A cash crunch and gas crunch

As a concise recap, my forecasts in regard to global economics have been simple. The two items that I have repeatedly forecast are a cash crunch and a gas crunch.

Starting in early 2003, I have published warnings about an emerging cash crunch (led by those deepest in debt to suddenly shift from attempting to secure more loans and mortgages to attempting to accumulate cash to cover everyday living expenses and avoid foreclosure and bankruptcy). That same issue applies to households, business, and even governments. I made my conclusions largely based on a very simple analysis of what has happened in Japan since 1989 and how it was spreading to Europe and beyond (like to the US).

Second, starting in 2004, I published warnings that the specific spark for that continuing cash crunch would be an energy crisis (relating not to a severe shortage of fossil fuels, but simply a rapid increase in prices). The nature of the shift was that global fossil fuel production levels (as in the extraction and refining of crude oil) was approaching a plateau and eventual decline. At the same time, global demand for fuel was already ballooning, including in nations with huge populations such as China and India.

So, the global trend of falling fuel prices that was in progress for most of the 20th century had reversed in 1999. By 2004, I noticed that reversal, understood the simple nature of why it was happening, and also understood the simple consequences of a continuing rise in fuel prices (which later spiked in 2008).

Again, the case of Japan was obvious. As one of the leading nations worldwide in total economic productivity, it is the one that has had the most dependency on importing fuel. 99% of the fuels used in Japan are imported from somewhere else.

global oil extraction

 

So, in summary, the easily predictable plateau of global fuel production led to an easily predictable price increase. Further, because fuel spending is such a high priority expense, the ballooning of fuel expenditures led to an easily predictable cash crunch, which led to a decrease in all other expenditures. As spending on fuel rocketed, cash reserves were depleted and a cash crisis was recognized, leading to an easily predictable decline in real estate speculation, stock market speculation, and so on (lowering demand). In fact, the cash crunch led to an easily predictable increase in selling of excess liquid assets (like stocks and gold) as well as excess illiquid assets (real estate).

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