World Debt Is Rising Nearly Three Times As Fast As Total Global Wealth

Some nasty dark clouds are forming on the financial horizon as total world debt is increasing nearly three times as fast as total global wealth.   But, that’s okay because no one cares about the debt, only the assets matter nowadays.  You see, as long as debts are someone else’s problem, we can add as much debt as we like… or so the market believes.

Now, you don’t have to take my word for it that the market only focuses on the assets, this comes straight from the top echelons of the financial world.  According to Credit Suisse Global Wealth Report 2017, total global wealth increased to a new record of $280 trillion in 2017.  Here is Credit Suisse’s summary of the Global Wealth 2017: The Year In Review:

According to the eighth edition of the Global Wealth Report, in the year to mid-2017, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached USD 280 trillion, a gain of USD 16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of USD 56,540 per adult.

This year’s report focuses in on Millennials and their wealth accumulation prospects. Overall the data point to a “Millennial disadvantage”, comprising among others tighter mortgage rules, growing house prices, increased income inequality and lower income mobility, which holds back wealth accumulation by young workers and savers in many countries. However, bright spots remain, with a recent upsurge in the number of Forbes billionaires below the age of 30 and a more positive picture in China and other emerging markets.

There are a few items in the Credit Suisse’s summary above that I would like to discuss.  First, how did the world increase its global wealth at a rate of 6.4% in 2017 when world oil demand only increased 1.6%??

As we can see from the IEA – International Energy Agency’s Global Oil Demand table above, total world oil demand only increased 1.6% over last year.  Thus, the rate of increase of global wealth of 6.4% in 2017 was four times higher than the 1.6% increase in world oil demand.  I would imagine some readers would stand on their soapbox and emphatically claim that energy has nothing to do with wealth creation.  Unfortunately, these individuals somehow lost the ability to reason along the way.  And we really can’t blame them for making such an absurd remark because they probably believe their food magically appears on the Supermarket shelves.

Second, the financial wizards at Credit Suisse reported that global wealth also outpaced the population growth.  What they are suggesting here is that the “Millenials” who (many) are becoming wealthier by sitting in front of a screen and clicking on a mouse than their grandparents (the poor slobs) who were mainly working in the manufacturing industry by producing real things.

Third, while the Credit Suisse analysts stated that the Millenials were facing some disadvantages, there was a bright spot with a recent surge in the number of Forbes billionaires below the age of 30.  Well, ain’t that a lovely statistic.  What once took an individual at the ripe old age of 55-70 years to achieve a billionaire status, now can be done right out of college.  It’s probably not a good sign for the economy going forward that we are seeing more billionaires below the age of 30.

Global Debt Is Destroying Real Wealth

Okay, now that we know the global wealth reached a new record high in 2017, what about the other side of the story?  You know… the debt.  As I mentioned in my previous article, ECONOMICS 101 states:

NET WEALTH = ASSETS – DEBTS

Now, that equation above is a simple one… kind of like 2 + 2 = 4.  However, the financial industry likes to focus on the assets and not the debts.  But, according to a recent article on Zerohedge, Global Debt Hits Record $233 Trillion, Up $16Tn In 9 Months, the world added more debt in 2017 than total U.S. GDP:

As we can see, total global debt increased from $217 trillion at the beginning of 2017 to $233 trillion in the third quarter of 2017.  That is a $16 trillion increase in global debt in just nine months.  While U.S. GDP hit $19 trillion in Q3 2017, if we add another quarter for the increase in global debt, it could surpass $20 trillion for the entire year.

So, even if global wealth surged in 2017, so did world debt.  According to the data, global wealth increased by $16.7 trillion in 2017 while global debt expanded $16 trillion… nearly one to one.  However, this is only part of the story.

If we look at the increase in total world debt and total global wealth over the past 20 years, we can see a troubling sign, indeed:

Since 1997, total global debt increased from $50 trillion to $233 trillion compared to the rise in global wealth from $120 trillion to $280 trillion.  There are two disturbing trends shown in the chart above:

  1.  Global Debt has increased 366% vs. 133% for Global Wealth since 1997
  2.  Net Wealth was $70 trillion in 1997 versus $47 trillion in 2017

If we compared the percentage increase in global debt versus global wealth, global debt is rising at nearly three times the rate of global wealth.  Furthermore, doing simple arithmetic by substracting DEBTS from ASSETS, global net worth fell from $70 trillion in 1997 to $47 trillion in 2017.

