Peak Oil, Peak Credit and Investments - "So What the Hell Does One Do"?

(*Note: This posting was delayed due to the discovery that the mushrooms in the woods adjoining my parents cottage were black trumpets. 4 hours, 5 lbs of mushrooms, and some soaking wet clothes later, here, on my 4 year anniversary of being a member of this website, is tonight's Campfire...;-)

A common theme in conversations of the peak oil/limits to growth aware is 'What do I do'? Just slightly less common is 'What do I do with my money?' The biggest difficulty in contemplating/deciding/acting towards a new paradigm is one does this while the old paradigm is still going strong, if only on the surface and the media. In a temporary departure from usual Campfire topics, tonight's discussion will revolve around the concept of investments, and the coming transition from the old finance based rules into new undefined territory.

The Four (non-financial) Capitals -Natural, Social, Human, and Built - (description)

I got this email yesterday:

To:Nate Hagens
Subject: So What the Hell Does One Do?
Date: Aug 27, 2009


I read your work in various venues and appreciate the thought that goes in it. I have been peak oil aware for too many years, made some money, kept it and yet was too early. What the hell does one do now? Specifically:

Any thoughts on farmland? Farm income is going down, but I am looking at buying a good chunk - the offer is on my desk and as I am a broker I can buy it at wholesale - but will the odds of the land going down in monetary value be greater than the odds of it going up?

I see the worst case scenario that I lose half my invested wealth in farmland, I see the best case scenario that I lose half my wealth invested in farmland and keep the rest at break-even.

Yeah, free advice is what it's worth I guess. But it is becoming exhausting trying to win this game. And, if truth be known, I really don't want to go live on a farm, sit on metaphorical beans, bullets, and band aids; but as a retired doctor doing public medicine I also see a huge part of our society that just won't be able to cope post peak - and part of that society is the doctors in private practice.

Damn, I did everything right for retirement, actually made it there and now this little inconvenience of peak oil comes along...

(Name and some words changed/deleted to protect anonymity

I rarely give investment advice, except to my closest friends and family. Clearly there are logical market neutral themes that should prove advantageous over time to those who primarily care about such goals. For example, long the low cost, low externality energy companies vs. short the companies making non-essential goods, long the companies that focus on top 10% of social demographic vs short companies that rely on general consumer, etc. However, other than needing to really understand someones objectives on risk, return, time frame, etc., I have stopped giving investment advice for other reasons.

Firstly, I increasingly believe that a) the tertiary wealth markers (stocks, bonds, derivatives, etc.) have decoupled so fantastically from primary (energy, forests, materials, metals) and secondary (gasoline, lumber, tractors, blankets) wealth and b) the tertiary wealth markers due to excessive credit/debt/leverage are becoming more and more correlated to eachother, evidencing massive systemic risk and c) the receding tide of cheap energy, cheap credit, and available leverage will leave behind a social stratification so extreme that governments will increasingly have to change the rules of the game -on the fly- to appease the various disenfranchised. In other words, following fundamental macro based analysis will be increasingly akin to betting on a match of Jai Alai. (You can bet on Jai Alai but its 50/50 whether you are choosing the side rigged to win). I suspect the standard portfolio manager model of 'dollar average on dips', 'stocks return 10% on average over the long run', 'some new technology will cause DJIA to be at 30,000 in 10 years', etc. is finished, though a majority of the players don't yet realize it. (the concept of differentiating primary, secondary and tertiary wealth was detailed in E.F.Schumachers Small is Beautiful, but has origins as far back as Frederick Soddy's Wealth, Virtual Wealth, and Debt", in 1926. It remains a central tenet of Ecological Economics)

My second reason is more personal - the whole investment business is becoming a bit obscene, irrespective of whether one wins or loses, and I have decided (for myself) I've spent too much of my finite life on something with little lasting meaning. I suppose dealing with 80+ year old billionaires who never spent a penny but screamed at me when their $5 million monthly Treasury coupons didn't transfer to their banks on time gave me an early clue.

As such, let me approach this readers question from a different angle....

Why do we invest?

Wealth - any income that is at least one hundred dollars more a year than the income of one's wife's sister's husband.
H. L. Mencken

We are genetically wired to respond to cultural cues to move up the mating ladder, as opposed to down. Theories of sexual selection, relative fitness, etc. are robust in the animal kingdom and humans differ only in their expression of what constitutes successful competition during different socio-economic eras. Our culture currently measures status many different ways - respect, reputation, intelligence, publication, accomplishment, notoriety, etc.

However, pecuniary wealth has, at least in the last two hundred or so years, functioned as a shortcut for moving up the social status ladder. In short, investing in financial assets has been one avenue open to jumping up a few notches on the social status ladder, not to mention the other fun and novel experiences it enables. Once obtained, paper assets widens the spigot of neurotransmitter cocktails matching the sensations our ancestors experienced as they themselves became successful at opportunities involving acquiring resources, mating and reproducing. In sum, making money is promoted by our culture, and it feels good. Losing money, or having no money versus our conspecifics, (especially if we used to), feels bad...;-)

Why do we care about risk and diversification?

Our aversion to risk has evolutionary origins:

Kacelnik A, Bateson M 1996. Risky Theories - The Effects of Variance on Foraging Decisions
American Zoologist 36 (4): 402-434. Here's the abstract:

This paper concerns the response of foraging animals to variability in rate of gain, or risk. Both the empirical and theoretical literatures relevant to this issue are reviewed. The methodology and results from fifty-nine studies in which animals are required to choose between foraging options differing in the variances in the rate of gain available are tabulated, We found that when risk is generated by variability in the amount of reward, animals are most frequently risk-averse and sometimes indifferent to risk, although in some studies preference depends on energy budget. In contrast, when variability is in delay to reward, animals are universally risk-prone. A range of functional, descriptive and mechanistic accounts for these findings is described, none of which alone is capable of accommodating all aspects of the data. Risk-sensitive foraging theory provides the only currently available explanation for why energy budget should affect preference.

In essence we prefer the highest return per unit time, adjusted by its risk (measured in financial assets by standard deviation).

Basically, in the above graphic, we will prefer opportunities, (ceteris paribus) that move right to left (less risk) and move bottom to top (more reward). (In animals, 'reward' is measured primarily by calories (energy). However in humans, the only species to (significantly) use exosomatic energy (the average american consumes almost 240,000 calories daily - only about 3,000 via food -the rest on transportation, entertainment, waste, etc. (1). It is our desires, our infrastructure, our marketing, and our social cues that dictate the exogenous (out of body) energy 'needs'.)

Let's take a look at boilerplate business school finance - the Capital Asset Pricing Model and Efficient Frontier -the foundations of asset allocation and investing.

Capital Asset Pricing Model and Efficient Frontier

In the above graphic, imagine hundreds or even thousands of points below the blue line as investable (financial) assets. The green dot represents Treasury bills - a smallish return, but zero risk. To get a higher return, we must move from left to right on the graph, taking on incrementally higher risk. An investor will always prefer Asset A to Asset B, because for the same return, A has less risk. Similarly, an investor will always prefer Asset D over Asset C as for the same risk, D has a higher return.

The risk of a portfolio includes systematic risk, (considered undiversifiable), and unsystematic risk (or diversifiable risk). Systematic risk refers to the risk common to all risky securities - i.e. market risk. Unsystematic risk is the risk associated with individual assets and can be reduced by including a greater number of assets in a portfolio. The CAPM assumes that the risk-return profile of a portfolio can be optimized -i.e. the lowest possible amount of risk for the chosen level of return. This occurs by adding uncorrelated assets into a portfolio. All such optimal portfolios, i.e., one for each level of return, make up what is called the efficient frontier (shown in red). A rational investor should not take on any diversifiable risk, as only non-diversifiable risks are rewarded.

Other than some statistics and top notch job interviews, you just saved 80k in tuition for MBA school...;-)

Peak Oil CAPM

The problem of exponential growth against a finite resource base has manifested in an orgy of tertiary marker wealth creation (and in so doing, sending a false signal through the socio-economic system that energy supply was being increased on its own merits). We don't really know how far removed 2,000 trillion of claims on 55 trillion of global GDP, itself heavily financially skewed, is from the reality of primary (natural resource) wealth (2). I suspect it is greater than an order of magnitude, but it might be less, if there is a high degree of notional offsettables. But derivatives and other contracts notwithstanding, we have north of $200 trillion of money as debt circulating worldwide, all in need of servicing. At some point, and I will argue in upcoming analyses, this point is now, the debt becomes unserviceable. In other words, what we think of as wealth, at least many of us, and much of it, is not. The interesting aspect is that although the debt will never be able to be serviced, the perception that it will be serviced is still with us.

The Capital Asset Pricing Model taught in business schools is predicated on the assumption that treasury bills (the risk free asset) are, by definition, not correlated with any other asset, and, by definition 'risk free'. It is quite likely that the perception of these assumptions, or possibly the assumptions themselves, end up being proven false in coming years. I drew the 'Peak Oil' CAPM to illustrate lower expected return, and higher expected risk across the board for tertiary marker assets.

Ronald Inglehart of the World Values Survey verbalized the above graph by stating that after meeting basic needs, lifestyle choices make up the majority of the difference in the GNP spectrum, and lower energy lifestyles do just about as well as high energy lifestyles (indeed, the USA uses 38 times the primary energy of the Phillipines but gets equivalent rankings of 'very happy' - any of you that have lived or worked abroad will intuit this).

A Future Interpretation of the Capital Asset Pricing Model, incoporating Natural Capital,

As such the Capital Asset Pricing Model, the foundation of modern finance, can only remain a valid model if it is reapplied with wider non-financial boundaries: substituting natural, built, human and social capital for the tertiary financial markers of stocks, bonds, commodities, and cash. The risk free rate in such a model would be 'basic needs' (food, water, shelter, companionship, meaning, etc.)

Above this level (*which I marked in yellow because it is NOT risk free in reality, but still could be acquired with little risk to an individual), one would gradually increase their risk adjusted return (in an evolutionary sense), by having a well diversified portfolio during their life made up of reasonably equal proportions of built, human/social, and natural capital, only then supplemented by financial. As a social species that implicitly values rank, we will never all be equal, and our makeup virtually guarantees we will continue to compete for status. But channeling our penchant for competition towards the human and social capital areas will be better for us and better for our planet than competing for natural or built capital (3). Still, we will need those things as a foundation for our basic needs, and a springboard for higher pursuits. The main takeaway here is not a formal model but for folks to think beyond digits/finance in measuring their own, and our planets 'wealth'.

The Four (non-financial) Capitals (description)

There is going to be an upheaval in our social structure in the intermediate (and possibly near) term future. It will not entirely invert, as many of those near the top got there due to skill, smarts and ambition, and if the rules change, they will quickly adapt, and these attributes will in relatively quick order reshuffle them to the top. The point however, is that post peak oil/credit, piles of financial wealth may not represent the free pass to the upper social crust they have the past few generations:

a) there is a non-zero possibility of a debt jubilee, new currency, or financial reset where fortunes could literally disappear overnight,

b) in a world that eventually must move away from increased specialization, globalization, and efficiency, and more towards local/regional scale, redundancy, and resiliency, the forward thinking human will need to diversify beyond financial assets, and into a portfolio of real capital.

It stands to reason the more uncertain the future becomes, the more one will need uncorrelated assets for proper diversification. Financial capital in reality has always just been one part of an individuals broader asset allocation - this fact is just likely to be more publicly intuited even if the financial academy doesn't acknowledge their methods measuring risk and wealth are broken. Individuals, neighborhoods, cities, regions, and countries that recognize this trend earlier will likely have advantages. After all, we are animals seeking the best perceived risk adjusted reward. On that, the safest advice I can give Pat, or anyone how to increase their wealth is an idea borrowed from Buddhist philosophy - reduce the denominator in the equation Wealth = Assets/Desires. This is possibly the only strategy that will increase ones wealth in virtually all future scenarios.

Lastly, however, our perception of wealth utilizes neural reward pathways linked with wanting, not having. Therefore, irrespective of how we change our cultural definition of wealth, as individuals we will still 'want' more of whatever wealth is than our conspecifics. Only when some unknown majority of people realize their own wealth will suffer if we continue to compete for finite resources, will the Tragedy of the Commons problem start to resolve. Barring such a cultural transformation, we'll continue in a series of socio-economic boom-busts where the striving for the upper levels draws down our collective primary wealth. That's a lot of risk for a species.


1) How many of you experience similar feelings with respect to investments as Pat does?
2) Will monetary wealth hold its value to the next generation?
3) How can people that understand the implications above most effectively move more towards a portfolio of natural, social, built and human capital when we all still live in a culture that sends strong cues favoring financial (marker) capital?
4) Will we ever get social/media cues that frown upon excessive financial wealth, but instead laud men and women with skills, knowledge and generosity? If so, would you give up/allocate some of your money to increase your standing in these other areas?
5) Natural capital, other than land with water, trees, soil etc. can't be directly 'owned' other than by all of us. How would a change in values towards real capital accelerate awareness of the public commons?
6) Other.


(1) In 2004, Americans consumed about 342,700,000 [3.4e8] Btu per capita, per year. [ ] This converts to about 86,358,951 [8.6e7 nutritional] calories per year [ ] or 86,358,951 / 365 = 236,599 [2.37e5 nutritional] calories per day. But humans only require something like 3,000 [nutritional] calories [of food energy] per day to survive, so it seems we (very roughly) use something like 235,000 [2.35e5 nutritional] calories per day, per capita for non-nutritional purposes. (Hat tip TOD reader Jay)

(2) The value of natural capital, 12 years ago, was estimated at $33 trillion per year (not valued by the market).

(3) The value of built capital can be estimated/aggregated via an emergy database. A Primer on Emergy Analysis from the EPA.

OMG!!! Black trumpets! Sooo jealous!

These are the first ones I've found in my life, so if you are a shroom forager you can understand why it took me a while to complete this essay. Its pouring here and I left hundreds if not a thousand yet to pick- I have been told they are delicious - will get up bright and early, make sure there are no trolls on this thread, and head to the woods to enjoy a Sunday morning of natural and human capital...;-)

I feel like I 'm in as good a spot as the world has to offer-but no Black Trumpets!!

I do find a few morels every spring though.

Off topic but the current issue of the Atlantic has the best by far article I 've seen on the health care issue.

LOTS of depth,as usual with the Atlantic.

Yes, freaking delicious. There is a reason they call it the "horn of plenty".

You say "I left hundreds if not a thousand yet to pick"

In the interests of you (& possibly others who might have found this treasur) having black trumpets in the future, I assume you do not intend to pick them all? If you can't control your mushroom eating (understandable!), at least ensure that the spores are left in place (e.g. collect in a perforated vessel or just give them a good shake). I'm sure you (Nate) know all this stuff but some might not have thought about it.

I hope others don't find this thread a distraction - while all 6.7 billion of us can't go foraging in our local woods, those who can should do so (sustainably, of course!).

1)Not me
2)Seriously doubt it. Really hope not, as I have virtually none.
3)We can only find like-mindeds. Thats reaallly hard.
4)By the time such social cues are going around, there probably wont be a "media" to send cues anymore. I would give up all of my financial wealth for some of that. Not that I have much to begin with...

Nate: One thing I think was overlooked or downplayed which is of primary importance is youth and vitality. Each of us would assign a different monetary value to being the world's healthiest, strongest, most vital 75 year old (as opposed to being the normal sickly, frail 75 year old) but IMO this is an asset devalued by younger persons. Often I have heard older persons with big money say they were happier when they had no money e.g. in college. What they are missing is that the happiness came from the youth and vigor and money can't take its place, any more than money can take the place of food or water. My piece of free advice, which is worth what the reader is paying for it, is simply DON'T GET OLD-EVER. None of the rest of it is the same if you are old.

Well, I didn't have time to detail the various aspects of the different capitals which is why I showed the graph and link. Absolutely - health is a major aspect of human capital, as shown in the pyramid.

When I was a high net worth broker I had a 70 year old client who had yachts and about $100 million - I was 26 - he said he would trade every penny to switch places with me. I thought about it and even given my pecuniary goals at that time, I agreed with him - youth is precious, though most in their youth don't realize it.

As a practical matter, substituting some % of ones time pursuing more money for getting healthier is probably a very good investment.

re 70 year olds with yachts and $100 million: I recommend Tim Ferriss' concept of mini-retirements while you're young. See

I think a lot of people will be doing that, voluntarily or not. Via unemployment, furloughs, etc.

I took Tim's suggestion to heart and have been on a mini-retirement for 2 years, but now that I am trying to re-enter the job market things are much tighter than I had expected. Still, no regrets. Two years lived well can never be replaced.

Agree that health is important. But young people can be unhealthy, too, and increasingly are, due to obesity, diabetes, etc. (Might be worth moving out of the suburbs for that reason alone, never mind the end of suburbia.)

What they are missing is that the happiness came from the youth and vigor and money can't take its place, any more than money can take the place of food or water.

