Energy Crisis Upon Us
The Russian invasion of Ukraine – and the West’s response to it – have increased the chances of a major economic dislocation, possibly a financial collapse.
Because of the often severely under-appreciated role of energy in making everything else possible.
In this episode – one of the more important ones I’ve ever made – I provide the same level of early warning to the world that I did on Jan. 23, 2020 when I publicly alerted everyone to the Coronavirus predicament in China.
As always, I will do my best to give you the context you need to understand what’s happening in the world so you can take effective action in response.
ALSO – and this is big – with the new website comes new membership options that go as low as $7.50/month, which is well within everyone’s budget.
To find out more, click here: https://peakprosperity.com/membership/
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Energy Crisis Upon Us
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Dr. Chris Martenson [00:00:00] Today, we’re going to be talking about an imminent economic disaster that’s coming. That’s how I see it involves Russia, involves energy. Come on. Let’s go. Take a look.
Hello, everyone, and welcome to this program, I am Dr Chris Martenson here back with you. And very exciting day to day. For me, this is episode 50, but we also have a brand-new website at Peak Prosperity dot com, so be sure to come and check that out. Amazing. And we’ve got a special offer for everybody because we have new business model ways to engage with me in my material. If you like this, you’re going to love going at prosperity and seeing what else is there.
So tough subject. I have to get back to my roots a little bit today, so let’s go here. This is about I think we’re facing an economic accident of pretty major proportions and. It’s rooted in energy. And I’ll tell you what I mean by that in just a second. So, at any rate, here’s my personal motto I’d rather be a year early than a day late when it comes to preparing, becoming resilient, making sure that your position for big things that are happening. Of course, when you’re a day late, you’re just in the mix with everybody else and you don’t really have an opportunity to prepare like you might want to.
So, I think we’re at a point where you need to be resilient. You need to be understanding of the context of what’s going on. I believe in people being educated. I’ll give you the context. You can come up with a completely different interpretation. I don’t care. I’ll tell you what I think you make of it, what you will. That’s all I ever ask. And if you have a different point of view, perfect because I actually value real diversity and that’s diversity. That’s not on the skin. That’s diversity that’s in here in how you see the world because you see it differently than I do and really put those together. That’s when we’re actually stronger as a result of that.
So, let’s go here. This is my concern. I think there’s a potential for a systemic economic, if not financial, collapse. Is that too strong of a word? That hyperbole? Nope. And let me make the case for you about why that is. So, this is something you may not know about me.
If you’ve been watching my channel on COVID is actually pre-COVID, I wrote this thing called the crash course. It’s also a video series. There’s a screenshot from that video series right there, and what it does is it connects three things the three E’s economy, energy environment we have to look at all three now is a system. We have to look at all three together because if you just burrowed down and look in any one of these things, you’re not going to get the right story.
Federal Reserve busy out there just looking at the economy and making stocks go higher because that’s what it really wants. It wants stocks to go higher, but it’s completely ignorant of the idea that we live in a world that is, we just cram our economy higher and higher by falsely throwing more and more claims into it, which is what we call currency our money that we’re creating other issues over there in the environment. Obviously, there’s no connection between those two for the Federal Reserve. Oh, we just need more growth than we need stocks to go higher. Why when we see that birds fish soil, big trouble going on over there, same thing on the energy front. That’s what I want to talk to you about today. And of course, one of my personal all-time heroes in history, Leonardo da Vinci said it best is like learn how to see, realize that everything connects to everything else.
That’s just how it is, and it’s just everything is connected, so way to go, Leonardo, helping us out there. All right. Here’s the one thing everybody needs to know, but you need to know about the economy. It’s founded on a debt-based system of money that is itself. It’s either expanding exponentially or as busy collapsing. Those are its two states. It’s either merely expanding or it’s collapsing. So that’s why the Federal Reserve is so addicted to this idea of we have to keep it expanding by it. It’s not really the economy. The Fed doesn’t actually care about that. It doesn’t care about you, doesn’t care about birds or bees. It doesn’t get any of that. It’s in charge of protecting a system. And that system is a banking system in the banking system, is founded on a type of money, and there’s lots of different types that we could use. But we’ve settled on one across the whole world, and its debt based, debt-based money now.
