discussed. Their comparisons of declining individual prosperity over the years in the US and elsewhere are especially disheartening but appear valid. More importantly, they match our own “lying eyes.”
The site also has a lot of useful data regarding the feasibility (lack thereof) of so-called renewable energy sources. Since I’ve no doubt the Coonman is not about to relinquish his grip any time soon, you might have time to delve into this particular can of worms at length whilst comfortably ensconced in the comfort of your home.
Thanks for all your work and content. I’d send you a tip but haven’t figured out a way to do it from China yet. Btw, I’m convinced I have more freedom here than you do. That’s not to say I have a lot:)
My reply: I had a look and the writer’s point about discretionary purchases being generally unaffordable absent financialization (i.e., credit) resonated with me. An interesting experiment would be to wave a magic wand and “vanish” all homes, cars and so on that are currently possessed on sufferance (i.e., credit). When you opened your eyes, you’d see hundreds of millions of homeless, destitute people. I cannot recall offhand the percent of Americans who actually own their homes but I would bet it is less than 5 percent. I have also heard that two-thirds of the population has less than $1,500 in cash savings that could be used for emergencies and exist “paycheck to paycheck.”
This transformation is relatively recent. The used of credit cards was fairly uncommon as recently as the ’60s – but today it is common for college kids without any income to be issued credit cards on the first day they arrive at campus. Car loans are now routinely six or even seven years long.
I agree, this cannot go on – and for that reason will not go on.
I disagree with the premise that the cost of energy extraction has reached a critical tipping point. There are sound reasons to believe that the reserves of energy (oil, natural gas) are vastly higher than almost anyone has dared to state.
My view is that the energy austerity being imposed is being imposed for just that reason. The elites cannot stand affordable/abundant energy because it empowers the average person and thus takes away from their control over the average person.
Still, it makes for interesting reading. And I find Greer fascinating, by the way!
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