It’s been a while since I posted, but today I put up an important one as a new page at the top. The title is pretty self explanatory. It is the answer to the question I posed in my previous page about whether it would be possible to bring everyone in the world up to a western diet. The answer is clearly, “No”. The numerical analysis I go through in this page comes to some scary conclusions. Humanity is so very close to a collapse and the only thing preventing that is our reliance on fossil fuels. If we do not find a way to replace fossil fuels then we will very likely, almost certainly, see a planetary die-off. The planet cannot support so many people without that external energy input.

As the global monetary system, with the US dollar at its heart, desperately gasps its dying breaths before reaching full cardiac arrest and joining the Hall of Shame of all previous bank-issued fiat currencies, the blame game is heating up. Proponents of all political and economic ideologies are claiming victory, as it’s always someone else’s fault when things fall apart.

Worldwide, debt-to-GDP ratios are spiraling out of control, led by Europe with its rising interest rates accelerating the end game like gasoline to fire. The US still enjoys 0% interest rates, translating into about 3% on its debt bonds, “thanks” to the Fed’s easy money policy of flooding the world with worthless pieces of counterfeit confetti to bury the systemic insolvency under inflationary money printing. Clearly, the road we are now on is leading to hyperinflation, not deflation, absent a new gold standard which would entail a drastic overnight devaluation of the dollar.

This inflation is masked behind the US government’s comical CPI adjuster, which arguably understates the true inflation rate many times over. Much has been written about why and how this is done, but basically it facilitates the transfer (theft) of wealth from savers to debtors. Those “debtors” of most concern are of course the US Government and the TBTF financial complex.

Those on the Keynesian left point to millions of homeless, unproductive workers that need education and assistance to again re-enter the workforce and facilitate a resumption of growth. Those on the right point to exponentially bloated government spending and bureaucracy as the cause. Indeed, just look at the pattern of US Federal spending and it’s obvious something’s not right. If only we could just get our finances under control and force austerity to balance the budget, then the private sector would begin innovating again and start rebuilding the battered American economy, insist the Austrian-schooled theorists.

Let’s analyze that. On one hand, the government-spending bashers like to point out how federal spending and deficits are spiraling out of control, and then they make a causal link to the collapse of the economy. But remember the old saying, “correlation does not imply causation”? I wonder, is government spending the cause or the correlation? Or maybe both, or what about neither?

But those same government-spending bashers will also fervently hold up the Shadowstats inflation adjusters to show how artificially stating inflation too low allows the financial complex to magically turn economic contraction into growth, make levitating stock indices seem justifiable, with the ultimate goal, as mentioned, of transferring wealth away from savers.

Well, have they ever put the two together? What does US Federal spending look like if we adjust for real inflation as per Shadowstats? Thankfully, the Now and Futures website has graphed this for us.

And Federal Government receipts:

You will notice the logarithmic axis which implies that the black lines denoting nominal values are increasing very rapidly now.

But have a look at the Shadowstats-adjusted green lines. They have actually been going down over the last 10 or 15 years! What’s up wit dat?

Let’s take it further and adjust this data to account for the increasing US population over the years, since obviously to gain a true picture of how much the government is supposedly wasting on helping people in need we would have to factor in how many people there actually are. To do this I took the values off the graphs and entered them into Excel, then divided by population. I do not subscribe to Shadowstats so I do not have access to the raw data; my fairly accurate estimation from the graphs is the best I can provide at this point, and is sufficient for showing the trend. Here’s what I get:

Wow! Per capita government spending sure hasn’t been increasing as far as I can tell! It hasn’t been this low in 40 years! It seems the “bleeding heart socialists” aren’t being very successful in robbing from the rich and giving to the poor. But they sure are taking a lot of the blame for the apparent nominal runaway government spending, which as we see above, isn’t runaway government spending at all.

What’s really going on here? Well, if you notice, government receipts are dropping even faster than spending, and that’s why the deficit is running away, and that’s why the government is always having to play catch-up in a losing battle just to maintain previous levels of real-world, inflation-adjusted, per-capita spending.

I ask: what is cutting government spending going to achieve at this point? Are they going to pre-emptively cut spending to pre-1900 levels to finally get their finances under control? That’s a nice fantasy but wouldn’t the resulting deflation cause federal receipts to drop even further? Either way it’s a death spiral. Take your pick — deflation or hyperinflation. Inevitably, both roads lead to hyperinflation. Are we going to voluntarily destroy the true productive assets we still retain — our people, institutions, and environment — in some desperate but futile attempt to satiate a fundamentally flawed monetary system that will soon be no more regardless? Because that’s what austerity implies.

Let’s cut to the chase. It’s time the Austrians made a choice. Are they going to continue to blame government social spending for the problems, even in the face of such incontrovertible evidence as presented above? In which case, they will have to abandon their oft-touted Shadowstats inflation adjustments, because they can’t have both. Or alternatively they can keep their Shadowstats adjustments, but then be forced to concede that government spending is NOT the problem; it is a symptom.

Per-capita US federal spending is actually amongst the lowest in the developed world (from the same Wikipedia link).

When you consider that 19% of the federal budget is on the military, US spending should really be shown to be even lower.

What we are witnessing is NOT a result of runaway government spending. We are witnessing a country that is approaching third world industrial capacity, that has lost its industrial base to third world outsourcing, itself a result of currency manipulation on both sides of the Pacific. We are witnessing a country increasingly starved of vital resources, one that must secure those resources overseas via military brute force to maintain its skewed monetary system enabling such severe trade deficits. We are witnessing the end game of yet another of the world’s great empires, as they always overextend themselves and inevitably collapse.

Notice on my graph above how the deficit got out of control in the mid 1970′s. This is also around when the US dropped its gold convertibility and became a debt-backed fiat currency. And it is also when domestic US oil extraction rates peaked, of course followed by the steady rise in US oil imports up to today. Shortly after this, in the mid 1980′s, total credit market debt began its inexorable climb to the astronomical levels we currently see, only made possible with the continual reduction of interest rates from 20% back then to 0% now. Is this all mere coincidence?

So who’s to blame: the “left” or the “right”? Well I view this artificial one-dimensional simplification of complex social, economic, and environmental issues down to a slider scale shifting between left and right as grossly misleading and counterproductive. But whomever you choose to blame, be it the left, the right, top, bottom, inside out or upside down, you will be able to find ammunition to fuel your political ideology. Because the whole system is falling apart, from all sides. That’s what Peak Oil entails! Institutionalized theft from the middle class cannot be sustained if no additional wealth can be generated because an economy is out of resources.

THIS IS WHAT PEAK OIL LOOKS LIKE. And it ain’t gonna get any better.