Colleagues:
I recently got my Ph.D., within the past year. What I now see taking place in world financial markets is giving me "PD-PTSD" (post-dissertation post-traumatic stress disorder)! Why? Well, I saw it all coming--again--sort of. At the time, I felt I could not finish writing my dissertation fast enough! The more research I did, the more I saw I was in a race against time. I concluded we were headed toward an energy-induced depression. We are in the early / prelim stages of that process now, I fear.
What does this all mean?
In the final analysis, the "financial system" is based on the "Earth system." One of the best indicators of the financial system (in terms its medium- and long-term trajectories) is human relationship with the Earth system--as seen in the human-built, global energy sub-system. And the chief proxy indicator within that system is medium- to long-term petroleum pricing and availability (year-after-year analysis; daily/weekly price analysis would only confuse). In short, follow the oil resources in order to follow the financial resources. The key is to look at the Big Picture.
The following is extracted from my dissertation, which I completed in December, 2007. Here, I look back to the early/mid-1970s, and the global economic impact of high oil prices at that time.
Ask yourselves, "Might history be repeating itself, once again?
"***William Engdahl (2004) wrote of the impact of unusually high energy prices during the period of the initial global energy crisis, during 1973/74, as follows:
"Most of the governments of Europe fell during this period, victims of the consequences of the oil crisis on their economies.
But for the less developed economies of the world, the impact of an overnight price increase of 400 per cent in their primary energy source was staggering. The vast majority of the world’s less developed economies, without significant domestic oil resources, were suddenly confronted with an unexpected and unpayable 400 per cent increase in the cost of energy imports, to say nothing of the cost of chemicals and fertilizers derived from petroleum. During this time, commentators began speaking of ‘triage,’ the wartime idea of survival of the fittest, and introduced the vocabulary of ‘Third World’ and ‘Fourth World’ (the non-OPEC countries).
According to the IMF, developing countries in 1974 incurred a total trade deficit of $35 billion, a colossal sum in that day, and, not surprisingly, a deficit four times as large as in 1973—precisely in proportion to the oil price increase." (p. 140)
Engdahl—an economist—continues on in the same section to make a strong case for the connection between global oil prices and national debt levels; however, all too often, issues of energy resource pricing and availability have simply not been sufficiently linked to issues of economy by mainstream economists, when addressing economic development (Auer, 2004; Catton, 1980; Hanson, 2001). Why might this be so? This dissertation will explore some of the assumptions that have gone into economic development discourse over the thirty year period under review here.***
End of dissertation excerpt
For more details on the theory behind all of this, please see my Dissertation.
The main idea here is that human "thoughtways" and human-built energy systems operate in symbiosis, forming positive feedback loops. Humans then structure all of their organizational systems (including financial systems) accordingly.
Please feel free to question or critique this work. I welcome your feedback.
Dr. Blaine
12 years ago
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