Thursday, June 4, 2015

Economy Boiled Down

The issue I keep writing about is diminishing returns. There are virtually limitless supplies of almost anything, including fossil fuels and lithium supplies, if we are willing to accept the problem of higher cost of extraction, which really the problem of diminishing returns.

The problem we have is that wages don’t rise as the cost of extraction rises. Thus, workers can afford less and less of these things, as prices rise. This tends to lead to the circle of problems that leads to financial collapse–low wages, leading to low commodity prices, leading eventually to cut backs in production and job layoffs, and debt defaults. - Gail Tverberg

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