Peak Prosperity - My Most Powerful Economic Insight in One Lesson

Episode Date: July 19, 2025

Surprise!! Peak Oil has arrived, and the US is making zero plans for that except to accelerate federal spending and not talk about the obvious implications. Prepare accordingly.Click Here for Part 2

I've been accumulating my wisdom in this space for a couple of decades now, and so today I'm going to share with you the most important lesson I know about in economics in just one short lesson. The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello, everyone. Dr. Chris Martenson of Peak Prosperity here back with you.

And this is a really important episode for me. But where the peak? The economy in just one short lesson. Martin's in a peak prosperity here back with you and this is a really important episode for me. Um, Beware the peak want the economy in just one short lesson So if you're confused about why things are happening the way they are you want to have an explanatory function for understanding how things are unfolding I've got that for you here and it begins with this though my concern My concern is that our leaders they know a lot that just ain't so You know mark twain said it best it ain't't what you don't know that gets you in trouble. It's what you know for sure that just ain't so. So if you have the wrong narrative, if you have the wrong story, things can break on

you. So one of the stories that our leaders have had for a long time in the United States is that debts don't matter, right? Dick Cheney famously snarled that at the camera way back when. Debt don't matter, right? We can just constantly get our debts going up higher and higher and higher all the time. As a nation at the federal level, at the state level, at municipal levels, at personal corporate, just more debt, more debt. We're gonna tear that apart because it's really wrong and we're gonna connect it to the most powerful piece of information that has

come out This year from the US government it begins with this idea federal debt clearly unsustainable We noted here a while ago. I think I noted this chart in 2024 sometime it's only gotten worse since The US has added 11 trillion in debt since 2020 and it took 220 years to reach the first 11 trillion in debt and Obviously, that's an exponential chart and it's increasing Exponentially, you know, that's not a problem You know if Bill Gates debt is increasing but his income is increasing faster than his debt who cares, right? Here's the problem. Jerome Powell said this in front of the Senate Finance Committee on monetary policy

He sent the said this in front of the Senate Finance Committee on monetary policy. He said this to Cynthia Lummis. He said, quote, the problem is that we're on a path where the debt is growing substantially faster than the economy. And that, by the definition, in the long run is unsustainable. There it is. That's Jerome Powell commenting on debt, which really isn't his bailiwick, right? He's a monetary policy guy. Senate has to Congress have to deal with the deficit and the corresponding federal debt.

That's the federal debt, but it's even worse than that. When we widen out and we look here now at total. Well, let's start here. Let's go to gross domestic product. GDP, right? And that's in billions of dollars. So 20,000 billion would be 20 trillion. So gross domestic product GDP right and that's in billions of dollars so 20,000 billion would be 20 trillion so gross domestic product GDP then well this is our income

this is this is that's goods and services stocks and flows of stuff in the economy but but this is basically how we earn our way as we all get up and we go out and we work and we do things farm fix HVAC machines create beautiful PowerPoint presentations for our consulting company whatever we do This it all sums together into something called GDP gross domestic product So that's that line and the problem is when we combine it with this red dotted line here, which is All sectors debt and securities and loans. This is everything. it's called TCMDO total credit market debt outstanding in

The Federal Reserve System, which is the Fred system. I really like that. They have this system. It's very good So the Fed does something good I like that I like the Fred system, but this orange line right here dotted line That's total debt. You can see it's over $100,000 billion, which is $100 trillion. So yeah, the federal debt's going like crazy gangbusters, but it's total debt. We live in an entirely indebted country. And so this is the main problem of unsustainability that Jerome Powell is talking about. So we have to talk about how does this resolve? Because this makes all your decisions kind of clear what do you

Invest in what you not invest in, you know, do you need to get a resilient homestead? Should you you know renew your passport a lot of important questions to resolve about this and by the way this Idea set applies to pretty much the entire Western world right now including Japan in that statement because we all have way too much debt and not as much or too little of this stuff Which is the income to support the debt? lot of debt Not enough income. That's the problem here. Okay, and so again It's that the problem. It's unsustainable if your debt is growing faster than the economy.