The crash course goes into this in pretty great detail, which you can find online not going to go into it too much, but we have to have this one definition so that we can have the next conversation and it’s this What do we mean by money? It’s actually currency. Our currency today doesn’t really satisfy what I consider to be money. That’s a distinction that Mike Moloney makes all the time. He makes it very well. Currency is one thing. Money something else. Money should be a store of value. Currency is just something they just make out of thin air and just as much of as they want. But we’ll call it money for now, because that’s what people call it. Just know that there’s a distinction there that matters money.
What is money? Why does money have value? You know that if you take a hundred-dollar bill out, it’s a piece of paper. Why does it have value? Well, it has value because you can exchange it for either a good or a service. What are goods? Things like cars, food houses, planes, things like that, or a service which is people’s time. You might buy a service from a lawyer, from a massage therapist, a therapist or whatever people’s time are services. So that’s what it is. Money only has value to me. The $100 bill only adds value because I can go somewhere and do something with it. I can buy a meal at a restaurant, I can buy a car, a house, I buy a tractor, you know, ammunition, whatever your story is. That’s why it has value.
So, it’s actually money is a social contract between us. It’s an agreement that we hold and it has value because the government says if I don’t pay my taxes in it to take my house right. So, so. But money itself is a claim on real things. OK, so now we have to add one more thing to this particular story, which is I said we had a debt-based money system. So, what’s debt? Well, debt is a claim on future money. So, like a mortgage, if I take out a mortgage, take $400,000 out to buy a house or something, I borrowed that 400,000. I get that currency right now. Give it to the person who sell in the house. But then what do I have? Well, I have a house, but I also have a monthly string of payments. I have to make for the next three hundred and sixty months. Right.
So, it’s a stream of payments for 30 years if I took out a 30-year mortgage. So, debt is a claim on future money in what’s future money or future money is a claim on future stuff, goods and services, things like that. All right. So now that we understand that now we can get to the nub of why I think there’s a big problem, a big problem that’s going to surface this year, maybe within the next few months, and it is around this. So, this is a chart that comes from the Federal Reserve, and it’s very helpfully titled All Sectors Debt Securities and loans liability level. What’s that? And this is all the debt in the system, just debt, not unfunded liabilities like Medicare that hasn’t been paid, and we don’t know how it’s going to get paid in the future. Forget that this is just debt, corporate debt, state debt, local debt, municipal debt, student debt, household debt, federal debt just all the debt, right? Just an actual debt like auto loan is real debt, OK?
So, when we look at this chart, you can see it starting back in the 50s on up through current that we just have more and more and more and more debt. And again, what’s debt? Debt is a claim on future money. So, this chart has a lot of really powerful things baked into it. It tells you how the future is going to unfold when you can see it correctly. So, I’m going to help you see it today. That’s what this episode is about, so that you can understand the risks that we’re facing right now as a consequence of what’s going on in Ukraine. So, here’s I’m going to connect these dots for us. First, same data. I’ve just put it in Excel here and I’ve done a couple of things to it first. I’ve plotted it out so that we can ask the question How is that debt growing is are growing linearly? No, I’m glad you asked. It’s not. It’s growing exponentially. It’s growing in a way where we get a curve shape like this, right? In the average doubling time since 1952 is every eight point eight years on average, that debt doubles.
