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Why Oil Prices Can't Bounce Very High; Expect Deflation Instead

Economists have given us a model of how prices and quantities of goods are supposed to interact.

Unfortunately, this model is woefully inadequate. It sort of works, until it doesn’t. 3,652 more words

Financial Implications

World GDP in current US dollars seems to have peaked; this is a problem

World GDP in current US dollars is in some sense the simplest world GDP calculation that a person might make. It is calculated by taking the GDP for each year for each country in the local currency (for example, yen) and converting these GDP amounts to US dollars using the then-current relativity between the local currency and the US dollar. 4,421 more words

Financial Implications

Researchers have been underestimating the cost of wind and solar

How should electricity from wind turbines and solar panels be evaluated? Should it be evaluated as if these devices are stand-alone devices? Or do these devices provide electricity that is of such low quality, because of its intermittency and other factors, that we should recognize the need for supporting services associated with actually putting the electricity on the grid? 3,976 more words

Financial Implications

The Next Financial Crisis Is Not Far Away

Recently, a Spanish group called “Ecologists in Action” asked me to give them a presentation on what kind of financial crisis we should expect. They wanted to know when it would be and how it would take place. 3,117 more words

Financial Implications

Falling Interest Rates Have Postponed "Peak Oil"

Falling interest rates have huge power. My background is as an actuary, so I am very much aware of the great power of interest rates. But a lot of people are not aware of this power, including, I suspect, some of the people making today’s decisions to raise interest rates. 4,075 more words

Financial Implications

Open Thread and a Few Observations on Japan

I am putting this post up to give commenters who would like to carry on conversations related to previous posts a place to comment, since comments on my last post have been cut off. 1,147 more words

Financial Implications

Why We Should Be Concerned About Low Oil Prices

Most people assume that oil prices, and for that matter other energy prices, will rise as we reach limits. This isn’t really the way the system works; oil prices can be expected to fall too low, as we reach limits. 2,321 more words

Financial Implications