I don't think that's true. Rather, I think that's nostalgia - the tendency to remember the good and forget the bad. (If not for this tendency, no woman would ever have more than one kid. ;-) If you ask people how happy they are when they actually are that age (rather than remembering it later), you get a "u" shape: people tend to be happiest when they're young and when they're old, with the point of greatest unhappiness at about age 45. 70-year-olds are just as happy as young adults.

What I found most interesting about that study was that it was cross-cultural. The same pattern was found in 80 countries. I thought it might be different in countries where age is valued. (China, for example, where people can't wait until they're 40, because that's the age people start to respect them.)

Oh the bitter irony that I read this while laying in a hospital bed with multiple pulmonary artery clots and two others in my left leg ready to mobilize.

Assets pale in comparison to health IMO.

Hi barrett, Hope it all works out OK and you get back on your feet. - Ian

Thanks, home resting comfortably now. Its been unnerving.

But I have often heard older people saying they are much happier than they were when they were younger. In fact, that's a generally accepted psychological truth - that maturity, in the full sense of the word, makes for greater happiness. It's either the 50s or the 60s that are supposed to be the happiest decade. I am much happier (and a little healthier) than I was when I was younger. And yes, not being broke has something to do with it. It was stressful having to have the grocery clerk check how much I had spent to make sure I had enough money. Youth has many minuses - lack of self-knowledge, lack of experience (a great time-saver!), worry about peers' opinons, lack of options. It's great having perspective, and not caring about whether I have the most approved gadgets or belongings!

Yes, there have been many studies showing that people get happier as they age. Gail Sheehy said the 50s were a very happy time for people, because that's the "no more BS" age.

According to this recent study:

A Pew Research Center study found that the happiest men are ages 60 to 69, while the least happy are ages 20 to 29.

With the exception of those with age-dementia, mental health tends to improve as people get older, researchers said at the APA meeting.

Will this change due to peak oil? Possibly. But I suspect it will have less impact than you think. External events - winning the lottery, getting married, getting divorced, suffering a permanent disability - have short-term impacts on happiness, but in the long-term, people return to their norms. The fact that the age-happiness correlation appears to be cross-cultural suggests that it may be innate - something that's hard-wired into us.

Leanan, random-data-points like this from out in left field are truly wonderful. Thank you.

As the saying goes: "If youth knew, if age could".

Sad people tend not to live to their 50s/60s. Schubert, Beethoven, Mendelssohn, Schumann, Wolff, Warlock, for instance came to sad premature ends. (In Beethoven's case due to his most advanced works being rejected as mad; ditto Schumann's violin concerto.)

Peak Oil Advice from German Poets

thanks - I hadn't read that - Greer is clearer writer than myself -I get too nerdy - his 3 recommendations of Learn One Thing, Save One Thing and Give Up One Thing, parse all this '4 capitals' and CAPM stuff neatly into human terms.

I especially agree with him on the 'giving up things' part, which is in effect improving human capital - we are highly habituated not only to freedom, fun, novelty and the everyday stimulation options of a rich and mobile culture, but because of that we have gotten less physically and mentally flexible. Giving up some activities/ routine purchases that we internally recognize as crap is probably a great investment.

I would really like to see what you could write about peak oil & relationships specifically couples !
If you have time, thanks, if not thanks !
Keep up the good job !

I doubt I could offer much insight on that topic.

Off top of head, for stronger relationship I would recommend either both 1/2s of the couple read TOD, or neither...;-)

Ummmm... it's too late for some of us...

Maybe it's an issue after all, I'm curios what results will have a poll asking these questions:

Did you lost your partner since you have peak oil on your mind?
Do you think the response to this predicament is the main cause of the break-up ?

I didn't but my wife and son and a few other members of my family thought I needed to see a doctor, because they assumed I had a bad case of depression.
I'm pretty sure I was not depressed but as I was telling them all sorts of doom and gloom predictions and spending too much time reading and on the net researching, it seemed to reinforce their diagnosis of my behaviour.

I think I have safely entered the acceptance stage, I've made as much open preparation as I can for my family, without them having me committed. Just hoping its a slow decline and manageable with what I've done.

I just do a little here and there, little steps so they just humor me. No big changes any more or it would tip them over the edge.
Gees it's hard for people to understand their standard of living is going all to hell. I wish I could get them to practice being hungry and going without, not only for food, but nice things and nice food, being as warm or cool as you would like to be, to be fashionably clothed.

No wonder they thought I was depressed, they may still do but keep quiet about it.

As for myself I lost my 3 year relationship last year, I guess we were not so well bound toghether.

That Greer piece is one of my favorites.

I wish he'd picked a different title, though. It doesn't really give you any idea of what's in it, and I think a lot of people who would be really interested just click on by, because of the uninformative title.

On the other hand, it sucked me right in where a more informative title might not have.

That Greer piece is one of my favorites.

Strange--I thought it a very poor article myself. The first four paragraphs don't get round to actually telling me anything.

Then he elaborates five prefatory "points" (presented as Revelations From On High rather than given any reasoned basis). The first, that we are not in a historically unique situation, is simply utterly wrong, because: (1) this is the all-time peak of (useability of) energy here, the very hinge of history; and (2) never before has there been any society remotely as complex, globalised, planetarily-overshot and desperately de-skilled.

His second revelation "point" ("None of us are going to wake up one morning a few weeks, or months, or years from now and find ourselves living in the Dark Ages, much less the Stone Age.") is also unsound. I and others have argued good reasons to expect a sudden collapse to pre-Stone-Age as very likely, as per my own presentation at

His third revelation, that the future is going to be hard, I had already concluded. Ditto his fourth revelation, that some mitigation can be carried out (at low level), though I think he seriously underestimates the odds people are up against (due to his above fallacies).

Re his fifth revelation, that "we can only guess at many details of the future", I have to say: speak for yourself mate. There's much we can't foresee, but still much we can. Given a high odds that the developed world is going to find itself up the creek without even a hand-paddle let alone a motorised one, I have concluded it is wise to prepare along the lines of energyarks as per

At paragraph 12 he at last gets round to his actual advice, which is rather sloganish. "Learn one thing" makes sense in his slow collapse. But in an energyarks situation we need to know a whole lot of traditional things such as what plants are poisonous or healthgiving. What Black Trumpets look like. Greer's "one thing" person would soon sink into the bin of history.

"Give up one thing". Baahh. More like be prepared to give up just about everything if the cliché hits the fan (or even comes close).

"Save one thing". Baahh again. Save as many things as we can but we could be lucky to save anything if we don't anyway have all our basic life-support means in place (which as other pages here show can be daunting enough to arrange).

I think JMG's writing is greatly over-rated; there are much better-judged articles on this site, particularly those of Gail (albeit less original-thinking perhaps).

Another well-done post by Nate, whose quick knock-off campfires are often better than the summarized life's work of your average "expert".

I rather think that trying to actually predict the way the intersection of fiscal/physical emergent effects plays out, is a way to make oneself nuts. The rules themselves will change randomly as governments beg delusional experts for "fixes". There are enormous degrees of freedom in how in all falls out.

My own take on it is a bit odd, I'll admit, but for decades I've taken any money not necessary for basic survival and "invested" in things like preventing the destruction of species and ecosystems, and my wife and I continue to. We have no kids - having seen this all coming - and it's a sure thing we won't survive more than another 20-30 years anyhow. So we're able to invest in the "low-hanging fruit" of "impossible missions" that others ignore and get a lot of bang for our buck. After basic needs are met, wealth is a state of mind, and I can highly recommend "intangible wealth" of this sort. (Although to be frank, don't do it expecting society to value you for your skills, knowledge and generosity. Society will think you're weird.)

Of course, this only pushes the question back one logical step, since if my wife and I could drastically multiply our nickles and dimes, we could do more stuff. So it's fascinating to play with, and I have done, seeing balances veering crazily up and down. Not planning to spend it on ourselves either way lends a certain detachment which may or may not be a good thing.

I'm currently of the opinion that we're likely to see some sort of further deflationary event kick in within the coming year and last X years based upon how much funny money is created, and how many basic rules changed, in response to it, followed by some combination of hyperinflation and/or moving to a new US currency. It may be those who keep their options open who do best.

Then again, it won't affect me much personally; since any way things go I'll be keeping my eyes on that 1000-years-in-the-future target. There will be a good deal of chaos to surf, I'm thinkin'.

I'm not philosophically into any particular humans surviving, but for those who are, it might be interesting to set about looking at the sorts of "superorganisms" we may be able to collapse into, new kinds of human groupings. Actual symbiosis between those who currently have a lot of paper wealth, and those who have skills and knowledge, might create pretty survivable situations. (if they act before "notional" becomes "worthless") I wonder in what form contract law will survive, and what sorts of agreements might be set up in advance. Because once the current infrastructure weakens, the superorganisms like organized crime, organized religions, street gangs, etc will start pulling together more. A good thing to do with notional wealth now might be to create designer superorganisms with fitness in many dimensions.

But again, after seeing to modest personal resilience, I'd suggest leveraging notional wealth to help the future of earthlife. We're at war with that future earthlife, including trillions of humans who could have lived in a non-screwed-up future but are at this moment, NOW, being probabilistically massacred in their tens of billions.

Knowing how to be happy and respect oneself - without much money - is probably pretty good psychological prep for whatever stuff happens. And stuff WILL happen. I'd suggest that being engaged with the future is a good way of living with the present, however weird it gets.

I have earned enough money from time to time that I could have become a card carrying member of the middle class simply by keeping my nose to the grindstone.

But I made the decision that time,being the ultimately most limiting aspect of life ,is more important than money.

This entailed of course makeing other decisions in respect to status and lifestyle not ultimately agreeable to most people,but I have been reasonably well satisfied to be the only frog in a very small pond.

Nearly everybody spends thier life on a chain better calibrated by time than distance,and most of us in the US have been content to remain chained to the desk or the machine in exchange for rather paltry and shabby rewards having more in common with an amusement park prize than reality,the only real difference being that while the amusementpark teddy bear might look pretty good for a year,assuming no one actually touches it,the shiny new automobile might retain it's shine for four or five years,if it get's it's ritual wash and wax jobs on schedule.

If you have a regular job,the typical maximum slack in your chain is from Friday PM to Monday AM.

Nate remarks above that perhaps the only way to be sure of increasing one's wealth is to reduce the denominator in the goods divided by desires computation.Never were truer words spoken,and never has there been a time when so many would do so well to contemplate the meaning of this little pearl.

Right on, mac.

Money, and the trinkets it buys, can be replaced - maybe not easily, and maybe not right away, but they are replaceable. But I don't care how much money, or power, or anything else you've got, you'll never get back so much as an instant of your time. When it's gone, it's gone. Don't piss it away chasing money, or what money can buy.

Rebalancing a portfolio is always full of emotional, intellectual, and "prophetic" practices over some period of time. For 99.9% of people over the last 30 years this has meant listening to people (financial planners, brokers, neighbors, relatives, etc.) on which financial capital to place this in, including the defacto conversion of the home into financial capital from its original "built capital" paradigm. The best of these people pushed portfolios not a single investment. Additionally this financial capital was efficiently acquirable through allocating 100% of your non sleep/recreation time to a job. So where does one go now to get a portfolio recommendation like this:

Based on your age, and the age of your children we recommend on a weekly basis

40 hours/week at your job
10 hours/week building or training around self sufficiency
4 hours/week recreation
8 hours/week in local group activitives

And for your assets:

25% of assets in productive land
5% of assets in livestock
5% of assets bullion
5% of assets in long term storage food
5% of assets in storable or producable energy (firewood, diesel fuel, solar panels, etc..)
10% of assets in tools
45% in cash

And lastly from this "holistic" planner, "if the following list of events happen we recommend reallocating the cash in the following manner to
food, energy, bullion...."

There is no "holistic" planner for this, and yet many people (including me) not only have feelings, but are taking actions. These actions
one can sometimes garner from the press (such as the surge this year in the acquisition of baby chicks), but mostly
they are found in the conversations on main street, back to school night, and at the barbershop, or noticing the
"stock fence" going up on that smallholding you drive past once a week.

Monetary wealth will hold its value as long as it is easily and reasonably convertible into "built capital" and "natural capital", for some
an inability to do this seems like a ridiculous proposition, but over the past few seasons we've seen the elimination of the export of rice from
certain companies such that neither love nor money could get certain countries the foodstuffs that they wanted. When one looks at the growth of foreign
state acquisition of third world arable land in this same period it appears that there is some strategic planning going on in places like Saudi Arabia, China, etc....

The "other" question I would like to ask is when do we begin to use personal local script in the Colonial fashion (dozens of eggs, pair of boots, 6 hens) over fiat instruments like the US Fderal Reserve Note, (I'm aware of the Berkshare effort, but i'm not talking about that).

One of the best responses to the article, which answered the overall implied question.

I'd call it total bullshit. :-)

[There was a bit of a thread on Myers-Briggs types in the past month. I'm an INXX. Which means I'm not testable because I smell the test and the game.

40 hours/week at your job


You haven't provided anything of substance to support your position. I'm currently doing pretty much the same schedule myself right now. This may not be possible for many in the future, but the poster was talking about the current timeframe, not forever.

Boy this is a tough one and I wish I was in the position of only concerned about where to put my money. My wife and I are so far under water with our historical house in Florida that we are seriously looking at walking away and forfeiting over $100K - cash. It will cost us much more to get the equivalent equity back.

Will the real estate market "snap back" (term, mine)? Highly doubt it and please contain the laughter. Our major investment is not going to quickly return to the previous market valuation and enjoy a conservative but steady appreciation that will ultimately prove the investment of mortgage, taxes and maintenance a worthy endeavor. We're done, toast, the American Dream has been declared NSF.

The silver lining is we are mid-40's and have some chance of reforming our expectations and future. It's not much, but its all we got. So to answer Nate's questions about investment and capital;

1) How many of you experience similar feelings with respect to investments as Pat does?
If we are to survive, we must emphasize human capital. It will endure and sustain us (i.e. village and community) far longer and better than the present system of fiat currency capital investments - this is the long term view and pretty much answers question #2.
2) Will monetary wealth hold its value to the next generation?
see #1
3) How can people that understand the implications above most effectively move more towards a portfolio of natural, social, built and human capital when we all still live in a culture that sends strong cues favoring financial (marker) capital?
to be blunt, we can't. We're screwed and it will take excessive, dramatic forces to cause a refocus. Call a spade a spade and not a shovel, but that is my little POV as cynical as it sounds. I am no different and will not make the aforementioned changes any sooner than the rest because I suffer the same biological failings.
4) Will we ever get social/media cues that frown upon excessive financial wealth, but instead laud men and women with skills, knowledge and generosity? If so, would you give up/allocate some of your money to increase your standing in these other areas?
This is the one area that I remain hopeful. I can foresee an era soon to transpire where ostentatious wealth will become unfashionable. It may start with swimming pools in Arizona and South California when water is chronically limited, or it may be return to the SUV vendetta when gas prices rise again. (For the record, I drive a moderately gas guzzling SUV). I don't know what the signal will be, but I have a strong inclination it will center around water availability.\

5) Other
...from #4, this could be the prescient genius of Frank Herbert to set the story and tension of "Dune" on a planet that is severely short of H2O. We may get a real world glimpse of life depicting art. This comes from a person sitting in a certain N. American locale famously abundant of water resources, but I see and feel the pain for those of the lower N. American continent that are repeatedly short of water. I feel the pain because I realize (much to the objection of 99% of fellow citizens) that when push comes to shove, we will be faced with some major concessions about water supply and the resultant engineering required to facilitate the masses. I, for one, am not comfortable with withholding precious water while millions suffer regardless of their folly - directly or indirectly.

To put it in other terms, there are not nearly enough Nimitz Class aircraft carriers that can supply Phoenix, Tuscon, or L.A. with water.


The first thing I would suggest is that you go back over your post and read it very carefully. Then ask yourself WHY did I give that answer? I am living proof that a person can change there personality and thus their lifestyle, as I did so some 35 years ago. Believe me If I can do it so can you.

If you are expecting some sign from the MSM or from your immediate social group, you'll still be waiting when your ship sinks below the waves. I myself am at that point in life when one can see the end, and I wouldn't trade you these last 35 years for all the money in WALL STREET.


I am trying to hold onto the land I have now in my future, Parents own it currently, with estate taxes and other money out the door when they leave it to me I will need a cash cushion building up from now till then.

If I had extra funds apart from what I am doing now. I would buy more land, buy more hand tools, buy more books with helpful information in them, buy into a seed saving program.

While only the Land is an investment for the future that most people can wrap their minds around. The other things are investments that will play out over time, and will be good to pass on to others just in case things get as bad as they could.

But looking at the way America gets most of its food, I would foster the idea of buying into active farms. Instead of a bank owning the farm, you and a select number of investors can own a farm, change how it does farming, make it more of a Co-Op type of farm.