So, if it went from two trillion, it went to four trillion because that’s a doubling and it went from four trillion to eight trillion because that’s a doubling and from eight to 16 and 16 to 32 in 32 to 64 and on and on. So, every eight point eight years, our debt in the United States has doubled, and it’s kind of like this for a lot of the rest of the world, too. All right. The second thing is you see that little fancy thing called r squared there. That’s just a test. I’m asking the question How close is this thing growing? We run a little science experiment, a little math experiment. Like, can we explain it? How is it growing? And it’s growing? A power function and with a point ninety-seven. Perfect is a one 1.0 would mean 100 percent explanatory power contained within this. We understand what’s happening to it. But this with the reason that’s important. It’s not the math. I don’t care about the math. The reason it’s important is that since 1952, which is when the data series starts and if it went back further, I’d go back further. But that’s how far the data goes. And, when we look at it this way, every single person who’s in power today, 100 percent of them was either a child or an adult during a period of time when they knew for certain.
One thing about how the world worked, which is that we can always just have twice as much debt in the system 8.8 years from now as we had 8.8 years in the past. We’re going to double and double and double our debt. In fact, it’s gone through about seven doublings and five in six decades. So, it’s just double. It’s just doubling all the time. So, OK, so if we’re constantly increasing debt in the system? Chris, why is that an issue? You know, what’s the problem with that? Well, this is this.
Here’s the problem. This chart of debt is boring, as it might seem super important to how your life is going to turn out super important to how the future is going to unfold. If you could understand this chart, you kind of get everything. So let me let me help you there. This chart is an explicit bet that the future economy is not just going to be larger, but exponentially larger because it’s growing exponentially. And if you’re taking your claims on future money and growing them exponentially, we’re counting on the economy to be exponentially larger. But here’s the thing is the economy doubling every 8.8 years and the answer is no, because that’s about that’s about a 9.5 percent rate of growth.
The economy’s not grown by nine-point five percent, not even close. In fact, when we look at it, we would ask, we run. Asked the question, well, how does how does? How does the economy actually grow then, and how fast is it growing? Because you can understand this from your own standpoint. Let’s imagine that your credit card debt was doubling every 8.8 years at a minimum. Intuitively, very easy to understand. You would hope that your income is also doubling at the same rate because the amount of debt you have doesn’t matter. $10 million of debt. Is that a lot? For me, it is. For Bill Gates, it isn’t right.
So, it actually matters. The relationship, the proportion, the proportionality between the amount of debt you have and the amount of income that you have. So, the income in this story is the economy, right? Because that’s what we’re setting the debt against, right? Money itself, measuring debt and income around just money is irrelevant because the money only has value, only has value only because you can buy stuff with it. Where does that stuff come from? That comes from this thing we call the economy? All right. Well, if our debts compounding and doubling every 8.8 years and our economy needs to grow that fast, how does the economy actually grow? So, what do we mean when we say the economy?
Well, you can imagine the economy is every single thing you look at in your household. Just cast around, just look around. You look at everything, right? You see everything. All of that stuff came to you because somebody somewhere produced something. OK, those are the goods, right? And then the services, when you, you know, call up a lawyer who has, you know, 20 years of experience in tons of training or a or a doctor or somebody who has got a specialist of some kind who has a lot invested in who they are and their expertise. You’re paying for their service and all of that training they had, and then they have all of their goods and services they rely on. So that’s the economy, just a bunch of people doing stuff. So, what would what actually makes the economy grow, though? Because we constantly talk about a growing, but we never talk about how it grows? Well, let’s talk about that. First up, we’re going to go here. Economic output is intimately and I mean intimately linked to oil. In this chart, we can see up the y axis you when you want more GDP. We have to follow along the x axis and we see that, wow, every time we get more GDP, we’re consuming more oil.
So, this is a snapshot in time. This is saying, as of today, how big is an economy, right? That’s the y axis. And how much oil are they consuming? That’s the x axis. So, you see U.S., China, Japan, India, you can you can see the straight line there, right? You see the relationship. It’s like like there’s no dots scattered off of this. We don’t have a single economy out there that’s really massive, but is using really very little oil, right? That would be a way down, way down towards the bottom. And we don’t have dots way off to the side. Like, it’s pretty clear.
