For all his partisanness, Krugman tends to be more right than wrong. Facts do have a liberal bias.[/quote]
Krugman is a mixed bag of monetarist lunacy, DNC shilling and, at times, like that article, a semi-rational analysis.
Energy is the “master” commodity and has a flow through effect on all commodities. This along with all the central bank shenanigans can seriously muddy the waters to “what is going on” flation-wise.
Peak oil dynamics still rules the oil market and in reality the economy(energy is the ability to do work and it is something we can’t print) since about 2005 when we hit a production ceiling leading up to the 2008 price spike.
With an overall solid piece from Krugman, hestill goes all irrational because of his “faith”:
So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.
Stating we live a finite world and simultaneously can have infinite growth is pure insanity. That simple example shows the gulf that can exist between economic dogma and physical reality. A conspiracy of mass delusion that somehow monetary ‘sciences’ can usurp physics . Once you wrap you head around the ramifications, it kind of destroys everything we think we understand about economics – so it’s understandable Krugman will stop short a of a complete understanding.
Dr. M. King Hubbard developed peak oil math back in the 50s. In 1956 he did a report stating the US was going to peak in oil production in 1971 and the world was going to peak around 2006. Of course, he was laughed at as some sort of quack. We ended up peaking in 1971, just like Hubbard predicted and it looks as if we are at peak now.
Peak oil was kind of forgotten about until the late 90s. Petroleum geologist Colin Campbell of Oxford and Ken Deffeyes of Princeton dredged in back up around 97-98. Of course, again it was met with furious condemnation and heresy calls just for mentioning it. Something about human hubris I suspect. Also very reminiscent of medieval priests burning scientists at the stake. Economists run from the idea of physical limitations like vampires do sun light.
Dr. Robert Hirsch was asked by the DOE to do a report on peak oil in 2005. It is called “Peaking of World Oil Production: Impacts, Mitigation, and Risk Management”. It was not about the “when” it was about the what happens. His report concluded that without 20 years to prepare the would be serious economic and social stress. Last year he was asked not to talk about it anymore by senior official at the DOE.
So behind the meaningless economic pseudoscientist ramblings there is rational and realistic analysis being done behind the scenes.
To me, after looking at it for few years now, it is not so much a problem as a new environment that must be adapted to. However, there is so much vested interest in the status quo coupled with the fact most real “social” solutions are so far from acceptable that essentially nothing will be done besides endless monetary tinkering and political circular firing squads as conditions for the majority deteriorate and the monied elite build walls around themselves. It seems that impoverishing the majority of the population, increasing, very profitable, “security” and increased, very profitable, fighting for resources is more desirable than rethinking our social organization. There is ZERO chance of increasing or maintaining energy per capita with technology. Net energy will plummet. It is very possible to bring energy stability, but that would require plans, cooperation, intelligent resource management, and ‘gasp’ central infrastructure planning as well as rethinking how we organize ourselves.
Also, It does not necessarily mean high oil prices, actually the 2008 price spike was a good case study. We can conclude that around $120-150 per barrel is where global trade starts to break down, airlines are no longer profitable, most transportation gets killed and third world food prices start to get to high for people that live on $10 a day. No way oil will go above $200. People will just get kicked out of the system to bring oil prices down.
Now, Juxtapose peak oil with our current “crisis” and the global debt issues and we have a massive chaotic “economic” clusterf$%K. All the debt in the world necessitates massive economic growth for servicing. Energy dynamics ensures there won’t be. Period!