That's the problem. All right. All that debt. So we have to have a plan, though. What is the plan? How are we going to start to fix this? Right. And so the Trump administration came in and in January they were talking about we're going to cut a couple trillion out of the spending. Right. Which is be a great thing because the government had added about two trillion in spending because of covid and and forgot to take it off The books always easy to slap on more spending really hard to get it back off the books

So they were gonna cut spending and they wrestled with that for a while and they had doge and they ultimately Threw in the towel on that and went this path and now Scott Besson is out there saying well We're gonna have growth like we haven't seen since post-world war two. That's it. We're going to have growth growth is how this Gap gets closed up We're gonna drag the green line up at a faster pace than the red line is growing So we're gonna close the gap and we're gonna do that as a nation We're gonna do that at the federal level state all that that's the plan

Now here's here's where this gets goofy. So here's a something we're gonna have to cover very quickly What is money right money is a claim on stuff, right? If I have a hundred dollar bill I could go to a store and claim some stuff, right? I could buy lawn mowing services from somebody right a back rub a service right or I could buy stuff imported Chinese stuff from Amazon doesn't matter but money is a claim on stuff But that's a claim that can be exercised right now today Which is why if you create too much money you create inflation because you create a lot of money and it starts claiming a lot Of stuff and then the prices of that stuff gets bid up right inflation is not the prices of apples and oranges going up

Inflation is the value of money compared to apples and oranges going down. So money is a claim on stuff but it's a claim on stuff this is a temporal argument it's a claim on stuff right now. Okay? Debt however is a claim on future money. So if I take out a debt of $100,000 today that's due in a year I don't have to pay it back for a year. So it's a claim on 100 grand in a year, right? So it's a claim on future money. All right. Well, you put those sort of ideas together and it says that when you constantly, if you

are growing your debts at a faster pace than your economy, you are making the explicit and implicit bet and assumption that that future economy is going to be big enough to pay off The debts that were taken out today. Does that make sense, right? If debts are constantly growing sooner or later this part has to catch up again The economy has to catch up now. This is where the story gets super fascinating because we're gonna have to Examine where that growth comes from These are all the core arguments that I put forth in the crash course. First in 2008, got updated in 2011, in 2013, we're updating the crash course again because

it's this idea set that's really powerful, really potent, and it connects two things together that need to be connected. Well, multiple things, but two big things that seem to be missing. Things that we that we just know for sure that just ain't so right Which is that all the economy can always grow? Oh debts don't matter. These are things we know Because we've repeated them over and over again But what if they're not true? What if those are things we know that just ain't so so here's my question

What if we get this outcome instead? What if Scott percent is wrong and we can't find a way to really substantially, you know, really get GDP fired up and I'll show you what those challenges are gonna be. And debt just keeps on its current trajectory. Can it continue like that forever? The answer is no, obviously. That breaks at some point.

And when it breaks, that could be really ugly. And you better be prepared for that in just in case All right. Now, let's talk about this economic growth Where does growth come from? So when we say growth what we really mean is is more things This year than last year more more things. What what kind of things? Well, if we're in the commodity space, you know It's like you see these I love this flowchart to coal Over here if we start with coal way up here, we mine the coal, which takes energy, right? And then it flows over and we use it to make things.

Or we might use a little bit of coal to build things, right? Like you make steel out of it. Or you might use coal to fuel and power certain things. Or we might use coal to fuel and power certain things, or we might use coal to move things, right? Or feed people, or, you know, care. All right. So same thing for iron, copper, gold.