There’s a relationship here. And of course, there is. Think about everything again. Look around your household, look at your desk, look in your living room wherever you’re watching this right? Just look around trying to imagine one thing that got there without oil being involved somehow. Right? That big brown truck of happiness that rolls up and delivers the package, right? You know, with ups is coming. Oil, right? Obviously, anything that’s manufactured, anything is made out of plastic or has a plastic component. Anything that got shipped across the ocean, anything that flew on a jet oil was involved. Right.
So, this obviously economic output is intimately linked to oil. Hmm. What about over time, though? This is a snapshot. What if we went over time? This is what it looks like over time. Now we’ve switched the axis. Now we have energy up this y axis here and now we have economic output over time.
So, this starts when the world economy was a grand total of thirty trillion dollars. It was way back here. Let me get my drawn tool out so we can all be sure on the same point of reference. So back here in time, the world economy in total was about $3 trillion at one point, and then it hit 35 trillion. You know here and then it hit, where are we? Let’s see. Here’s 55 trillion here. And then it hit 65 trillion and then hit 75 trillion is much larger than that. Now this is as of two thousand fifteen. Yep. So at any rate, what do we see here again?
Now we see that over time, whenever the world economy got bigger, it consumed more energy. Now this isn’t just oil. This is primary energy that includes coal, oil, natural gas, nuclear hydro and all alternative energies plus biomass every form of energy you can think of all thrown into this one chart. Measured in something called Exa Jewels, it’s a very large number of jewels unit of energy at any rate. What do we notice on this chart over time? We notice that from 1980 to 2015, and by the way, it’s still true today. That every time we used more energy, we got more economy or every time we got more economy, we use more energy that they’re tightly linked. In fact, it’s a flat line that there’s no decoupling here. There are no like humans got better at making more economy with less energy. Because if we did that, that straight line, that straight dotted line in there, you would see this other thing curve off. The data would curve off of that straight line. It hasn’t. So very simply, we can say, if you want more economy, you were explicitly making the bet that you’re going to be burning more energy. Now it still makes intuitive sense, but this is the data. In fact, of all the economic charts, I haven’t heard a lot. This one is the most robust. It’s super tight. The correlation and there’s like point 9-9-9. I mean, it’s just like, it’s like there’s no better or more stronger, more explanatory chart than this is very simply says this.
When you have a growing economy, you’re going to be growing your consumption of energy, too, because the economy and energy are tightly linked. OK, very, very tightly linked. That’s why I go through and I talk about economy and energy. I got that big Green Line right there, I. Those things are connected to each other. They have a very, very strong relationship with each other. And as well, when we get down here and we say, well, this exponentially rising debt chart is an explicit bet that the future economy is going to be larger. It’s also an explicit or implicit, I guess. Either way, you want to look at it. I consider it explicit, but it could be implicit an implicit bet that we’re going to be burning more energy, which is an implicit bet that there is more energy to be had out there. All right. This is where the story gets awkward.
Trust me, I’m going somewhere with this. This is something I care deeply about. So, at any rate, really solid chart here. More economy. We’re going to need more energy now. Why is that important? Because I told you money printing by the Federal Reserve and other central banks out of control. Debt accumulation by private individuals, corporations and sovereign nations is out of control. Every one of those entities is making the explicit bet that there will be an economy to service that debt to spend that money on in the future. But what if there isn’t? What if we find that there isn’t this relationship, which is held for five decades? What if that isn’t true? Well, then what? Well, very simply, you have a lot of money. You have a lot of claims, you have a lot of currency, you have a lot of debt all hanging out there, but not as much stuff we’ll call it.