Buy land near a city and change it into a Carless town, promoting carbon neutral home building, Solar powered homes. Though this is not something one person could fund, it is something that a group of people could do.


Most of those who control great wealth in the present will lose that wealth and will not be prepared psychologically to cope with the new paradigm. Neither will they have the skills necessitated by the new paradigm.

Wealth will become essential skills, relationships, and tangible goods under the direct control of the owner.

I keep returning to the analogy of the Jewish business owner in 1936 Berlin. He had a choice, hunker down and hope for the best or leave with little or nothing and start over in a different environment. It is past time to forsake the good life and invest in new skills and relationships.

In my opinion, large population centers will become massive death camps. Few have the resources and courage to give up the good life and start over in small rural areas learning essential skills and developing mutually supportive relationships.

Over time, a new power structure will evolve. Some will rise to the top. Some of those will be despots; others will be leaders of men. I define leadership as the ability to influence others in such a way as to win their understanding, their cooperation, their participation and ultimately their allegiance.

A lot of sense there TGN (or folly in common with myself!).
What do you think of

I'm playing equity stocks short term. Made 2500. on two trades last week. Kind of fun to make money with the click of a mouse. I realize the stock market will blow itself out as post peak oil causes the deindustrialization to take place, but for now its a money maker if you are a student of the fluctuations, patient and willing to quickly dip out if needed.

Later when I think the price of oil is getting so high the market may collapse again, I'll dip out until it does, then dip back in later when stocks are super cheap. Society will not give up on the stock market for some time to come, and the more volatile it is, the easier it is to make money if you time it right. Don't try to get every dime, just make money.

Even when unemployment is 35%, the stock market will persist as a way to make money.

Here's my thought reading this post. We might want to look at the following related questions:

1. What would be the best course of action if everyone took that course of action?
(Sorry, my thinking is forever indebted to Kant, for his definition of a moral action)

2. What would I wish I (and 10 of my friends/relatives) had done when it was still time?

3. What is the best course of action for me, supposing the vast majority of Americans continue doing what they are doing?
(That's the likely scenario)

My personal hunch is to get out of the stock market (I have, by 90% or so), and out of banks, to invest in local food production. It's either going to crash now or later, and personally, I have had enough of my money "growing" by siphoning the last dime from the already destitute.

Already I can see that by being a CSA member for 2 years, but also blogging effusively about "my" farm, and being truly grateful to my farmer and excited about her work, I am getting special perks from her. A friend who is not only a CSA member but volunteers weekly pulling weeds and planting seedlings, bringing her husband around to improve the drainage in the chicken yard, etc, etc... is almost best friends with the farmer. There is no way this woman would let my friend's family starve, if it came to that. You need to find not only a good farmer with solid skills, but also someone who knows how to encourage opportunities for participation, who truly appreciates his/her customers.

Also, I want to have a little land (an acre would be great) on which to grow some food (I fully appreciate previous discussions indicating that my family of 5 might easily need 10-12 acres to be food self-sufficient, and I don't see that happening). Most of my savings is in retirement funds, and I wish I could use the money to fund a local CSA, or permaculture school, without having to shell out the early withdrawal penalty. I wonder whether the government might move in that direction, but I understand they might move in the opposite direction (putting further restrictions on my money). The other place I might put my money is into renewable energy/efficiency on my own home.

The skill I am learning (I already have doctoring skills, not too shabby) is permaculture - I think that if anything will "save" us, it will be those principles. Building community is at the top of my list, and something I consider fun.

I think also about having fun while I am at it, in case collapse does not come, or Mad Max comes in which case I might not make it no matter my preparations. In the small eventuality that what comes to pass is exactly the thing I have not prepared for, well, what can I say?

By the way, my grandfather did in fact lose all his fortune (which was in government bonds, in Greece) in the 1930's I believe, and then sold anything that wasn't nailed down during the 2nd WW to keep the family of 7 alive. Interestingly, his fortune was made running a general store in Africa, sometimes less than honestly, but it sure did not provide the sort of life for his family that he had dreamed of. He was killed in 1945, and his children fought very hard in poverty to finally make it to a middle-class lifestyle. None of them particularly valued money, but they all valued education, built extensive community links, worked hard as chemists and engineers, and were known in Athens for their honesty, reliability and quality work.

My other grandfather was a well-educated man, who had a special affinity for firearms. He treasured most of all a collection of antique firearms, and when the Nazis invaded Athens, buried them in his yard so he would not have to give them up. Unfortunately, he was eventually turned in by a well-known traitor (a man who, it was rumored, travelled in the city sewers and surfaced at intervals to turn people in to the Germans), taken to concentration camp, and died in a bombing. As it turns out, my grandfather had also been training resistance fighters (against the Germans) but evidently they never figured that out.

At any rate, the lessons there are about community, about "giving up" one thing (the right one can make a huge difference), and money or bullion not being worth very much except in the temporary situation of a war. Oh and about the war, my mother credits the family's survival (150,000 dead of starvation in Athens, winter of 1941) to the fact that they had relatives in the country who provided them with olive oil (calories!). Their standard meal was olive oil sandwiches, which they made up a special name for.


May God bless your family who lived through so much,and those who died, and once more we see that there are fates as horrible if not more so, than "peak oil". How humans react to conditions matter so much more than the initial conditions.



My sympathy for the trials and tribulations of your family.

I realize of course that the financial types must have a bench mark of some sort as a reference in order to measure the safety and stability of other investments.

And I realize that US federal paper is,AS SUCH THINGS GO,as good as any.

But the notion that such paper is "safe" is good only for a belly laugh for those of us with long memories and a solid connection to the Earth.

I can't immediately remember the name of the book but once upon a time there was one wherein the protestors motto was "we stand for what we stand on!"

I guess such a view point as mine might only make sense to someone whose not so remote ancestors suffered as yours did at the hands of those capable of driving them off the land that gave them food and shelter.

(They can have my weapons-when they pry them out of my cold dead hands.)

Even now when the economy is in serious trouble money invested in low interest paper for the last few decades is worth much less that it was at the time ,even including interest,than the same money invested in farmland or timberland,which probably could have been rented for as much or more "interest " income.

It gets worth less every year in terms of a simple visit to a doctor's office.

It's worth less every year in terms of a year's tuition at a respectable college.

No-what federal paper IS is paper-highly liquid paper,but just more paper.

And the people who are holding it are going to get the suprise of thier life someday.

As you are a physician,you must be one of the rare ones not much interested in money.

But you should get interested long enough to put your hands on a small tract of good farm land some place,if I may be so rude as to offer unsolicited advice.
And this ain't no Black Swan-anybody with"a lick of sense" can see it coming.

I'm with you on the land, and just buying something and not farming it will not be enough. However, somehow, I would have to get the rest of my family on board, and that would never happen until funds that rich people use to pay psychoanalysts out of pocket dry up. Until that happens (of course, that could be sudden), we are staying near an urban center - so I think the best I can do is an acre or so, intensively farmed, and perhaps another tract someplace I can rent to folks who would be farming it (and the right to move back whenever we want to, sharing and farming it together).

Yes, I hardly thought it worth mentioning that someone on your situation would want a tenant or rental relationship with a nearby farmer.

And I don't think that things will get so bad that a physician of any sort is likely to need to work in the fields, but there may come a time when you are glad to have a noncommercial source of a few chickens or cabbages or boxes of fruit,as rationing is a real possibility.

My take is that for the reasonably well to do ,especially those with skills that will remain critical,a piece of good land or a share in a farm is an excellent hedge bet in the event of the worst,and a reasonably safe investment in the event that bau staggers on.

For those without much money or crtical skills,a place to live that enables one to beat least partly self sufficient seems to be nothing less than critical,given the facts of peak oil,peak credit,etc.

Yes, I hardly thought it worth mentioning that someone on your situation would want a tenant or rental relationship with a nearby farmer.

Hello, world. This is exactly the discussion I'm having of late. What makes a good tenant? What gets included? Consider heat and electricity - how much? How much, when you, the feudal lord of the manor are cold in your wing-back chair trying to read TOD on a laptop under a tiny LED?


The good doctor will have to work that out herself.

It's easy in most places to rent a small tract of land to a local farmer who will take reasonably good care of it,but farmers are no more honest than the next guy and you would need to keep an eye on him of course.

If finances permit I would hire a caretaker and allow them the use of any house on the property as partial wages, and have it agreed in writing that the use of the house is month to month as it might be needed on short notice.There is probably a good possibility that this would work,as lots of country familes double up from time to time as the result of a fire,loss of a job,or a divorce,etc.

Such an arrangement could be a reasonably inexpensive way to maintain a working homestead type farm while still holding on to a lucrative job in town.It might even turn a small profit.

The question was, “What do I do with my money?”

You leap into investment advice. This is a logical error, akin to answering his question by suggesting which game to play in which casino.

First ask another question, “What do you think will happen to the economy as a whole?” If he thinks the economy will shrink, then the key is not to invest, but to HEDGE.

A HEDGE is when you take your money off the table in an attempt to decrease your losses. Clearly hedging in a growing economy is a losing game. But if the odds in the casino switch from positive to negative you should run for the door. So I disagree with your fundamental response and the title to this post.

The divide between optimists and doomers in TOD community should be recognized and acknowledged. I am sure you don’t want this thread to dissolve into a optimist/doomer spat so I suggest that doomers not post to this thread and wait for a doomer article on HEDGING.

Cold Camel

This was an article on a hedging, which is a form of diversification. Every time you make a decision to hedge something you are choosing to increase your risk adjusted return. Diversification is the financial portolio application of the concept.

You have to put the money somewhere. It's a serious problem for someone like me in this era of total uncertainty.

In contrast to you, Nate, for most of my life I haven't worried, studied, or thought about money very much because I didn't have any. Recessions would come and go and not affect me in the slightest. Also early on developed a egalitarian radical political point of view. I've been waiting for, sort of hoping for, the big crash for nearly 40 years.

Radical changes in the last couple of years. My wife and myself have become responsible for a ton of money, way too much to stuff in the mattress. It's not ours yet but a good chunk of it will be and we have total control over how it gets used now. Total control within the limits of a legal fiduciary duty to handle it responsibly. It's a steep learning curve for us and we're still climbing it amid what I can only describe as global economic chaos. What to do?

The first thing we did was buy 300 acres of undeveloped Vermont forest land not far from the state capital. We have since been working on making a viable alternative living situation there. You don't wave a wand of dollars and make that happen overnight. We've been well established in this community for a long time and our social capital is high enough. We've been spending money as quickly as we rationally can on high end tools and capital improvements. As much money as possible gets spent on local people for local goods and services. I ain't young so I'm moving as quickly as I can.

That still leaves a hatful of "money" that it seems to me could just suddenly melt into nothing. For the sake of respectable responsibility we hired a high end money management outfit and have been negotiating with them ever since. Initially they wanted a fifty-fifty split between equity and debt. That was just before the crash. We, in our total ignorance, argued them into a 70-30 split, debt to equity and much bigger chunk to remain in cash. We were right, lost money last year but not too much. We remain about a third in cash (dubious money market fund) and the rest in the 70-30 split. We added a good sized share of a commodity fund this year, more than they liked. Got some notes from them about fiduciary duty and volatility. Also put a chunk into the Winslow green funds, which the wealth guys had been dragging their feet on. All of the investments are no load index funds except Winslow. This all adds up, I suppose, to my best guess at hedging.

It's strange, I worry about money now and think about it a lot. Never used to. Our life style hasn't changed much. We are frugal and modest. I dislike shopping (but I love my tractor). But, damnit, I hate the thought of all that money getting swept away in some kind of economic upheaval. I want to spend it as quickly as possible on things that have real enduring value but I just can't get away with that right now, even if I knew what was the best way to spend it.

P.S. Nate, I did send TOD some money as per your suggestion.

Chuck - you raise valid questions. If you've read my writing here over past four years, you'll know I don't think the financial markets, some reasonable semblance of social equity, and declining energy gain (not to mention other resources like water), can co-exist. As such, your perception of money as concentrated power/options may be different than the reality. Those will little money are going to feel the pain more sharply at the beginning of this transition, which will force them, on average, to change their habits to be more in line with reality (and therefore better and more resilient). There is no palatable answer for everyone Chuck, except for a new system. The existing system will continue to concentrate wealth near the top, which is good for them, bad for us and bad for the planet. But its worked because everyone at least had the perception of the option to pursue that goal, should they choose - I think people are starting to get it that given resource limitations that goal is not achievable for all - the open question is whether that accelerates the scramble for wealth or accelerates social change.

Thanks for your input. And thanks for the donation to theoildrum, which is, in its truest sense, an allocation towards social capital. If I had to guess, I would say it is an extremely high risk, high reward investment option - likely to return zero, but might have huge payoff. We'll see.


read the article and read some of the posts.

My simple answer to many peoples angst I am reading is that being wealthy and being rich are not the same. Most people today equate being rich (having lots of dollar convertable assets) as being wealthy.

Hard for me to define this difference but true wealth does not dissapear in times of economic turmoil or even natuaral disasters. Wealth endures independent of currency. I consider the U.S. wealthy because we have National Forests, very large fresh water lakes, good farmland, etc but how that wealth can be characterized in dollars is not obvious. To me there is greater value than any short term monetary transaction would indicate. Again you can't quantify the wealth in monetary terms but people constantly want to because that is the only tool they have.

This truism goes for certain types of construction, buildings and machines as well. They are worth more in some hard to define way than a balance sheet indicates. They cost more to rebuild than you can sell them for even if they are nearly worn out. Really good wealth becomes more valuable over time in some equally hard to define way, but that most people can recognize.

Wealth is like Quality. Neither is easily definable in western though patterns and they are related to each other.

Many of us outside the US are locked into compulsory superannuation schemes that insist on investments in 'funds'. Apart from finding a superannuation fund manager that is actually thinking about the potential impact of peak oil, there seems to be little we can do to 'protect' our savings. The choices we have revolve around changing the percentages of each 'asset class'. Not a great deal of comfort.

That only brings up the same question: where should you put your money to most effectively hedge it against further declines?




Cash under mattress?

Foreign stocks or currencies?

You cannot "hedge" money against decline. All you do is shift the decline onto someone else. If you have something of value, perhaps you can make it useful. But that is not a hedge.

Your hedge is everyone else's loss. Everyone else including not only your spouse, children, sisters and brothers, but the salmon and the trees and even the rocks that some millenia down the milky way might spawn life themselves.

If you have something of value, use it wisely. NOT using it is unwise, greedy, and all the other evils.

Invest in things that have value to you, and will continue to do so no matter what the overall economy does.

Don't invest too little in any of these choices for it to be useful, or more than will be useful.

Diversify your holdings to the extent you can within the above guidelines.

If you don't understand an investment, don't put your money there. This includes "obvious" choices like land and gold as some other posters have pointed out.


So much to deal with in the questions by Nate...and yes, I have been here before...

I graduated high school in 1977. It is impossible to convey to someone who cannot remember that period what it was like. I told one of school friends that I wanted to go to engineering school and work for GM or maybe Ford. He laughed in my face. No one believed they would be around another 5 years, much less any longer.

The cover of magazines declared the "death of equities". I told an older guy who was himself very well off that I was looking at maybe investing in stocks. He laughed in my face, and said it was the most idiotic think he had ever heard. I asked him, didn't you invest in the stock market? "yeah", he said, "but that was a different time."

Oil? I know that today folks say "oh we knew it wasn't the real thing". Yeah, right. Jimmy Carter had CIA reports saying the age of oil was done, the easy oil could not be gotten to even if it could be found, and the guess in the press was $10 per gallon soon, and then on up from there. I was recieving a newsletter at the time published by Rodale Press instructing people on how to raise local food, because the price and shortage of fuel would soon end interstate transportation of food. I still have my books about raised bed gardening, solar greenhouses, underground homes, and movable insulation.

Yeah, I been there, done that.

So once more, around the same dog track. Is it real this time, are we at the end of the road, the great collapse? Maybe.

Of course, at the core what we are talking about is a decline in the availability of easily transportable liquid fuel used almost (not quite, but almost) exclusively in transportation.

Then I look at the footnote, using data from TOD user Jay, showing the amount of calories we consume over and above what we need for nutrition. I try to grasp what those numbers say: WASTE, ASTOUNDING WASTE, ALMOST CRIMINAL WASTE! It hits me in the face...not for the first time, that the whole argument is about not what energy is needed for our nation and the world to survive, but instead how much is going to be allowed to unproductively wasted.

Now let us connect this to the economy and investment. If one looks at a graph of the world equity markets and how much they declined from top to bottom, and then looks at a pie chart of the fuels used to produce energy, we see an astounding thing:

The equity markets have already declined more than the total percent of all the crude oil being consumed by the economy (!)

Of course I realize that this will not work as a one to one match, but what we are looking at is an approximation, the kind we see used here on TOD all the time in various "curve smoothing" techniques, projections and conjectures of behavior made from a small oil field,to a larger oil field, to a nation, to the world.

