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Is Growth forever possible? Problem or Predicament?

8th Apr 2012

Category: Opinion

I normally write about house prices at the beginning of each month, or so was the plan.

However, being Easter, I thought it was time for something new and I am digressing to think about money, growth, energy and ultimately oil.  Many people will already have heard the term 'Peak Oil', but I stumbled across Chris Martenson's video and found myself engrossed for the full 1 hour 11 minute presentation and subsequent Q&A.

The term 'safe as houses' feels so redundant when you start to think about some of the challenges that we will face, and are starting to feel right now in our economies.  I have had many discussions before with people about population growth and what this means for the food supply for example.  I have had discussions about the growth of oil consumption and the dependence of our everyday chores (buying food, running a home, operating our businesses) on oil. I also studied Mechanical Engineering, in which I fully understood the mathematics of exponentials and how they are used in modern engineering design.  What Chris has done in his presentation below, is tie these all together.

Population growth graph taken from: http://geiasousuperman.wordpre...

Chris, in his presentation below, nicely links together what he calls the three 'E's.  Economy, Energy & Environment.  He smartly draws conclusions on gathered data about debt and money (where our global debt is always higher than our global money stocks) and how growth has been achieved by simply borrowing or printing money.  Traditionally we have grown our debt levels exponentially, doubling our total debt 5 times in forty years, which provided superb steady(ish) growth.  In 2008, the growth of debt ceased, and the reliance on the exponential growth of debt to provide growth in our economies came to an abrubt ceiling - we reached a peak amount of debt.  So how do we grow now?

Chris goes on to talk about the same being true for oil, how peak oil production was in the 1960's and how demand will outstrip supply very shortly, creating huge rises in the cost of oil, and hence energy which means higher cost of livings and ultimately less pudding for your pound.  What happens when oil producing countries realise this and start to stockpile instead of export? It is arguable that China has already realised this and has commenced stockpiling natural resources, maybe because they already make up 20% of the World's population and this got them thinking sooner than others.

If you want to learn some extremely complex things about the potential world in the next 20 years, presented in a more simple way, click play and set aside 1 hour and 11 minutes.  To tempt you, just think about this: One half of all the oil consumed to date in the world, was consumed in the last 22 years, or the average age of a current university graduate. So, when current babies graduate, given the exponential growth in the use of natural resources, what will their graduation day look like?

Phil Ashford

Comfort Partner

An experienced Chartered Accountant and a Founding Partner of Comfort Lettings.

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