The economy is now stuff. There’s not as much stuff as you thought. What happens when you have too many claims and not enough stuff? It’s called inflation. Anybody experiencing any inflation? I’m trying to give you the underpinnings, the grounding, the reason for that inflation. It’s not some mysterious omen. Like the Romans watching a comet. They have no idea where it came from, the Oort cloud. They don’t know what’s happening. It’s like this mysterious thing is talked about. Like, it’s this thing that just happens in our newspapers all the time because they’re running as bad as the newspapers have been about COVID.
They’re just as bad at covering the Federal Reserve and their money printing. They just like, Oh, Jerome Powell cares about price stability and full employment. And no, he doesn’t. Not even close. So, they failed at the job is sort of articulating that inflation is everywhere and always a monetary phenomenon. Right? As Milton Friedman said.
So, all you have to do in the story is understand the source of the real stuff, which is energy. That’s this is the headwaters of the Nile and the story. You have to understand the source of the stuff and then marry that against the money printing, the debts, the claims, the fantasy promise, paper tickets that are being arrayed against this. And then when you put those two pieces together, you go, Oh, I get inflation now makes a ton of sense. All right. So, let’s look at total debt to GDP. So, the debt on top in orange, in red, below is the income. So, if this was your private personal credit situation right and your borrowing was constantly growing faster in a pulling away from your income, you know that sooner or later you have a math problem, you have a financial problem, you have a bankruptcy problem, et cetera. You just get that.
But somehow, when we put it at the national level here for the United States, we’re like, “oh, it’s not a problem”, and they just kick the can down the road. Eventually, you run out of road. Right. And that’s where we’re getting to in this story. And that’s why when I said there’s a potential for a financial or an economic collapse coming, it’s because the collapse itself, it’s not a collapse in stuff because we’ll still have plenty of stuff. The collapse is in the system of money, in currency and debt that we’re using to measure all this stuff against. That’s where the trouble starts. Right? So, when you look at what happened, say, in Weimer Germany in from 1918 to 1923, explosive inflation. Did anything what happened like did the country suddenly not have stuff, not had the same amount of farmland, it had the same number of factories, the same number of people, nothing happened except the currency system. The claims, those blew up. And that’s again, money is a social contract, debt’s a social contract. When that contract gets broken and that trust gets shredded, lots of things fall apart. That does get bad. That’s Zimbabwe. That’s Venezuela. Things, trust me.
You don’t want to mess with your currency system unless you’re a moron or an idiot talking to you, Jerome Powell. That’s what the Federal Reserve has been doing, and they’ve been enabling this behavior because this constant increase, exponential increase in debt, it keeps the system working today. And that’s as far as they’re, you know, they look like their horses with the blinders and a wall in front of them, like, like they just don’t. I don’t know what they’re up to. I’d love to have a debate with them because it’s just it’s really what they’re up to is really dumb and they’re going to keep being dumb until there’s a forcing function that stops them. And you know what that’s called? That’s where we get to in this next part of the story, which is where are we with the energy right now?
OK, so obvious question to ask the right question to be asking right now is are more oil supplies readily available today? I won’t even talk about in the future and peak oil and all that stuff just today. Do we have enough oil to run the system? So that we can at least pretend that all this debt accumulation makes some kind of sense. And the answer is no, we do not. So, we can see that in a bunch of ways. This is from John Kemp. He does great, great writing on energy. Looking at Brant is a grade of crude. It’s how we measure the world. Price for oil is measured, something called Brant that probably needs changing because it’s actually only one percent of the oil traded on the market.
