New Martenson Report - The Coming Collapse

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The Coming Collapse

The topic of this Martenson Report is one of the most important we will ever cover. My mission is to help you see that change is coming - potentially highly disruptive change - far enough in advance so that the opportunity exists to make gradual changes on your own terms.

 
 

 Executive Summary

  • Underlying beliefs can get in the way of action.
  • The status quo is unsustainable.
  • We face a future filled with "less" on many levels.
  • Surplus energy determines social complexity.
  • Peak Oil has passed and there is no return to the old economy.
  • We still have some choice in how this change plays out.
  • We must continue reformulating our beliefs and moving towards action.

Standing in the way of our taking actions are our beliefs, which we have formed over a lifetime of observation. For example, if I show someone forty-two very compelling graphs of Peak Oil, but the person remains unconvinced (as evidenced by their lack of action), I invariably find that they hold an underlying belief which is in conflict with the data. Most often, that belief turns out to be "technology will save us." This is a powerful belief, because it has been reinforced by a lifetime filled with the most exceptional technological progress ever seen in human history. So it won't matter if I show that person one graph, or ten, or forty-two, or a hundred. That stuff is just data. We take actions based on our beliefs. But if a belief is in conflict with data, the belief wins every time.

Every day I try to convince people that one era is drawing to a close and a new era is beginning. The lure of the old way is very strong. It is constantly reinforced by a media machine and an interlocking institutional framework that are fully dedicated to preserving the status quo.

From my point of view, the status quo does not have a future. It was unsustainable from the start, and even if we manage to resuscitate it for a few more years, nothing will change that fact. Worse, every attempt to sustain the unsustainable results in squandering our precious remaining time and resources, which means that with these attempts, we relegate ourselves and our children to a future of decreased prosperity.

Our economy is in crisis, and Peak Oil may well have arrived. While the potential link between these two situations can be debated, there is absolutely no doubt that declining surplus energy will greatly complicate and almost certainly thwart any possible return to "how things were." 

Assuming Peak Oil came and went in 2008, I can envision no possible way for the world economy to grow past its former levels. It could only do that if we were already reaping the fruits of a crash program in energy efficiency that had been implemented some years back. Unfortunately no such program is even on the drawing boards today let alone begun when it could have done some good.

This is a companion discussion topic for the original entry at https://peakprosperity.com/new-martenson-report-the-coming-collapse-2/

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Dear Chris,
We in Canada could use a tour through our country.  The next time you plan a tour and get to the north of the States hop over the border and visit a series of Canadian sites.  I am in Regina, Saskatchewan so I highly recommend my city.  It is close to Minot, North Dakota so if you are there you could also just hop over the medicine line at that point!

It would also be interesting if you did a series of blogs that refer specifically how the collapse, which will happen in the US and ultimately the rest of the world, is going to have effects on various regions of the world.  Maybe one week, focus on Canada, another on W. Europe, another on E. Europe, Asia, Africa, South America, Antarctica;o)

Thanks for your website and I appreciate the free blogs!

My final request (good things come in threes?) is if instead of paying for a yearly subscription, that someone is able to pay for individual instalments of your blog.

I appreciate your consideration!

citizenman

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I agree - I see no government plans or new technologies that could cushion the resulting changes in energy production and distribution. We have cooked up the perfect recipe for collapse - and its so obvious! How we got to be a country hemoraging money out of our economy for gas/oil and food from other countries is beyond me. Not to mention the hemoraging of debt based money or our vast military costs. No country can sustain itself with those kinds of drain of resources.
If our politicians had a clue - they would be:

  • Building bike-ways instead of highways.
  • Upgrading the existing train system to include the need for long distance transport of goods and the future need for more people in long & short distance travel.
  • Do what Canada and Germany are doing in 50% tax energy deductions instead of 30% of tax credits and deductions for wind & solar, insulation and energy reductions. Plus pay people who install solar & wind power more than what they kW sells for to add to the incentive. This is how Canada and Germany ended up with so much power. (Canada has a better future outlook now.) I think the insulation for existing buildings (home, commercial & governement) should all be offered for nearly free.
  • Encourage Transitional areas in towns and cities. I just saw the Traditional Town Design the governement is promoting called the New Urban Design with shopping and services within walking/biking distance of the community and all towns should be thinking of the food implications high energy costs will bring us first.
  • Build jobs by supporting the local food systems, building the bike-ways and making building energy efficient. Build jobs with solar & wind production and installation. Build jobs with a new banking system of non-fiat debt based money for communities. Build jobs via production of energy efficient train systems. . . This supporting a money system that doesn't work has got to change.
If they had a clue - they would stop the hemoraging and direct this country's population into healing our mind-less ways. I guess I'd start by making every person in the US and all high school students watch Albert Bartlett's Scariest video and take it from there.   EGP
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Chris,
I greatly appreciate your insights and the knowledge you impart through Crash Course and your blogs. But when predictions are so dire, it is necessary to be a skeptic and ask some questions, particularly about peak oil and peak energy:

  1. BP report on world energy claims that crude oil production increased in 2008 by 0.4%. At the same time, natural gas production increased by 2.8%. Taken together, the increase was 2.07%. While the oil production increase does seem to have tapered, natural gas production is increasing at a healthy (for the economy not CO2) rate. Also, crude oil production has significantly increased in the OPEC region, especially, in Saudi Arabia (4%), Iraq (13%), and UAE (2%). This certainly does not look like a peak oil scenario in the OPEC region. I do agree that reported proven reserves could be a bunch of lies, but production data is certainly more reliable.

  2. Natural gas consumption now amounts to 24% of total energy consumption. This indicates that natural gas is well positioned to fill the gap that might be created by a possible drop in oil production. Even in a developing nation like India, I see the transition from gasoline to natural gas taking place quite well.

  3. Economic collapse will certainly occur if the total primary energy production declines but the available data doesn’t indicate that total primary energy production is on the verge of a decline. Now, at some time in future,  total energy production may decline but 2008 doesn’t seem to be the year for this.

Living in India, I still see the economy growing at a healthy rate. Banking system is quite healthy with non-performing assets at a very low rate. Production data indicates that the Indian economy is already turning around. The real problem out here is the population and environmental impact of resource consumption. However, a collapse due to peak oil or peak energy doesn’t seem imminent. A collapse due to peak energy on the billion people that live in this country can be so drastic that I shudder at the thought. This is the reason that I am trying to get as much objective data as possible on the peak energy scenario.

Warm regards,

-Aniruddha

 

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Chris, your material has been enlightening but there does seem to be some Malthusian aspect to it.  My "lense" is that energy is not the problem, that we’ll figure a way out on energy.  (Granted I acknowledge not being an expert and thus must consider the outcome you describe a possibility.)  That said, I believe the big issue of our day is financial irresponsibility based mainly on the government’s inability to restrain itself from spending other people’s money (and borrowed and printed money).  The result being that we are setting ourselves up for our country’s bankruptcy by not addressing the reality that government workers can’t get multi-million dollar pensions and that government can’t spend $1-$2 trillion more than it takes in on an annual basis.  Our big issue is financial/monetary as a result of expanded government.

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When you say - a billion people . . then I automatically think of Albert Bartlett’s youtube video and it IS - The scariest video you will ever see.  EGP

