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Friday, February 3, 2017

peak profit part 1


PEAK PROFIT

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Note: part three of the last posted article, “Flee In 30 Days”, will continue after this article series ends.  What can I say?  I got excited about this one.

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A hat tip to a loyal minion for the suggestion for this article idea.  As yet another indicator that the old ways of doing business are over and gone, we now come across Peak Profit.  I was moaning in a decidedly non-provocative manner about how I was completely confused why every swinging cheese dingus shoe manufacturer out there insists that I am only able to purchase either complete crap or ultra expensive two weeks wages footwear ( as opposed to shoes that cost you half a days wages and lasted, literally, ten times longer than the ones costing three times as much today.  The ultra expensive ones are what is needed to equal the cheap ones of yesteryear in longevity.  A fifty dollar pair lasts six months and a $300 pair is, supposedly, going to last you the five years you used to see for $25 ).  I’m still fuming about it, and as you know I’ll pick at the scab of an idea for eons until I decipher the what-how’s and what-for’s.  I don’t promise that this is the last rumination on the subject, however, so kindly refrain from any celebratory excitement. 

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For those of us that spent hundreds or thousands of hours studying Peak Oil, it turns out to be surprisingly disappointing that nothing is turning out how we envisioned.  We aren’t running out of oil, we ran out of high BTU oil.  We aren’t seeing economic contraction through lack of oil, but low prices as a result of both petroleum producer bankruptcies caused by lack of demand and economic failure from the end of high EROEI oil taking down the banking system ( if you want a highly technical and detailed explanation of this, you can read The Druid Dude and the Internet posts that turned into his economics book ).  Products aren’t getting more expensive and decreasing in quality because oil is scarce, but because the first casualty of the Low EROI was employment.  We are seeing a repeat of the Great Depression as far as a consumer economy goes.  The difference this time is that while we lack jobs just as before, we also lack resources, most unlike before.  We used the last of the higher ( not High, just Higher, because oil has been Low and Getting Lower BTU for nearly fifty years.  It finally went to a tripping point ) energy oil to strip mine miniscule ore ( high levels of rock with low levels of ore-as opposed to the opposite since the Agricultural Age started.  Since we used up all the high concentrate ore discoveries we had to burn increasing amounts of oil to get the remaining ore.  As we all know, there are thousands of times the amount of gold on land in sea water.  Since it is so diffuse, it is never going to be economically feasible to extract it.  Apply that observation to most of our ore supply on land now ).

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Just don’t confuse the last Great Depression with this one.  Then, we had most of the worlds gold to confiscate, as well as our own citizens.  We had lakes of oil so vast we had to regulate its release onto the market.  We had food supplies so vast we had to destroy a lot of it to keep prices from going even further below cost of production.  We had abundance of everything ( except population ).  So abundant that we had to fight a global war to destroy most of our surplus.  Not only did we put nearly ten percent of our population in uniform, as well as staff all production centers with women, we supplied all our own needs AND almost all of the Allies ( Russia’s vast surpluses could not easily be tapped with their infrastructure disrupted and we gave those crusty commie bastards a LOT of war material.  We then doubled down on that waste fighting them during the Cold War.  Then they became our buddies because they had the oil they DIDN’T burn in the world war to sell to us as we began running out.  All pointing to the retarded-ness of our leaders ).  We could build THOUSANDS of naval ships and tens of thousands of aircraft.  None of which we can do today.

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Oil caused the first Great Depression from its over abundance, and now after we readjusted our economy to run on that oil, lack of that KIND of oil is causing this Great Depression.  Before, lack of jobs caused by lack of demand caused by over production was remedied by destroying the surplus through war.  Today, we don’t have any kind of surplus.  Just lack of demand caused by lack of jobs, coupled with overcapacity of production.  Just not enough to create employment.  Just because we aren’t using all our oil or ore doesn’t mean we have an abundance of it.  It just means what we have left is unaffordable to those unemployed.  Which is most of us.  But oil/energy is just the root cause.  Now let’s turn to the economic problems that was caused by lower BTU energy, which just causes a perfect storm.  A negative feedback loop.  We have us five basic issues, economically speaking. 