But somehow it defines the price for the world. But when we look at Brent’s six-month calendar spread, so it’s asking the question If you had to buy a barrel of Brant today, how much does that cost compared to a barrel of Brant in six months from now, it’s called the spread. Usually they should be pretty tight, and it actually should cost more in the future because it costs money to store oil for six months, right? No. You know, oil tanks aren’t free, right? But in fact, we’re seeing the opposite of that. We’re seeing that oil today costs a lot more than oil in the future. And that’s weird and very rare. And the reason that that’s happening right now is because there isn’t enough oil today. People hope there’s going to be more in six months, but we haven’t seen a spread like this since nineteen ninety. OK, that’s. And of course, that was the Kuwait War, and that was a legit oil shock that led to a double dip recession 1991. Right? Because spiking oil prices and oil shortages more than the price, it’s the shortage of it. When you don’t have enough oil, the price goes up. Right? So that’s what creates the shocks. Oil shocks are very, very bad for economic systems, but the really bad for overleveraged systems that have too many promises outstanding. Thanks again, Federal Reserve and other people like that.
So, at any rate, that’s one measure. Here’s another thing we could note as well we’ll just get more oil out of the ground. We’ll just open some spigots. Then Chris will just like, get more. The problem with that has been this is energy capital expenditure within the oil business, and it has been got, to be honest, really unimpressive for a while. If this was the average sort of amount of expenditures will call that, you know, $80 billion-ish from 2000 through 2014. Well, from 2016 onwards, 2015, 16 onwards, we’re at less than half that. And the reasons for that are many.
The price of oil wasn’t high enough to support this. We had dangerously false narratives running around from what’s called ESG, the environmental sustainability goals, things like that that, you know, oil companies really were pilloried and saying, you know, we don’t want your oil. So, they heard the message and they’ve been a little lackluster in their investment in this. At any rate, oil is a very long, slow sort of business. If farming is a one-year cycle, he seems to be a little short on corn out there. I’ll plant more. It’s a one-year cycle. Oil’s about a five to a seven year cycle. It’s much slower. So even if tonight. Oil went to $300 a barrel, and every oil executive in the world said, let’s get busy investing in more oil. It would take five or so years to undo this past five years of underinvestment, seven years of underinvestment. It just it’s not easily remedied, takes time. So, it’s a longer, slower thing in the way we detect it. Oil is in structural short supply. How do we do that? Price prices easy.
So, oil exploded upwards recently. Crude oil Brant is over one hundred and ten dollars a barrel at the time that I was. I’m recording this. It’s up 57 percent on the year, as they say in skydiving. Or, you know, if you fall out of a building, it’s not the fall, it’s the stopping. It’s never where you get is $110. Oil unsurvivable now. We survived it in 2013, right? It’s the piece, though, of that change. That’s the hard part for systems. So, it’s a shock. We’re in the middle of an oil shock right now, but it’s not just an oil shock. We have a general commodity shocks.
So, this is commodity spot index. It includes energy, but more importantly, it includes a lot of food. This is an absolute unbelievable shock to the system right here that’s happening right now. And why is it happening? Well, that’s easy. The central banks printed, printed, printed, printed, but the printing that just increases the claims. It doesn’t do anything to increase the actual supplies of things. Where did things come from? Oh, from energy. Fundamentally, even like food like, Oh, food’s going up. Where’s that come from? Well, when you understand how industrial agriculture works, it mostly comes from oil and fossil fuels because obviously the fertilizer running the tractors harvesting, drying, storing, cooling, you know, transporting everything food is is just oil’s just all through that now. Fossil fuels are just buried all through that entire story. So, when oil and fossil fuel goes up in price, food follows very, very quickly afterwards because it is an expression of oil in many respects. So, we’re seeing this massive, massive amount of inflation happening. So, the central banks are caught right now. They’re caught in a really tough moment. So, what we’re seeing with the central banks right now is that this problem that they’re facing is one that they’re going to have to work very, very hard to correct. So, on the one hand, they have to control rising inflation.
