Wednesday, October 22, 2008

The Tinfoil Hatter's Gold Trap

Knowing that peak oil is a real force of nature, and not something that can even be argued against, one tends to realize that there is trouble on the horizon. Also, it is obvious that both Joe-the-Plumber and his buddy, J6P, will never know and will never be allowed to know and will never care to know what peak oil is and what it means.

Therefore it is logical to assume that there will be a 2nd Great Depression, to mask the effects of peak oil for at least another decade.

I am assuming that Helicopter Ben and Co will not be able to print enough fiat currency to prevent a deflationary collapse. And thus the next 10-15 years will see no net growth in the stock market, similar to 1929-1945 and 1969-1983. In other words, we're entering into the next phase of the ~40 year cycle of boom and bust. My question is, if this indeed happens and history repeats itself a THIRD time, then where do you see gold going? The answer from most people who've seen this crisis coming: "Gold is going to the moon! You're crazy if you don't buy gold!"


But all this talk about $2000-$5000 gold just doesnt make any sense to me. And I'm beginning to wonder if all these seemingly trustworthy people who have been right about everything else are part of an ugly conspiracy to sucker so-called informed people out of their cash. I guess I'll just call it the Tinfoil hatter's gold trap.

It makes sense to me. If I was an elite banker, with billions to invest in the business of suckering people out of their money and covering my tracks, then why would I not go as far as to hire a bunch of goons to go speak truths about the coming crises, only to have them recommend throwing their money away on gold heading to $50 an ounce? It explains a lot of things, doesnt it? Alex Jones talks all the time about why he's still alive when you'd think they'd just whack him or whatever. Well, what if he was approached and told he can talk about whatever he wants, as long as he tells people to buy gold? And they listen to him and buy the gold, and then lose all their money in a depression, along with everyone else. This small investment in 100 media personalities such as Alex Jones, all telling people to go buy gold, would cost no more than a few billion dollars. But it would prevent people in the truth/awakening movement from acquiring capital which can be used to mount an effective resistance. Sounds like money well spent, if I was an elite banker. If you were an elite banker, would you want to see a bunch of well-educated and informed people gaining wealth and thus gaining political power? How much would you pay to prevent that?

I'm not going to point any fingers, I just want to bring to light the possibility that there are people out there spreading truth and useful information, who are allowed complete autonomy in exchange for the small favor of pushing gold. IF things like this are indeed happening, then the only proof you might ever see of it is when someone is right about everything else, but wrong on gold.

Monday, October 20, 2008

A New Sheepleskin Robe

A shiny new Sheepleskin Robe for the Emperor Wolf.

I've seen this catastrophe coming for quite some time now. Tried to write as much as I could about it. But it's hard to fully describe events like these until long after they happen. Here we are, almost a month after the big bailout, and I'm only just beginning to be able to describe the sheer scope of the scandal. I knew it was an economic 9/11. I knew the date would have occult significance. (10/9/08) And I've known for years that they were planning on stealing 401ks and transferring huge masses of wealth to the ultra-elite rich. lol I guess I just never thought they'd actually do it, so out in the open like this.

I want to try to explain how this scam works, for those who havent figured it out yet. This may take some revisions until I get it simplified as much as possible, but here goes:

GS went to the treasury and asked for a bailout. Paulson is GS, so of course he's going to go along with it. They get their money and they use it to "shore up capital".

Shore up capital. That's a real hoot. That's an occult phrase. You know, sort of like "whack that guy" is an occult phrase. Sooner or later people are going to learn that all it takes is a few talking heads to redefine terms for us, and we buy into it every time. Our instincts tell us to mistrust, but our higher reasoning centers tell us to defer to the authority. Curious isnt it?