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Peak oil is not about a collapse, it is about the annual decline in the production of fossil fuel due to the fact that current facilities can no longer maintain previous output levels. It is also about not being able to replace the facilities with sources that can compete on a unit cost of production. Both China and India are going to continue to grow for the time being, but even the natural gas supply has to decline sometime in the near future. The ability of population and industry to continue using ever increasing amounts of energy will be restricted by the continuing increases in the costs of production, ultimately causing economic growth to decline since all modern economies are driven by cheap energy.
The problem for the recovery of the U.S. economy is the fact that there is an attempt being made to shut down fossil fuel production at the same time we are attempting to develop alternatives that are renewable. Sounds like a plan except that there are no alternative fuels on the horizon that can compete with fossil fuels to drive the vehicles that supply goods and services throughout the economy. Also, the alternatives on the horizon are greatly dependent upon fossil fuel for their research and development. Our leaders do not seem to understand that we cannot convert to alternatives that are not even in early development. We need to reduce our dependence on foreign fossil fuels by developing more of what we already have, even if initially they might cost more. The fuel we import is going to cost much more in the near future as production continues to decline. We can use the money we do not ship overseas to do research on alternatives where we currently have no resources to do the research now since every available dollar is being thrown down the rathole of financial institutions that should have been allowed to fail.

The two main concerns for every economy in the world are first, the coming competition between the developing and developed nations for energy to keep their economies going, and second, the failure of the world economies to see the problem coming and to start research on alternatives ten years ago while there was still a chance that something might have been developed. Face it, the current situation is going to get worse no matter what fossil fuels we switch to in the short run. In the long run, the amount of fossil fuel available worldwide is going to decline between 5 and 10 percent annually even with the currently reduced consumption figures caused by the recession.

Not only are we not going to have a car and a house for every person in the U.S. they are not going to be available in BRIC countries either since the resources are not going to be there anytime soon.

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I watched that entire Bartlet video and well what I kind of knew already but its good to reinforce it once in a while. I wonder if anyone asked afterwords what exectly can we do? 90% of the population is going to continue on the path of destruciton so living sustainably is like the titanic example, your going down with them anyway. Realisitically things are just going to keep getting worse until society breaks, then things really get bad. I think Jared Diamonds collapse is a good book to read. Imagine easter island on a worldwide scale.

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Well, it seems that a couple of new members here are going through the phases. One believes that fossil fuel production can only rise (despite its being finite and despite the fact that oil only just pushed past its previous 2005 peak, last year). The other believes that someone will think of something.
Give them a little more time and they might come to realise that we live on a finite planet, that the laws of nature can’t be overridden and that the economy is a subset of our biosphere, not the other way around.

I agree with the first reply, asking for the ability to purchase individual reports. Not all reports are as relevant as each other, outside of the US, so it would be good to pay as you go.

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Sofistek,
I am not saying that fossil fuels will last forever. Also, I do understand the exponential functions quite well :slight_smile: It is quite obvious that perpetual growth on a finite planet is not possible. The only  question that I am asking is if 2008 is the year when peak energy was reached. I do understand that implications of this are quite catastrophic on the civilization in its current form. It seems to me that Natural Gas will sustain energy demands at least for some time. Will this be sufficient enough to carry out changes to the structure of economy and the structure of civilization itself so as to be less energy intensive? If natural gas does not reach peak production for a couple of decades then there may still be some time to avoid a complete collapse. Experts such a Vaclav Smil suggest that there is some time still available:

http://books.google.com/books?id=2UM6KSEMoLUC&printsec=frontcover&dq=energy+at+crossroads

I think it is relevant to ask these questions and to be a skeptic considering the dire forecast of an imminent collapse of civilization. The book that I mention above does provide a lot of obective information and arguments. It will be interesting if someone in this list  has read Smil’s book and has arguments that refute the claims in the book regarding timing for peak energy/ peak natural gas. Again, Smil is not arguing that energy available will grow forever. He suggests that before a collapse happens due to peak energy, there is a greater danger due to environmental damage, specifically CO2 concentration. However such a collapse may still be many years away.

All I am looking for is a stronger argument for the collapse due to peak oil that is assumed to have been in 2008. Chris may well be right but for any immediate and drastic action to be taken by majority of individuals, more convincing arguments and information in public domain will help. It is certainly difficult for a large number of individuals here (in India) to pay in USD to access the information.

BTW, I agree that it will help to purchase one report at a time, especially for overseas customers.