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1) added debt

2) less customers

3) more competition

4) Peak Automation

5) increasing costs

These were all issues that were nullified while the oil supply increased.  A perfect way to easily understand energy and the economy is to watch “Crash Course”.  You can buy the DVD for $8 or watch it free on You-Tube.  It is just a low production, still picture with commentary, but it is simply beautiful in its clarity and simple explanations.  In short, if you create money and charge interest on it, you must have more energy coming in every year to pay the interest which is an increasing cost.  Without that energy, game over.  We are living in the opening to mid phases of that, with the final end of that game coming along very shortly ( by all indicators-just keep in mind only a moron tries to time the collapse.  One almost wonders if Y2K, if not simply a game played to keep the Tech Bubble inflating, wasn’t a False Flag to propagandize us into never panicking early again.  Buys the elite extra time during the real collapse ).   We continue next time with those five economic problems.

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6 comments:

  1. Crash Course is awesome.

    I can't wait to read you get cranky about the size of products getting smaller.

    My favourite YouTube video's on it are about Toilet paper getting smaller and shorter. A guy with a Big Mac in his hand from the 80's (maybe late 70's) and compares it to a Big Mac in his hand today (a lot smaller). Then there's the Cadbury Creme egg where a comedian found one that was in the back of his freezer and it's clearly smaller despite Cadbury saying "They're not getting smaller - you're getting bigger"

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    1. Reduced sizing doesn't chap my ass as much as reduced quality. Its like a self destruct button on a product that you have no way of knowing the timing. You can compare pricing on volume, but not on self-destruction.

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    2. That's an excellent point.

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    3. Too true. Reduced quality AND reduced sizing, add in a lowest bidder contractor doing the important parts of the actual work and you get what we have got. Corporate profits that have exceeded inflation without a significant increase in sales - but consumers having to spend multiples of what they used to, to even approach the lifestyle they used to have.
      I remeber as a teen ager (and I am not 50 yet) my mom would spend <$100 on groceries once a MONTH for a family of four. Now my family of three spends more than that in a WEEK - sure part of it is dietary (no gluten, fresh veggies and fruit, no beef but lots of other meats, etc). And the quality of the food is also lesser.
      Which is, why just like a tobacco or MJ user should, I recommend everyone do what you can to 'grow your own'.
      Think about it, that 1lb. tomato you buy today is going to be lower quality than that 1lb. tomato from 20 yrs ago. How is the quality lower? lower nutrition.
      Lower nutrition means your body continues to crave food, which means you eat more almost empty calories, which makes one fat when working a sedentary job, unless of course one spends hours a day on meaningless 'exercise' - and usually paying for the privilege!
      Machines can now do most grunt labor quicker, cheaper and more energy efficiently than a person can.
      So get your own high quality food (don't bother buying the organic labeled stuff- it is still produced by people looking to make a profit and is not that much significantly more nutritious according to several studies). Pharmacy vitamins can help, but studies have also shown that much in the vitamins don't absorb right as the manufacturing process does not put them together like in high quality food. Fresh Raw Homegrown vegetables, meat, eggs, etc. is where the best nutrients can be found.

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    4. If I was 30 again, I'd find a Southern mountain lot and garden/raise chickens. I'm too damn old now. It isn't lack of energy as I'm in better shape now, but lack of lifespan to appreciate the effort ( I believe we will once again see barely over 60 as the new old age/survival rate, BEFORE collapse ). So, I just stay as healthy as I can and know the lack of home grown will factor in my demise.

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    5. Sprouts. You said you have done them before, keep doing them. It doesn't take much of a garden to supplement your food stuffs significantly, and anyone with a home kept above @67F can grow sprouts (during the winter my place is colder).

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