Think about the implications of this recent 2 years or so, when as much or more money disappeared from the economy as would have bought all of the crude oil used in that year. Economically, it was as though EVERY DROP of crude oil disappeared (despite the fact that peak oil does not mean the ceasing of all oil, but is only the inflection point at the top of the production curve, with the second half of the oil still to be extracted (assuming no improvement in extraction technique or surprise finds, or no advances allowing heavy oils to be easily other words, technology stops dead)

All of the above to say...the recent financial collapse has put a lot of things back into more balance than may at first be assumed.

For three decades leading up to the financial collapse, anyone who know anything warned of an excess of traders, speculators, funds, hedge managers, and all around vultures and leeches.

Could it be as simple as that...that those who warned us were right? Interesting thought, that, and now they have "peak" oil, and peak everything to hide behind, oh and don't forget that the climate is warming so fast it will destroy your crops and make your children stupid and cause premature balding just before your dingus falls off...but whatever you do, don't get hysterical, just come on down to your broker and we can fix things right back up for ya'...

What we have seen is an equalization of idiocy, in which the "expert" is proven as ignorant as the customer, and those who frittered away their money proved to be in better shape than those who carefully planned. If you rented instead of bought a house, you could not be "uderwater" on your apartment, if you bought CD's because you were scared of anthing else, or left your money in your passbook account, your better off than the smart azz investor bragging on his latest fund find at the last cocktail party (which now may have been held some two years ago!

I sat in a Barnes and Noble bookstore earlier tonight, drinking a caramel frapiccino, watching the folks mill around the "personal finance" section, gazing longingly at the endless string of books telling them what to do NOW by the same authors who told them what to do THEN, the endless streams of garbage by those who warn us "if you don't know this, you'll be sorry!" The equalization of idiocy continues.

Folks, we live in SPECIAL TIMES. I come home, and go onto my more than once a day check of TOD to see the effectively the same warning I recieved in 1977.

I didn't waste the whole day though...I shopped for one of the greatest inventions technology has ever offered electric guitar...and came home and watched Grace Potter and the Nocturnals and Shawn Colvin on TV (the only show on all day worth a crap)...and oh yeah, I had that caramel Frapiccino.

Roger Conner Jr.

Thanks Roger, I always enjoy your rants :)

Then I look at the footnote, using data from TOD user Jay, showing the amount of calories we consume over and above what we need for nutrition. I try to grasp what those numbers say: WASTE, ASTOUNDING WASTE, ALMOST CRIMINAL WASTE! It hits me in the face...not for the first time, that the whole argument is about not what energy is needed for our nation and the world to survive, but instead how much is going to be allowed to unproductively wasted.

Roger, that "waste" you refer to is what most think of as "the economy." That waste is what separates your way of life from that of the Bushman or the goat-herder. I agree with your contention that much of the energy that we use contributes little to our overall well-being -- Nate made that point in his essay -- but, nonetheless, as the system currently works, this profligate consumption of energy is what backs up the paycheck that each of us takes home on Friday. Take away that waste of energy and you take away the paycheck.

Roger -- seems to me that it was the North Sea and Alaska's North Slope that enabled us to stretch out the peak of industrial civilization a bit longer.

Otherwise the peak would have been much sooner, esp. in the West.

Somehow I don't see history repeating itself this time, there aren't any more undiscovered giant fields on friendly territory to save us now.

Someone on this site pointed out to me that Cantarell was also discovered and ramped into production around this time.
Of course all three finds were under Oceana's (US UK) control so they got pumped dry as fast as possible.
Probably you are right on not finding much more cheap oil since just about everywhere that is likely has been surveyed.
But maybe substitution to other energy sources like Nuclear electric and if there is a way to access the Shale Gas can soften the transition.

I graduated from H.S. in 78 and had similiar conversations. Graduating in 82 with an engineering degree from a university that had averaged 7 offers per eng. grad
over the previous 30 years, went to 1 per graduate that year. In 83 I tried to get a mortgage, 21% fixed, those were interesting times. I started an Internet business in 1989 and then had the bank that i borrowed money from crash during the S&L crisis, I took over the administration of a 401k that had been organized with prudential (despite my protestation), and their "crash/ripoff" got me that responsibility and the work of switching everything and everyone. i took that company public in 1995. then two more public internet companies, and sold them both by december 1999. interesting times. retrospectively i remember 1972 gas lines, buying gas on odd days due to our license ending with an odd number and my mom getting a job due to the roaring inflation. Best of all I remember reading Alvin Toffler's work "Future Shock" at the ripe age of 16 available in the local library. I also remember as a member of the IEEE in the early 80s reading about their lobbying for a portable pension which eventually became the 401k and IRA.

What I decided very early on as a young adult (18, in college and the reserves) is that things change a lot, and to hedge in any manner that I could at the time reducing my possible MAXIMUM return for higher PRESERVATION probability. But preservation for whom? Myself of course, but also for future generations and for charity as well. I am on the last chapter of the book "Leisureville", and it is apalling, enlightening, and confirming all at the same time. A good sociological read. If these micro societies (47,000 senior homes in the "Villages" of Florida) are organized and focused on removing the 55+ to have a segregated bachanallian, total consumptive last years, and that reflects the cultural standard and societal hope then there is little than can be done for that society and for those who have this "world view".

While you may not believe in "peak oil", it is easy to see that certain societies have invested the last 30 years surplus in things other than SUVs and Suburban track homes. Europe appears better than it did 30 years ago generally, countryside, village, city (at least Western Europe), but I couldn't say
the same about the equivalencies in the US with some exceptions like NY or Boston. Detroit, Chicago, Atlanta, Richmond are all dramatically worse, but so are the small towns, villages etc in Pennsylvania, New York, Michigan, etc. Of course many of the suburbs still look great since that is where the money went,
but then you see the sales/lease/rent signs on the houses and commercial establishments and then peer more carefully and see how many are empty. What is
going to happen there? The book "Leisureville" has something to say about the parallels in retirement communities established in the 50s and 60s.

What is also interesting from my work in Africa with my 50 something friend (chem E) is how much experience and skills we have (and had at 22) compared
to the 22 year olds when something has to be done beyond the keyboard - in "meat space". I'm kind of hoping that someone else will know how to move that
1000 lb rock (without the use of diesel) or weld something on my bumper when i hit 75 (thanks Mr. Wenger in 8th grade for teaching me that).

Basically between culture, skills, and expectations, I think we are a LOT worse off then we were 30 years ago, and having experienced Katrina first hand (with $1000
of cash, and 30 days worth of food, 100 gallons of water and a little camper) I have little expectation that the government will actually be of much
use (though reading the headlines of late, they are probably increasing their ability to make stupid decisions since then).

Off to feed the chickens on my little farm-ette where the water flows out of a Spring and the house is heated with firewood, almost like my grandparents.....


First just to clarify, there is no where in my post that I said "I don't believe in peak oil." I have never said that on any message I have posted on TOD, and I have been posting here nigh on three years.

Peak oil, in the conventional core definition (i.e., Hubbert,Campbell,Deffeyes,Simmons) of peak, and using the conventional definition of crude oil,is absolutely assured by geology.

What we are discussing (or at least I am) is timing and potential outcomes from the peak event.

I am fascinated that you have read "Future Shock", because you are thus familiar with Tofflers argument that the impact of change in itself can be very disruptive and disorienting, whether or not the change is negative or positive in the larger sense. Toffler also pointed out that the "pace" of change alone can be disorienting, regardless of the nature of said change...if the pace is too fast, the culture or individual flies apart, and if it is too slow, the culture or individual atrophies and finally slows to a stop. In history we have seen both outcomes.

The books to read are the follow on books to Future Shock by Toffler, including "Powershift", but much more for our discussion "The Third Wave", written in 1980. In that book you will see every issue we now discuss on TOD, including "Relocalization", "Kabuki Currency", the collapse of the former Soviet Union and even the possible collapse of GM...all years and sometimes decades before they occurred. But none of this is given in a "doom and gloom" fashion, but instead as a list of possible outcomes that may or may not be catastrophic or even "bad" depending on how the culture reacted to the events and at what pace they came.

I am still astounded at the seeming astounded surprise that I see when the end of the age of oil is discussed, and the belief that exists among many folks (especially here on TOD) that there can be no economy, culture,technology or advance without oil and not only oil, but vast imputs of cheap oil! The way in which oil has been converted into a deity is fascinating to me, and somewhat only see this level of oil worship in other parts of the culture among hot rodders and auto racers, and the top level of them use ethanol, methanol and other alternative fuels (nitromethane, propane!) without even thinking about as being a radical departure. Only on TOD do you see the implied logic that no oil means no economy, it's truly astounding, and this is from someone who absolutely accepts the core concept of peak oil, so imagine how absoluely daft it must sound to those who have doubts or don't accept the original premise!

So let's do it this way, and state my contention clearly: The oil age will end, perhaps soon (I am hoping this is so). The oil age MUST end, even if we were up to our eyebrows in easily extractable oil...oil simply has far too many liabilities (as does coal) The current national economy (U.S.) MAY end in our or our children's lifetimes...this we cannot know. History indicates that economies of the scale of the U.S, Britain, France, Japan, China, etc., can go for centuries, but with enough change and incompetence there are no assurances, an economy must evolve and be maintained. As we saw with the U.S.S.R., very large economies can fall apart very fast...but of course the Russian economy, which was the core of the old Soviet economy, continues on. We simply cannot know the future so we must attempt to predict the most likely scenario. My impression is that what we seem to be doing is betting on the least likely scenarios because they are more exciting...but of course the least likely (but most fascinating, scary, and thus exciting) scenario also sends people into bad decision making with their money.

We need to settle down a bit, look at the real numbers, look at the areas that demonstrate real stability combined with an ability to evolve into the future as an important service or function for society. Those areas will ALWAYS need investors, and always be promising areas of investment...not assured, but promising.

The core desire of humans for achievement, change, and new experiences will not change. It is this that drives economies. (by the way, take a look if you can, at Tofflers conjecture that the industry of the future is "the experience industry".

Thanks for an interesting discussion. :-)


I am still astounded at the seeming astounded surprise that I see when the end of the age of oil is discussed, and the belief that exists among many folks (especially here on TOD) that there can be no economy, culture,technology or advance without oil and not only oil, but vast imputs of cheap oil! The way in which oil has been converted into a deity is fascinating to me, and somewhat ironic...

I don't see any such folks here on TOD. But I (and some others, I think) would argue that our society can't tolerate limits to growth. Oil happens to be the first major energy source to peak in production. Regardless of which peaks first, however, a limit to growth is established.

Eventually - in my lifetime I suppose - the other major energy sources will peak and decline. This, I think establishes a permanent, shrinking upper limit on the economy and population.

I suppose this can seem like a deification of energy, but without energy no action is possible?

I don't want to sound flip, but I will worry about that when the sun burns out and the earth goes cold (either of the above hold more energy per year than all the energy ever extracted by humans) Of course the same arguments will be made, it can't be economically that those who now curse the market none the less deify it enough to pronounce that it will end the march of humanity. We are in a tautalogical argument, but those are good for something actually, they make us clarify our own biases and thinking.


Your phrase "march of humanity" itself is loaded. It's unclear even that agriculture was a good idea. Please see Jared Diamond for details:

Your argument about the sun doesn't withstand scrutiny. Hundreds of empires have risen and collapsed, despite the fact that the sun hadn't burned out yet. Ours yet may collapse for lack of fuel, though the sun still burns.

Is a life worthless because you're going to die anyway?

I'd apply the same test to civilizations.

Only on TOD do you see the implied logic that no oil means no economy, it's truly astounding,

ThatsIt, The case has repeatedly been well-made-out here that the end of growth of oil must inevitably have a catastrophic impact on a financial and economic system that depends on everlasting growth. There's nothing astounding, just cold logic. Substituting coal or some other current fuel cannot do a vast amount to bypass this.

Some people are in denial of the peaking of energy. Some others (JM Greer) are in denial of a risk of sudden collapse. You appear to be in a similar or somesuch denial, those many who see the facts but cannot adjust their minds to see the writing they put on the wall.

Nate's basic thrust is quite correct for the long run, but it assumes that things are going to start going really badly fairly quickly. I'm expecting about 10 years more of BAU, before the ever-increasing price of oil causes a significant economic discontinuity. And even then, the drastic ones will be further down the road.

Now, I'm one of these unfortunate people who has to work for a living, rather than a rich investor using my capital to get others to do the work for me. On the other hand, my job is in the public sector (in Australia), from which I'll retire in a few years to collect a defined benefit superannuation pension. My personal financial situation is secure, since I'm not expecting any Australian government to default on its financial obligations in my lifetime (my kids, however, can't say the same with confidence). I am, though, investing in making my dwelling as sustainable as possible, and will be putting in a vege garden in the not-too-distant future. That will be more significant than whatever I do with my meagre savings.

And, BTW, I've been looking ahead in other ways. I don't drive, will shortly have no debt, and I'm in walking distance of just about anything I need apart from my employment. Cities are fine. It's the suburbs that are unviable.

1) After some years I have made my decision.
2) With luck yes money will be preserved but many downside risks. Diversify (invest in gold/land/skills/friends/health/etc/etc)and don't forget about surviving in the short term as well as the long term.

3) I hedged my bets a bit. I sold my urban house in 2006, and sat on the cash hoping for a house price crash. I bought a few acres, with a small house within cycling distance (5 miles) of a vibrant market town where I have two part-time jobs. I had to down shift eg no car, no central heating. I could have bought more land on a remote island but I would not have the part-time job and social opportunities within cycling distance. I could have waited longer for house prices to fall further but I like where I am, its beautiful. Doomsteads could be pretty lonely places. I expect more people will end up living at my place ( family/intentional community) and if I am lucky they will keep me in my old age. Being too poor to live a lonely life on your own is an upside of down.

4) Being rich will always give more status. People may be more motivated to steal it though.
5) Do what you enjoy, you could get hit by a meteorite any time.

Smart thinking, Max. What are you doing with your few acres?

As financial collapse accelerates then finance, which has become an end in itself rather than a means to an end, will start to breakdown the physical economy to release residual value. In a growing economy, the financial system benefits from increasing the real economy, in a shrinking one it benefits from extracting wealth from the real economy.

Finance is going to become a destructive force ripping apart the economic fabric of nations and consuming the wealth of their citizens. In fact whatever is to follow our collapse will need to take all it requires for its own birth and growth from what already exists. So while finance is rendering down the carcass of our global economy, corporations, other organisations (including criminal, terrorist, etc) and groups abandoning the existing paradigm will be cannibalising the failing social/economic/political system for their own needs.

In these circumstances investment takes on a new meaning; you invest your life and everything else, not just your money. General communication within society will be little more than lies and misinformation, the truth increasingly bringing misfortune, personal and business information will increasingly need to be hidden as a survival necessity. Investments will be bound by trust and loyalties rather than increasingly meaningless contracts, meaning personal relationship being paramount in any investment. Third parties are no go areas and shouldn't be trusted. Invest in nothing where you don't have some direct involvement or control. Don't invest in BAU. Don't invest in finance or corporations unless you're an insider.

Don't wait for collapse before taking personal action. The first thing to vanish will be choice. Those already in possession of good investments will be locking in their future profits, the door will be increasingly closed to new entrants. Think of it as an analogy; will a successful self-sufficient village that can feed itself welcome newcomers who will jeopardise its success? When the music stops and you don't have a chair, then your out of the game.

Certificates of deposit distributed among 4 small local banks, taking advantage of any "interest specials" available, but avoiding rates that seem too good to be true.
Some cash in the basement.

It seems that the local banks (all with at least 3 star ratings) are less exposed to risk than the large banks, although I realize that they have siginificant exposure to local commercial loans. I don't expect to make any money, but I hope not to lose much either. If the whole system goes, of course, then all bets are off.

The house, car and truck are paid for, the garden is in, and food and clothing stored for a considerable time.

The best plan I could come up with.

Don't forget a small stash of gold or silver coin. When archeologists in England dig among the sites of Roman estates, they often find a stash of gold and silver coins buried in the corner of the manor ruins. It seems the barbarians were too busy looting, burning and raping to take much note of the whereabouts of any hidden coins. Their investment was safe for nearly two thousand years.

I think there are many better investments, so does Thom Hartmann, author of "The Last Hours of Ancient Sunlight". Good luck.

the one thing that doesnt seem to crop up much is - dentistry

if the collapse happens and money is no worth then having a good set of gnashers ( even if paid for by the NHS) will see you through 25 years or so .

can't think of a better investment than that !


How about being a dentist?

maybe , but I was thinking along the lines that all the dentistry tools , equipment would be back to the 18th century
level..... (ouch!)

hmm, eye laser treatment comes to mind as well. plus any hip replacments

nothing to do with looks ie cosmetic. you don't want to standout too much I think.

and yes , once you've taken car of being fit as possible by excerise an diet but I took that as read or atleast you'd get that for free when the SHTF ! ;)


I've been spending a lot of time this year getting medical/dental procedures done that I put off for awhile...want to get these done now while I still have insurance and a high standard of care and medical tech is still available.

