In 1956 Hubbert predicted the US oil peak would be sometime between 1969 and 1971. For this he was ridiculed and laughed off the face of the earth (almost). Turned out the US oil peak was in 1970. This is something the drill-baby-drill, it's all the environmentalists' fault, ditto heads don't know anything about.
Next in 1974 Hubbert predicted the world oil peak to happen about 1998. However he DID say that if OPEC were to restrict the supply, then the peak would be delayed by 10-15 years which would put it at 2008-2013, or exactly right. Here is what Hubbert's prediction (to scale by MBPD) looks like overlayed onto a reasonably close estimate of the actual global oil peak which started in 2005 and has continued as a plateau up to now.
OK, now is anyone willing to make a bet that Hubbert's THIRD prophecy is wrong? Didn't think so. Here it is:
Hubbert said, "The third curve (on the left) is simply the mathematical curve for exponential growth. No physical quantity can follow this curve for more than a brief period of time. However, a sum of money, being of a nonphysical nature and growing according to the rules of compound interest at a fixed interest rate, can follow that curve indefinitely...Our principle constraints are cultural...we have evolved a culture so heavily dependent upon the continuance of exponential growth for its stability that it is incapable of reckoning with problems of non-growth...it behooves us...to begin a serious examination of the...cultural adjustments necessary...before unmanageable crises arise..."
Ok, anyone see any cultural crisis happening? Yeah, what about a worldwide uprising of the 99% against the 1%? What does this have to do with Hubbert's Third Prophecy? EVERYTHING!
Here is a graph of total US debt in all sectors up to end of 2009:
Here is same curve overlayed with same time scale on global oil peak:
Looks kinda like Hubbert's graph above doesn't it? That's because it is. Debt can continue to increase indefinitely, while oil can't. And since our entire money system is based on debt with interest attached there is no way to escape it. All money is debt because we have allowed banks and the fed to create all our money through interest-bearing loans by using the fractional reserve system. The details are unimportant, the main point is that our money supply is created by interest-bearing loans of banks and the fed. Therefore, the economy must always grow in order to pay back the interest. When the economy can't grow anymore...collapse.
Here is what has happened to US debt over the last several years:
2008 US Debt:GDP ratio = 350%
2009 4Q US Debt:GDP ratio = 425%
2011: US Debt:GDP ratio = 475%?
Debt has continued to grow because we don't have a real economy anymore, we have a fictitious funny-money phantom economy of mostly financial speculation. Here is what happened in 2008:
As we all know, we had a stock market crash, a housing crash, an oil price spike and crash, and an employment crash. Because we don't have a real economy any more we have papered over these problems by creating more debt. The taxpayers bailed out the criminal fraudsters on Wall St., taking on more government debt, and the fed bailed out many bankrupt banks internationally ($12 Trillion), indenturing the taxpayers for future debt.
Since debt represents ultimately a claim on real assets, debt cannot continue forever if growth of the real resource based economy has stopped. This is Hubbert's Third Prophecy: When economic growth cannot continue due to the lack of affordable oil, then we will have a cultural crisis. Well here we are folks. The solution of the powers that be? Create more funny money through the fed's "quantitative easing program". The solution of the Keynesian economists? Take on more government debt through interest bearing loans by selling Treasury bonds to the fed, China, and other parties (stimulus). The solution of the right-wing "deficit hawks"? Cut government (social) spending to the bone to "cut the deficit" which they created through monstrous military spending, and tax cuts to themselves. Guess what. None of these are going to work. The solution is structural in the monetary system itself. When all money is debt, there is always interest to pay and growth is required.
Hubbert didn't mention one other notable feature of a debt-money system. It systematically pumps wealth from the bottom 80% of the population in wealth to the top 20%. The bottom 80% pay interest while the top 20% collects it, and of course most of the interest is collected by the top 10%. When all money is debt, that's a lot of money going to the top. The Occupy Wall Street people aren't stupid. They know the game is rigged.
A SOLUTION
A solution is some form of Public Credit Money. That means that money is issued without interest:
1. 100% reserve requirements (abolish bank money)
2. Abolish Federal Reserve notes (end private central banking)
3. Issue Treasury Notes INTEREST-FREE (Greenbacks)
4. Issue state or local currency (warrants, bills of credit, zero interest bonds)
5. Social Credit (CH Douglas)
6. Kucinich NEED Act
Each of these topics could have a separate article, but I will summarize briefly.
1. The small reserve requirement of ~5% means that the banking system can create 1/.05 = 20X the money from deposits on hand. Most people think banks loan out money that people save and deposit, but that isn't how it works. With 100% reserve banks can only loan out money on time that you deposit, and you cannot withdraw it during that period of time, so it is like a CD (certificate of deposit).
2. Abolish the fed or put it under the treasury department.
3. The Treasury department could then issue Treasury bills, not Treasury bonds. Treasury bills are credit money that is spent on public goods, or loaned for projects creating public goods. It is returned to the government through taxes or repayment of low-interest loans. The colonists used colonial scrip, Lincoln issued GREENBACKS, and Kennedy issued Treasury notes. These were all credit money, not debt money.
4. States or local governments could issue warrants, bills of credit, or zero interest bonds. Some people feel the national government is too unaccountable to be trusted with money creation and it should be devolved to lower levels of government.
5. Social Credit (CH Douglas): Part of public credit money could be to resurrect the idea of social credit. Government issues credit directly to the public as a guaranteed minimum income and they spend it on things they need. The fed gave money free to banks. Why not give money free to us? This is similar to the scene in the recent movie "In Time", when they rob the bank and announce to the crowd that the bank is giving zero interest loans, and you don't have to pay it back.
6. Dennis Kucinich has introduced the NEED act which incorporates many of these ideas from the American Monetary Institute.
Debt-based money is incompatible with the post oil-peak world. It's only a matter of time before it collapses in default.
