Well, the oil prices seemed to have settled around $60.40 for the night

Assuming the market is arbiter of all knowledge on the subject, the consensus is that things will get better not worse; oil futures prices peak in about 6 months time and then gradually reduce out to 2011.

On the other hand, I did dig out some research on the accuracy of the futures market in predicting future spot oil prices; the answer being "not very".

The only useful conclusion to draw is that any peak oiler who is willing to put their money where their mouth is can make a financial killing. If they are right, that is!

They can make a financial killing provided the financial system survives the event ...

Roy:
Good point.

___________
I've been coming to the same conclusions after this last week, it appears we are reaching peak oil's onset...

...they can make a killing if they have the capital to play in the commodity futures market. Since that is not an option on my 401k plan, I think I'll stay focused on getting out of debt. ; )

I don't see what's so wrong about the US losing power, if all else were to stay the same. We need to consume less. IMHO whatever pain we feel in a "crash", including however many deaths, is less than we will feel if we destroy our environment. I have grandchildren, whose survival is a lot more important to me than my own.
On the other hand, changes in the global balance(s) of power might result in war; such would certainly be a tempting avenue for politicians striving to gain or retain favor with an angry and totally confused public.
Years ago (early 90's) I watched the transition in my section of my state as a formerly "hot" hi-tech company, where fellow employees bragged about the lengths of their boats, lost its way and many became unemployed and unrich - and people seemed to be better to each other in that harder time. The wealth this country has experienced of late has (I think) a serious downside, which is the growth of oblivious selfishness. The reason is simple: When money is falling from the sky so-to-speak, everyone feels s/he must rush 24x7 to get their share, lest they fall behind. When things are tight, people have time and leisure to share.
Given the possibilities, perhaps balanced, of both extremes - cooperation and anger/confusion - I think what is badly needed now is education of the public about the peak oil issue. It can be presented as a "serious possibility" to bypass pointless debates about whether it's real or imminent etc.. But the public needs to be warned. And too much of the media (e.g. Boston Globe) are apparently not interested.

Iran seems to be the touchstone of declining US power. They are dealing with Pakistan and India on the gas pipeline, continuing toward creating enriched uranium stocks, they just elected a reactionary government, etc. Chalk one up for this member of the "Axis of Evil". Iran is powerful because they have large energy reserves and they are perfectly positioned geographically, smack dab in the middle of south/west Asia. What can the US do about any of this? Nothing.

Looks like the June 2005 nuclear facilities bombing rumor is not going to pan out. Good thing, too. That would be the Oil Shockwave as Roy Smith points out commenting on Energy Conflicts in Asia.

What can be done to turn world public opinion? Another show of strength (Iran?)?

I think it's safe to say that this would NOT help our public image. Besides, unless we have a draft, we can't possibly stay in Iraq and take on another country too (despite what the Powers think).

Anyone have any insight on how the rest of the world views Iran (positive? threatening?) especially after the election there?

ianqui, here's a BBC story on world reaction to the Iranian elections. Look at the difference between the Asian statements and those coming from the West and Israel.

Thanks Dave! Actually, I'm surprised there was as much negativity as there was from Germany. I wonder if France and Italy feel the same way.

Perhaps this should go in the China post, but I'll put here. From the International Herald Tribune today, Appetite for energy fuels China's fears

Shortages of imported oil could threaten China in the event of a conflict with Taiwan. The United States could block shipping in the East China Sea, crippling Chinese trade.

Partly for that reason, China has scrambled to diversify its oil and gas imports and its transportation routes, pursuing oil deals with Russia and Central Asian countries and signing a preliminary $70 billion commitment to buy Iranian oil and natural gas. All of these supplies could be delivered overland if expensive pipelines that Beijing favors are built.

Emphasis added.... and no comment necessary

That was negative ?!? What is your point? That Iran didn't exclude candidates, their nuclear program is peaceful, or that criticism should only be directed at the US?

Jack, I was mostly referring to Germany's fairly strong words about the deficiencies in the voting process. I mean, I'm glad they made that statement, but notice that most others didn't (except the US, Britain, and Israel, predictably).

I didn't say anything about criticizing the US here. This whole comment thread was just a response to Prof Goose's comment about whether a show of force toward Iraq would help the US image in the world. If the gov't thinks that would be a good idea, I suspect they'd find themselves quite alone in the world. Which may not bother them.

On second reading, though, this article doesn't really answer my questions about how other countries view Iran more generally. If I get a chance maybe I'll look into that a little more.