By putting the numbers together, right in front of our eyes, we can clearly see that the world is going broke by adding debt.  Basically, we erased $23 trillion in Global Net Wealth in the past 20 years.  However, I believe the situation is much worse than the figures shown above.  For example, I came across an article several months ago on Zerohedge that also reported the increase in global debt, stated it did not include FX Swaps, etc.  According to their data, Foreign Exchange Swaps likely exceeded $13 trillion.  FX Swaps are more short-term debt instruments, but they are still debt instruments.

Moreover, we have no idea what other nasty debts or obligations are hidden out of sight of the public.  Regardless, if we were just to include the FX swaps worth $13 trillion, the estimated net worth of Global Wealth would only be $34 trillion ($280 – [$233 +$13] = $34).

The Percentage Of World Gold Investment To Global World Assets Is Much Higher Than We Realize

Now, here’s how the financial situation gets really interesting.  If we go by NET WEALTH, then the value of global gold investment as a percentage of world assets, IS MUCH HIGHER.  According to the typical financial asset allocations, precious metals comprise approximately 1% of total global assets.  The following chart shows that total global gold investment is valued at $3 trillion and silver at $51 billion (based on $20 silver, last year):

Thus, $3 trillion in the value of world gold and silver investment equals a little bit more than 1% of the $280 trillion in global wealth.  However, if we are clever and remove the debts, the real NET WEALTH is closer to $34 trillion.  Thus, total world gold and silver investment comprises nearly 10% of GLOBAL NET WEALTH, or ten times higher than it is currently valued.

Furthermore, we must remember, physical gold and silver, purchased and held in one’s hand has no debt attached to it.  Of course, this assumes that an individual didn’t take a loan out against their precious metals holdings.  Thus, the precious metals have always been the highest quality stores of wealth for 2,000+ years… even though the Millenials forgot about them for the promise of millions of Crypto profits.

Unfortunately, the situation is much worse than what the figures in the charts above reveal.  Why?  Because, the only way that debts can be paid down is if we have another $233 trillion worth of profits from economic activity, correct?  Now, I am not talking about $233 trillion in costs; I am talking about PROFITS.  Big difference.

To pay back $233 trillion in debts, we have to burn one hell of a lot of energy… don’t we?  That’s correct; we have to burn energy to create economic activity.  And not just plain ole economic activity, PROFITABLE economic activity.  Well, we are in BIG TROUBLE because we have been burning one hell of a lot of oil (95+ million barrels per day), but global debts are increasing faster than global wealth.

So, it’s just a matter of time before GRAND FACADE comes crashing down.

Here’s how I see the future unfolding…

  1. The Falling EROI- Energy Returned On Invested will continue to gut the oil industry, and in time the world will experience CLIFF LIKE declines in global oil production
  2. As oil production suffers massive declines, global debt will become unmanageable.
  3. As debt becomes unmanageable, it starts to collapse.
  4. As debts collapse, so will assets.  Why?  Because debts are the other side of the assets
  5. As assets collapse, so with the value of STOCKS, BONDS, & REAL ESTATE
  6. As investors watch their investments implode, some who still can think for themselves will buy gold and silver
  7. As investors flock into gold and silver, patience will finally pay off for precious metals holders

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66 Comments on "World Debt Is Rising Nearly Three Times As Fast As Total Global Wealth"

  1. ‘WORSE THAN 2007’: Top Central Banker warns of looming wave of worldwide bankruptcies
    http://www.telegraph.co.uk/finance/financetopics/davos/12108569/World-faces-wave-of-epic-debt-defaults-fears-central-bank-veteran.html

    The world is drowning in debt, warns Goldman Sachs
    http://www.telegraph.co.uk/finance/economics/11625406/The-world-is-drowning-in-debt-warns-Goldman-Sachs.html

    OCED Economic Growth GDP Per Capita 1970-2015 (0.5%)
    https://imgur.com/a/HXBkr#Bv4I4AF

    Global Economic Growth GDP Per Capita (1.3%)
    https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG

    World Governments Gross Debt to GDP (330%)
    https://imgur.com/a/3usX7

  2. We can no longer talk about reforming the system. The system is past reform. The wealth has been misallocated. The environmental destruction has been done. The irreversible climate change is happening. The energy supplies are dwindling. We are out of resources.
    https://imgur.com/a/6dEDt

  3. Maurice Miner | January 8, 2018 at 6:45 pm |

    OK, grammar Nazi here – Steve, you said “total global wealth increased to a new record of $280 billion in 2017.”

    You obviously meant the “T” word, which in terms of size befuddles most pundits.

    Secondly, your interim headline is “The Percentage Of World Gold Investment To Global World Assets Is Mucher Higher Than We Realize”

    “Mucher”?