All of these things don't come out of the ground for free. They take energy to come out and then we do things with them and we either make, build, or power, or move things around. That's what, that's what we're saying an economy What's it really doing? Well, it's making things It's building things. It's repairing things It's right providing fuel and power for all those activities or removing things things are built in China They're sold in the US etc. So that's growth

So if we're saying we want growth we're fundamentally saying growth comes with using more coal, more iron, more copper, more gold this year than last year to do various things. Now, if you think about a GDP as goods and services, gross domestic products, really goods and services, and if we broke it all the way down and said, well, what's in a household? What does a household spend its money on? A household has a certain amount of income. So, if the average annual expenditures are $77.3 thousand in the the US twenty five point four of that roughly a third goes into housing thirteen point two goes into transportation so that's fueling your car buying replacement cars maintaining the cars all that then there's personal insurance and pension so

some get saved off for a rainy day or used to use to insure against disaster health care which I call sick care, food, right, food away from home, and then various other things like that. So that's GDP. If you want to have more GDP, then the household next year, instead of spending 77.3 is going to be spending more than that. We'll spend 80,000 and that would be growth, right? Because we're that a single household is spending more on these sorts of things.

All right. If we looked at it by industry in the United States, broken down by various trillions of components, right? Manufacturing, two point nine trillion clocking in there. You got real estate at three point three trillion dollars of yearly activity. So this is twenty twenty three private total is 23.5 trillion. Government's another 22% of that higher, you know, over the overall economy. So there's wholesale trade, retail trade, construction. So when we say GDP, it's people making and doing things, making and doing things. They're providing services like food and hospitality or they are you know state and local workers or they're making

things like houses or providing health care or manufacturing things so when we say we want the GDP to grow and Scott Bessent says we're gonna make the GDP grow faster than it has in any point since World War II. He's saying more people at work doing more things. That's the economy, it's that simple. Okay, so what causes people to do more things and so we can get more of this growth? All right, first we're gonna hear from our advertiser very quickly, my favorite sponsor of all.

We'll be right back and I'm going to be talking about this thing that we have colossally wrong and connecting it to the most important piece of data information that's come out of the U.S. government this year. Hi, I'm Dr. Chris Martenson. The news isn't just wrong. It's a lie. And it's costing you. Inflations a freight train.

Resources are vanishing. And they're still peddling the everything's fine story. Well, I'm done with it. As your information scout at Peak Prosperity, I ripped through the web, reports, raw accounts to expose what's real. Energy crises, economic unraveling, all backed up by hard evidence. And I'll correct myself if I miss, but I won't stop. You're in the crosshairs of this mess.

Subscribe now, see the truth, and fight back with me. Welcome back, everybody. Let's dive in now and talk about this. Look, this is something that a lot of people have wrong. They have they have this very wrong. They say that, oh, energy is a subset of the economy. It's just one of many things we do, Chris. We get energy, we know we get, you know, all these other things. But energy is a subset of the economy.

When in fact, when you think about it for a little while, it turns out that economy is a subset of energy. That if you have energy, you can have an economy. If you don't have any energy, you can't have an economy, right? And energy could be what you're thinking of, like electricity coming out of the wall, which is actually power It could be a fuel source like fossil fuels Nuclear something like that or it could be food energy right just imagine. We have no coal no oil no nuclear no electricity and no food

Obviously, we don't we're just gonna waste away, and we're not gonna have any Bodily energy to do anything like build a hut and start creating a GDP out of that. No, the economy is a subset of energy. If you have energy, then the economy is possible. Now, it sounds like a radical idea to economists, but the data is really powerfully strong here. There is no such thing as a low energy rich country. If it was possible for this to not be true, if it was true that this was true That energy is just a subset of the economy somebody somewhere somehow in this world would have figured out

