If you have not yet read Part I: The Demise of the Car, available free to all readers, please click here to read it first.

China contains 19% of the world’s population and accounts for 21% of the world’s energy consumption. But India, while containing 18% of the world’s population, only accounts for 4.6% of global energy demand. It is not possible that India can call upon oil to fund the next leg of its industrial growth.

For even after we consider the higher marginal utility of oil in the developing world – higher prices are integrated more easily to the economy as each new consumer uses only a small amount of oil – there is simply not enough economically recoverable oil for India to replicate the Western history of car and highway development.

Furthermore, the prospect that hundreds of millions of India’s citizens, already unserved by the powergrid, would turn first to oil consumption is highly unrealistic. Perhaps the government of India wagered that the Great Quadrilateral was needed as a foundational piece of national infrastructure – not as a bet on a future built for automobiles.

Regardless, we have already seen in the data out of countries like China that the mix of energy demand starting last decade began to shift, strongly, from oil to electricity.

If you have not yet read Part I: When Quantitative Easing Finally Fails, available free to all readers, please click here to read it first.

Had every US homeowner with a mortgage also held 100 ounces of gold through the rise and fall of the housing bubble, the balance sheet of US homeowners would already be repaired. Gold has at least tripled, if not quadrupled, through that time period.

We state this to illustrate a point. Quantitative easing (QE) and other reflationary policies benefit gold, global growth outside the United States, and the earnings of corporations — not US workers.

QE largely benefits the continued dollarization of the world, as the dollar has now fully joined the yen as a cheap funding currency. But QE does not improve wages and does not help the private sector deleverage. Indeed, despite the amount of deleveraging that has occurred in the private sector, the asset side of the private sector’s balance sheet has fallen. To put this in plainer terms, Americans have indeed been paying down their credit cards and mortgages. The problem is that their assets, primarily homes and other investments, have concurrently fallen in value. (The Federal Reserve’s Z1 Report is pretty clear in this regard; see the B.100 Table on page 120 of the 7 June, 2012 FED Flow of Funds PDF).

This lack of progress will eventually express itself in a kind of exhaustion. Either America is going to have to accept much lower levels of consumption and permanently low levels of labor participation, or the country will have to explore more innovative ways to shock its economy back to life.

Let’s take a look at a few of these possibilities: