The Four Horsemen of the Economic Apocalypse

The four horsemen of the economic apocalypse
The four horsemen of the economic apocalypse. Four Horsemen of the Apocalypse, an 1887 painting by Viktor Vasnetsov. From left to right are Death, Famine, War, and Conquest; the Lamb is at the top. Public Domain via Wikipedia

I enjoyed reading this rant and wanted to save it on my site in case, Reddit decides to take it down… Here you go:

First Horsemen – Boomer Retirement

Reduces labor availability and increases labor costs. From South Korea, to America, to Japan to China to the EU to Islamic countries to most of the world outside of sub-Saharan Africa; their Boomer generations are starting to retire enmasse and there aren’t enough Millennials, Gen X, Gen Y or Gen Z to take their places. 2020 was the year that half the Boomers reached retirement age.

Covid-19 acted an accelerant.

It pushed Boomers to retire sooner and others to drop out of the workforce, restructuring how/where we work. And all the benefits from increased productivity since the mid-1970s have gone to the top 1% leaving most of the rest of us in desperation or squalor.

Neo-liberal globalization shifting production to third world countries where workers will labor for a pittance has destroyed the American dream, which is now dead for most of us. After enough instances where a CEO ruins thousands of ordinary workers’ lives by laying them off so he can goose the stock price and spike his annual bonus, and you have a work force that no longer gives a rat’s ass about working hard to make somebody else rich.

Labor cost inflation is permanent and can only get worse going forward.

And there is nothing any government can do about this.

Second Horseman – Declining EROEI

EROEI (energy return over energy invested) is the only energy number that really matters as it cuts through the bullshit created by tariffs, subsides, tax breaks etc. to arrive at a real cost of energy as measured in other energy required to extract it. Lower EROEI increases the real cost of energy. Note that the EROEI of renewables end to be much higher than cheap fossil fuels, so renewable energy will inevitably be more expensive in real terms.

And the cheap, easy stuff is already gone – we’ve used it up (the real meaning of the term “peak oil”). When oil was discovered in Titusville PA in the 19th century the extraction method consisted of digging a pit, letting it fill up with oil and extracting it with hand held buckets. Drilling technology can uncover new deposits – but via the unavoidable laws of physics these newer (but deeper and harder to extract) deposits require more energy to extract and have steadily declining EROEIs – and higher real costs. No technology can overcome basic physics.

The Ukraine War acted as an accelerant.

It took Russian oil off the market (10% of total world oil production), a move that will be permanent after this winter. Without demand, the oil will stay in thousands of miles of Siberian pipelines under pressure (thousands of miles of oil pipelines are essentially impossible to drain). When the intense Siberian cold cracks these pipelines, its game over for Russian oil. Even under the best of circumstances, it will take decades to replace and repair them. That can only be done by Western oil techs and petroleum engineers, the Russians don’t even refine their own crude. It gets shipped to Germany for refinement and gets shipped back as diesel. After this winter, Russian oil for all practical intents will cease to exist.

Energy cost inflation is permanent and can only get worse going forward.

And there is nothing any government can do about this.

Third Horsemen – Declining Crop Yields

Last year America lost half of its spring wheat crop to heat and drought. This year, China’s rice belt experienced the hottest temperatures ever recorded. India banned grain exports last year due to drought. Climate change is reducing global production of staples such as rice and wheat worldwide.

In the Corn Belt states of Indiana and Illinois, drought is shaving up to 8% off of annual corn yields. After translating crop yields into consumable calories – the actual food on people’s plates – weather-related events are already shrinking food supplies, particularly in food-insecure developing countries.

The American West is going through a decades long drought (or let’s call it what it is: a desertification!), drying up the Colorado river, draining the Ogallala reservoir and most importantly dropping the water levels in the western branches of the Mississippi river basin to the point where barges can’t navigate them. No matter what happens on the farm the results are meaningless if bulk grain shipment can’t travel down western waterways.

Then there is soil depletion and the spike in both potash-based fertilizers (both mostly from Ukraine and Russia) and nitrogen-based fertilizers (caused by increased real costs of oil). Fertilizer costs last year nearly doubled, with prices projected to remain high for the forceable future.

Again, the Ukraine War acted as an accelerant.

It took Ukrainian wheat off world markets, wheat that fed Europe, the Middle east. Sharp increases in the price of bread have always caused social instability. It was the primary cause of the Arab Spring and is the hidden driver of the current unrest in Iran.

Labor cost inflation is permanent and can only get worse going forward.

And there is nothing any government can do about this.

Fourth Horsemen – Increasing Interest Rates

The great thing about Boomers of any nation is that they saved a lot. Either by direct deposits into their 401Ks, matching employer deposits, or employer sponsored pensions, a huge number of highly productive people saved for their retirement. This provided the capital needed for the greatest economic expansion in human history.

That’s over now – forever. Boomers are retiring and pulling their money out of stocks and bonds to pay for their Golden Years. And of course, they are no longer putting anything back into financial investments. The law of supply and demand applies to money itself as well as it does labor, energy and food.

The Federal Reserve’s fight against inflation acted as an accelerant.

These wrongheaded monetary attempts to reign in inflation by the Fed will need to crash and burn the economy into a recession to actually have an effect on inflation. It’s why after multiple interest rate increases, inflation remains stubbornly high. Current inflation is monetary in origin and also stems from supply shortages which will be permanent going forward due to demographics, energy physics and Earth changes.

High interest rates are permanent and can only get worse going forward.

And there is nothing any government can do about this.

Fifth Horsemen – Demand Crash

People tend to forget that there was a fifth horseman (a buddy of Death – “A pale horse! Its rider was named Death, and Hades was following close behind him”).

The declining demographics of lower than replacement birth rates world wide doesn’t just mean fewer workers, it means fewer consumers. Japan has already achieved this level of demand collapse. Remember when they were going to take over the world back in the 1980s? Didn’t happen because they stopped making babies. This led to an aging work force, fewer consumers and heavier financial burden per working taxpayer to pay for the benefits of more and more retirees.

It’s why my kids all tell me that they don’t expect a dime from Social Security when they retire.

Japan stays in the game only by going massively into debt every year, floating government bonds that nobody expects will ever get repaid – bonds that the Japanese buy out of patriotic duty.

Again, Covid-19 acted as an accelerant.

Old people on fixed incomes don’t buy much either. A population top heavy in old geezers won’t see much consumer demand. Geezers have no need for new cars or the latest flat screens. Most of us don’t understand or even want to learn the newest technology or phone apps. What we do buy is services, entertainment (travel, dining out, etc.) early in retirement and medical services later on. R&D investment follows consumer demand and its really hard to perform meaningful R&D improvements for services (short of robot waiters and nurses).

There is a word for an economic situation where productivity greatly outstrips demand. It’s called “depression”.

Demand crash is permanent and can only get worse going forward.

And there is nothing any government can do about this.

So, what can be done?


No growth capitalism is an oxymoron. And without population growth there can be no economic growth. It isn’t physically possible.

So get ready for the rest of our lives, and for the foreseeable future to experience an endemic stagflation with capitalism on life support. The whole world becomes Japan. Combining inflation driven by unalterable demographics, energy physics and Earth changes with depression era levels of crashing demand and you have the 1970s on steroids.

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  1. That was cheerful. I worked two jobs most of my life to retire and relax. Now, the world is turning to shit, and will continue to get worse. We can’t vote our way out of this either, as evidenced by the cheating marxist-satanist actions last night. The best way to fight these corporate communists is to bankrupt them. Cancel them all. Vote with your wallet, don’t spend money with anyone that votes left.

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