Gregor.us comes at the debt crisis from a different perspective but comes to the same conclusion as Jeremy Rifkin the increasing costs of an oil-based economy is driving advanced countries into spiralling debt crises.  In Limits to Keynesianism he argues that “the greatest flaw with Keynesianism now is that, like the economy itself, it has run squarely into the energy limit.”

 

 

The above chart is used to highlight this conclusion,  Since 2004 global oil production has remained steady raising questions about whether peak oil has been reached.

As the most recently updated data shows, 2011 will be the 6th year that world production of crude oil was unable to increase beyond the ceiling established in 2005. Oil remains the primary energy input to OECD economies. OECD economies are of course where the Keynesian experiment has flourished longest, first in Japan, then the United States and now Europe. It is hardly, hardly the case that the current financial crisis in the OECD is “simply a matter of accounting.”Instead, the crisis is one of systemic, structural growth now permanently limited by energy costs as OECD economies try to service debt loads that have escaped their ability to manage. Change all the digits, and the energy limit remains.While I continue to be an advocate of debt jubilee, and, of energy infrastructure Keynesianism (building out more efficient transport and non fossil fuel energy production), the energy-intensity problem of OECD economies is now the controlling factor in the West’s ongoing crisis. The redoubling of government efforts to distribute paper capital to society will not bring forth the cheap energy required to spur the growth Keynesians either assume, or have failed to even consider.

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