What does that mean? Well, they have to take some of this currency out of circulation as they do that that creates shocks to their precious stock market and bond markets, and then financial asset prices start to get hit and then they get a little squirrely about the whole thing. And given the choice between ruining a bunch of middle-class households with rapidly rising prices or a falling stock market, that’s an easy one. The Federal Reserve, every single time and every central bank will always throw the entirety of, you know, the 99 percent and under they’ll throw them right under the wheels of the inflationary bust every time because they’re more concerned about the system of banking and they’ve got a rationale for it. I know they have to go to sleep at night thinking they’re good people, so they think to themselves well. It would be bad because the stock market, when it falls, makes people lose confidence, when people lose confidence, then they don’t spend as much. When they don’t spend as much, all these people will lose their jobs.
I’m really helping these people by making sure stocks stay up in price. In fact, sort of true, but really, honestly, it just makes the cocktail parties. They go to a Davos that much more friendly because they hate getting cornered by angry hedge fund managers going, what happened to my portfolio? Jerome makes people get cranky. So, at any rate, what we’re going to be seeing here as we go forward is a lot more inflation and there’s not a lot, they can do about it because they’re caught between a rock and a hard place. Huh. Federal Reserve and the European Central Bank, they think what would I rather have a crash, you know, fall get prices back under control or crash stock market, so they think that’s the choice. Actually, it’s not the choice they’re caught now because energy itself is its own. Federal funds rate or interest rate like there’s nothing you can do, you can’t print more or less and make more oil come out of the ground, it doesn’t work that way. Right. So we’re going to see a lot of shocks coming in.
By the way, this whole idea that we’re in structural shortfall for oil has nothing to do, particularly with Russia and Ukraine. Except that’s after Afterburner on a story that’s been slow cooking for a while because I told you, I already told you see this, see this last multi-year failure to invest. That leads to statements like this from a variety of places like Here’s the head of Nasser, who is the CEO of Saudi Aramco, warns that world’s spare oil supplies are falling rapidly. When was that? Well, that was October of 2021. Here’s September 2021. The Chevron CEO warns of high energy prices and supply crunches. In December, we had another warning here from all the oil CEOs that were coming together for a meeting the shale space down in the United States. We have Pioneers CEO Sheffield warning U.S. shale is now unable to grow to meet this demand. This just comes to us from mid-February of 2022. So, this has been going on a while and all of these steps we’ve known about this, we have known about this, but it hasn’t been really addressed in any serious way because guess what? Honestly, even if you want to address this, what are you going to do with a five-year, seven-year delay cycle? That’s tricky. So, at any rate, that’s what’s been happening. But now we have afterburners on the story because if we take Russia’s supply out of the mix and this happening very, very rapidly, we’re seeing traders all over the place not work with Russian firms.
It’s an astonishing collapse in anything coming out of Russia and of course, the situation in Ukraine as of the recording here, which is on March 2nd. That’s not going to resolve anytime soon, but nations agreed to release 60 million barrels of oil. A million sounds big, right? Well, actually, Russia exports. It’s one of the largest exporters in the world. It exports five million barrels of crude a day. So, if they stopped, that would be 60 million divided by five sixty divided by five gives us about 12 days’ worth of Russian exports. So that’s the situation we find ourselves in right now. And that’s not a lot of buffers in the system. Well, before we get to those 12 days, you know these 60 million barrels is going to be a blip. It’ll bring prices down for a few days here, but we’re going to see prices go back up again. How high? I don’t know. But oil? Could it be 200 a barrel? Sure. Three hundred. Yeah. If it’s 400, Chris, you wouldn’t buy oil anymore. Yeah, I would. That’s about how much at the pump equivalent they pay in Europe right now. Do they still put fuel in their cars? You better believe it.
So yes, people will pay 400 more per barrel, trust me. So that’s where we’re potentially heading in this story. So, here’s how I wrap all this up right now. First, we have a massively over leveraged system. It’s just a massive failure to plan or think ahead on that and that massively levered system, of course, as we learn, it all depends on oil to function right to make it make any sense at all. You need oil in that story. Yeah, that oil, that’s kind of in short supply. We see that in the price. I could show you all the supply demand charts.