Sorry for the ignorance, but there must be alternative fuels that cost less than $100 a barrel, e.g. biodiesel, ethanol, electricity, etc. Did this "leading German Institute" take this into account?

Ethanol:  Mostly made from corn, which is planted, cultivated and harvested with diesel fuel and petroleum chemicals, and fertilized with nitrate produced from natural gas.  It is distilled with propane (from oil) or more natural gas.  The highest estimates of energy payback are ~1.24:1; some estimates are still negative.

Biodiesel:  Same cultivation and fertilization issues, though the energy cost of conversion to motor fuel appears much smaller.

Both of the above have the handicap that productivity is woefully insufficient to actually satisfy demand; their prices will be bid up to same level as petroleum fuels.

Electricity would be great, except that most of the developed world has ignored electric vehicles; the existing fleet cannot use electricity, nor can any but the hundred thousand-odd Priuses be converted easily and retain much all-around usefulness afterwards.

War with Iran? I vacillate. We clearly don't have the military resources at the moment, but the draft rumors have never gone away. At the moment, the American people won't go for it either. But Media, Inc can change opinions sufficiently on that if it wants to. If you listen carefully to the reporting on the recent election, you can hear that the groundwork for the demonization of the Iranian government has already been laid. A cynic might say that the war-mongerers and oil money were routing for this result because it will furnish a plausible rationale for invasion under the auspices of "freeing" the Iranian people.

The real problem with Iran is that everyone in the world will then see what is up. I don't see how it doesn't lead to at least a limited (perhaps clandestine) world war, with all the other interested parties being in much closer proximity and our much longer supply lines always under attack. (You'll remember from Iraq just how well our civilian and military leaders remember to protect the supply lines.)

I just don't see the rest of the world allowing the US to control that much of the world's oil.

\*/

I don't even think it will be a clandestine world war - I think it will be an economic war which could bring the U.S. to its knees very quickly. If China dumps all its treasury bonds, we will be in a world of hurt, and if nations that are pissed off at us decide to stop trading with us, our material quality of life drops like a stone.

"... clandestine world war..." Would that be equivalent to "The Revolution Won't Be Televised"? Cheney got who is in its last "throes" mixed up. It's the US Empire, not the "insurgency" it fostered. It's entirely possible that the US suffers a socioeconomic breakdown similar to Russia's as our overly dependent lifestyle gets simplified by the outcomes of problems of our own creation.

RE electric cars, the issue at present is that power generation is already limited; we'd either have to build more fossil fuel generation plans (nat gas, coal, oil - check) or nukes.

Trading one problem for others more than likely.

A few million bikes would be a better short term solution.

ianqui - Thanks for the clarification. My stray US comment meant that Germany had been harsher in many references to the US. I see your point and do think it is more notable that others weren't critical. They know where their bread is buttered. It does show that US pressure on Iran's trading partners will be futile.

Regarding attacking Iran, regardless of the merits, it is a huge undertaking. Given Iran's oil reserves, one has to assume a massive (maybe temporary) impact on oil supplies and the world economy. I think this is a big reason that we have so much in the strategic reserve.

Roy Smith: I think this comment is virtually meaningless.

"If China dumps all its treasury bonds, we will be in a world of hurt, and if nations that are pissed off at us decide to stop trading with us, our material quality of life drops like a stone."

China can not "dump" treasury bonds, they need to ask us to pay them back. The first thing that would happen is that they, and the rest of Asia, would suffer a massive capital loss and their exchange rates would go through the roof. That alone would bring depression to Asia and China.

Secondly, the US would most likely just inflate our way out of it. We would print tons of money, and give it to China. This would deflate the dollar. Again, China and Asia would suffer massive capital losses, and wind up with exchange rates that would detroy their economy and that of their neghbors. Then China would be sitting on a pile of cash and have no where to reinvest it. A lot would probably go back to the US at new rates, favorable to us. The world can't absorb that level of currency (which is part of why it is here n the first place).

The US would suffer from this high level of inflation, but would fare better than China and the rest of the world. It may not be just, but printing the world's currency is a powerful asset.

I guess you can say that if China were to commit economic suicide, it would really hurt us, other Asian countries and the world. I think that is more accurate, but less dramatic.

The structural imbalance in the world economiy is caused equally by conditions in the US and in Asia (as well as the rest of the world). I do think there is huge risk in out fiscal position and how it all evenually unwinds will impact all of us. I don't see how the US can maintain this level of consumption/savings balance without long steady productivity and economic growth, but it is not impossible.