    I concede that it is an excellent descriptor, but not within the Queen’s English.

    By the way, your recent description of the gold/silver price disparity (along with cost of production) was truly excellent,and I really like the way your thinking has transformed towards cost of energy being the basis of precious metal prices. Intellectually, it has merit, and I have put a fair amount of thought into your argument, and can’t counter it.

    I would subscribe to your site, but unfortunately you are a Catastrophic Anthropogenic Global Warming (CAGW) believer, and it concerns me that you take this tack in the complete absence of replicable scientific evidence.

    However, you have recently sensibly denounced “cryptocurrencies” despite previous support, so there is possibly hope for you. Please don’t take this as a personal attack – we all need to explore the intellectual boundaries of what we are being told…

    • Maurice Miner,

      I made the changes a while ago. However, my website CACHE does not update the site for 10-15 minutes. Thanks though. Don’t know what I would do without your tremendous help.

      steve

    • Maurice Miner,

      Ah… very nice of you to NOT subscribe to my site, based on my ECONOMIC, PRECIOUS METALS & ENERGY analysis because we disagree on Global Warming.
      I’ll remember that the next time I need to see a doctor who has a different political view than mine.

      steve

    • Maurice Miner | January 8, 2018 at 7:15 pm |

      No worries, Steve. Once you examine the CAGW beliefs, and rationally analyze them (which I am positive that you can do), perhaps you will have a moment of clarity. MM

      • MM,

        Looks like we are going to have to AGREE to DISAGREE on that one. However, in 5-10 years, if you don’t come around to ABRUPT CLIMATE CHANGE, then you probably are six feet under. Because if a person is alive, then in 10 years there shouldn’t be doubt… LOL.

        steve

        • Maurice Miner | January 8, 2018 at 7:34 pm |

          OK, we can certainly agree to disagree – the science is pretty much settled, and atmospherics (and ice-caps, for God’s sake) do change (I’m not a climate change denier!)but your projection of 5 to 10 years towards “ABRUPT” climate change is just silly.

          We have been berated by pundits of proselytism of the CAGW faith for the last couple of decades.

          All you need to do is apply your obviously analytical mind to the propaganda. MM

          • The incoming ice age will quickly correct your beliefs.

            Grand Solar Minimum… look it up.. the Thames will freeze again, and much more. In the next few months food prices will also be indicative of the ever increasing amount of crop failures due to early frost etc.

        • Echos Of Light | January 9, 2018 at 12:46 pm |

          Steve, long time lurker 2nd time poster…you have much insights into the financial markets, but unless you have the necessary equipment to verify for yourself, you’re relying on other “expert’s” opinions on the matter…the same cadre that you chronicle manipulate the economy…why? Taxes…

          Let me riddle you this…why would all of the solar bodies be increasing similarly to the increases on Earth, perhaps normal and cyclical changes to the Sun? Or you SUV…you be the judge…appreciate your work.

          • Tsar Nicholas | January 9, 2018 at 6:22 pm |

            There is no evidence to support your contention that “all the solar bodies” are “increasing similarly to the increases on the earth.”

            The people who claim this are often the same ones who claim that Niburu is approaching Earth and that it’s all being covered up by NASA (ignoring the tens of thousands of amateur astronomers in each and every typical western country who haven’t seen it either).

    • Roger MacDonald | January 10, 2018 at 12:00 am |

      Your two quibbles relating to language are not even remotely related to grammar. Do you know what “grammar” even means, Nazi?

  4. Steve,

    In one of your recent articles you concentrated on the prices of gold and silver being driven by costs – labor, fuel, and concentration of ores extracted, and they correlated very well with the current ratio.

    When the financial collapse occurs will gold and silver price ratio reflect the then available stocks. The current world supply 2.59 billion ounces of silver to 2.25 billion ounces of gold represents a ratio of 1.15. Is a move in this direction really possible?

    Thanks,

    SteveW

    • SteveW,

      You bring up an excellent question. I don’t know if the huge movement of investors in gold and silver will push silver’s value closer to 1 to 1 to gold because of the available amount of metals, but I do see the percentage gain in silver outperforming gold in a big way.

      steve

  5. Michael Kohlhaas | January 8, 2018 at 7:21 pm |

    What is the growth of debt to growth of e.g. GDP or a better metric of economical growth?

  6. Actually, you are wrong, and let me explain this simply to the gold, and silver, people here.

    The currency value of everything in this world is at least partly based on debt. Without all of this circulating debt, nobody actually knows what the value of anything else is.

    Moreoever, the banks can use this systemic debt to drive the price of gold and silver to wherever they need it to be, and this is true for most other assets as well.