There are tons of charts. I got lots of data. We’re a little short on oil in that oil is going to be really kind of tricky to replace anytime soon because we’re short on investment. And that just takes a lot of time. There’s nothing we can do about this in the near term, and there’s nothing the Federal Reserve can do about this. They can print money and make stocks go up and pretend we’re all happy. But the truth of the matter is your economy runs on oil and we’re out of it. We’re short on it, and we don’t have any quick way of making more of it quickly. And on top of all of that, we’re facing the biggest energy shock in decades difference. This time we’re doing it with a lot more of the leverage in the system.
So, start at the top of that wheel over there again. No one got to get my sight. Yeah, start on the top of that thing over there. All right. So that’s the whole system that we got running right there now. So, was this hyperbole for me to say this, that we are facing a potential financial collapse of some kind or economic collapse? No, because it’s grounded in the reality of the fact that the enter the energy is the bottom of that economic pyramid. And on top of that economic pyramid, we have all these leveraged bets. It’s like an inverse pyramid. The energy is the actual wealth. The economy is how we turn that wealth into other forms of wealth. And then there are all these bets and claims that are stacked on top of that. That’s the system we have on top of it right now. All right. So that right, there is what I have for you today on this side, but very exciting news. We’ve just launched a whole new website at peak prosperity. It’s got a bunch of new options for how you can engage with it. We have our lowest membership tier for people who want to hear part two of this. And by the way, part two of this is going to be me going into this, what the economic shocks are, how they’re going to hit and what you can do about that. So that’s the kind of conversations we have because I want you to be resilient. You need to be resilient. You need to be economically resilient, physically resilient, financially resilient. These shocks are just about to get started.
So, this is as close to an alert as I can give right now. So, listen, I’m the guy who was out there on January 23rd of 2020 saying, Hey, there’s this new virus and there’s a pandemic coming. I was really early on the Fukushima story, a year and a half before the Nuclear Regulatory Commission admitted the stuff that I managed to figure out all of my own about what was going on around that. You could look that up. That’s all-old history. I saw the housing market come early, remember? I’d rather be a year early than a day late to this story. This energy situation is already in structural difficulty due to underinvestment. Russia going into Ukraine only adds rocket fuel on top of that story.
This is where we are. It’s not widely recognized yet, but you get early warning about that. That’s what I do. I’m an information scout.
If you come by Peak Prosperity, by the way, are we have a membership tier now that starts at $10 a month or $90 for the year, which is 750 a month. It’s twenty-seven cents a day. If this kind of information and forewarning isn’t worth 27 cents a day, you are the wrong client for Peak Prosperity. Don’t come by. But for those of you who value early information who like being ahead of the curve who like the context, I’m going to give you this sort of explanation. This is what I do. I connect dots and I make things make sense. Across systems.
So, if you need an you know what, I’m an expert in, I’m an expert in not being an expert in anything. I don’t have the dogma of the economists who know how the world works and I’m just being an idiot. I don’t have the dogma of people who are going to tell me about how the energy system works, and it’s going to solve all this stuff technologically. I’m going to cut across all the disciplines to get you a story, which is where the actual thread of this story really is.
So, I want you to be resilient, though, whatever you do, whether you come to peak prosperity or not, please. Heed this. Think about it, watch it again if you need to, but understand that energy is the master resource. It’s the only one that matters. And once you understand where we are in the energy story, you see the urgency of the situation that we’re in. We have a fantasy economy built on fantasy money printing. Those fantasies can persist for a long time. But when they break, they tend to go pretty quickly. So that’s my alert or warning to you here today. If you want to find out more about that, please again, come by peak prosperity. We have critical conversations that are happening right now in there about being resilient, about being with your tribe, finding the other people out there who are interested in having these sorts of conversations and love to see you there. All right. That’s all I have for you today. Please be safe and take care. We’ll see you next time.
- The Crash Course & Other Foundational Peak Prosperity Materials
- Federal Reserve Total Credit Market Debt
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