Anyway... what they're really doing is putting in a bottom. Shoring up capital means going out and buying a bunch of stocks, basically. So they did, at bargain prices. And they leveraged that capital in the process. Then they sell them after the market bounces, pocket a commission, pay some bills, and then go buy more stocks. Each time they do this, the smalltime investors throw a fit because these actions cause huge waves to ripple through entire sectors of the market. It's basically just a big money laundering scheme. They take the bailout funds, buy stocks, leverage that money out 10-1, and by putting in a bottom they are guaranteed to get a bounce. Because of the leverage, they get a huge profit. But since the money is laundered through the stock market, the profit is "legitimate". Yes, even though it pretty much comes directly from people's 401ks. So the big wigs get to keep all of it. And we're stuck with the over-leveraged mess they leave behind. The process of de-leveraging is what swallows up pensions and 401ks. All predictable. All predicted. Legalized theft.

It really is a beauty of an irony isnt it. 401k and pension money is transferred to the elite, and the mechanism for which to do it is provided by the bailout funds. So the taxpayer pays their own money to have their pension and 401k stolen. Ha ha HA!! How can you not laugh? Hell, it almost makes my own 401k losses seem worth it, just to witness this comedy/horror show that rivals anything Hollywood has produced. But it gets sad when you realize that the average american has not simply paid taxes to have his retirement stolen, but in fact has actually gone deep into debt in order to do it. Where exactly does this end? Tell me, in the simplest possible terms, what is the most logical next step here? When a government has this much deep-seeded contempt for its people, what's next?

Thursday, October 09, 2008

Proving How Peak Oil Caused the Financial Crisis

Anyone who has been studying peak oil for years has known without a doubt that it is what caused this mess. Yes Bush borrowed a whole bunch of money. Yes Bush ruined the value of the dollar from all that borrowing. Yes Bush promoted an Ownership Society doctrine which overpromoted home ownership. Yes the dollar devaluation caused energy prices to rise. Yes it was this increase in energy prices that made it impossible for many homeowners to pay their mortgage. Yes there was billions of dollars of scamming and looting and predatory lending and predatory deregulation. But ultimately it was a lack of energy that brought down the house of cards. That was the root cause.

In an economic model that is based on infinite growth, it was the halt in growth that brought it down. Since this general economic model has been the same for generations, we cant just all the sudden start blaming it now! When did the growth begin to halt?

Notice that the 14 year trendline in vehicle-miles traveled (VMT) was broken back in mid 2005. Here is another graph that clearly shows the divergence began before Katrina. And check this out:

This chart implies an early 2005 peak in gasoline sales. That is more than a year before the Case Schiller index peaked.

2 years before the stock market began to notice there was a problem.

It takes a lot to break a 14 year trendline in VMT.

In 2005, the financial system was moving along like a well oiled (albeit corrupt) machine, lining the pockets of rich guys around the world. Meanwhile, while the CEOs were raking in the cash, VMT was breaking a 14 year trendline. What does that tell me? It tells me that VMT, and thus oil, was a root cause. Otherwise, the trendlines would have been broken AFTER Case Schiller peaked. And AFTER the banks started having problems.

The evidence is clear: peak oil, and peak VMT, caused the financial meltdown. You can say that it was all a house of cards, but that was as true in 2004 as it was in 2006, as it was in 2008, so why did it continue until 2008? Why not break down in 2005? Because it took 3 years for peak oil to eat up enough credit and rack up enough debt to cause the financial bubbles to pop.

I know there are some incredibly obtuse people out there, and they just wont get it until you draw them a picture. So I'm going to attempt to do that. Here are 4 steps to understanding peak oil and the financial markets:

1. Our financial system is global, and it is growth based. Because it is growth based, it requires about 1.5% growth in energy supplies every year in order to keep from imploding in on itself.

2. Global Oil production peaked, or plateaued, in 2005, at about 30 billion barrels a year.

3. For 2006, the economy was expecting one and a half percent more oil than in 2005, or about 450 million barrels more. Instead, it only got the same as in 2005.