    The end result, therefore, will be the following:
    -if we have some sort of general collapse and the price of stocks or housing, or anything else, falls, the central banks will just step in to reinflate or perhaps even hyperinflate the currency structure, rather than allow a deflation to make financial debts onerous
    -during this process, most people will probably just be scrambling to meet their daily needs, and therefore there will be little to no speculative investment in gold or silver…they might very well drop below their cost of production
    -if this happens, the mines shut down and the mining industry largely goes bankrupt, along with the oil industry that you are constantly crapping on
    -so the end result will be little to no demand, nor production, of gold or silver; the price will drop to levels you don’t think possible

    How do you like them apples. I’m just telling you how it is. If you disagree, load up on gold and silver, see how far it gets you.

    • When central banks hyperinflate their currencies eventually, people will abandon those currencies and move to real money to (partially) preserve their future. By that time, the price of silver and gold won’t matter. Its value will matter though. What can you get for it on a day to day basis is what matters. Its a mathematical certainty our financial system will blow up. So why would i keep dollars, euro’s whatever? It doesn’t make sense. Get out of paper while you can, gradually, month by month.

    • I think you are trying to be funny here, but I’m not entirely sure. Fiat currencies will hyperinflate, and PMs will tank in price? Doubtful. I don’t price PMs in dollars, but in what they can physically buy in labor.

      When/if the fiats all collapse together, if we only use gold/silver as a lifeline our system will fall apart because there will be no trust in currencies, and PMs are hard to transport & transact in with our modern digital economy. If, however, we lose trust in our fiat currencies but there is an alternate system, that isn’t based on the whims of a politician’s ego, but instead is based on open-source math & consensus – then perhaps the transition to a crypto based economy is more realistic than many believe possible.

      • PMs are hard to transport ? Do you think precious metals are available only in big bullions, like dores ? Do you know that Chinese, Russians, and Swiss are producing gold & silver bars in the size of a credit card ? They produce those bars to be used in the daily transaction, not to be stored as a reserve in a vault somewhere in Antarctica. They know that gold & silver will enter the public’s daily life again, regardless what Bix Weir & Dracula said about the inconveniences of using those metals in the daily transactions.

        • Yes, PMs are hard to transport… relative to the other options at our disposal in the 21st century. Being a PM holder I am very familiar with the size, shape & storage requirements. In our modern economy, if I want to buy a product online, or from a vendor a state or a country away – how do I do this in PMs? The last time gold was used as a currency in the U.S. was 1932. About 85 years ago. Our economy isn’t a local one anymore where I drive to the nearest market center and swap gold & silver for farm products & food. I don’t really see PMs being used as daily commerce tools in the age of the internet, when crypto does the job much better. But if I am wrong, I hold both just to be safe.

          • @ SDZ
            You do not need any cryptocurrency to make an online purchase. Digital FRN will serve you well. Just sell one of your gold or silver bars to get the digital FRN.

    • dolph,

      You stated this, “The currency value of everything in this world is at least partly based on debt. Without all of this circulating debt, nobody actually knows what the value of anything else is.”

      If you actually believe that, then I gather your LOGIC will be flawed in many other areas as well. I am assuming that you failed to stay awake in class when the Economics teacher taught that NET WEALTH = ASSETS – DEBTS. Furthermore, you are making a lot of future assumptions that MAY or MAY NOT occur. However, if your LOGIC IS FLAWED from the beginning, then your future assumptions don’t hold much weight either.

      You seem to look at the world in the very same manner as Bix Weir. Instead of Bix getting to the ROOT OF THE PROBLEM, he comes across crappy conspiracy theories and then finds data to support it.

      For example, he says there are billions of oz of gold in the Grand Canyon. He mentions the article that states there is 1/40th of an ounce of gold in each ton. If it was theoretically possible to mine a billion oz of gold in the Grand Caynon, some POOR SLOB would have to move 40 billion tons of material.

      Currently, the TOP GOLD producers in the world are mining gold at about 2 grams per ton or 0.06 oz/t ton. In order for the top gold miners to produce 25 million oz of gold, they would have to extract and mill 425 million tons of ore.

      Now, if you have your THINKING CAP on, how long would it take the Top Gold Miners to EXTRACT & MILL 40 billion tons of material?????