Also been investing in long-term health, spending money on acupuncture, chiropractic, and high-quality organic food (well now I'm growing as much of my own food as I can so that helps)...

I did the same thing myself this year. It's a very good investment to take care of any nagging health issues while we still have insurance and advanced medical care available.

I find it sad that at this rather late date we're still talking about what new resource sets seem best to switch to for getting the best compound financial returns on our investments. Shouldn't it be common knowledge by now that that search strategy for ever compounding returns, in particular, is what got us into the sorry situation we're in? Our main problem is that, because we share a planet, it charts everyone toward having to run ever faster to stay in one place searching ever more intensively for how to survive because everyone else is doing the same thing.

The new paradigm, (if you were learn from how successful natural systems take care of themselves) is for the whole system to back off its multiplying strategies in time. It's hard to talk about changing ones way of thinking, and since nearly all conversations on the topic are still reasoned in terms of deterministic systems rather than natures other scheme. Natural systems also have opportunistic learning pathways, with learning parts following each other's leads.

The first rule of opportunistic systems is learn to multiply, yes, but that fails dramatically unless the whole sets a point of completion for its self-investment strategy (whether the parts do or not). The whole system's response has to be somewhat short of allowing the exponential search path of growth take it to a point of collapse in exhaustion. So the working question for the "new paradigm" is "How does my strategy help bring the whole systems's search for growth to a natural point of completion?" I don't hear that question in this post at all.

So the working question for the "new paradigm" is "How does my strategy help bring the whole systems's search for growth to a natural point of completion?" I don't hear that question in this post at all.

I did write:

As a social species that implicitly values rank, we will never all be equal, and our makeup virtually guarantees we will continue to compete for status. But channeling our penchant for competition towards the human and social capital areas will be better for us and better for our planet than competing for natural or built capital.

You are right, but not enough people understand that yet -as EO Wilson says, we have to ground behavioral change in ultimately selfish reasons - this post was not the best topic for Campfire but the topic was the bee in my bonnet yesterday.

The supply side (given our precise situation) hinges on oil decline rates. The demand side hinges on changing values - which one dominates will be non-trivial.

Thanks for the graph.

Wishing it so doesn't make it so, however, particularly if the solution being recommended is the same as the one that caused the problem. Competition for status isn't the problem. It's competition for status using an exponential multiplier technique that works fine until it makes your life support system unstable. I gather you don't know that that's what you are recommending people invest their money in... Really, where is "peak money" in your recommendations. What I'm seeing in your recommendations is alternate routes to "peak returns".

Forgive my frustration, but I've just been writing on how the whole damn intellectual community is shrinking from asking how our solutions are the main source of our problems (because we keep multiplying them...) and how all the visionary models for steady state economies have "peak wealth" but still neglect to have "peak money". Failing to deal with glaring contradictions is not "genetic" as so many people are saying these days. It's just failing to deal with glaring contradictions.

I made only one recommendation in this post and that was for people to reduce desires. I think there is some disconnect here as it seems we are on same page - perhaps you just skimmed my post - I mentioned peak money early on - we have 2,000 trillion+ in obligations due to a fiat based leverage/credit splurge in order to 'obtain' supercharged status/wealth that before the 1970s was reasonably linked to primary goods - further, the terminus of such (2004-8) sent an erroneous signal to market that energy supply was much higher than it would have been without the supercharged credit- again - that was not point of this post but I will write another on it to clarify. Again, it's not my style to make recommendations and I don't think I made any other than 2nd to last paragraphs.

And I fully agree with your edit that our solutions are main source of our problems. That is why I am here - to accelerate discussions on these topics - 9 out of 10 readers are probably going to be pissed off - (and for different reasons), but some strands of truth filter up and some options that once were open are understood to not be so.

I forgive your frustration...;-)

I think the first step to a solution is not to reduce desires but change them.
If intellectual achievement where rewarded ( and I mean with respect not money etc.) to the same extent that being able to throw a ball well is today that it would become popular to develop ones mind.
One problem is that it takes one to know one and high level thought blows right by most people completely unrecognized.
Changing culture is very much like turning the Titanic when you compare how long it takes with how quickly it is needed.
I think the first people see the iceberg but it is to late to avoid collision.

I'd agree that big things can't be steered quickly, but that means you have to use nature's method, continually accumulating changes over time, while remaining responsive to the new conditions so created. I think people have both great sensibilities as well as horribly misguided ones, but mostly can't tell the difference. That makes our steering rather inconsistent, and not accumulative. It seem what would help them see the difference and let them be more consistent is better ways to perceive the realities involved.

That modern science all but dismisses the existence of natural systems (representing them as following imposed outside pressure rules rather than developing their own internal organization rules...) has a big effect on anyone's ability to see the working parts of the environmental systems that we're trying to steer, for example...

Great! I would like to direct your attention to a curiously ignored fault in the money system, whether using fiat based money or any other kind, that the central intent of the regulators is to stabilize the ability of people to use money to earn a stable return and continually multiply their own money. As long as people do add their investment earnings to their investment capital, our whole economic system is then being run much like a Ponzi scheme. What endlessly multiplies is individual ownership of the earnings of other people's future work, just by compounding unearned income, which grows exponentially until something goes haywire.

There's an exceedingly sneaky way to foil the scheme, first suggested by JM Keynes and then studied by Kenneth Boulding, two visionary real world economists. As the physical economies start to underperform the growth of money (as was happening recently until the financial world collapsed) those with accumulating ownership of work that has not been done yet could relieve the growing disequilibrium by spending (divesting) enough their money. What I noticed is that could be instituted with a simple rule (and perhaps adjusted to for special interests so long as that didn't void the rule) that everyone with investment earnings spend all their investment earnings, and so ending the endless multiplication of ownership without labor when the physical world can't handle that any more.

If the economy is not pushed to overshoot and collapse, the odd effect is that investors will again be guaranteed to get healthy returns for investing, but only from investing savings from their own earned income. They'd have to spend all the unearned income received from that. I think that's a fair compromise, keep the economy from collapsing and give up my right to own an ever multiplying share of something I'm actively driving to collapse.

Anyone joining the movement would be motivated to complain loudly about others who are not so inclined (also then having put themselves at a competitive disadvantage to them)... I simply look at having a stable economic system as a physical necessity. That makes eliminating an inherent instability built into it equally necessary, and so only how to go about it in question. It runs against the magical thinking of mankind so directly, however, it's been slow to gain much of a following... What questions does that leave open to you? What do you think?

How about no interest. Have equity share as the investment relationship.
Dante had a circle in hell for usurers which back then was defined as any one that lent money at interest.
If the fortunes of the lender and the entrepreneur are aligned things would probably work better.
Money should not be able to make more money based just on time. It should have to improve conditions or the lender shouldn't get rewarded.
The due diligence alone by the lender would be a huge improvement.
Just some quick thoughts.

Proge, Yes, that's a common idea for how to solve it, like the Holy Roman Empire prohibited and Islam supposedly does too. By eliminating returns on investment, however, you'd also be erasing one of the main reliable measures of how the whole system is responding to things, positively or negatively, and would also assure that lots of investment business would take place on black markets where people can get returns for helping with things that are really valuable to do. The return on investment you can get is actually one of the reliable direct measures of the whole system response.

That measure is overused, yes, but it is so difficult to understand how the whole system will respond to individual prospects, you really want to ADD other kinds of indicators about the value of investments rather than eliminate the main indicator of value that people have always used. Then if people spend their earnings you get investment directed to the things that the whole economy most values and ownership doesn't automatically multiply.

One of the added measures I've suggested using is total environmental impact, and use that to help determine the tax treatment of investment income. The basic idea is that investment is what chooses the new directions of the system, and people have a stewardship responsibility for doing that well, and it would help them do that. Determining tax status based on sustainability of investments would also draw a line between good and bad stewards of the earth too boot.

I didn't say no return on investment just to link the return to the success of the endeavor.
The problem as I see it is that the money is lent based on time and not the actual returns the enterprise may create.
Equity share so they both get the profit or loss. This will make the lender perform more stringent due diligence.
Another point I want to make is that money should represent PREVIOUS production.
Today it is conjured by usurers as a control device to enslave productive humans. What we should do is quit using their money and institute a parallel currency that is controlled by the people themselves and it can be fiat.
In fact the current system could be left in place and instead of having a few outrageously rich psychopaths trying to squeeze every drop out of the rest have any National interest collected go directly back to every citizen via "tax rebates".
I really should post all my ideas on this to get some feedback instead of this hodge podge I am throwing out here......maybe after I get my kid off to school later today.

The complete revamp I have thougth about and have seen the basic idea before and don't claim it is mine by any stretch is energy based value measuring.
Pretty straight forward.
What ever it costs in energy to produce is what it costs in energy bucks.
Intellectual capital is worth what it can save in energy and will get put into use based on this.
This may reduce innovation but only in superfluous areas and efforts will allways be directed at reducing energy costs because that is the scorecard.
We are trying to rein in wasteful consumption anyway so it is a positive step toward that goal as well.
I am writing this fast because I have to feed my kid..........I will come back to this thread later.
Just some thoughts for you to pick apart and help me fix if you so desire.

Edit: Another benefit of energy based money is that instead of panning for gold people will try to come up with ways of harnessing more energy.
This is a win win. Now that the artificial energy source of fossil fuels is becoming a limiter, this line of thought makes sense.
We need to get synchronized once again with the system that we are just one part of.

Porge, The catch is that way of controlling returns on investments would require some other true measure of "success" of the investment, which doesn't exist, and it would only protect the enterprise invested in from being limitlessly milked by compound investing... It won't protect the environment invested in, however. The environment still gets invested in and pumped for multiplying returns until the resources are depleted and all the enterprises in it are driven into increasing conflict with each other. That's the real reason that systemic investment failures occur, the natural tendency of compound investment in the environment to produce grand tragedies of the commons like we just had.

There seem to be solid reasons to treat the value of money as what anyone normally does, i.e. equal to what you can get for it. We just don't live in a theoretical world to make it possible to assign the value of money or products independent of the marketplace in which they are exchanged. That 'reality' vs. 'theory' thing is one of the main issues. The idea of using the divergence of money and material value is good, but the way I'd use it is to compare the growth of physical goods and services with the growth of obligations to produce more. Over the past 40 years those have been steadily diverging as the environment became less responsive and people began financing current consumption more and more with promises for future earnings... My approach to that dilemma, is in "concept$.htm" and considers compounding money in an economy with real diminishing returns asaccumulating misinformation about the real economy. At present, the relative values of the two need to be reset so that the promises people have made and the potentials of what they can accomplish can be put back in line.

Your idea to make the prices of things reflect energy content, rather than what others are willing to pay for them,is HT Odum's idea. If he had taken his analysis a bit further he'd have found, to his surprise, that the economies already quite largely work that way. When you study it you find the whole system is needed to deliver any product, and the only practical and accurate way to measure the energy the whole system uses starts with multiplying the ratio of GDP to whole system energy use and the market price. That says, because the economic system does actually work as a whole, energy is essential to each of the myriad steps in delivering any one thing and is it is highly liquid in how it is allocated to where it creates the highest value. As a result the price you pay rather reliably already represents a good measure of the whole system energy consumption for delivering it to you! I have more on that "dollarshadow" concept of the embodied energy of money following the link above.

The key difference between your approach and mine, perhaps other than my having spent more time studying the issue, is my using natural system units of measure and your using abstract units of measure. The use of theoretical units for real things is the real problem that caused Marxism and the Soviet Union to fail, as well as lots of other central control economic schemes. There just is no way to predict or define what learning processes are taking place in the real economy, and so it's impossible to find a reliable abstract model for it just the same way as it's impossible to accurately forecast the weather.

How efficiency effects things also turns out quite different when you use real system measures. In a strictly non-growing economy improved energy efficiency would have the effect of reducing energy use, true, but in a growth driven economy like ours the effect of improved efficiency is like that of productivity. It always multiplies total energy use, as it has consistently throughout history. Our impression of the opposite is an illusion. Think of how businesses use efficiency to increase their output, and think of what they do with the savings and added income they then have available for other things as a result... Efficiency improvements are profitable because they create new opportunities to do other things. I think why people generally see that backwards is our natural subjective viewpoint. People seem to assume the effect of something on the whole system would be a multiple of the effect it has on themselves, but in this case they're opposite. Improved efficiency improves your leverage on the environment. It may relieve strain on your resources, but because it lets you do more with less, it's increasing your strain on the earth... I hope I explained that right. It's really important that we begin to ask systems questions like these.

See all the twisted things systems thinking can get you into?! Unfortunately the above also points to the whole sustainability movement making some very considerable errors in strategy at the moment...

Thanks for that fire hose of information!

Taking just one issue.............I am fine with leaving money as it is, a unit of exchange not connected or based in energy or any other tangible.

Not knowing how familiar you are with the US monetary system I will just ask. Why is it necessary to have an extra entity called the Ferderal Reserve from whom the Treasury has to borrow every dollar that comes into existence?
Applying Occam's Razor, the answer is that there is no reason at least not a legitimate one.
The entire banking system down stream from the Treasury could be left as is but instead the Treasury could issue the money at interest to member banks when they needed funds for reserve requirements and then the interest collected by the Treasury (that is the US people) could be a profit for the Nation instead of for the Criminal Fed and not a debt of the people.
I would also increase reserve requirements to reduce the leverage banks have and to also reduce the dilutive effects of fractional lending.
Not only is the Fed obscene but it is unconstitutional in the sense that only congress has the authority to coin and set the value of any currncy that includes foreign as well.
This is more than just suspicious and actually it is blatant.

If you want a good read on this situation The Creature from Jekyll Island by Edward Griffith.
It's a good start.

The rest of your comments I have to read over and digest to see if I can find any objections but more likely more questions.

Hopefully I can run into you again here and pick your mind a bit more.

Well, if you have further questions feel free to contact me by email, id at synapse9 dot com. I'd be glad to hear what I'm not adequately explaining. Various people are telling me that I need to do better at that.

As to the monetary system, the historical accidents in how the Fed was created are indeed curious. I don't think those are the great flaw, though. I also don't think it's necessary borrow money into existence (so money is created for promises to generate a return). I'd listen to any real benefit people saw in doing it another way. I believe the Fed does make a large profit doing that, and that the profits do go to the US Treasury, though.

The great flaw in the Fed I see is not how it is set up or operated, really. It is that it has a flawed task. It's job is to stabilize the interest rates and continual compound growth of money and the economy. One of the curious features of exponentials is that the best straight line approximation of any exponential, no matter how gradual, is a vertical line at the time you ask the question. Exponentials rise ever faster the faster they rise, and so naturally outstrip any other linear trend other than instant infinity, is the point. Theoretical models can remain stable and follow exponentials just fine. It's only physical things that can't. That the Fed is assigned the task of stabilizing a theoretical behavior for a real system that can't perform it is the problem.

Exponential growth invariably pushes any real system beyond it's own limit of stability, and the Fed's job should be to pick the right time to turn off the money pump so the whole system can stabilize at a sustainable level. Because they think the real world is a theory, it's actual (unintended) job is to maintain the stability of growth as far as possible, to produce the biggest and most destructive collapse possible. They don't see it that way, of course, not being persuaded that the physical world has limits that theoretical worlds don't...

Justin Fox, the author of the new book about wall street called "The Myth of the Rational Market" just said something very interesting.

Fox pointed out that all the people who only last year were screaming for health care reform are now bailing out, that all those who screamed for oversight of banks and financial institutions are claiming that Obama is attempting socialism and trying to destroy the American nation, all of which means...

Except for prices, we are back about where we were a year and a half ago as if nothing ever happened! America's amnesia is now getting so rapid fire in occurance that it is really national narcolepsy.


Would be interesting if it were true... ALL the people who voted for Obama are now against him? Anecdotal only, but everyone I know who voted Obama are still standing behind him. It seems like the Republican party is making those claims... and I don't think they were ever screaming for health care reform.

I would love to see where he gets his data from.

"Any thoughts on farmland?"

Speaking as someone who grew up on a ranch in central Alberta, I don't recommend it for retirees, especially city slickers with no practical experience. If you intend to rent or sharecrop it, you can be taken for a ride by the tenant if you don't know what to look for when checking the farm. If you really must have your Green Acres, then go for rangeland grazing, which is the least intensive form of farming.

Bear in mind that you must be resourceful and able to fix things yourself, like plugged septic tank lines or a mile of barbed wire fence on rotten fence posts that need replacing. You have to check on the herd twice a day, no matter if there is a howling blizzard or you are sick with the flu. It is hard work even for a young man, and more so for older people. Resources are fewer in the country. If you have a heart attack, the ambulance may be hours coming.

