Yesterday I watched a short web video that blew me away: Global Financial System: On Life Support. Then I watched it again, and again… It is only 12 minutes long. The crux of the presentation was not only that the global financial system is on life support but also that the financial system is dependent on energy flows into the economy and energy flows are dependent on a healthy financial system. That is they are co-dependent upon each other.
About two centuries ago, a new financial system was required:
To concentrate and direct the vast amounts of capital needed to exploit fossil fuel resources.
To fund the exponential growth that these energy resources facilitated.
The crux is a vast amount of capital is needed to fund the fossil fuel industry and…
Vast amounts of fossil fuels are needed to feed economic growth of the economy.
Economic growth is driven by cheap fossil fuel, primarily cheap crude oil. If the price gets too high the economy suffers. Less oil is consumed at this price so the price collapses. When the price collapses a production decline inevitably follows. And when the price rises again, a production increase will follow… if there is more oil to produce at that price.
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