 

Regards,

-Aniruddha

 

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In terms of Peak Oil specifically as opposed to Peak Energy, the macro charts of production are the way to go for me. It’s irrelevant if production fluctuates within a tiny window for a year or two, which is really just a plateau – and that is what we’ve reached. As Chris says above and countless others have pointed out over the last year or so, why has all of a sudden, during a boom time, oil production gone from steadily rising by several percentage points a year to flat? Seems counterintuitive from a money-making point of view.
If one adds this fact to the most recent IEA report regarding declining production rates, how are we not at peak? Well, seems to me, only if the data is bunk. Which, I maintain, could be the case. I have to leave that door open. Maybe we will plateau in the 70 to 80 and change million barrels a day for the next thirty years.

At the very least, I feel confident I can say the world ain’t gonna be producin’ no 110 million barrels a day in this dimension.

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[quote=cupabj]Sofistek,
I am not saying that fossil fuels will last forever. Also, I do understand the exponential functions quite well :slight_smile: It is quite obvious that perpetual growth on a finite planet is not possible. The only  question that I am asking is if 2008 is the year when peak energy was reached. I do understand that implications of this are quite catastrophic on the civilization in its current form. It seems to me that Natural Gas will sustain energy demands at least for some time. Will this be sufficient enough to carry out changes to the structure of economy and the structure of civilization itself so as to be less energy intensive? If natural gas does not reach peak production for a couple of decades then there may still be some time to avoid a complete collapse.[/quote]I don’t know about peak energy production but peak oil might signal peak energy consumption. Oil provides very concentrated and flexible energy options. A peaking in that one energy source (which I think is about 38% of all energy use, globally), could signal a peak in energy consumption because we can’t quickly switch between all energy sources, particularly for transportation (of all kinds).

 

But, in a sense, it doesn’t matter when that peak was or will be because it will be catastrophic for civilisation whenever it occurs. Unless, of course, that actions are taken to move to very different societies that are not based on economic growth. I see no such actions. Indeed, almost every brain is being turned to getting economic growth going again. Non-growing economies are unthinkable to most people.

The timing also doesn’t matter, in another sense. Since precise data is not obtainable, especially globally, just when peak oil, gas, coal or energy will be is unknown. What we do know, however, is that unsustainable consumption of any resource must end. Any consumption of finite resources is unsustainable. As we hit the peaks of one resource after another, it will start to become clear that there are limits to economic and population growth. Unfortunately, it really looks like we need to actually hit those limits before realisation will dawn. That will be catastrophic for civilization.

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Very good presentation called ‘The Great Reset’ on Youtube by a guy called Warren Pollock. Very relevant to the Crash Course:
http://www.youtube.com/user/wepollock#play/uploads/6/74a8JgB0FIE

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Dr. Ravi Batra: Depression Is Inevitable

April 20th, 2009 . by Marc Friedland
The keynote speaker at the National Conference on Spirituality and the New Economy in Dallas, Texas, April 4-5, 2009 was Dr. Ravi Batra (noted economist and author of “The Great Depression of 1990″, “Greenspan’s Fraud” and “The New Golden Age”). Dr. Batra has a remarkable ability to take something very complex and make it seem remarkably simple.

Dr. Batra was able to untangle the economic mess we are in today and explain it as a failure of previous economic policies, primarily promoted by Alan Greenspan, former Chairman of the Federal Reserve Bank.

As Batra explained, during the 1990’s and early 2000’s, productivity rose at a tremendous pace but wages didn’t rise with productivity. This created an increasing supply of goods without creating additional purchasing capacity to buy it.

Shareholders demand for increasing value forced corporations to maximize profits at all costs. This pressure kept wages down. Profits rose, share value rose and executive compensation rose. The supply of goods increased with increasing productivity but purchasing capacity stagnated with the failure of wages to rise along with productivity.

