Lethal Trajectories - Michael Conley [211]
1) Energy shortages: The modern industrialized world was built on cheap energy and the mobility and movement of people, goods, and services. In this milieu, King Oil, the dominant fuel for planes, trains, cars, trucks, and ships, has no appreciable rivals—at least not on a scale that matches its utility, portability, and power punch.
The days of cheap oil and energy are over, and their loss brings a paradigm shift the world has yet to acknowledge, much less make. As future oil shortages intensify, the access and affordability of oil will become increasingly problematic. Without alternative fuels and an energy infrastructure of sufficient scale to replace oil, productivity will sputter and along with it the economic engines of growth. As the effects are increasingly felt throughout the economic food chain, the global economy will worsen and geopolitical stability shaken. Poorer nations will be first to feel the pinch, but the ultimate relative impact on oil-dependent OECD nations will be worse. The GDPs of most countries will stagnate, and unemployment will remain chronically high as a greater percentage of discretionary income is directed toward food, energy, and heat rather than the more economically stimulating consumer goods and services.
2) Environment and ecology: Climate-change trajectories and greenhouse gas build-ups, though quantifiable, have been ignored or denied. Droughts, desertification of arable land, and extremes in weather patterns will increasingly hinder agricultural production, and global food prices will increase as the cost of fossil fuel-based fertilizers, herbicides, and pesticides skyrocket. Freshwater shortages will reach critical points as aquifers worldwide are depleted. Oceanic acidity levels will threaten coral reefs and other underwater ecosystems, and the ocean’s food production capacity will falter. Erratic weather patterns will intensify, and a variety of land-based ecosystems will be put at extreme risk.
The toll on mankind will be taken in the form of famines, mass migrations, and regional wars fought over freshwater and other national resources. Poorer nations and areas located close to the polar regions will be early sufferers of climate-change. As the world population grows, the competition for scarce resources will intensify.
3) Economic and geopolitical forces: The high debt-to-GDP ratios of a growing number of nations and their ability to meet entitlement obligations and service their debt in a zero-growth economy will be problematic. Revenue-starved governments will increasingly resort to the printing press to monetize debt and meet their financial obligations. With currencies devalued, the price of precious metals and commodities will skyrocket. The devaluation of the dollar will adversely affect almost everyone through a loss in buying power—particularly anyone on a fixed income.
The powerhouse economic status of the United States will be increasingly contested by China and others as the dollar’s fiat currency reserve status is challenged. The petrodollar transactional system might also be morphed into a basket-of-currencies system. The United States’ financial independence and options will be increasingly threatened by the foreign debt taken on to finance its deficits. With the continued devaluation of the dollar, the threat of foreign capital disintermediation from U.S. institutions cannot be taken lightly. The cost of capital and pressures on long-term rates needed to retain foreign investments will crimp economic growth. As the percentage of GDP allocated to debt financing, entitlement payments, and the military increase, little will be left for infrastructure development and growth. Clearly, America’s long-term debt