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http://peakoil.com/consumption/the-global-economy-echoes-1930s-great-depression

The global economy echoes 1930s Great Depression

In the comments:

" Davy on Sat, 20th Feb 2016 7:30 am

Trying to understand the global problems today in relation to the 20th century is not valid anymore except with some of the lessor details. Looking at today’s issues with 20th century economic analysis is just inviting us to continue with the same irrational policies that are creating more dysfunction. Global central banker’s decisions to take the global economy into Zirp, Nirp and QE is an example. China’s huge credit and physical development growth is another.

What is happening now is much more in a world that is vastly different at almost every level. We are now a complex global world at limits of growth with a population in overshoot. That population in overshoot is in over shoot for quantitative reasons of numbers but also just as dangerous with qualitative reasons from consumption requirements for support. Too many people along with a significant amount of those “too many people” relying on our complex global world for the basics of survival.

We now have a complex global world economy along with its absolutely vital “foundational commodity” oil both in demand destruction. This is an economic compression destroying demand which will destroy supply and economic networks. The supply of high quality oil has declined. Our 20th century way of life was built on the economics of plentiful higher quality oil. Our 20th century civilization is increasingly unworkable in the 21st century because of demand compression. Our wants of developing a 21century world is likewise confronted by limits. An energy transition is likely not possible in scale of time nor economics. On the economy side of the equation our financial system has grown outsized and has become parasitic. That financial system has become a bubble in a global economy that is itself a bubble. That bubble with all its malinvestment, overcapacity, and irrational development is now surfacing as nonperforming loans and assets. This is a huge deflationary event that is compressing the rate of growth which is all important to our hyper complex and dynamic global economy.

This is deeper than economics with symptoms of existential collapse with limits restricting our growth and our ability to solve macro problems. It is deeper because of a population many times past normal carrying capacity even in relation to the 1930’s. This is deeper than economics because it is about demand destruction of not only from economic problems but also resource problems. High quality resources are in decline. The ecosystem and waste stream is dangerously destabilized now. This ecological factor is not yet extreme but it is certainly close.

It is the combination of so many problems converging in negative reinforcement that is driving us into dangerous territory. We are in territory like man has never been in with global locals delocalized from decades of efficiency efforts of globalization. This globalization was economic and partly social but on the political side we are still stuck in an earlier time. We have a vacuum from the rapid decline of American dominance. We have a dangerous multipolar world polarizing under the stress of global problems armed to the teeth with sophisticate weapons with global reach. Globalism is polarizing at a time of vital need for cooperation because we can no longer decouple economically without collapsing.

The 1930’s was an economic event without the delocalization of globalism and overpopulation of 21st century. We survived demand destruction without much trouble then. We will likely not survive such a drop this time and remain as we are now with globalism intact. Without globalism there is no way we can feed almost 7BIL people. Our food system has been globalized just like the rest of the edifice.

Death at a macro level with all its disruptive qualities is very disruptive to complexity and growth. Death at a macro level with its corresponding declining population is by definition not growth. You cannot grow our type of global system while people are dying more than are being born. This is existential demand destruction with a corresponding decay of all aspects of our global system both hard assets and soft assets like vital knowledge that supports vital complexity.

This can’t end well. We are not there yet. We are still in aggregate growth maybe not healthy but still satisfactory to avoid collapse. This predicament is subtle. Globalism is all or nothing which makes it very dangerous because the whole high performance machine could size up at any time for multiple diverse reasons. We have no plan B’s especially for delivery of vital food and fuel. Cities are too large with many poorly placed geographically for sustainability. We have a macro situation of multiple predicaments in a fog of catch 22’s. In such a systematic situation we must break to a lower level by definition. The problem for all of us is when and how hard. There is no way to know these answers. "