      That’s correct, it would take them 86 fricken years. Bix Weir never thinks about things LOGICALLY. And it seems as if you are suffering from the same sort of problem.

      steve

      • Only the results have importance in dear capitalism : how many dollars/ethereum/gold you have period. If you are poor you are wrong, if you are rich you are right. Why “working” if you are able to join a strong asset(s) rise ? Indeed they are plenty of international peons (1 billion in china alone !) to deliver what you need (albeit of low quality indeed)…
        Capitalism is what it is for some good reasons, not what A, B or C wish it should be or could be like it was on the so called golden age which never happened.

      • DisappearingCulture | January 9, 2018 at 10:52 am |

        “The currency value of everything in this world is at least partly based on debt. Without all of this circulating debt, nobody actually knows what the value of anything else is.”

        Using that logic the value of light in this world is at least partially based on darkness? Without all the dark areas [at night; in closets], nobody actually knows what the value of light?
        Light and dark are opposites, like debt and a real asset?
        Is this contrast logic?

      • I am not shocked. Bix Weir saw the bad guys (“banking cabal”) as the very logical men. To fight them, the good guys have to think illogically and act chaotically. Logical thinking will only lead the good guys to the booby traps set by the bad guys.

    • OutLookingIn | January 9, 2018 at 10:18 am |

      Currency is debt.
      Currency eg: dollars, yuan, euro, francs, pesos, etc.
      Are nothing but printed “chits” that represent debt, owed to the chit holder upon demand.
      As for your premise about gold and silver and how they will interact within an hyper-inflationary economic environment, you had best rationally analyse your assumptions. Good luck. You will need it!

  7. FX swaps to mask underlying problems.

    In Europe, they use TARGET-2.

    https://mishgea.files.wordpress.com/2017/02/target2-2017-02-231.png

    Imbalances between central banks to hide the debt/energy problems.

  8. Interesting banter on climate change. What people think is that they can drive looking in the rear view mirror. Past events are not good predictors of future events because the conditions are not the same.

    The same is true with economies. We’re in uncharted water.

    The Arctic sea ice is an absolute necessity to main stable climates in the northern hemisphere. In normal conditions it absorbs heat from the oceans in summer helping to regulate them and in winter it expels heat keeping extreme cold at bay. As the Arctic ice has been disappearing we have had record breaking cold snaps and warm snaps in winter as well as unusual cool summers an extreme heat events in summer.

    There is also a natural feedback mechanism because of the loss of summer reflection of solar radiation. So the changes are not linear they’re exponential.

    The jet stream has become unstable and the polar vortex is weak. The most likely immediate problem will be crop failures and infestation of pests. And this we have already been witnessing.

    The likelihood is we will waste the last drops of energy trying to compensate for the unstable climate. This will simply hasten the demise of the fossil fuel industrialized world.

    These things are not going to happen slowly.

    • JT Roberts,

      It seems as if you have come across good LOGICAL INFORMATION about our current and future climate predicament. Unfortunately, most people who adhere to the notion that humans aren’t responsible for what is now runaway Abrupt Climate Change haven’t looked at the data or if they did, they are too stupid to make sense of it. Either way, I have found that it’s best to refrain from the debate on Climate Change because it’s a waste of time.

      However, I do continue to check out my Climate Change sites every week or so. And you are correct when the ice in the Arctic is gone, then the warming of the Arctic Ocean will start to rise exponentially, thus releasing a massive amount of methane that is being stored in the Arctic Ocean seafloor.

      I have to get a laugh at the folks who say we are entering a NEW MINI ICE age because there is this super-cold air now moving down to the lower latitudes that normally stays in the Arctic Region. I gather they have no idea that the Arctic region is heating at 4-5 times the rate of the planet, thus it is screwing up the Jet Stream, as you mentioned, and now the super-cold air is moving down to the lower latitudes.

      Lastly, for a NEW MINI ICE AGE to occur, we must have ICE forming from the ARCTIC downward. We are seeing quite the opposite as the Arctic is heating up from the massive amount of methane being released and the melting of the Ice.

      So, we will continue to experience an exponential increase in CLIMATE CHANGE as silly people keep regurgitating that HUMANS have not been responsible for Global Warming.

      steve

      • And then there is the Geoengineering factor which the Gov’t has admitted via a massive 750 page 1978 US Senate report and a Dept of Defense memo that they have been employing weather modification aka stratospheric aerosol injection, solar radiation mgmt, global dimming for decades.

      • Arctic was heating up not because of the methane release. It is the opposite. The methane was being released (from the permafrost) because the Arctic was heating up.