China can dump treasury bonds - into the world bond markets. Price of bonds drops dramatically, and interest rates go sky high. Yes, they inflict a lot of damage on themselves while they are busy destroying our economy. I think you are too optimistic to assume that our economy would survive the debacle, though. It's more like mutual assured destruction economically.

The big advantage the Chinese have is that they have the political systems and experience to run a command economy, which is effectively what would have to happen for a while in order to put the pieces back together. In the U.S., transition to a command economy would require something resembling a revolution, or at very least suspension of the Constitution and imposition of martial law.

Jack, One caution—if it's true that China thinks in centuries where we're lucky if we think in fiscal quarters, they may well be willing to suffer a deep and long-lasting depression so long as China sees that it will yield material benefits over the long, long term. Diminishing the ability of the US to project its power in Asia may well pay a better long term dividend than any immediate economic consequences China might suffer. Maybe I'm just being naive, but I certainly don't see how China would see it more advantageous having the US take control of the oil market than participating in a concerted effort to wage at least economic warfare on the American markets.

\*/

The Chinese are using some of those dollars to buy up American companies. Read the Appetite for energy fuels China's fears (IHT, Ny Times) I gave the link to earlier.

Sorry, Jack, I think the US is pretty vulnerable. Did you (or others in this thread) read the Fallows piece Countdown to a Meltdown in this month's The Atlantic? He thinks America's at risk too.

The Chinese government was determined to keep the value of the yuan as low as possible, thus making Chinese exports as attractive as possible.... To this end, Chinese banks sent their extra dollars right back to the US Treasury, in loans to cover the the US budget deficit; if they hadn't, normal market pressures would have driven up the yuan's value. This, in turn, would have made it harder for China to keep creating jobs and easier for American to retain them. But Americans would have had to tax themselves to cover the deficit....

.... The question economists debated was how long this could last.... But by Bush's second term the warning signal were getting louder. "This is starting to resemble a pyramiid scheme," the Financial Times warned early in 2005.

This is Fallows' view, which I generally agree with.

I am happy to see three good replies to my post and to be able to say that I don't fully disagree completely with any of them.

I agree with Roy Smith's categorization of the situation as mutually assured destruction. I had meant to use the term myself, but forgot.

I don't give as much credence to the ideas that China's ability the run a command economy would be enough of a consideration to make them feel any insulation from the impacts of their end of the assured destruction. I feel about the same way about the idea that China thinking long-term would make them willing to take a hit. I very much doubt that the elite of China would be any more willing than our elite to have their privileges and lives taken away knowing that it is for the long-term good. China is more vulnerable than we are to an economic downturn and mobs of unemployed Chinese pouring over the walls of their mansions is an idea that I don’t think is far from the minds of China’s leadership.

I think that in a comparative sense the fact that the debt in denominated in our currency is a factor that differentiates this situation from any other debt relationship in history and does tip the situation in our (relative favor). While this is slim consolation, I think it does give some perspective on the likelihood that China would pull the trigger.

My points should not be construed to mean that I think the debt balance is good. I think it confers two major disadvantages on the US. The first is the risk that the mutual assured destruction pact is not stable and an unintentional series of events pulls down the whole house of cards. The second is that the US does eventually have to pay back the money. For a country, like a company, debt is not a problem as long as it is being put to a use is net productive – ie. it is returning value higher than the cost of the debt. The US does have high productivity, but much of the US expenditure is going to consumption. The US either has to grow our way out of this, or cut consumption in the future, which will be harder with the aging population.

I do intend to read the Fallows piece and appreciate the reminder. I am versed in the critiques of the current policy and sympathetic (ie. in agreement) with much of them. I do not think our deficit is good by any stretch. None of this is meant to support the Bush administration or their profligacy. I agree with the pyramid scheme description to a degree, although I think there is even more to it than currency management (although that is the big one).

My initial point was that it is not as simple as saying China has all the cards or that they could somehow call all the money back and sit around laughing at us. The situation is complex and interrelated. There is a better than zero % likelihood it will all go up in smoke, a better than zero % likelihood it will all work out fine and a whole lot of possibilities between.

From Jack:

The first is the risk that the mutual assured destruction pact is not stable and an unintentional series of events pulls down the whole house of cards.