Workers were forced to increase debt to keep demand up. The Fed, under the guidance of Alan Greenspan, helped by encouraging subprime mortgage lending so people without sufficient credit could buy homes and then borrow against these pseudo assets with pseudo credit. As long as home values continued to rise, no one was asking any questions. When the housing bubble burst, we saw the cascading collapse of economies built on this pseudo credit. With credit drying up, wages stagnating, and asset values plummeting, purchasing capacity vanished and demand for goods along with it. The result of this excess inventory was loss of jobs, which further depressed demand.

In the US economy, 15% of GDP is based on investment and 70% on consumption and 15% on government spending. The current government program to bailout the banks and stimulate the economy with government spending only takes care of 30% of the economy without any effort to increase consumption. The economy will move into depression unless consumption is increased.

What to do?
Create purchasing power among workers. We need to increase the purchase of US assembled autos in order to slow or stop the coming depression. Dr. Batra suggests that the government should give a 20% tax credit to anyone who buys an auto assembled in the USA and a 20% tax credit for home buyers. But whatever the government does, Dr. Batra predicts that it is too late to stop the coming depression. Now we have to look toward slowing and reversing the depression as soon as possible. But this will require elimination of widespread corruption in business and government and the implementation of new economic models.

Dr. Batra further suggests that to counter the corporate tendency to maximize profits by suppressing wages and minimizing product quality, employees should become majority owners in big corporations. For example, there is about $2 billion worth of General Motors stock. Instead of spending 20 billion to bail out GM, the government can spend $2 billion buying all GM stock and giving it to GM employees. We know the GM employees know how to design and build cars. This would solve most of the problems facing GM and be a much better value for taxpayers.

Dr. Batra explained that the source of all depressions is a growing gap between the rise in productivity and wages. The way to overcome this problem is through the process of economic democracy. This would be accomplished through worker cooperative ownership of businesses or at least majority ownership with management by professionals accountable to boards set up by employees.

One of the major problems we have now in overcoming the current crisis is widespread corruption of public officials due to the massive amounts of money injected into politics by large corporations. If this corruption is not rooted out, our elected officials will be powerless to prevent or reverse the coming depression. But when the depression hits, it will rob the corrupt officials of their power and make way for a new “golden age”.

How to survive the coming depression? Take shelter of the Supreme and meditate.
Batra says the coming changes will be very difficult for everyone and he recommends the practice of yoga meditation to help maintain mental balance during times of change. He also said that meditation helps develop a spiritual outlook on life which gives the courage to fight against corruption.

The new economic model should be based on PROUT (Progressive Utilization Theory). Dr. Batra explained that in a PROUT economy, the government doesn’t have to do much for the economy. Economic democracy keeps control of the economy on the local level. With local control over the economy, wages and demand will increase with productivity.

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Thanks Province for the reference above to "The Great Reset" series of videos by Warren Pollock.  I watched each video and found them extraordinary – a "must see."   A very thoughtful presentation although I did not agree with all of his points.  Pollock made it clear that the coming collapse besides being economic is also political & cultural & that the current order maintained by the triangle of politicians, special interests (mostly the big banks) & bureaucracy is going all out to maintain their own interests, the common man & woman be damned.  Huge inefficiencies are built into the current order.  Pollock also presents a vision for a new order of things.  It is the first presentation of its kind (besides the Crash Course) that I have seen.  Amercans in general have an entitlement mentality & when the collapse comes few will be prepared for it.  (I have come across Pollock’s financial blog in the past but the url escapes me.)

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fwiw, I too watched "The Great Reset".  Thanks for posting, Province.  I also did not agree with everything he said, but it is still a good presentation.  Now what I really want to know is, who is paying for those Orwellian signs all over the country trying to convice people the economy is OK.  The article said "someone  from the East coast".  The Fed?  Congress (Ad Council)?  Barney Frank (LOL!)?
 

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Great Reset update:
http://www.youtube.com/watch?v=1LjS2bg2ymc

 

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