The Nature of the Problem

Abstract

Over the next decade or so, the most basic assumptions you have about how the economy and the financial system work will, almost certainly, be turned upside down. The perpetual economic growth you have always known will become less and less possible as the cheap energy powering it steadily diminishes. As more energy is required to extract fossil fuels or to provide alternative energy sources there will be less energy for everything else. That ‘everything else’ includes both your favourite company’s earnings and the ability for individuals, companies, and governments to keep paying their debts. The financial system that you assume will multiply your savings and provide for your retirement is completely dependent upon continued growth; and without that growth, it will cease to function. Societies may be able to mitigate these impacts through increased energy efficiency and other measures, but these will only slow down the impacts rather than being a cure for the underlying scarcity of cheap energy.