The Economist, in one of its many articles on the Chinese ownership of American debt, noted that the situation poses a quandary for China, Japan, and other holders of American debt - namely, that pretty much everybody recognizes that the American dollar is in a bubble situation and that they are at a high possibility of large losses when the adjustment happens. Problem is, none of these countries want to try to sell their American debt for fear of triggering the very depreciation of American treasury bonds that they fear. So, a number of central bankers are engaged in a game of chicken which may end in a panic - when one bank heads for the door, everybody else will race to get there first in fear of being the last one holding (relatively worthless) dollars.

Roy Smith,

Yep. Did you notice the panic when Korea mentioned they might diversify their reserves a few months ago. The dollar dropped and the Koreans were told to shut up.

The scenario you describe is exactly how it could all unravel. If anyone thinks the others are getting out first, they will need to get out. Even if they know it will ruin their economy, the first out loses the least. It would be a classc bank run.

But at the end of the day, the US would probably loose the least. We could print money and inflate our way out. I am not saying that this would be good, but it is what we would do. If you think this will happen - borrow money. Spend real dollars now and pay back deflated ones.

Reply to Roy's last comment and Jack's: Yes, the cards can fall lots of ways. When Roy says:

"So, a number of central bankers are engaged in a game of chicken which may end in a panic"

and Jack says

"My initial point was that it is not as simple as saying China has all the cards or that they could somehow call all the money back and sit around laughing at us."

Couldn't agree more. I think that Fallows' (and the economists he implicitly cites) point is the instability of the whole situation, it's not so much that one party (China) will do something outrageous but that a pyramid scheme always collapses at some point. What is the tipping point? I think it will probably be the subject of this website -- Peak Oil and China's ever-expanding search for imports and the inevitable conflict with American interests. I have no idea how this may play out but I'm going to stay tuned.

Jack -- print money and inflate our way out? This would be a total disaster with an already weak dollar. That's exactly what we can not do. Inflation is already a problem with oil over $60/barrel and going up. Housing bubble on the horizon too. Lots of crazy speculation there (interest only loans, shades of 1929). Even less value for the dollar and then, with the exception of the rich, we're all hosed. If that's our best prospect, we are truly screwed.....

So we should all buy gold and other tangible assets as a hedge against runaway inflation?

\*/

Whoa! Let's stop right here and get real.

Daybreak, only the rich can do what you suggest as a hedge against inflation. Most (and I mean about 90%) of people in this country are mortgaged to the hilt with large credit card debt. They have no -- I mean ZERO -- financial leverage. No savings. Could lose their jobs at any time. Last time I looked, wealth inequality was pretty much at an all time high in this country and getting worse all the time.

Economic theory is all well and good but people and the quality of their lives are what count.

Dave,

I'm not saying it is going to be pretty. If tomorrow, China says "We want out 900 billion dollars", there are very few places we are going to get it from. Typically a debtor in our position would have to find the money or default. We have a third choice, print the money.

So of the three options, I think print the money is the only viable one. The US will not default. So unless you know where there is 900 billion dollars lying around (or can think of a fourth option), we've run out of choices.

I am not sayng it is good. I am saying it is our least-worst option. I'll also go as far as to say it is better for us then the capital loss and currency gain will be for Asian bondholders.

A modification on the scenario might be that if China tried to cash in the bonds, we would say hold on a minute, then let everyone else cash out first so that China is the last and lowest claimant.

The reality is much more complicated. The process would start in the secondary markets, which would crash the price. Then the US might print money and start buying some back, which would create some level of temporary equlibrium. I haven't thought it out beyond this.

The impact on the US would be negative, but mixed. Capital holders and importers would be hurt the worst. Debtors and exporters would have some benefits.

Well, of course the rich never have to worry. What's a billion dollars or two to Bill Gates?

Still, even with all the consumer debt, many of the non-rich own retirement funds, and many of those funds can be allocated to gold or invested in foreign markets. Surely if we are indeed on the cusp of significant inflation that would be better than letting those funds remain in US stock funds.

\*/

Jack -

Lets remember that the financial economy ultimately rests on the real economy. The real economy is something like this: China produces goods, and Americans consume them. (Oversimplified, I know, but the point is still there.) The U.S. produces entertainment and financial products. If large scale economic devastation happens, it is a good bet that those financial products will be of very little value.

In the event of massive chaos in the financial world, I would want to be the nation holding the factories that produce stuff - unfortunately, that is China, not the U.S.

Daybreak -
In the worst case scenario, (not necessarily saying it will happen, but not ruling it out, either) the financial and political systems collapse completely, and one's right to property becomes intimately linked with one's right to physically defend it from others. In that instance, even Bill Gates is not immune.