4. For 2007, the global economy again required one and a half percent more oil than in 2005. But again, in 2007, the global economy only got the same 30 billion it got in 2005. That is yet another 450 million barrels missing. Now we're up to 900 million barrels missing. Again, that is what caused the problems in 2008. Depending how you look at it, because of compound growth (30*1.015*1.015), you could even say the economy required another 450 million on top of the 900 million. That's a total of 1.35 billion barrels missing from the economy. But to be conservative let's just focus on the 900 million. How much oil is that? Well, here is a tanker:

It's a very large tanker. It holds somewhere around 3 million barrels of oil. We're missing about 300 of these from the economy. There is a 300 tanker difference between what we've gotten, and what we needed to keep growing.

This is how much extra energy the financial system needed in order for all its models to prove correct:

Peak Oil Tankerz! It is incredibly difficult to properly visualize that much oil!

Because that extra energy never arrived at the market, it caused all the financial models to be wrong. That led to huge losses. That missing oil also led to some very real supply issues that drove up prices and led to even greater losses. The paper economy is driven by the real world economy, not the other way around. And it doesnt get more real than an oil tanker. The question is, did the financial industry willfully ignore reality as tanker after tanker failed to deliver the oil needed to make their profit models work? Of course they did. And why not? That's what happens in a system that socializes the risk and privatizes the profits.

If you're still not convinced the collapsing housing bubble had anything to do with energy, then here's a thought experiment. Imagine if the price of homes kept rising. Instead of leveling off in 2006, they just kept going up. People kept getting home equity loans, refinancing, buying bigger homes, buying more cars, etc etc. What would have happened? The prices of food and energy would have gone up even more. They would have kept going up until people started to not be able to afford the energy they need to maintain their lifestyle. Then the demand for new homes would have fallen. In other words, the collapse in real estate was inevitable. Houses need energy. Cars need energy. More cars, more houses, yet only the same size pool of energy. That made a recession inevitable. During the recession is when the cars and the homes get more efficient, which allows more homes and more cars to be built. Then the recession is over. But the media ignored the energy dynamic, or downplayed it. They instead focused on words such as "subprime". By doing this, they risk turning a recession into a depression.

Friday, October 03, 2008

The 21st Century Interstate Highway Project

My own vision is somewhat similar to Christer Lindstrom's and others. I call it the New Interstate. I am envisioning a hybrid semi-autonomous rail system with roads much like we have now, but with the addition of New Interstate terminals located in each city. You drive your car (a PHEV) into the terminal and onto a big long rail car (a Carrier), and it whooshes you off to the New Interstate terminal in your destination city. Then you drive away autonomously for the last mile(s) of your commute. The New Interstate system would be computer controlled, managing traffic 10 times as efficiently. A trillion dollar investment could expand current highway capacity tenfold and eliminate the need for more than a 20 mile battery in most PHEVs. The amount of oil this transportation model could save is nigh immeasurable. The US alone could save 10 million barrels a day. The current economic collapse (brought in part by the failure of the Old Interstate highway system) is what will provide the fuel to build the New Interstate. All that is needed is imagination, and resolve.

I dont like either candidate, but somehow we've got to get them to see how big of a long term economic boost the New Interstate could be. The Interstate is everything, because an electrified Interstate removes the need for more than 20 miles of range on a PHEV battery. It's worth trillions of dollars in both energy savings and economic growth. And we have everything we need to build it, right now.

What is needed:

- An inexpensive PHEV with a 20 mile range
- An electrified rail grid, with the ability to charge the PHEV batteries while aboard the Carriers.
- Rail Terminals designed to allow large throughput of PHEVs.
- Wind and solar arrays to power the grid.
- The ability to conceptualize how much energy it would take to build all this, vs the energy saved during the first 5 years of use. Hint: in 5 years we will import nearly 3 trillion dollars worth of petroleum. At what point do we decide that it is better to invest money in infrastructure that saves fuel, rather than simply burning it up as fuel‽

I am not an artist so I cannot draw my recommended design of a terminal, but it would look a lot like the above image. That image is just a row of toll booths. But if you picture the row of toll booths as the Carrier car, you can see the basic design of the terminal.