        • Bukharin,

          It’s called a POSITIVE FEEDBACK LOOP. The Arctic is heating up mostly from the melting of the ICE and METHANE releases. Either way, when the ICE in the ARCTIC is gone, its game over for humans on planet EARTH.

          steve

      • JT…….the climate on this planet has been fluctuating for as far back as we can find ice core samples and deep ocean sand samples to examine. Those samples CLEARLY SHOW CYCLES OF WARMING AND COOLING…….over millions of years. Thise patterns of warming and cooling mimic almost perfectly the sunspot cycles. We have just completed the most recent cycle of warming and are embarking upon the next cooling cycle. The temperature data that is collected globally has been “tamperd” with to hide temperatures that do not fit the ” global warming ” meme. Until several years ago I was absolutely on board with the global warming crowd……but not any more. You might wish to spend a weekend, omline, examining all the evidence showing sunspot cycles and climate change….excellent graphic data on .YT CHANNELS. Just search for mini ice age, global cooling, maunder minimum, etc. It is quite eye opening and actually unnerving to explore and absorb that information. I began looking at the information from John Casey, and that lead to others. I wouldn’t even remotely think of commenting about this unless I was absolutely convinced that the theory of global cooling now will apply. We are at the very low end of a sunspot cycle and could stay here for decades, or longer. The patterns are so very clear, and consistent……as the evidence is examined far, far back in history. Actually, things will likely get pretty dicey for decades……crop failure and all sorts of issues.

        • Good luck with that. The reality is the coral reefs in Florida and Australia are dying. The evidence doesn’t support the crazy hypothesis. Sorry I didn’t mean to burst your bubble but windmills aren’t dragons.

          The reality is temperature is increasing. Sorry so sorry.

          So how about this go back and study some more.

          • Yes, temperature has been increasing, but nothing close to Global Warming/Climate Change projections. However, Jupiter got so hot it developed a second red spot, Mars lost its entire ice cap and Venus has been glowing in the dark (much more than usual). NOT MAN MADE!

          • JT,
            First of all climate change happens as it has always done for hundreds of million years. Calling it climate change instead of global warming allows “them” to cover their bets, or should I say, agenda?

            There is a lag effect. Perhaps the warming ended around 2003. It takes time for effects of cooling to kick in.

            Lots of other reasons for coral reef death including increase nutrients from farm run-off, Cu++ run off (toxic), fertilizers, pollution etc. Most coral reefs, especially the small polyp stoney (SPS) Acropora like clear, nutrient-poor water.

            Increased temp is harmful to reefs (they like it 77 Fahrenheit) generally, so that’s part of it. Have scuba dived reefs in Australia, Belize, Phillipines, Bora Bora and Polynesia and I quit doing it because the reefs are indeed half dead, so no quarrel there. I believe what I see with my own eyes.

            I read, right or wrong, that core samples of Antarctic ice showed warming occurred first, then CO2 release. Cause and effect ass- backwards. I have heard from adapt2030 etc. that it is water vapor and cloud cover, not CO2 levels, that influence temperature on a relative basis, second only to the sun activity.

            Then there is yet another curve ball I recently read, which I don’t know if based on peer review: that the ocean rise as a result of global warming has been masked due to increased pressure on the ocean floor which has subsided. Almost sounds like a snow job to me. Like overpopulation is going to cause Guam to tip over into the ocean? So the earth’s mantle or the magma etc. is now compressible?

            The way I look at it, if there is indeed global warming, the oceans will rise- we’ll know it. If there is cooling, the oceans will recede-we’ll know it. But for now, the simple crab fisherman who has lived in the Chesapeake Bay area for decades says? What ocean rise? He hasn’t noticed it, while in Florida, some report increased water levels. Who knows? In the meantime, we could be in the transition period, or paradoxically, the industrial age increased CO2 emission may be ameliorating an impending solar minimum/cooling period.

            I went from the global warming crowd on my trip to Antarctica 2003 to the global cooling crowd on my trip to the Amazon 2016, and now I have no idea what to think. I have become a fence sitter.

            Having spewed my opinions, I can see why Steve has wisely decided to stay out of this issue, which in a way tells me, if he is undecided on global warming vs cooling, and yet so convinced about PMs, EROEI decline etc., well, that tells me a lot about his level of conviction.

      • Steve

        Most people believe what they want to believe. If they build a bias the can easily reinforce it by how the search for information. Very few truly are open minded and accept changes in direction. The internet has exposed us to a great deal of information but it’s easily manipulated to support our personal bias.

        So I’ve chosen science and thermodynamics which is proven and discard all other foolishness.

  9. Whether you are an evolutionist or a creationist, the same problem exists. We started off as humanity owing no one anything. No one owned any property or animals or what ever. So, how did we get to everyone in the world owing anything to anyone?

    The answers are actually quite simple, but we have to look at them from both the evolution perspective and the creation perspective as each reveal necessary information to get to the bottom of this issue.

