Forget ‘peak oil.’ Or so they say. It has fracked its way to energy self-sufficiency.
… there are roughly 20 major shale oil plays in the US. The largest five of these new reservoirs have more than 20 billion barrels of recoverable oil… meaning that each of these new fields is not only the largest in US history (by a wide margin), but that each of them, individually, would more than double the proven reserves of domestic oil…
That is why America is on track to be the world’s leading producer of oil within the next five or six years… and why the most knowledgeable oil analysts are predicting a new all-time high of American oil production by 2017. In fact, we’ve already become a net energy exporter for the first time since 1949.
The Wall Street Journal tells us that the US will not import a single barrel of oil from the Middle East by 2035.
Hey, wait a minute. Wasn’t that supposed to be why we’re spending trillions on wars in Middle East…to keep vital supplies of black goo headed our way?
Of course, the numbers never really made any sense. Neither did the logic of it. It would have been a whole lot cheaper just to buy the oil on the open market. Trillions cheaper.
But money isn’t everything. The US needs to guarantee access to oil…or its whole economy might be brought to its knees.
Which is probably a good place to introduce a new idea:
The biggest fraud in economics is economics itself.
What’s the point of having an economy? It is so that people will get the stuff they need and want. The more efficient the economy, the more stuff people get with the least effort and expense of resources.
It makes no sense to waste trillions of dollars’ worth of resources just to “protect the economy.” The whole point of an economy is to create more stuff…not to waste it. You might just as well try to protect your health by committing suicide.
Most economists are fools or knaves. The knaves want to get prestigious jobs and Nobel prizes by offering crackpot advice. The fools think it will work.
A few months ago, they were concerned with peaks. There was a peak in oil production. There was a peak in food production. There was a peak in available water coming. Then, a peak in peaks must have been hit.
Now there is a peak in valleys. All of a sudden, the peaks are far away. Commodity prices are falling, not rising. Deflation is economists’ worry, not inflation. Deflation is an impediment to growth; everyone believes it.
The European debate is largely a dispute over which fraudulent solution will cause ‘growth.’ The austerity crowd believes it has to clamp down on government spending. This will give investors confidence in government bonds. The feds will be able to borrow again. The economy will grow. All will be well.
The stimulus crowd targets growth directly. It wants the feds to spend…creating jobs, incomes, spending and so forth.
Paul Krugman is in The Financial Times today.
“At a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilizing force, attempting to sustain spending.”
Krugman says the real problem is a lack of demand. People just don’t want to spend their money. This is something that needs to be fixed!
Why? Why not let people decide for themselves when they want to spend and when they want to save? Why let the government do for them what they do not want done? Krugman doesn’t bother to think about it.
He is worried only about growth. He is afraid that the economy will collapse completely before austerity measures lead to growth. The austerity group worries that government-led ‘growth’ will blow up the economy before it has a chance to turn into real, private sector growth.
Neither side doubts that growth is the key. Almost everybody agrees: we have to pursue growth. “The Hero,” Ben Bernanke, does it by printing money. Congress and the administration do it by running trillion-dollar deficits.
Nobody doubts that ‘growth’ is the key to progress, happiness, and maybe even Heaven. But there’s the foundation of the great flim-flam right there.
Why do economists think ‘growth’ is such hot stuff? Because they can measure it…
Economists can measure GDP. They can tell when it goes up…or when it goes down. Generally, more is better…because it means the economy is creating more stuff. So, economists tailor their policy recommendations…their theories…and their editorial page blah-blahs to the goal of stimulating growth.
But is growth a good thing? Is it the same as progress and prosperity? Is more stuff what the world really needs?
Just 5 years ago, TIME magazine thought the US needed more stuff…in the form of houses. Seventy years ago, the US needed more stuff…in the form of tanks and fighter planes.
Forty years ago, US economists — notably Samuelson — were convinced that the Soviet economy would soon be larger than the US economy. Why? It could produce more stuff. They had charts to show how stuff production in the Soviet Union was increasing…and how it would surpass the US in just a few years.
And what happened? It didn’t matter. The stuff was worthless.
Bill Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
“Wasn’t that supposed to be why we’re spending trillions on wars in Middle East…to keep vital supplies of black goo headed our way?”