Roy,

It gets hard to discuss this without specific scenarios. Up to the point, serious economic disruptions, I think my description is accurate. I think it presents a real enough scenario that it influences those participating (ie. bondholders). Once you get beyond that (ie. my scenario of US paying other creditors, financial markets collapsing, war), the situation shifts so quickly, all is speculation.

My personal belief is that the debt imbalance adds significant risks to the system, but that the most likely scenarios are some form of a smooth exit. It is clear that China and others feel this way as there has been no real efforts to devlop alternatives and markets don't seem to be pricing in much additional risk.

I do think the international financial system is very robust. We have had two world wars without a financial system collapse. I don't think much has changed. I think war is a more likely outcome than finacial system collapse, and still think both are pretty remote.

I appreciate your comments, I really do but...

Daybreak, those retirement funds -- for those that have them -- are not liquid until they retire and maybe not even then. And most people don't have any such funds to begin with.

And Jack, sure it's not going to be pretty but you're talking secondary markets, capital holders and such, economic theory again, an abstraction to about 90% of Americans living on margins.

To both of you, I'm going to say it again: most Americans are at the cliff's edge right now, any large negative perturbation (significant devaluation of the dollar, even higher energy prices) will push them over it. I'm talking Great Depression II here, no nonsense.

I get a little peeved, as I did with ianqui's post "Make your list and check it twice", based on some horse manure by Dave Pollard, about how we can all adjust our lifestyles to get ready for the crash, e.g. using less energy at home, buy organic et. al. Most people don't have anything resembling those options. I know I don't. Ianqui, if you're reading, don't take this personally -- but most Americans are struggling and this reads like a manual "100 ways to save the Earth from Global Warming" by running your dishwasher less often or some nonsense like that.

This is the Peak Oil site, if we can't deal with reality here, where can we do it?

I think Dave is even more pessimistic than I am.

Jack, I don't think the financial system is as robust as you give it credit for. During the two world wars, the financial system was (more or less) still using the gold standard, and was more reflective of the underlying real economy than it is now. I think historically the closest we have come to financial system collapse was the crash of 1929 and the great depression, and that was not accompanied by a general war. This is also probably closer to the situation we are in now, and a number of people have alluded to how the financial economy is becoming disconnected from the real economy in ways reminiscent of 1929.

More fundamentally, the underlying assumption of the industrial economy did not change during the world wars - namely, more or less continual growth fed by increasing consumption of commodities, especially oil. I think that since one of those fundamental assumptions (increasing consumption of oil) is now in question, all bets are off regarding stability of the financial system.

Finally, we don't get smooth exits even in ordinary recessions (which I don't think this will be) - at least not at the level where it matters to me and most ordinary citizens. Deep recessions are not much fun for anybody and are very disruptive to those who lose their jobs.

Hah! "I think Dave is even more pessimistic than I am."

No, Roy -- LOL, we're on the same page. "Deep recession" = "Depression"

Not much fun for anybody.... Have a good one,

Well, I think it is safe to say that you are both more pessimistic than I am. I hope that doesn't wind up meaning realistic or right, but I don't discount the possibility.

I know that if you believe the Hubbard's Curve is right and the peak is today, then the downturn has to be soon and severe. But a few devations from this precision could make a lot of difference.

My guess is that we are bumping up against the end of oil production growth and doubt we will ever see 90 mbd. But I think production may ease up for the next year or two, then flatten out before falling. I think the price levels that now exist will also creap up, gradually suppressing demand and encouraging alternatives. I do think that there is a lot of luxury oil use and think we can shave demand without economic collapse.

I don't argue with Roy's logic, however. I think you present a possible scenario. The difference, I think, is that we assign it different weights. I hope I am right. I will confess to being a hopeless optimist and think all of our beliefs here are influenced as much by our basic charactor as the few facts we are able to piece together.

*

In the end all we have is the evidence, the rest is but a dreamer resting on the fantasies of others:

Jack said:
My guess is that we are bumping up against the end of oil production growth and doubt we will ever see 90 mbd.

Evidence or experience that allows you to make this assumption??? (economic theory is not anh answer)

Jack said:
But I think production may ease up for the next year or two, then flatten out before falling. "

Evidence or experience that allows you to make this assumption??? (economic theory is not anh answer)

Jack said:
"I think the price levels that now exist will also creap up, gradually suppressing demand and encouraging alternatives. I do think that there is a lot of luxury oil use and think we can shave demand without economic collapse. "

Evidence or experience that allows you to make this assumption??? (economic theory is not anh answer)

You may also want to read Ran Prieur's "The Slow Crash" and William Kötke's "The Final Empire."