I suggest a better idea might be a small acreage where you can keep a garden. Before buying goats or chickens, check the local zoning laws; you may get a nasty surprise. Livestock of any kind ties you down; you can't go on vacation without finding someone reliable to look after them, which may be more difficult than you think. The daily maintenance of livestock is universally called "chores" by farmers, and you'll find out the true meaning of the word when you do.

My investments for Peak Oil are:

Own my house free and clear. Cities will be safer than the countryside if a collapse comes (which I don't really believe in; I think we'll just ratchet down slowly to how our grandparents lived).

Physical gold as 1-ounce coins, for my old-age pension. I can sell the coins one at a time as I need the money, as opposed to those GMAC bonds that used to pay 10% and are now worth their weight in scrap paper.

Physical silver, partly for long-term, possibly for trading.

Private-equity physical conventional oil, in the form of mineral rights and partnerships in producing wells. There will be a lot of stripper wells available in the future when the petroleum companies can't afford to run them because the output is too small, but a couple of guys with a pickup truck can keep them going with baling twine and the occasional spot weld. I don't like oilsands because they need a high and stable price for oil; my conventional wells make money at $20 because they were all drilled about the time I was born and only have low maintenance costs.

Non-perishable food and other supplies. I'm not saying five years worth like some survivalist, but enough to get by if there are transportation disruptions or daily power outages.


For most of your savings you want mint gold and silver coins.
Coins, ok? Do NOT buy piles of junk/scrap gold.
But a small bag with a few ounces is a good idea in my opinion.
It doesn’t attract much attention, you can pull a wedding band and sell it and still look like just another poor desperate guy, even if you have a small bag with a couple dozen more used ones bought at a pawn shop.
Going around offering mint gold and silver coins is a good way to get robbed, shot or kidnapped.
You can go to the jewelry store, bring out your great grandmother’s favorite bracelet on the counter (BS, you bought it as scrap on ebay) and cut just a few links of chain with your Leatherman tool.
Just the amount of weight you need to buy some groceries next door, just a few links. (chains make this so much easier)

Like Pat, I constantly analyze the financial scenarios and dream about possible personal roads that I could take. Unlike Pat, I enjoy working with the land so I am aiming to grow crops. Lately, I have been considering buying land in an urban setting since crops need to make to the market pretty quickly or you need some kind of refrigerated truck to haul stuff around which is the last thing I would consider using.

I don't really fret about outcomes anymore -- I have realized that the meaning of life is impossible to determine and I take much joy and happiness in the hours that I am healthy and free.

IMO mobility hasn't been stressed enough. Deep community roots are important when things get rough, but not all areas will slide at the same rate and those that are able and willing to move will often have a psychological advantage. Someone posted a video about Detroit the other day and the viewer wants to ask the interviewees why they are still staying in a place after all the motivated humans have left.

Perhaps Detroit (and other "lost" communities) will find that once the ambitious ones are gone, that it will be possible to establish a sustainable way of life. Just a thought ...

1) How many of you experience similar feelings with respect to investments as Pat does?

I may have when I was still working a corporate job, but since I found out about Peak Oil (4 years ago) my life has changed considerably. I now work locally, cut my income in half, but, at the same time, have more quality time at home, and don't need to continually update a corporate wardrobe ;) (this is somewhat of an oversimplification, of course)

2) Will monetary wealth hold its value to the next generation?

I doubt that. With the mountain of debt we have, and an escalation of prices when oil prices start to climb, debt-payback may become very difficult, if not impossible, for most people.
While banks could, theoretically, repossess all the houses, eventually they will own more derelict homes than they can find buyers for, with no more revenue - so a way will have to be found to let people stay where they are, and pay at least something on their "mortgages".

btw: I don't believe anyone really "owns" their property. You may have your name on a "deed" or "title", but essentially, all that means is you are responsible for the property taxes. You are still basically renting from the bank until you are all paid up. Even if your mortgage is paid up, free and clear, try not paying the taxes !

Homes should be seen as what they really are - revenue generators for neighborhood services - so we should be trying to make our properties productive in any way we can - by growing food, making home crafts, woodworking, producing small livestock, beekeeping, power generation - anything productive rather than consumptive.

3) How can people that understand the implications above most effectively move more towards a portfolio of natural, social, built and human capital when we all still live in a culture that sends strong cues favoring financial (marker) capital?

I think necessity will drive this. When the need for food overcomes the need for shopping for the latest new widget (Maslow's Heirarchy of Needs), people will start to value things differently. I think the reason we value money so highly is because we, in general, don't lack much else.

4) Will we ever get social/media cues that frown upon excessive financial wealth, but instead laud men and women with skills, knowledge and generosity? If so, would you give up/allocate some of your money to increase your standing in these other areas?

One has to try to tune out all those old social cues. It may make one seem a little odd to one's former peers, but one rapidly develops new relationships with people who have a different set of values. It takes an effort of will, however.
In terms of giving up/reallocating some of my money, I did most of that 2 years ago by investing in a food garden, garden tools, solar panels, food storage - I left some money in a portfolio, some in cash, some in natural resource funds - but I never really pay attention to that any more. I've become more absorbed with weeding tomatoes than watching the market.

Selling some things I produce at the local farmer's market has created relationships where people value my skills and knowledge of gardening. I'm a person who likes to teach, and be acknowledged as an expert. One has to know oneself and figure out what would really make one happy. I'm perfectly happy teaching someone about medicinal herbs ;)

5) Other
Gardening is a great way of tuning in to things of real value - you start taking cues from weather events, time of year, length of day, wind, rain, sunshine, soil, growing cycles.
There is a rhythm to it which becomes rather compelling after a while.
I find bringing in those first beautiful tomatoes of the season far more satisfying than watching dividend performance, and the loss of my squash plants far more devastating than a market drop.

Question : Does a billionaire have a value to a community, or only to him/herself ?
Answer: If the community needs food and the billionaire can't provide it, he/she has no value to the community.

EDIT : Afterthoughts

1. Who still thinks they will actually be retiring ?
2. If the economy no longer has the power to grow, where will interest come from ? In other words, in order to build wealth, people will have to be working at something productive, rather than sitting idle while the money "works".

This is another top shelf article that should be repeated every 6 months (and tweaked as conditions warrant). This is far too valuable to be a one-time blog entry.

1) Hopefully, every TOD regular has the same feelings, though not all might be as secure as a retired doctor. A 6.7% decline in existing field production means wrenching changes for markets and lifestyles, and businesses supported by disposable income.

2) Different currencies will have different levels of value retention. Note that the EU is back in a growth cycle and the US is lagging considerably. The yuan, yen, and kroner currencies, for example, will likely have different overall results than the US dollar.

3) By investing in the other 'capitals'. I've been learning about and planting fruit and nut trees as a part of landscape replacement, so that is both knowledge and natural food production. I've been active in the transition town movement, which covers many more areas. I'd say the best investment of monetary assets would be to purchase a home/lot/share in a community that is showing significant progress in their transition away from oil dependency (and the many other aspects that go along with that).

4) Greed is powerful, and the step you are describing is a wide chasm. Of course, we've made similar strides in the past, such as guilds, republics, democracies, so we could make a similar progress in the future, though the greedy and powerful will foment upon this mightily as some form of socialism.

5) Some natural capital can be owned, such as wood, food production, shares in metals and energy, fertile soils, and skills, for example. A change in values toward real capital could transform awareness of the public commons. Many already have made this transition, some of them over a century ago (e.g., Teddy Roosevelt). We simply have to convince those who live by (and rule through) greed.

1) I don't think farmland is the answer, at least for someone who doesn't want to farm. Pat's most valuable asset is probably his MD.

2) Will money retain value? Quite possibly. Will you be able to transfer it to the next generation? Maybe not.

3) Greer writes a lot about this. I think he's probably right. Change is coming, but it's coming so gradually that we need to do things that are economical today, not in some imagined future (not least because we're really, really bad at imagining the future). For example, a farm not in the country, but near a city, near customers who may be interested in local and/or organically grown food.

4) I think most of us do give up money in exchange for social capital. It's why we give money to homeless people on the street, why we put money in the collection plate at church, why Bill Gates was shamed into starting his foundation.

5) This is the biggie, IMO. And I fear we've reached the point where it can only be addressed globally. Which means some kind of global government. And I don't think we have the resource base to support that level of complexity, even if we wanted it.

I would say "invest in yourself".

I was reading about a Manhattan attorney who was laid off this year and went to live in Nepal, she volunteered for a charity there and now seems to be rethinking whole idea about what to do with her life.

I would invest money in learning more about what was possible for me to do. This lawyer said if she hadn`t lost her job, she would still be in NYC working. But she has a new view of the world, how others live, what`s possible.

One of my fantasies is to live in a Buudhist monastery. I would like to invest money in a trip to live at one for a while and find out about it, learn about this more.

There are many old techniques (weaving, making dyes out of plants, spinning, recycling metal using a forge, fixing bicycles) etc. that I want to learn very badly and would consider investing in by taking lessons and buying materials. I am proud to say that I have learned much by doing a little veggie gardening (invested in a few books) and I have improved my sewing (books again) and can cut hair (learned by practicing and I had to buy the scissors of course).

This sounds a little silly but PO is giving many people a chance to rethink their careers. We can go slowly, be creative, look around, kind of enjoy the new possibilities.

Investing would be for me getting an education in how to manage life where there is less fossil fuel energy available. I would travel to "less developed" regions and stay in villages. I would read books about the things I wanted to find out. I would spend money on a computer to read TOD!

I don`t know if buying farmland is a good idea. It is if you can manage to use it well and profitably. But if you are good at singing, or making things, or cooking, or preaching or doctoring or any number of other valuable skills, then maybe farmland is not your only option or even your best one?

The thing is that the generation that is now around 40 (my generation that is), we (the middle class ones I mean) really had only one choice when we were young: college and a white collar job. (Machines and factories were monopolizing all fun jobs where you get to use all your senses, for example, sewing, cheesemaking, wine-making, cloth-weaving, pottery, etc. so what was left for human beings was banking, teaching, management, etc.)

So I feel like PO could be a great chance to jump off the white collar wagon and embrace a lifestyle where I won`t have to work with paper all day. And I`d invest in anything that could help me explore those possibilities: books, travel, language lessons, apprenticeships, etc.

What to invest in? Seems fairly obvious to me that if you invest in something that has had monetary value since time immemorial, something that requires large amounts of energy to extract, something that is used in the best solar reflectors because it gives the highest efficiency solar reflection, something that is a natural anti-microbial in an age of increasing ineffectiveness of antibiotics, something that is destined to run out entirely in about a decade according to the USGS, then you can't go too far wrong.

That bar is being lifted with one hand? I have containers that hold twenty 10-ounce silver bars and I have to lift with both hands.

I find the best compilations of articles and blogs about bullion at and

Not all Peak Oilers may know that we hit Peak Gold several years ago, and that is not disputed by anyone. No Daniel Yergins amongst the gold bugs.

I am increasingly convinced that gold markets are being manipulated. 3 firms control 99% of short interest and are leasing out gold from Ft Knox. It's complicated and as I said Im not yet fully convinced, but if natural market forces allowed gold, at any time in last decade, to rise to $4,000-$5,000 an ounce, there is no way that interest rates, and therefore mortgage rates, and therefore some semblance of economic growth could have been achieved.

Sure, everyone knows the precious metal markets are manipulated, Nate. TPTB will continue to do this ... until they can't. Reason being that a runaway Gold/Silver price is their worst nightmare and means the jig is up with fiat currencies (aka "faith-based money").

But remember, Fortuna will spin her wheel, and nothing will stop her in the end.

That bar is being lifted with one hand?

No, it's a 1000oz bar. It's been photoshopped into mid-air :¬)

Silver, unlike gold, has been used up (eg photography, industry) and lost as it is mined. There is less above-ground accessible silver than gold, some people argue. At its current price it is an unbelievable bargain. But make sure you buy the metal, and not a paper simulacrum like an ETF. I really cannot imagine how this investment can lose, long-term.

A good campfire debate. But could I just point out that most people here seem to be 'boomers' who have been able through their lives to take full advantage of the cheap energy induced 'economic miracle'. Your generation actually has capital; be it mortgage-free property, financial assets or big-ticket items such as yachts.

My generation, which came of age in the 90s, have only ever lived in debt: personal or government. As such there are not many people of my age who actually have any capital to protect. I hate to point fingers but the boomer generation has lived in a golden age, and if one is being honest, has failed my generation and future generations in preparing the world for the necessary changes which will be inflicted due to the end of cheap energy.

It seems as though this debate is a bit two faced. We all know that monumental changes are heading our way but still people who perhaps should know better are trying to hold on the principle of 'ownership'. If we are to stand a chance of a peaceful transistion then capital, and particularly land, will need to be released from individual ownership to collective ownership by the local community.

More whining about boomers. Suck it up, kid. Elders have always controlled the wealth. You are my children's age. They have gotten and will get whatever I have to give. Most people, I think, feel the same. You can't take it with you.

Well old boy it sure wasn't my generation who mismanaged the amazing endowment of FF. Rather than use the Earth's gift sensibly to build a sustainable economy at peace with the biosphere the post-war generation has gone on one almighty bender, raped the Earth for material gain and are now retiring screeching about their 'right' to have a good pension/social security and health care, provided off the back of my generation's labour. Perhaps you need to fess up to your generation's calamitous greed!

Yes, and if you had been born in 1945, you'd have been right in there with them (see post below). Ya know what they say about hindsight, right?

If the Boomers really cared about the earth, they wouldn't have had kids.

Hey watch it!!
This site is gonna turn into generational warfare and the flags will start flying.

some of us didn't, eh? But yeah.

If we are to stand a chance of a peaceful transistion then capital, and particularly land, will need to be released from individual ownership to collective ownership by the local community.

You first!

You first

I don't think you have read my post correctly. I (we) have no capital, no land, nothing to give up!

Serious point here. When wealth is too narrowly held history shows that civil unrest/revolution is always just around the corner.

Hopefully, Earthmarines, at all costs, will give most of the land back to remaining species [those that created all the value so long ago].

Your recurring mention of this theme is interesting, even if I doubt it'll happen. Drop me an email if you get time.

HAc, don't be too hard on us boomers. We didn't know any better. What the hell; we grew up watching "Route 66" and "Lost in Space." My own father was a rocket scientist. We were simply doing were simply trying to live up to the prevailing truths of the time. My father repeatedly told me as a child that it was my "duty" to better myself -- that this was the obligation of each generation.

I graduated from high school in 1973, my head full of the same garbage that most others of my generation were filled with. The following year my father lost his job and was a year in finding another. That's when some of the shine began to come off of my world view but it wasn't until I got to college that I heard anyone speak of "limits to growth." So, boomers of my age cohort have had a lot of rethinking to do. It hasn't been easy.

One final thing I'll say: many boomers are ill-prepared for retirement. While some of that owes to our fiscal profligacy, some of it is the result of our having to continually reinvent ourselves in an ever-changing job market. I'm probably better prepared than some, but all it will take is another 50% dip in the Dow, and my wife and I are cooked. For what it's worth, we've generally lived pretty frugally and have tried not to live beyond our means.

Fair points.

My anger is not at the boomers, per se. Rather it is at the woeful, woeful policy decisions being made at the moment. I should point out that I live in the UK, but the US and UK demographics, economies and policies are one and the same, so my points are valid either side of the pond.

The lack of rational debate, and the consensus of our governments (which are 99% comprised of wealthy boomers) is mind blowing. All we hear from these numb skulls is that we must return our economies to 'growth'. I actually am physically sick whenever I read this. More debt, more pseudo-growth, more raping of the Earth, more pollution, more consumption, more population, more, more, more, more!


We are human beings, not human doings. What is wrong with just living? We have made the technological advancements which have enabled us to lift ourselves out of grinding poverty. We have mastered the art of providing clean drinking water, healthy food, clean electricity and safe shelter. Why can't we just be content with what we have? Why do we allow our dumb politicos to try and convince us that we need to hold onto a fiat currency, debt based fractional reserve monetary system? Why do we need to send our soldiers to Afghanistan to 'bring democracy' to the 'poor, retched backward peasants' who refuse to eat MacDonalds and drink Starbucks coffee. (The UK lost 5 soldiers defending a pooling booth where only 12 Afghans bothered to turn up and vote. I am sure their mothers can sleep easy knowing their sons helped those 12 people vote)

We don't need 'capital', investment banks, stock market analysts, credit cards or any other crap we think makes us and advanced civilization. A truly advanced civilization would have a healthy world view, would see the biosphere as our host and not our general store. We would provide shelter, water, food and education for our peoples. We would be a people of science, not consumption. And we would have more time to write poetry, create great works of art and music. You can judge the level of civility of a society by how it treats animals and how great its artistic heritage is. Well at the momment we squash thousands of cattle into Aushwitz-esque 'fattening pens', have football field sized barns full of chickens which can't move. We catch every last fish we can and through our Creed of Greed we are killing off other species like there is no tomorrow. As for the arts, we fawn over 'artist' who throw a bucket of paint at a canvass and call it brilliant when it patently isn't. Our music is so bereft of substance that it all sounds the same, with few exceptions. And our architecture is nihilistic and functional at best, monolithic towers of glass reaching to the sky like modern day Towers of Babel.