No. It’s not. I don’t know what to make of people who say things like that. You won’t find a single person who said that, but I know you’ll responde with something like, “sure, no one said it, but YOU KNOW that’s really the reason.” What a shame, it was shaping up as an interesting post.
You won’t find a single person who said that, rather you will find several million.
Okay, Fimmvörðuháls, time to start coughing up the quotes. Should be easy, since there are millions of them. Good luck.
1967: “My fellow Americans, it is with a heavy heart that I must report to you,
as your president, that there is a stuff gap between us and the Soviet Union.”
What did economics have to do with all the U.S. aggression in the Middle East? Absolutely nothing. The wars were for the benefit of a few wealthy Oligarchs here in the states, not the economy.
We should all know my now that continued growth is unsustainable. Stansberry? The Nicaraguan farmer? Wake up people, growth can not continue on it’s present course.
Poor Fimmvörðuháls, voice of the millions, seems to have vanished. Of course, the pat “it’s all about the oil” schtick is empty, just designed to sound smart. Nothing there: it’s so superficial that it doesn’t withstand even casual inspection. For example, what about Afghanistan? Was that about the oil? Do a word search on both the UN resolutions approving the Iraq wars, you won’t find the word oil. Check the Declaration of War by congress…no mention of oil. Check all of Bush’s exhortation to war, and you’ll see he never mentioned oil. Please, give it a rest.
Oh, but then again, YOU KNOW it’s all about the oil.
…no mention of oil. Eyjafjallajökull, I must inform you on behalf of the million, yes it’s true. It’s about oil, It’s about the ownership, supply and price of oil.
Never mind though, we all go through denial first.
Gore Vidal said it.
btw – I’m just the voice of me.
Afghanistan? Natural gas, my friend. Ted Rall, I’m around others, have documented this extensively.
*among others, that is.
Damn dictation programme! Last time I use you.
My basement is getting filled with ever more stuff (mostly plastic) and I don’t feel wealthier, to the contrary.
The more stuff I get the more room I need to store it,,,then I have to maintain it,,, repair it,,,get rid of it when it’s outdated in six months…
I don’t like more stuff!
those who have more stuff than they need want still more and so they market whatever stuff they can to get others to want stuff they don’t really need – the circuit breaker is getting to the point of knowing the difference between what we really need, lots of which is totally free, and what we have been told we want and must have
no. it was to keep the dollar as the world reserve currency.
“It would have been a whole lot cheaper just to buy the oil on the open market. Trillions cheaper.”
not if the dollar was no longer the world reserve currency.
Alan Greenspan himself said the Iraq War was about oil, and in so many words: “the Iraq War is largely about oil.”
Just because the Iraq War was about oil, does NOT mean that it is about the USA getting that oil. Of course the USA could buy the oil on an open market more cheaply than it can wage war in the Middle East.
Instead, it’s more about being able to DENY the Middle Eastern oil to other countries. Industrializing countries like China and India are going to need Middle Eastern oil more than the USA. By dominating the Middle East, the warlords in the USA can hold other countries to ransom, and thus artificially maintain the USA’s pre-eminent position in world affairs.
What practical good is that to the average American? None. None at all. Absolutely none. But since when has an empire ever been maintained for the benefit of an empire’s subjects?
Empires are not about the well-being of an empire’s subjects. Empires are all about the gratification of the empire’s rulers!
I think I’ve just had an epiphany as to why Krugman wants the government to keep on spending:
HE’S AN OLD MAN!
Old men have investments and they are close to retirement. If the government gives in to inflation then Krugman’s investments go down in value and his retirement gets a little poorer. It all makes sense now.
Never take short term policy advice from economists who refuse to buy green bananas
bring back the OTTOMAN EMPIRE
It’s not about getting the oil-The Corps & Al Saud have oil-the real amount is a secret. It is about stopping oil, from other sources, so the price goes up, and the corps get rich. Encourage strikes in Algeria, Stop Iraq UN Oil for food, Bomb Libya, Next Iran. Stop the competition! Drive up the price. Oh, & Texas has natural gas too! At least 300 years worth.
Today, Ray tells you how to profit from curing cancer.
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