In 1956 Hubbert predicted that US oil peak [production] would be sometime between 1969 and 1971 for [which] he was ridiculed…[but it did precisely that – ] in 1970… Then, in 1974, he predicted [that] the world ] production of crude] oil [would] peak [around] 1998 [qualifying that projection by saying] that if OPEC were to restrict the supply, then the peak would be delayed by 10-15 years which would put it at 2008-2013, or exactly right. OK, now is anyone willing to make a bet that Hubbert’s THIRD prophecy about the cultural crisis he expected is wrong? Didn’t think so. Here it is [- and I include in the article several suggestions on how Hubbert’s 3rd forecast might actually be averted were the powers to be agree to take drastic action, which is unlikely]. Words: 1369
So says Gary Flomenhoft (http://cluborlov.blogspot.com) in edited excerpts from his original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted the article below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
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Flomenhoft goes on to say, in part:
In case you are not familiar with Hubbert’s first two prophecies, [below are charts outlining what he expected to unfold].
Prediction #1: Hubbert’s U.S. Oil Production Profile
Prediction #2: Hubbert’s Global Oil Production Profile
Here is what Hubbert’s prediction (to scale by MBPD) looks like overlayed onto a reasonably close estimate of the actual global oil peak which started in 2005 and has continued as a plateau up to now.
Prediction #3: Hubbert’s Projection of Cultural Crisis[In an article** entitled Exponential Growth as a Transient Phenomenon in Human History Hubbert put forth the following, as presented in chart form:]
[Or, to state it differently,] since debt represents ultimately a claim on real assets, debt cannot continue forever if growth of the real resource based economy has stopped. This is Hubbert’s Third Prophecy: when economic growth cannot continue due to the lack of affordable oil, then we will have a cultural crisis.
The third curve (on the left) is simply the mathematical curve for exponential growth. No physical quantity can follow this curve for more than a brief period of time. However, a sum of money, being of a nonphysical nature and growing according to the rules of compound interest at a fixed interest rate, can follow that curve indefinitely…Our principle constraints are cultural…we have evolved a culture so heavily dependent upon the continuance of exponential growth for its stability that it is incapable of reckoning with problems of non-growth…it behooves us…to begin a serious examination of the…cultural adjustments necessary…before unmanageable crises arise…
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Ok, anyone see any cultural crisis happening? Yeah, what about a worldwide uprising of the 99% against the 1%? What does this have to do with Hubbert’s Third Prophecy? EVERYTHING!
Here is a graph of total US debt in all sectors up to end of 2009:
Here is [the] same curve overlayed with [the] same time scale on global oil peak:
Looks like Hubbert’s graph above doesn’t it? That’s because it is. Debt can continue to increase indefinitely, while oil can not and, since our entire money system is based on debt with interest attached, there is no way to escape it. All money is debt because we have allowed banks and the Fed to create all our money through interest-bearing loans by using the fractional reserve system. The details are unimportant, the main point is that our money supply is created by interest-bearing loans of banks and the Fed. Therefore, the economy must always grow in order to pay back the interest. When the economy can’t grow anymore…collapse.
Here is what has happened to US debt over the last several years:
2008 US Debt:GDP ratio = 350%
2009 4Q US Debt:GDP ratio = 425%
2011: US Debt:GDP ratio = 475%?
Debt has continued to grow because we don’t have a real economy anymore, we have a fictitious funny-money phantom economy of mostly financial speculation. Here is what happened in 2008:
As we all know, we had a stock market crash, a housing crash, an oil price spike and crash, and an employment crash. Because we don’t have a real economy any more we have papered over these problems by creating more debt. The taxpayers bailed out the criminal fraudsters on Wall St., taking on more government debt, and the Fed bailed out many bankrupt banks internationally ($12 Trillion), indenturing the taxpayers for future debt.
Since debt represents ultimately a claim on real assets, debt cannot continue forever if growth of the real resource based economy has stopped. This is Hubbert’s Third Prophecy: When economic growth cannot continue due to the lack of affordable oil, then we will have a cultural crisis.
Well here we are folks. The solution of the powers that be? Create more funny money through the fed’s “quantitative easing program”. The solution of the Keynesian economists? Take on more government debt through interest bearing loans by selling Treasury bonds to the Fed, China, and other parties (stimulus). The solution of the right-wing “deficit hawks”? Cut government (social) spending to the bone to “cut the deficit” which they created through monstrous military spending, and tax cuts to themselves. Guess what. None of these are going to work. The solution is structural in the monetary system itself. When all money is debt, there is always interest to pay and growth is required.
Hubbert didn’t mention one other notable feature of a debt-money system. It systematically pumps wealth from the bottom 80% of the population in wealth to the top 20%. The bottom 80% pay interest while the top 20% collects it, and of course most of the interest is collected by the top 10%. When all money is debt, that’s a lot of money going to the top. The Occupy Wall Street people aren’t stupid. They know the game is rigged.
A solution is some form of Public Credit Money. That means that money is issued without interest:
- 100% reserve requirements (abolish bank money)
- Abolish Federal Reserve notes (end private central banking)
- Issue Treasury Notes INTEREST-FREE (Greenbacks)
- Issue state or local currency (warrants, bills of credit, zero interest bonds)
- Social Credit (CH Douglas)
- Kucinich NEED Act
Each of these topics could have a separate article, but I have summarized each, briefly, below:
Debt-based money is incompatible with the post oil-peak world. It’s only a matter of time before it collapses in default.
*http://cluborlov.blogspot.com/2011/11/hubberts-third-prophecy.html (**PDF of the Hubbert article)
It wasn’t supposed to be this way. By now, Peak Oil was supposed to be a fact of daily life. People were supposed to be lined up at gas stations, struggling to buy US$10-a-gallon gas. Solar and wind companies were supposed to occupy prominent places on the Big Board instead of going out of business right and left. People were supposed to have diminished expectations – resigned to shivering in the dark. Free markets, a flawed system of commerce, were to be exposed as a misleading theoretical construct, incapable of providing for people’s needs…The world was running out of resources…Now, suddenly, there is a different tale to tell and the New York Times is up to the task. Up and down the Americas, we learn, there is an Oil Boom. Suddenly, we have gone from enforced austerity to an unheralded plenty. Middle East, watch out! [But all is not as it seems. Let me explain.] Words: 1440
In a recent article called There Will Be Oil in the WSJ, Daniel Yergin once again attempts to debunk the concept of peak oil and sees global production capacity growing to 110 mmbpd by 2030, followed by slow decline. In this short report I take a quick look at his key arguments in an effort to bring further convergence between the peak oil and business-as-usual camps. [Unfortunately, I failed to do so concluding that Peak Oil is still very much with us. Let me explain.] Words: 2032
Of all the many banners being waved around the world by disgruntled protesters from Chile to Australia the one that reads, “We Are the 99%” is the catchiest. It is purposefully vague, but it is also underpinned by some solid economics. A report from the Congressional Budget Office (CBO)… confirms the contentions of the 99% that a system that works well for the very richest has delivered returns on labour that are disappointing for everyone else and that the people at the top have made out like bandits over the past few decades, and that now everyone else must pick up the bill. [Take a look at the graph which shows just how unequal income distribution is in the USA.] Words: 776
Richest 1% of Americans Own 33.8% of Country’s Private Wealth and 23.5% of Its Income!
The Rich are NOT Paying Their Fair Share of Income Tax
Over the last half century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else – dramatically! At a time of national economic crisis, especially, they can and should contribute far more in taxes. [Let me show you the extent of this massive redistribution of wealth so you decide for yourself if this is, indeed, the case.] Words: 1140