Uncertainties in the System

I heard Alan Greenspan say this on Meet The Press this morning:

“Investment occurs when you have a stable economy, when you can foresee what things are going to do in the future…it’s very critical that we get the uncertainties out of the system,” he warned.

The uncertainties in the system have everything to do with estimating how much cheap oil we can continue to find and process. Until we know this with more certainty, the wild ride will continue.

The following graph shows a correlation without a causation. But it asks the nagging question, what happens when a driver of production, that of cheap oil, starts hitting a real hard peak?

I nicked the original curve from the Economic Undertow blog. Steve has postulated that peak oil occurred in 1998 based on just looking at the price (that date looks like it sits at an inflection point in the curve above). If Steve thinks that the huge spikes in the monetary base occur as the crooks try to find alternative forms of "money" to take over that lost by oil, I tend to agree that it should remain a very important consideration.

see also
-- "Second Law of Thermodynamics May Explain Economic Evolution"
-- "What computer science can teach economics"