Dave, no offense taken. And I think you're totally right. Most Americans definitely cannot afford to think about buying organic or cutting back on driving, because they're just struggling to make ends meet.

But I don't think that's a reason to get peeved. Those people aren't the extremely wasteful ones who contribute to our 25% usage of the world's energy resources. Lists like Dave Pollard's are for the people who are relatively well off, who can afford to think about changing their habits. And just because 50+% of the country won't be able to change their habits, it doesn't mean that the other 50% should blow it off. The latter 50% IS the problem.

And there's the selfish aspect of it too--if you're able to wean yourself off of high energy resources just a little bit, you (personally) might be better off later. Sorry if we shouldn't be touching on the selfish angle, but again, just because a lot of people can't be prepared doesn't mean individual people shouldn't try to do their best.

I struggle with the inequality issues too. I had a whole post about how I feel guilty buying organic food, because I can afford the luxury of doing so. But I've more or less come to terms with it now, since the benefits of buying organic extend beyond myself. But I would never, ever criticize someone who couldn't afford it.

One last thought, Dave. If most Americans can't take the small steps to try and prepare now, what's their future? Starvation and homelessness, because there's absolutely nothing that can be done?

ianqui, you just put your finger on the reason why I'm so upset about the refusal of our various governments (state and Federal) to do the right thing when we had time to prepare and money to pay for it.

One thing is for certain:  the pickup and SUV segments are going to tank, and cars like the Focus are going to become very popular.  People will buy CF lights where they'll fit, put heat-shrink film on their windows, and think about saving (or taking out an equity loan) for better insulation.  People will move closer to work, or take jobs closer to home.

GE's wind power division will become wildly profitable; sales of locomotives will soar as freight moves from road to rail.  Companies like Commuter Cars will grow like crazy.

It's going to hurt.  Maybe lots of people will move in with friends to save money; it'll be the end of the housing boom.  But starvation... I think not.

I get a little peeved, as I did with ianqui's post "Make your list and check it twice", based on some horse manure by Dave Pollard, about how we can all adjust our lifestyles to get ready for the crash, e.g. using less energy at home, buy organic et. al. Most people don't have anything resembling those options.

In part, I disagree. I do agree that simplistic options without a serious sales job by "leaders" - people, politicians, etc - aren't very helpful, if only because 1/10 of 1% is even aware that peak oil may actually be an issue in their life time.

But where I disagree is regarding options. People have options and make choices all the time. No one put a gun to someones head to buy a gas guzzling SUV. No one forced big chunks of the population to load up on credit card debt and mortgages. No one forces us all to eat more than we should and to support agriculture and animal husbandry techniques that a) use a ton of energy and b) (I suspect strongly) will in the end be shown to be part of our down fall.

Closer to home - I'm shocked at how many mothers drive their kids to school; ours is a K to Grade 3 school, most folks live pretty close. When our kids started there, very few were walked to school. Zero rode bikes (trail a bikes, trailers, what have you).

What kind of an imprint do we put on kids when we drive them 5 or 8 blocks to school?

We all make choices, every single day, in terms of where we shop and what we shop for. What percentage of the population is caught up in the "spend like there's no tomorrow" cycle? Judging by the continued resilience of consumers (I'm a market analyst) clearly its a big hunk of the population!

Another choice, one not made by most, is self-education. Our media is pathetic. Again I'll take a leap and assume (think I'm on safe ground here) that more people than not get the bulk of their "news" in the 5 minutes between whatever the latest shoot out was and the pretty weather girl.

An informed public is what is needed.

We don't have that, not by a long shot.

(sorry for the preachy tone, not intended)

I know this thread is a bit long in the tooth, but maybe someone will read this !

The expression "inflate our way out" is particularly apt. I actually refer to this path in my economics essays as the IWO (inflationary way out) alternative.

A basic point in that inflation is heaven for the debtors, hell for the creditors. Just look at who is in each side.
Debtors: most americans, the US government, US corporations
Creditors: all bondholders. And half of all US bonds are in the hands of Asians (Japan, China, etc.), who do not vote.
My view is that there will be reckless printing of money.

And in the event of massive chaos in the financial world, I would want to be in a nation that currently has either a food surplus or an energy surplus, or best both. The US has one, China neither.

ST