    But in short – No one should be owing any other human being anything as it is humanity that owes humanity all this debt and it is humanity that can forgive humanity this debt anytime it chooses to.

    Think on that for a while.

    • The idea of “I’ll gladly pay you Tuesday for a hamburger today” has been going on for centuries. Even the Bible talks about a jubilee year where all debts were forgiven.

    • Georg Wilhelm Friedrich Hegel (the founder of Modern Dialectics) once said that every problem contains the seeds of its own solution. People should look to the inside of the problem to find those seeds. It is an irony that people spent most of their time looking at the outside of the problem they have been trying to solve.

    • Well, rabbi, your debt will dissapear like beans on supermarket shelves. So in a way, you are correct.

    • Rabbi,
      There was no such thing as debt until there was wealth. The farmer who invented the plow who had more wheat than he and his family could eat- invented wealth. He had something of value, more than he needed, and a commodity that somebody else would be willing to go into debt to get. Nothing has changed except the stakes are much higher today.

  10. Craig Moodie | January 9, 2018 at 11:46 am |

    Simple question. With all these theories about lower eroei and reduced available oil exports ala
    Jeffrey Brown, surely there should eventually be shortages at the pump. I see no signs of this anywhere, globally.

  11. Hanomy Manifesto … free download at Hanomy.com is the solution. I believe I came up with the solution for the world. Please collaborate, spread the words… 2nd edition and FAQs section are coming soon. Hanomy is a new social, financial, and political system for the whole world. Highlights of Hanomy:

    • Fundamental human needs met throughout life’s existence
    • Basic human rights observed everywhere
    • Sovereign debts worldwide are settled and eliminated
    • Upheld liberty and freedom
    • Financial contributions drawn from a portion of idle/unutilized money
    • No taxes on income, profit or spending
    • Interest charges and usury practices abolished
    • Power of money creation where it belongs – the people
    • An end to the fractional reserve system
    • Upheld free market principles (true capitalism but with social responsibility)
    • Decreased or dissolved inflation and hyperinflation
    • Reduced income inequality
    • An end to corporate welfare
    • Advanced technology benefiting humanity
    • Freedom of time for quality of life and caregiving
    • Prohibited conditions for authoritarianism
    • Preserved sovereignty and respected borders
    • An end to “modern day slavery” (this includes you)
    • Improved care of the environment and world resources
    • A world we’re proud to claim and pass along

  12. “carbon based fuels have distorted the cost of production”

    This is Steve’s comment in 1/5 article which just now catching up on. So, consumer cost based on production cost, not at ratio it comes out of ground at, and currently this production cost ratio is about 70/1.

    It is stated that in the past, with muscle power alone, the extraction ratio mirrored the production cost ratio. I.e, Gold cost 10x more because for a years worth of muscle power you got 1/10 as much gold as silver. (Belaboring this because older article)

    Question is WHY does oil distort this ratio and so radically? If takes 10x as much muscle to produce same quantity of gold as silver why does it take 70x more in price of oil?

    Seems like, roughly speaking, a joule should be a joule

    • Because Frank you don’t understand what Steve is saying.

      When you mine energy you skew the production of every other commodity. Everything is a cost of production creating affordability in markets. That has been the formula for the last 150 years. Well guess what we hit a limit on percapita net energy growth. So old rules don’t apply.

  13. Billy Lone Bear | January 9, 2018 at 2:44 pm |

    The 2.59 billion ounces. Is that what is above ground bullion and coin form available for purchase?
    (Not including what private stackers are holding)

    Thanks

  14. andre schneider | January 9, 2018 at 4:19 pm |

    Dude so you believe in global warming and you want us to buy your story? haha who knows if all of this stuff is true,

  15. Jose Gonzalez | January 9, 2018 at 4:48 pm |

    Great article until it got to the part where real estate goes down while gold and silver go up. People need a place to live, they don’t need a pile of gold and silver to play with.

    • JG,

      It is not the depletion of energy resources that will cause the house of cards to collapse. It is the collapse of the world financial markets, probably a cascading collapse brought on by a serious lack of liquidity, the will bring the end. This end will start with the failure of “on time delivery systems”. This will lead to famine, which will lead to riots, chaos, and marshal law. As a result Billions of people will die, if not from starvation then from the plagues that will follow. There will be plenty of real estate, far more than the remaining population will use for decades. There will be no more mining of any note but markets will emerge when the dust settles. People will need a medium of exchange that they trust, some will barter ammo, food, etc., but ultimately we will be left with gold silver and probably copper.