Seriously, watching our 'developed' world self destruct is very hard to take. And the real rub is that 99% of the people DON'T CARE!!

I don't suppose you have ever run for office. If you had it might broaden your prospective. You want people to like you so they will vote for you. You listen to six different people and they drag you in six different directions. You want them to vote for you but you don't want to look like you have no "positions" or "values." So you equivocate in the most obscure way possible just to get a majority to vote for you. Then you keep the balls in the air as much as possible in order to keep getting elected. I was never very good at it but making the effort taught me a lot about how humans work. It's a bad game but tell me how a better one might work. Democracy sucks but give me a better alternative.

When I was your age the power elite were the WWII generation and I felt very much the same about them as you seem to feel about folks my age. Keep in mind that that generation ran things for a long time, through Reagan and Bush the elder and, in your case, Thatcher. I could have been you 30 years ago and what did it get me? A lot of frustration and depression, but also the satisfaction of living an ethical life, that's what, for whatever small change it's worth.

You want people to like you so they will vote for you. You listen to six different people and they drag you in six different directions. You want them to vote for you but you don't want to look like you have no "positions" or "values." So you equivocate in the most obscure way possible just to get a majority to vote for you

And that is what is so wrong with capital-driven democracy. It is all about appeasing 'the people' rather than providing effective leadership. Strong, visionary leaders such as Churchill are good during war time (and by that I mean when a nation really knows it is at war, rather than the bizarrely non-aware public of today's wars). What we need is to change our entire perception. We should adobt the mentality of being 'at war'. People are much easier to lead when you can point to a clear and present danger. That is why I am so pessimistic about the next few decades - which happen to be the 'productive' part of my life. Until we have a real catastrophe - a climate 9/11 or massive oil shock - then there is no way that our politicians will stop being the vote-tarts that they currently are and start being the genuine leaders we need.

Have you ever heard of the Zeitgeist Movement?
They are kind of technotopian but most of what they think is spot on.
Also there are others that advocate resource based economics.............which is what I think you would agree with.

Not much point in adding to the inter-generational debate -- we are
all embedded in a culture which we can see about as well as fish see

However, give the boomers this: the civil rights, women's, and
environmental movements (well, at least we started it but didn't
follow through). And, the sexual revolution.

What "movements" do the post- baby boom generations have?
The Ipod, texting, p2p movements?

I castigate my ecological students for not really getting behind
a "sustainability movement." They admit they are consumerists.
And, in their defense, there is no "out group" enemy to do battle against.
At least other movements could hate the racists, male chauvinist pigs,
and sexual prudes.

The problem with the "sustainability movement" is that the enemy is us.
There is no enemy out-group.

But still, I emphasize to my students, you will be living through this... you
need to be at the forefront of the sustainability movement. You need to
burn your water bottles.

They look up at me for a moment, pause for a second or two, and then
return to texting....

memills - you make a good point. Part of my frustration is that there appears to be nothing that can be done. I can't opt out of the current Creed of Greed society. I can - and am - responsible for making sure that I live a sustainable life, but I still have to go to work to earn a living in a system which I categorically hate. I still have to listen to enthusiastic politicians bang on about 'returning the economy to growth'. Our dipshit chancellor of the exchequer (treasury secretary) has based his numbers for bringing the the UK's national debt under control with figures of 3.5% annual gdp growth in real terms from 2011 to 2031. Which is conveniently one doubling! so in order to just arrest the increase in national debt, never mind reducing it, he is placing his trust in our economy DOUBLING in real terms!!!!!!! Twice as many cars, twice as many computers, twice as many fish caught, twice as many cows slaughtered, twice as many light bulbs burning twice as much energy. I know in reality not everything doubles, but the number of value-added transactions will have to double. This is the very definition of crazy. So here I am trying to navigate the next two decades, having to be part of the most innumerate, idotic plainly fraudulent system. You must allow me to be just a tad concerned about the future!

Hey HAClkand;

You have made some valid points, and it is certainly healthy to vent your frustration and anger. Better than blowing your head off with drugs or a gun.

The root of the economic system we have has been around for some time. I think that it important to remember that the exponential population growth that we have experienced since the 1950 has certainly thrown fuel on the fire. Like all the global issues we face today, they all stem from this catastrophic burden that ourselves and the planet must bear.

I say we induct the Dalai Lama as our inaugural world president. Then we will truly have gross national happiness!

HAcland, forget about the dissembling political system, its just there to distract you, absorb your anger and deflect your energy to render you harmless to the status quo. If you're going to do anything then the first thing you need to do is ignore politics entirely. You need a clear mind to start thinking things through.

"Part of my frustration is that there appears to be nothing that can be done. I can't opt out of the current Creed of Greed society"

You're in the grip of a totalitarian economic system. Of course you're going to feel frustrated, you're an economic slave after all, but don't blame it on other people who are in more-or-less the same situation as yourself. Blame the system, which you yourself are a part of, but which you cannot change.

So, if you're going to navigate the next two decades you need to make a choice; take the red pill or the blue one :) Stay within the totalitarian economic system or leave it.

Obviously, if you leave it, then you're going to have to change the way you live completely. It's not an easy option, but many people do take it.

You sound like a very earnest and caring person HAcland. I was once where you are...pouring over media, reports, "news" of all kinds...getting angry, feeling frustrated and powerless. I even watched TV for a while. Know what it got me? Depressed! Hell, I'm only 35! Then it started - I went to the WTO protest in my city (Seattle) and realized that I WAS powerless! Right where they wanted me to be!

Now here's some deep stuff HAcland...if I may advise. Take these reports, factoids and figures, and especially TV and just throw it away! You have already accepted(it appears) the basic truths espoused here at TOD, right? Well then, now is the time to act, right where you are. If you feel anger or frustration, most times just ask yourself this question (I do this all the time now):
-Can I do anything about this issue right now or in the near future, that will make a difference? That will help me to feel better?(BTW this question often helps me to quiet my mind whilst trying to fall asleep haha)

Yes? - Obvious answer
No? - Take a deep breath and move on to something whose outcome you can affect.

This strategy has helped me in myriad ways in the last 10 years. Now, if I happen to see a TV news report on the economy or our wars or other ephemera, all I hear is muhmuhmuhmuhmuhmuhmuh! It's great!

-fixie is the leading cause of death in America...Terrorist threat level ROUGE!...Glenn Beck dies suddenly on air of apoplexia, CNN found one surprised citizen, EXCLUSIVE INTERVIEW IMMINENT!...Michael Jackson muhmuhmuhmuhmuhmuhmuh...

How about the free information movement. The last time something on a scale as grand happened it was because of an invention by a guy named Gutenberg. And the result was many, many more movements.

You got me on the free information movement.

Can't eat information, tho. Still need a sustainability movement, or we all (or most all) eventually starve.

It seems to me investing in equities is the best way to go. You might argue that these will be nationalized, taxed significantly, or fall with rest of the economy, but they are the best and easiest bet I have. As someone who has a career and only limited capital it would be unrealistic to traipse off into the country or buy a home. As someone who has another 40 years before retirement, equities are still the best way to grow my money. I like those that are leveraged to the price of energy, in sectors such as coal, oil service, steel, minerals, energy infrastructure, industrial/residential/timberland REITs, agricultural, railroad, mining vehicles, phosphate/potash, defense, nuclear power, barge, rail/barge builders.

The stock market existed long before easy oil and I hope and assume it will persist afterword. I am unable to prepare for the apocalypse, and so I only prepare for a moderated BAU. My first investment was in coal; the BTU reserves are so cheap relative to oil and gas that I expect coal will be the best performer (as long as it is not nationalized/taxed to death that is.)

As an old fart, I obviously had to confront these issues a long time ago. At this juncture, all of this investment stuff is really moot.

But, what were my guiding principles 40 years ago?

1. Capital preservation - as I have noted before, the Depression seriously impacted my/our investment strategy. In other words, I was highly risk averse. To me, it was better to have no debt and usable stuff than potential market gains since, within reason, they would at least retain their value.

2. Realistic view of the future - we really foresaw most of what is happening now back in the late 60's. It didn't take a PhD (although I did work on an MBA for a while) to see what has developed. There is/was a huge literature base available. All one had to do was connect the dots.

3. A change in philosophy - few people talk about their philosophy of life. When I graduated from college in 1960, my aim was to climb in the organization and make bucks. As my wisdom grew, I saw that the important thing in life to me was time. Therefore, I was ready to live low on the hog to "buy" that time. And, as indicated by my first Campfire Essay, A Trip to Todd's, this is what my wife and I have done for the last 35 years.

I believe investing in anything other than preparing for one's personal/family/community survival will result in not only financial loss but also anger directed at one's self for making a poor choice.


I have roughly 15 years until retirement. Just bought a townhouse with 30 year fixed mortgage, in a very high priced part of SF Bay Area. So, I'm pretty much resigned to the idea that we will need to move to a lower cost area come retirement.

I took a chance back in 2005 and got my retirement money into a "traditional" IRA, by accepting an early retirement package (LOL I'm back at the same company now and slowly building up a new 401K). Consequently I have control over 212K of tax-deferred money. Currently it is invested in 5 year treasury bills earning 4.2% interest.

I'm enough of a doomer to think, that money could become worthless even though it is "zero risk". Maybe I should use it now to acquire the land for our retirement home. My accountant tells me that I could purchase land and hold it in my IRA, if the IRA is set up with a non-bank custodian. Using the property in any way (like a vacation house) would disqualify it and incur penalties.

This summer I spent a week helping my younger brother build his retirement house in West Virginia. He found a remote farm that is being developed as 3-4 acre lots, it fronts the Greenbrier River Trail and is surrounded by National Forest which has been designated Wilderness. There are bears and deer wandering around the place. So I'm thinking about transferring my IRA to a non-bank custodian, having them purchase 2 or 3 lots adjoining my brother's place, and keeping the remainder liquid to pay property taxes or assessments for road maintenance, etc.

If BAU continues, this could be a good investment. I could sell 1 or 2 lots and use the proceeds to pay taxes and build on the remaining lot. If the world goes to hell, at least I've got something to call my own, and my brother is living next door.

b) in a world that eventually must move away from increased specialization, globalization, and efficiency, and more towards local/regional scale, redundancy, and resiliency

This is a big, Big, BIG assumption.

Specifically it assumes no high speed global communication, and no global scale shipping. Neither I think are likely to prove true.

Specialisation and globalisation will continue to have the advantages that they do today in delivering niche expertise to the widest scale market and making it pay. That's particularly true of those countries that are resource poor - its their marketable quality.

Efficiency continues to be an aim, although with a rebalancing to stable rather than unstable efficiency. More vertically integrated concerns, less just-in-time, more inhouse control of risk - but with a global reach.

When it costs the same to ship a product half way round the world by ship as it does to deliver it 50miles by lorry, there is no great reason to expect a dramatic shift towards regional/local/national scales if political/social risks are to be addressed.

Finally redundancy and resiliency comes from specifically NOT going local and NOT forgetting global scale communications.

While the social and political entities hold, the rest will hold too. If they break, then nothing, and certainly not small group subsistence farming, will survive.

I didn't say we would have NO specialization or globalization, just there would be no increase. And I'm reasonably convinced this will be the trend. Primarily because of the import substitution model is back in vogue as Washington Consensus loses influence. Look at Chinas recent announcement that they are protecting their rare earth metals as a national resource and limiting (or canceling?) exports.

I agree with you regarding efficiency, but not if efficiency ends up using more resources in total and spreading the pie thinner - then, in your words, the social and political entities won't hold.

On the contrary, if you are trying to keep a complex value chain going, say to manufacture solar cells, then with the possibility of social breakdown breaking out anywhere you need to introduce redundancy into your supply/manufacturing lines. That way if you 'lose' a country, you don't lose the globalised chain entirely.

Nationalised only chains are risky since there is a single point of failure.

The need to increase globalisation is particularly hard felt in the energy intensive industries. Being rationed out of production in existing locales, they will have to move high energy stages where the energy is.

It's no good having rare earth metal ores if you can't afford the energy to extract them.

I think the author of the article made the article unnecessary complicated. A lot of so called wealth have to be lost, be it in stocks, property, oil "reserves", insurance claims that never realize or anything else. After the dust settle down in like 2 decades with a lots of population reduction and wealth evaporation the real assets would be land and skills. Thats it. That is in which one should invest for long term planning. Keeping cling to the system would bring major losses in long term, but its also true that too fast a move to farm also bring loss in wealth and potential profit in short term. So, what is the solution?

First, one should invest in himself/herself. Its never too late to learn a real skill like weaving, carpentery, cobbling etc. Skills like software development, pharma, consultancy etc would be mostly useless.

Second, train yourself to load heavy weights for long distances on foot or climb ladders, control on hunger and sleep for 48 hours, talk with people in real sense without using any machines, entertain yourself through simple board games and books and watching sky. Tougher you are, more are your chances for survival.

If you have enough money, the best long term investment is to buy a farm to secure food supply, it is when you can actually go and live on that farm given your age, body strength, taste and patience. You should not be expecting any income from that farm, it should be considered just a shelter during the economic and may be military fall out of peak oil.

I LOVE this guy!


1) I certainly started thinking seriously about my (seriously limited) savings a coupe of years ago, with respect to the limits to growth, peak everything and so on.

My conclusion is that TWAWKI will not end, but evolve. I am an optimist by temperament, and wish to engage with the world as it evolves. I had my money sitting in an account bearing paltry interest, because I disapproved, not of capitalism as such, but of the money-for-nothing attitudes surrounding the stock market.

Starting at the beginning of this year, I have been investing in alternative-energy companies, small caps, having taken a bit of time to figure out which are the promising ones. This is, obviously, a risky thing to do with one's money. But I don't see how I merit any profits if I'm not prepared to take risks, so I'm happy with that.

These are companies that are making things that the world is guaranteed to need. This is not the general case in the stock market. I am not willing to invest money in companies who do things I don't understand or approve of, or which are likely to decline in coming years. As it happens, I entered the market at pretty much the right point, and am doing fairly well, and expect to do much better over the next couple of years.

2) Will monetary wealth hold its value to the next generation?
Fundamentally, I expect so. People's fortunes will not gain 10% mechanically per year, that was all smoke and mirrors. But barring actual decline in overall production of goods and services, I expect monetary wealth to be worth approximately as much as it is now.

Here are a few basic thoughts:
First remember that your bodies will deteriorate with time. You will not always be able to cut/split and burn wood. You will not be able to haul stack and load 40 pound sacks of wood pellets/corn in a stove.
Make your investments to cover your long range retirement needs.
Look at your present and projected daily/monthly/yearly expenses and invest your available capital to reduce these expenses.
An example is that if you are living in a dwelling that costs a lot to heat and cool, investing in insulation to reduce or eliminate the heating/cooling costs would be better than investing in CD's at less than 1% interest. Do NOT look at "payback" on things like (investing in) Super Insulation or Geothermal Heat Pumps, but look at your annual return on investment instead. (You don't look at "payback" when buying/investing in a CD)
Vegetables are generally available at farmers markets at reasonable costs. Doing gardening is hard work and as you age you may not be able to keep it up. Plan ahead for this possibility.
Raising livestock (chickens, miniature cattle, sheep, etc...) can save a lot more money than gardening as meat is very expensive. And if you invest funds in the proper infrastructure raising livestock can be a very low input of hard work.

It's good that Pat has some money to put to work. One approach is to remember the country doctors who worked well past today's official retirement age, out of very modest surgeries. This is still the pattern in many other countries. Pat might look for a city house within walking distance of potential patients, with a bit of space for a home office and waiting room. Having a vegetable garden, even if it means hiring someone younger and sturdier to work it, contributes to food security and the fresh food is better than anything you can buy. A few chickens, fruit trees and a spot for a large medicinal herb garden would round out the the doctor's place. Even if Pat confines his activities to part time organizing of medical services rather than practice, having room to work at home will simplify life greatly.

As for buying farm land, I'd look for a nice bit with water, close in to city markets, with the view to leasing it out to an organic farmer. The farmer can grow some small grains for Pat and farm the rest for cash crops.


1. I have faced how to invest what I do have but not in the traditional use of the word "investment" but more as Nate has described here. I figured I could invest in physical capital (fencing, garden space, a small barn) or I could invest in investments. I chose the former.

2. Will wealth hold its value to the next generation? Depends. Some will loose everything and make a comeback in the new paradigm. Others will "invest" wisely and hang on to it. Most of those that I know who have urban wealth (CEO's, vice-presidents, consultants of various strips etc) are pretty paradigm bound. If their children rebound with a degree of wealth it will be due to the intellegence of their genetics and upbringing combined with the flexibility of youth rather than passed down wealth.