The idea is that many cars will simultaneously drive aboard the Carrier. Then a pair a doors will close around the cars and the Carrier will take off. Then a new carrier arrives and the doors open, the cars drive away and a new line of cars loads onto the Carrier. The terminals would not have to be very big. They need not be much bigger than the row of toll booths pictured above.

Such terminals could be placed ubiquitously around a city. With computer controlled traffic flows, it could take literally 5 minutes to commute from one side of downtown Atlanta to the other. Clearly there is more than just energy savings at stake here. Productivity could go way up as well.

List of advantages and disadvantages:


-Supports the existing paradigm popular in America. People want autonomous vehicles rather than to be tethered to an inflexible public transportation system. Now we can have the advantages of both.
-Reduces oil consumption by eliminating 50% of the demand for gasoline and 10% of the demand for diesel fuel.
-The same grid and terminal design can be used for much of our commercial shipping. Because the Carrier charges the batteries, even companies like the UPS could use low-cost PHEVs to ship containers over vast distances. They just wont be able to stray very far from a Carrier.
-Terminals can be built directly at the locations of big box retailers like Walmart. Fully commercial Carriers (the equivalent of semi-trucks) can be built to travel on the same grid, making deliveries directly to Walmart in much the same way that trucks do now. Note: the same Carriers that transport PHEVs around during the day can be used to transport goods at night.
-Highway accidents would be almost completely eliminated, saving hundreds of billions of dollars. Any accidents that do result will result from software errors in the control logic. That means that all accidents would eventually be eliminated as the software is perfected.
-Commuting would be less stressful because all the highway traffic management would be done by computers.
-The rail infrastructure can also act as part of a 21st century direct-current power grid, delivering cheap solar-thermal power from the desert to cities like Atlanta and Houston, with limited transmission line losses.
-Can easily integrate with pedestrian transport. You can have People Carriers and PHEV Carriers operating on the same grid. Perhaps even on the same carrier.
-Emergency vehicles would be able to function much better because they can be given priority on the network. Police and fire stations could have their own private terminals, as would hospitals.
-Easy transition to interstate, intercity, and intracity terminals. Intercity and Interstate Carriers would be built to travel much faster, possibly even over 200 mph, while intracity Carriers would be built for rapid acceleration and deceleration to take you to many different terminals within a single city. If you needed to ride one local Carrier to a central Main Terminal, where you drive off that carrier and onto an Intercity or Interstate carrier, it would not be difficult or overly complicated to do this. In fact, the whole process could even be automated.
-The ability to promote domestic manufacture of goods. This is very important. By providing free electricity for shipping while on the grid, we eliminate or nearly eliminate the impact of high shipping costs for domestically manufactured goods. Imported goods will be more expensive because they were shipped overseas, whereas domestic goods were produced in the US and shipped across the network for free.
-The Carriers can act as part of an extremely high capacity emergency evacuation and wartime supply infrastructure. Millions of people could be evacuated out of a city in a few hours. Troops and weapons can be shipped in. All using the same infrastructure.
-Carriers fitted with a large number of ultracapacitors can act as mobile power units, delivering emergency power to areas that need it. (I am assuming that ultracapacitors will advance significantly over the coming decade.)

-High upfront capital costs
-Vulnerable to the same potential software problems as other computerized networks.

Cost control and funding strategies:
-Implement a tiered priority pricing scheme. If you are rich, and you want to avoid any queues, you can purchase a priority pass.
-Free grid power? The government would be able to decide whether or not to charge users for their electricity use while traveling on the network. They could give everyone a certain amount of free credit, and then start charging if you go over that limit. (Say 1,000 miles per month for example.) Grid power should be free to promote the use of PHEVs. But it could also be based upon income.
-Start with Interstate and Intercity first. Intracity can come later. Just having an Interstate system will allow most PHEVs to make trips like SF to LA, or Chicago to Detroit, relying on the PHEV range to get them to their final destination within each city. Later, intracity terminals can be built to eliminate all but the last mile of travel.