How to create a very rich low energy country hasn't happened in no country in the world has been worked out And this is electricity consumption per capita up the y-axis and GDP per capita people doing things across the bottom axis the x-axis there and you can just see that there's a very clear relationship here a little bit of a curve to this line if I was gonna draw a little curve here but basically more electricity consumption you have a richer country that's electricity what about total energy this is everything all energy from all sources nuclear alternatives

fossil fuels Biomass all the big categories all the energy slapped into one spot in the world and then measured against total world GDP What do you see you have this almost perfect straight line relationship saying that more energy being consumed from all those sources I just mentioned plot it against total GDP output Each one of these X's being a year in in the series you see this almost perfect line So energy energy and GDP obviously it makes sense right because it takes energy to move things make things build things Etc even if I'm just providing a service. I'm a masseuse, I provide masseuse services. Well, I still have to eat, I still have to drive a car,

probably have to have an office, which is maintained at a certain temperature. All of that is energy. So once we look at this not in dollar terms, but in energy terms, the world gets really, really clear. And in particular, when we look at this in oil terms, a similar chart to the one we've just been seeing, we saw one for total energy, we saw one for electricity. This is oil in this case GDP is now on the y-axis

So higher up this y-axis more GDP and this is thousands of barrels of oil consumed per day This is in the globe according to the globe. This is not just any one country So it's the whole world and so ninety000 thousand barrels per day would be 90 million Barrels per day because a thousand times a thousand is a million alright. Yep again look at this R squared It says 93.932 Point nine three two means there's a ninety three point two percent explanatory power Between the amount of oil consumed and the amount of economic output that you would observe in any period

So if you said Chris five years from now This is how much oil the world is producing What's your guess as to how much economy will have then and my answer will be 93% accurate? Stat this is such a solid relationship right here. That's just intuitively accurate, right? It makes sense attracts because this is the economy there are people Doing things going to work coming from work trucking stuff going around moving things from a to b coming from the ports to the ports Whatever they're doing oil oil oil oil the more of these things like if there were no trucks on the road and

None moving you probably have a pretty low economy But you're also burning a lot less oil if you want to have more economy You're gonna have more oil consumption Now this brings us to the most powerful piece of information that the US government has released this year But first we had warning signs We had warning signs back in May So the US drillers say that the shale peak shale peak shale oil peak oil output in the shale patch has arrived.

That's what that's what the shale drillers have been saying for a while. But then the government at the EIA, the Energy Information Administration, the EIA is a subset of the Department of Energy came out and produced this chart in their annual energy outlook for 2025. And here we're looking at total energy production. This is just crude oil and least condonate condensate is called C plus C crude and condensate. And we can see that it goes up for a while and they said, Oh, it's going to start peaking in 2028 and it's going to flat line for a little

while. And then it's going to slowly start wandering down, but that is a peak This is a giant watershed moment once the shale peaks That's kind of it now there might be more offshore there might be more in Alaska But man we better get on that really quick if we don't want to experience a peaky peak, but the problem here is then well We're not ready for this at this point. We're just not. The United States is not ready for this.

And our only option once this is passed, we get past the peak, is we're gonna still need that oil if we wanna maintain our economy, if we wanna somehow fund our exponential debt growth. Like if we don't have any plan for this and we're just sort of storming into peak oil without a real plan around that, we're going to find that we're going to have to compete on the open world stage in open markets, unless we're going to fight somebody for it, which is a possibility.

We're going to have to compete for those marginal barrels, which means the price of oil is going to go up, which means we're going to suddenly find out that $100 trillion of debt that's affordable at $60 a barrel oil is completely unaffordable at $100 per barrel oil, and we're not ready for that. So if there's no plan and we don't know what we're going to do about this and our only plan is don't worry, we're going to get the bottom to grow really fast, the bottom line there GDP, I just worry that this just sort of blows up on us pal right that's what's gonna happen now I'm gonna be talking about this and it really great detail and length at the limitless conference that I'm gonna be at out in Texas which is a Ken McElroy's should show out there great show that's

coming at the end of July here and first first that first weekend end of July into August I'm gonna be speaking about this but in much more detail So what if this is true that what if we get this instead? What if there's no plan the plan is let's just pretend this isn't a problem. Nobody's really thinking about what this means And we just sort of sail into this and next thing you know in a couple of years We find we have oil at 200 dollars a barrel 150 or 100 or whatever number is, and we can't afford it and our debt markets blow up. Okay? Well, there's only one obvious answer the way that all prudent adults need to hedge

their bets in this whole thing is to become more resilient. And this is what we do at Peak Prosperity. We talk about resilience, home, health, wealth, and community. But here we're talking about home and health, obviously healthy foods. You wanna grow as many, remember plant a garden, right? Grow what you can.