3. How best to move to human, etc capital? Move to a place and live there. Buy a medium priced house for the area. Shop there. Go to church, synagogue mosque or whatever there (even if you do not believe). See it as a community building exercise. Join some club there. Learn to talk about what they talk about there. Build there. Love there. Be there.

4. The media may give clues about "ingenuity in the face of change" and the opportunity to reconnect with our neighbors in the face of a downturn or somesuch. In fact I have already seen an article or two which emphasized those virtues. I doubt, however, they will go much beyond that.

5. The only way I can see us developing a way to protect the commons from our strong natural instinct to soil them is a strong form of social control. It might come in any number of forms but if it is to be resilient over time those of us in the West will probably need to strengthen our "conservative reflex." If we develop a manner of social control a deep distrust of change will be necessary to protect it.

6. Other: Making the transition will be fraught with mistakes and losses. One must be prepared for those and prepare any who come along with them for the ride. Their will be unknown social taboos broken (if moving is part of the re-investment), projects will be "less than successful," and values that we think we now have in spades will be tested and rethought. This should be the standard disclaimer for anyone seeking to invest in a new paradigm.

1) Yes, I have the same concerns as, Pat.

2) I don't know about "monetary" wealth, but there will be wealthy people no matter what happens (and poor ones; lots of poor ones).

3) I agree that a move toward putting abstract financial assets into physical assets is the way to go. The difficulty is in effectively managing the transition; maximizing the gains still possible under the current paradigm while limiting the losses. For me, I own my home outright, no mortgage and my only debt is a very manageable car loan for my Prius.

I get into this "tug of war" with my financial advisor at the bank who is well meaning and an expert in the "old paradigm", but he really doesn't "get it". So, I "push" to buy more gold and oil, and he "pulls" to keep me invested in equities! Right now, I have about $30K in gold, $22K in oil and $11k in cash. This still leaves me with the bulk of my "paper" wealth in the equity market (I have moved that into mostly very conservative balanced funds upon my banker's advice). I think I'm successfully managing the transition; have pretty successfully held the line on losses. That's the name of the game now, wealth preservation.

4) Wealth will always be "worshipped". That's a basic failing in human nature; a deadly sin. These faults have always been with us and they will remain with us.

5) Natural capital will be privately owned. The idea of communal ownership and some sort of "Brotherhood of Man" is preposterous in my view. Might will make right as it always has; morality is immaterial to the issue. Those with the weapons will control the means of production. Just like in the Middle Ages, there was a reason that the land owners/property owners where the only ones who possessed weapons. This is how humans "sort things out".


Peak oil.
Carbon footprint.
Financial crisis.

All of these have sparked a new found interest in home-owning. No longer is my home just a mortgage and a bed. Now it is a place to grow food and produce energy. A place to gather water. If I can pay off my mortgage soon enough, it becomes a place where I can weather financial insecurity.

It began with Kunstler's rant against suburbia. I've never been that interested in lawn-care. Never really interested in my house, for that matter. But then I began to try to imagine the home as a place of production, not consumption. Yards into gardens. Roofs into solar collectors. Rain gutters into reservoirs.

Food. Energy. Water. It is all so ridiculously cheap in the Western world, we think of them as practically free (except for gasoline). But imagine if that was not so.

Now, I get to live out boy-hood fantasies of Robinson Crusoe and Swiss Family Robinson. I get to take baby-steps towards an autonomous life. And while I am definitely a creature of civilization, I can learn some basic skills that might be important in the future, but then again, might not. Either way, I now have a reason to putter around the yard, to fix up the place, and bother my wife.

Advice to the old doc at the top of the thread: Find some place to live that you enjoy, with scenery and climate you enjoy and do something that you enjoy. Find one hobby that you enjoy that you could have shared with your great-grandfather if he still lived. Read some good books. Get a pet. Spend time with friends. Money is supposed to be the means to a good life. But never mistake it for the good life itself.

oh yeah, a final message: The world will not end in your lifetime or mine.

Exactly. Food, energy and water are all very cheap. I'm focused on investing in energy at the moment because I'm pretty sure it will be the first shortage.

I also promise nothing because all investments carry risk and uncertainty (including keeping your money in a bank account at low rates in U.S. dollars that may become worthless) but here is what I am doing.

50% in Canadian oil and gas companies. I primarily have ARC Energy Trust (Toronto exchange - AETUF) and Penn West Energy Trust (New York Exchange - PWE) . I like these a lot because 1. They are in Canada and pay dividends in Canadian $ 2. Canada has a lot of energy and other natural resources, especially for a country of 21 million, and their retirement system is paid up for 75 years. 3. The stocks both have very high dividends over 10% 4. Those dividends are taxed at 15% U.S. federal rate under a tax treaty until 2011. 5. After 2011 the dividends are likely to have partially tax favored treatment including return of capital and depletion and depreciation (which the companies have been saving up for years). 6. The companies are basically split between oil and natural gas. I see oil as rising steadily into the end of next year and then a bigger pop in 2011 as we approach the 2012 shortfall. Natural gas is very depressed right now and is traditionally very cyclical and it is selling for way less than the cost of marginal production. A study by Credit Suiss had marginal production at 7.15 per million mcf, so it cann't stay at a $3 price for long and will likely rise to at least $6 to $8 or more by next year. If you do buy these, Canada withholds 15% but that can be a tax credit against U.S. taxes for investments held in regular accounts. The 15% tax credit is not available if held in a pension or IRA.

I also have about 35% in fixed investments, primarily Canadian bonds, long term and short, because 1. The Canadian dollar has a very high correlation with the price of oil. 2. I believe the U.S. will likely survive but have Very major problems due to A. being the most energy dependent country by far B. Impossible rediculous deficits including a social security and medicare system that was designed to support people for 3 years (the life expectancy was 68 when Roosevelt enacted the program). C. Movement toward socialistic thought and government dependence which will further weaken the capitalist system that made the U.S. the wealthiest nation in history. Also, Government involvement in healthcare can easily destroy one of the appealing aspects of living in the U.S. If anything, Canada is moving at least marginally the the other way (with a Conservative government and even talk of more private sector involvement in health insurance). I doubt the world is ending, very most likely even in the U.S., but it just is going to get Very ugly for the average U.S.citizen, which might be a necessary condition if people are going to be forced into smaller cars and smaller houses. The odds are a lot better that Canada and some other commodities based economies will do relatively better.

I have 1% in CEF a Canadian Fund that holds 60% in gold and 40% in silver. Governments around the world are likely to freely print money (as they are now, ie tripling the U.S. deficit in one year) because inflation is more politically acceptable than recession, although it won't help much when we get significant and devastating stagflation (Jimmy Carter redux).

I keep my investments with TD Ameritrade (discount broker)(Canadian) , RBC Dain Raucher (full service)(Canadian), and UBS (full service)(Swiss,), so my investments are not tied too directly to the U.S.

I also have some gold coins and keep a little extra food around.

I subscribe to the economic theory that new technology drives growth and that depressions come at the end of technology cycles, such as the peaking of the steam engine economy (railroads, steamboats and steam powered factories) causing the Long Depression of the mid 1870’s. This was just before the birth of electrification, which would be the driving economic force into the Great Depression of the 1930’s, by which time urban American homes and business and American factories were mostly electrified, but most farms and rural areas were not. Of course there were the introduction streetcars, automobiles, trucks, tractors and nitrogen fertilizers in the early decades of the 20Th Century and these innovations dramatically increased productivity which eventually overwhelmed the labor market and led to persistently high unemployment after 1929.

These technological changes resulted in a lot of economic “creative destruction” such as the obsolescence of steam engine ships by diesel and steam turbine ships, diesel locomotives replacing steam, electrified factories replacing steam engine / line-shaft ones (with enormous labor savings), electric lights replacing gas, internal combustion engines replacing horses and mules and telephones replacing telegraphs and messenger boys. The stock market values of many companies were reduced to zero while others like General Electric and Ford became the new glamour stocks.

I do not see an emerging driver of economic growth anything like electrification or the internal combustion engine. However, peak oil will cause a lot of not so creative economic destruction as the oil production, refining, distribution and transportation system starts to decline. Alternate transportation systems may be developed, but this will not be “growth”, but simply maintaining some sort of economic output.

Therefore, I would not be inclined to invest in any stocks except those holding natural resources, select alternate energy, or new productivity enhancing technologies. Avoid all bonds, except US Treasuries for short term parking of funds. I have no faith in bank accounts, CD's or money market funds, except as a place to park cash while waitng for a furher decline in hard asset values. The government is delusional, still believing growth will return and that we have wealth left to redistribute (Social Security, Medicare, GM bailout, Pension Guarantees, etc.). This will not end well, and the end could be abrupt, as with the faiancial system collapse, and it could be sooner than many think, say within 5 years.

There could easily be a second leg down in the current bear market and stocks, metals and real estate will go down again. If and when that happens wallstreetexpress post above gives some good recommendations, some of which I already own, but to which I would add FCX, LINE and a few other top miners and some fertilizers like AGU, MOS and POT.

Land should be a good investment, mainly as a store of value but also because there are more people to feed. We will probably end up like ancient Rome and around much of the world prior to the 20th Century where the elite owned most of the land. Perhaps now is the time to listen to Henry George’s message in “Progress and Poverty” (warning: dull reading) and take preemptive measures to prevent land hording. (George would have had the government own the land and rent it out).

Nitrogen fertilizers are very cheap now and this situation will only last as long as it takes for the decreased gas drilling rate to take its toll on natural gas supply. Anyone intending to farm or garden should be stocking up now. Urban gardeners should be aware that fertilizer dealers like Agrium sell at rates far below what you pay at retail outlets, but they are located in farm areas.

Fertilizer is the ultimate store of value. It is ever so necessary and the government would never think to tax it.

Wealth can be created w/ mundane steps w/ patience.

In the 1950's when I was a young child I heard all the stories about the depression. In early college years I talked w/ an older family friend about what the depression was like. He stated that his family had several rental properties and it really wasn't too bad for their family.

A year or so after I became a professional, I started buying real estate in a suburb outside San Francisco in the mid 1970's and built up some equity over the years w/ dull residential income producing properties. By the late 90's I realized I was in my 40's and didn't have that much longer to lever with debt. I refinanced & begain investing in a rural N Cal community that was cheap compared to the SF Bay Area. It looked like a place I would like to move to. I levered my home & investment equities and started buying properties as rentals. The value over the last 18 years has increased by 5 times and my mortgages were modest by the time the recent collapse occured.

My net worth has probably dropped on paper by 40% in the last few months, but w/ modest 15 to 20 year old mortgages, each of the properties still has a positive cash flow. It doesn't take genius to make money. As I learned from the stories of the great depression, people alway need a place to live.

Inflation will always be there,. Debt financed investments in property of lasting value is a great way - if boring way - to build a secure future. You do need to be willing to take calls in the middle of he night regarding tenant problems and have the cash flow to carry the property when it isn't paying it's way in the first few years. Partnerships will work for a while, but soon, one party will want to sell or get out. Choose your partners carefully.

Recalling from a graph that I no longer can find, there was just enough housing to keep up with the population until the 1980's. Now we have a large surplus, not just from overbuilding but also from people owning second and third homes.

Much of US housing is obsolete, either being in the wrong location, that is, in economically declining areas (Detroit, rust belt) or poorly constructed, or just requiring more money than they are worth to bring up to modern standards.

I would only invest in housing in growing areas and in truly modern housing specifically designed to avoid almost all maintenance like thick walled aerated autoclaved concrete with metal roofs and water supply lines of cross linked polyethylene (PEX) in conduit for easy replacement.

The current financial turmoil has hit people and companies really bad. In this situation any organization would think of earning more and more. At a point when organizations are laying off employees heavily, few organizations can actually think of sustainable development, conserving energy and promoting clean energy.

All that comes in mind is the next quarterly results, top line and bottom line and nobody has time to think about triple bottom line. Our short term needs.

We will pay heavy, if we keep neglecting our long term needs. We better get aware and make others aware.

The funny thing is that once we hit the wall we might actually find we enjoy it. Taking a cold shower instead of warm one will keep us healthy. Tending the potato patch instead of making your thumbs sore on your BlackBerry trying to keep up in the rat race will make you feel better. The energy hogging toys we use now might look quite ridiculous with a hind-sight. I'm not proposing that we return to cave age. We just need a little breather to come back to our senses.

We don't really know how far removed 2,000 trillion of claims on 55 trillion of global GDP, itself heavily financially skewed, is from the reality of primary (natural resource) wealth (2). (I suspect it is greater than an order of magnitude, but it might be less, if there is a high degree of notional offsettables). In other words, what we think of as wealth, at least many of us, and much of it, is not.

It's not only an issue of knowing. If I know and I'm right but no one else knows and no one else recognizes that I'm right, I still lose.

I find myself more and more drawn to "hard" assets and skills. A home that needs no heating, a home that generates its own power in its own footprint. Skills like gardener, moonshiner, welder. I find myself advising friends to consider their future as a lord with serfs - where does the school bus full of refugees go and will you arm them or not? Have you got a site plan for where the composting toilets go?

The crash will be very hard, because we will spend our last dollar, denial and lie to put it off. Our failure to embrace it early makes it worse. Think Rwanda. Haiti. It's biology. Some of us can sometimes get a little past that. But no, try to put together a tribe based on superceeding biology. Fat chance.

Thinking like a feudal lord, I look forward to this winter. I'll be warm. I'll have food. Who will I let in? But, on the other hand, I cannot sustain that economic effort long contrary to the current economic system if it continues to persist. And it will persist - in different degrees for shorter or longer periods of time.

Pathmaker, there is no path.

cfm, The Growlery, in Gray, ME

The image associate with the "Inglehart of the World Values Survey" is mythological. As GDP per capita increases, I would argue that well being does not approach an asymptote, but instead decreases.

The ASSUMPTION of what curve fits is wrong.

No matter how little one values the commonwealth.

cfm, "The Growlery", Gray, ME

Its based on this data:

Nate, have you ever heard of propaganda campaigns? As in TV being part of the corporatised consumerised system. The TV inevitably paints a picture of happy consumers versus sadly deprived non-consumers. It shows the supposed joy of owning a car that would be fast if it weren't stuck in a jam [tailback], and isolating one from human engagement behind its windows. It is unable to show the joy that comes from being part of a community of life-long trusting friends and neighbours, or the joy of something carefully and lovingly made by one of such friends or by oneself.

So the word "subjective" is the key word for that chart. How about objective statistics on psychosis and depression and other neuroses; they are notoriously associated with industrialisation/corporatisation (aka high-gdp).

Hence the fairly obvious dogleg in the curve. At less than half US per-capita GDP people have basic needs met pretty handily.

Nothing sours a person's mood like not being able to feed their kids consistently.

Once the basics are covered, more leisure activities and disposable income doesn't help much.

What is even more interesting about that 'dog-leg' is that below about $6,000 income the curve is effectively vertical. In other words, for those countries with av income below $6,000, income level actually has no bearing on the happiness. Some are pretty unhappy and some with roughly the same or lower incomes are actually reasonably happy. Something else is effecting their happiness.

The corresponding observation of course is that none of the countries with income greater than $6,000 are less than being reasonably happy. Obviously, for a country to maintain a high income, most things need to be going ok.

deleted my bad.

Currency speculation overrides all other forms of fundamental analysis. Even peak oil. You can be 100% right about peak oil and its effect on the economy, yet still lose money if you dont handle the currency fluctuations properly. I'm sure a lot of people learned that lesson the hard way as they watched their oil futures get obliterated starting roughly 1 year ago. The dollar strengthened dramatically. It can and will happen again. Bernanke loves to print money, but when it pushes the dollar to the edge he will do anything, including crashing equities and commodities, to bring the dollar back up.

So how does one hedge against these wild gyrations of QE/printing and the requisite destruction that always follows? My solution is a volatility trade. I dont really know which way things are gonna go, because I'm not a member of the criminal banking cabal. I just know there's going to be some big moves.

Energency is a word created by Dr. Dana Anderson to describe an energy emergency. An Energency is any human caused catastrophe directly linked to a fossil fuel dependent economic model brought on by society’s unwillingness to adjust until it is too late. The fundamental constraints to production and absorption of emissions of fossil fuels will run up against natural limits. Energency encompasses the concept of peak oil, and the combined peak of all non-renewable energy sources. Further, energency relates to global warming to the extent fossil fuel emissions contribute to greenhouse gases in the atmosphere that absorb and emit radiation within the thermal infrared range. The limits to production of fossil fuels, environmental impacts of consumption, and growing population trends will result in shortages and declining standards of living worldwide.

At first glance one mistakes it for eMergency. At second glance one assumes it is a misprint. At third glance one wonders how it is pronounced as energy has stressed first while emergency has stressed second. So I don't see this word catching on. I just use the term energy crisis or energy peak.