[M_B_S]

http://fcnp.com/2015/08/19/the-peak-oil ... lion-hole/

If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs.

We are living in interesting times and just could see peak oil before we realize it.
***************

fcnp still hits the point.

PEAK OIL

M_B_S

[onlooker]

http://fcnp.com/2015/08/19/the-peak-oil-crisis-a-4-trillion-hole/

If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs.

We are living in interesting times and just could see peak oil before we realize it.
***************

fcnp still hits the point.

PEAK OIL
The erratic swings in price of oil has been thoroughly talking about on this site, geo-political-economic factors will contribute as will cost to price ratios. As as been correctly pointed out though oil has seemed cheap these last few years it actually has been historically high. It basically has priced out some players in the market. Expect to see higher oil prices as demand seriously dwarfs supply in the future.

M_B_S

[Newfie]

I'm starting to get the impression the global economy is going into a deflationary phase.

That may keep oil demand low and end up destroying our global economy.

Not such a bad thing over all.

Interesting times indeed.

[Cog]

Deflation is nothing to fear as long as you can hold onto a job.

[onlooker]

Deflation is nothing to fear as long as you can hold onto a job.

What about Stagflation?

[Pops]

It would indeed be interesting for peak to occur during a period of overproduction but that is just what CHS predicted back in '08

[GoghGoner]

Good pull, just because he was wrong then... From 2009:

Showing an unusual degree of discipline, members of the Organization of the Petroleum Exporting Countries have slashed their output by more than three million barrels a day in recent months as they sought to put a floor under oil prices, which have fallen by $100 a barrel since last summer. That is about 75 percent of the production cuts pledged by members of the cartel since September.

[Cog]

Deflation is nothing to fear as long as you can hold onto a job.

What about Stagflation?

Not so good but we don't have that yet.

[Pops]

Good pull, just because he was wrong then...

Actually I don't think he was wrong, I think the idea that we have recovered from the recession is wrong... we're just paying our credit card bill with a different credit card at the moment.

[onlooker]

Good pull, just because he was wrong then...

Actually I don't think he was wrong, I think the idea that we have recovered from the recession is wrong... we're just paying our credit card bill with a different credit card at the moment.

+1

[dolanbaker]

Deflation is nothing to fear as long as you can hold onto a job.

What about Stagflation?

Not so good but we don't have that yet.

More likely a dose of destagnation, a combination of insufficient growth and commodity deflation.

[onlooker]

Isn't that a Depression?

[ennui2]

If you define "recovery" in terms that can't be met, of course we haven't recovered. Sorry we're not all living like kings with no debt. On the flipside, we still have fully stocked store shelves and no zombie horde and no Peter Schiff style hyperinflation either. So I'd qualify that as a recovery, regardless of how long it lasts.

[Pops]

If you define "recovery" in terms that can't be met,

You mean like clearing the over investment that caused the recession in the first place?

Typically recessions cause deleveraging of bad debt and over-investment.
That hasn't happened. Governments assumed the bad debt.
Then they added more debt in an attempt to prompt growth.
The upshot is the prior bad debts linger, depressing the economy no matter how much free money is passed out.

Hyperinflation is a red herring. It never was a danger, especially in the US. That is just more Glen Beck/goldbug reactionary scaremongering, deflation is and always has been the PO danger.








If your schtick now is that everything is peachy because there are still Pringles on the shelf, just say the word and I'll put you on ignore and save us both the effort.

[Cog]

At the time the Fed felt they had no choice. The large banks and other financial institutions had so much exposure to bad debt, the whole system was going to fail. The consequence, as you pointed out was to preserve the debt and not let it default. A recession is not a bad thing necessarily if you allow it to work itself out.

We aren't really going to know if they made the right call or not. In hindsight probably not but they were scared.