      So if you haven’t already you best be preparing which includes silver and gold and a whole lot of other things if you want to survive.

  16. Jt, are you purposely trying to be obscure? or do you not understand Steve’s point or my question? Nothing to do with limits to capita net energy growth.

    Steve?, Houtskool?, Disappearing culture? validity of GSR theories of interest to anyone?

  17. All debts are someone’s else assets. How these reports deal with it?

    I have hard time believing that debt held by lender is accounted as asset in these reports, because real estate is surely northe 100T in total

  18. Instead of insulting newer readers who don’t fully grasp the connection between the whole economy (not just shipment of food) and rising oil demand, perhaps you could point us to some posts that spell it out. Just because you spend every day in this space doesn’t mean your readers do. Poor form Steve. You’re better than that.

    • Mike,

      I understand what you are saying. Normally, I have a tremendous amount of patience with people who ask questions. I get tons of emails and I spend time responding to them. However, I am only putting in a bit of HUMOR to get the point across. When I use that kind of language I am normally referring to people who JUST DON’T GET IT or DON’T WANT TO GET IT.

      But, I will consider what you are saying… Thanks.

      steve

    • Give it up MIKE – Steve’s doing more than his best & now he has to waste time on posts like yours . . . why don’t you do your own research instead of asking to be spoonfed like a baby . . .

  19. I’ve read that the stock market is worth $100 trillion + the global property market = $217 trillion. So inflated assets should be worth $317 trillion not including the derivatives. The planet’s net worth should be more like $84 trillion.If the banker’s keep control in a collapse ,it is all academic however because the $1000 trillion in derivatives put us all in the negative since they get paid out first.

  20. IMO all this global wealth thing is not all that complicated. If A has $10,000 and B has $10,000 in equities total wealth is $20,000. If B sells to A the total stays the same. No one looks at the other side of the equation.
    Now if A sells the equities to C for $20,000 the total wealth stays the same because C’s cash position decreases.
    The only thing that truly adds to global wealth is the harvest of natural resources, which in fact are being depleted.
    To the detriment of the public some have viewed cash as having value so therefore the printing of cash is an increase in a natural resource.
    The public is slowly realizing the emperor has no clothes.
    All equities and cryptos are only shifting wealth, just a new holding place for the newly printed money.
    PM’s are the only long term store of newly harvested resources. All ag products deteriorate and petro vaporizes.

    • Right so money is not wealth. So A borrows from C to buy B and now you have $10,000.00 more dollars in the system but no real increase in value. B takes his new cash and sinks in another equity. Wash rinse repeat.

      Eventually the debt exceeds the value which is what we have now.

      This is evidenced by no inflation in consumables but massive inflation in equity. Once again it’s an issue of affordability which is crashing into cost of production which has been masked by debt and increased efficiency of the supply chain. These have been attempts to keep affordability in an unaffordable system. Let’s add welfare and all the other handouts.

      If the system was still alive the price of goods and services should have risen proportionally with equities. Because the system is a dead rotting corpse all that is left are fleas fighting over the remains.

      • In my writing above I should have used the term currency rather than money.
        Thanks for bringing that out. I do consider PMs money, a store of wealth, but the almighty dollar is only currency.
        Perhaps when we had silver certificates the dollar was money, but when that stopped it became only an inflatable currency.
        I see the future of cryptos as money for the coins that have a limited number. But of course there are already numerous cryptos just as there are many currencies from each country. For a while cryptos will be buyer beware until the cream rises to the top.

        Concerning consumer inflation, IMO there is, but some call it volflation, sure the price has not increased, but the volume at the same price has decreased.

  21. I am thinking that if the world was flat all assets would have to fall off the edge except PM’s. Then people who still had something of value could buy PM’s. Then my huge horde would make me rich and I would then have enough wealth to buy most anything except for the fact that nothing would be left to buy. (based on how you see the future unfolding) Do I get ‘it’?? Maybe, Maybe not. In any event I have great faith in every article you write Steve. Keep it up!!

  22. Joseph Metcalfe | January 10, 2018 at 11:04 am |

    RE: GLOBAL WARMING. How many BTU’s were put into the atmosphere by the forests (and buildings) burned in the California wild fires? How many gallons/barrels of oil would be the equivalent? Why is this never mentioned by the climate change people?

  23. The Elite Groups don’t care about debt , most probably we will pay for it.
    This is about “Transfer” of wealth from us to them.
    They buying real assets all around the World with their dollars and other fiat currencies backed by nothing. The Total Dictatorship and slavery is coming. This is only about Power. They will have enough oil for them and we are left with “peanuts”.

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