You wanna become as resilient as you can, being less dependent on the overall systems out there so that you are as resilient or as self-reliant as possible. And hey, you could divvy this up around your community where you might be the carrot meister, right? But other people might be better at other things that you don't particularly wanna have to take care of. I'm not saying we all have,

each household becomes its own island, but we wanna be more resilient in terms of energy, energy at the home, how many different redundant systems we can use in our home to keep it warm, to keep it cool, to keep ourselves safe. Health includes that idea of safety, but also emotional health, spiritual health, physical health, all of that, all of that's true. Everybody's got to start thinking about how they're going to protect their wealth in this

environment because this is one of the most dynamic environments we've ever seen. And if what I'm talking about here with the United States sort of blithely sailing into a peak oil future, which it seems to be, then we're going to have some exceedingly large challenges that are going to be highly disruptive and create a lot of what they call volatility in the overall markets, which is why you want to have a risk managed strategy. And of course, we partner up with Kiker Wealth Management. wealth management. So if you're interested in having your wealth examined, looked at, poured over, and so you can develop a plan and a goal, go to peakfinancialinvesting.com. And then for community, your physical community is going to be very important. Whatever money preparations you make, you're only actually as safe as your community, as your neighbors.

And so building your social capital and really leaning into your community is very important. That's something Evie and I are doing here in our own local community. I'm hearing about more and more people doing that. Finally becoming involved in doing more. I was late to that game, but now I'm in it. And it's vitally important because this is the only thing I can actually have some control over and I don't not control. I can have some influence over very directly.

So that's important. But while we're sort of watching all this unfold and staying oriented and understanding what the things are and making sense of the right data and seeing the signal for the noise, your virtual community is going to be exceedingly important so I would invite you to come back to peakprosperity.com become a member and you can see here we have like lots and lots of conversations these are really rich, meaty conversations in those comments with extraordinary talented people in here discussing all of these things openly and without any limits. We do complete free speech at peak

prosperity, meaning we're willing to go into any topic provided you bring the data. Unqualified opinions that just sort of get spouted out don't tend to go far in our community. But if you want to have a rich, adult-sized, prudent conversation where you can say everything that's on your mind about your concerns and bring some data along with that, man, this is the place for you. You wouldn't want to miss out. And by the way, that virtual community at Peak Prosperity, once a year becomes a physical community, we come together. This year it's going to be in Lake Winnipeg, New Hampshire, September 12, 13, 14. We've got a bunch of great guests. Here's three of them. James Howard Kuntzler is going to be there presenting. Dr. Ken Berry and Paul Kiker. I just can't wait to see these three plus me and Evie, all of us together. Just what's the common element? Super high integrity, very thoughtful people. And we're going to be talking about the political landscape, the health landscape, the financial

landscape. That's what we need to be doing now. And we have to come together because that's how we learn. And that's how we understand the seriousness of our current problems and predicaments. So we bounce our ideas off other people and see where they're at. All right. So that's going gonna be a lot of fun. I would invite you to join that as well. For now, I am going to be taking this back

to my subscribers back at Peak Prosperity, because I got a very important message from my heart about where we are and a big summation of where I think this is all going. For everybody else, thank you very much for being here. It's been an absolute pleasure spending this time with you. Can't wait to see what you say about economy and the energy pieces being put together. It's just so important. Let me know what you think.

All right, until next time, bye-bye. you