[M_B_S]

The Indonesias Smoke Apocalypse triggert by PALM OIL after PEAK OIL
LEIGH SALES, PRESENTER: For three months, a vast part of South-East Asia has been choking on the smoke from Indonesian peat fires. The fires were deliberately lit and the smoke is killing children, affecting the health of millions of people and doing permanent damage to threatened species like Borneo's orangutans. Outside of the region, few people are aware of the devastation. Indonesia correspondent Adam Harvey travelled to the peatland of Central Borneo to file this report for 7.30.


http://www.abc.net.au/7.30/content/2015/s4344018.htm



http://crudeoilpeak.info/indonesia-peak




http://jakartaglobe.beritasatu.com/news ... ince-june/

http://news.mongabay.com/2013/11/defore ... orest-map/

[AgentR11]

For those that say deflation isn't a problem.

Bob borrows $500 to plant his wheat.
Bob commits another $1000 in expenses from cash.
Bob spends $500 raising the wheat that he intended to sell at $2500
Bob needs $500 profit from his wheat to pay himself, and buy a loaf of bread for his kids.

Deflation comes into play and bob gets $2400. So he only lost about 5% of the price. Doesn't sound so horrible. And the $2400 technically buys the stuff $2500 did, by definition of inflation.

But... the $500 loan did not become $475.
The $1500 is gone from working cash, and must be replaced.
Thus, Bob's income on the wheat dropped from $500 to $400.

This is a very simplified example of course, but I post it this way to point out the amplifying impact of deflation. That small deflation, causes Bob serious losses, he will either have to cut his lifestyle back 10-15%; or he'll have to borrow to sustain it, and everything he borrows further amplifies the impact of deflation; which will eventually radically cut back his lifestyle whether he likes it or not.

And in a society as leveraged as we are, with as much debt public and private as we have; that amplification cycle will run out of control if not constantly and deliberately countered; and it will do it fast.

Inflation is no threat. Heck, hyperinflation isn't much of a threat. Deflation isn't just a threat, its a doomsday machine for the modern economy.

There are no tools the fed will not touch to prevent deflation. None.

[Pops]

At the time the Fed felt they had no choice.

Bernanke studied the depression and concluded deflation was to be avoided at all cost and the way to do it was through unlimited money printing. The Bernanke Doctrine:

"The US government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost." "Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation."[1]

So now we get to test his philosophy.

(not that we didn't already have a test when Greenspans lowered rates post dot.com crash and helped inflate the housing bubble... As well, Greenspan, acolyte of Ayn Rand, eventually admitted his mistaken belief that bankers would self-regulate... what a guy)

[Subjectivist]

For those that say deflation isn't a problem.

Bob borrows $500 to plant his wheat.
Bob commits another $1000 in expenses from cash.
Bob spends $500 raising the wheat that he intended to sell at $2500
Bob needs $500 profit from his wheat to pay himself, and buy a loaf of bread for his kids.

Deflation comes into play and bob gets $2400. So he only lost about 5% of the price. Doesn't sound so horrible. And the $2400 technically buys the stuff $2500 did, by definition of inflation.

But... the $500 loan did not become $475.
The $1500 is gone from working cash, and must be replaced.
Thus, Bob's income on the wheat dropped from $500 to $400.

This is a very simplified example of course, but I post it this way to point out the amplifying impact of deflation. That small deflation, causes Bob serious losses, he will either have to cut his lifestyle back 10-15%; or he'll have to borrow to sustain it, and everything he borrows further amplifies the impact of deflation; which will eventually radically cut back his lifestyle whether he likes it or not.

And in a society as leveraged as we are, with as much debt public and private as we have; that amplification cycle will run out of control if not constantly and deliberately countered; and it will do it fast.

Inflation is no threat. Heck, hyperinflation isn't much of a threat. Deflation isn't just a threat, its a doomsday machine for the modern economy.

There are no tools the fed will not touch to prevent deflation. None.

Your time horizon is to short, deflation also means that farmers expenses for food and fuel are lower the next year, his expenses for planting are also lower the next year, so that 500 dollar loan is only a 475 dollar loan the next year. His payment for the new seed/fertilizer/pesticides is lower, his income tax bill is lower and on and on through the whole economy of his business.