Europe is in the process of losing its industry. It didn’t start this year, it was already going on for decades now. However, in 2022 the process has switched from a long slow grind to a considerably higher gear.
Energy is the economy. This is the key point in understanding not only economics, but geopolitics and history as well — especially the recent events in Europe and around the world. Too bad, that this rather self-explanatory observation has been completely left out of modern (i.e.: neoclassical) economics theory, where everything revolves around prices of goods and services, demand and supply, and ultimately: infinite growth on a finite planet.
In the real world, however, every single economic activity requires an irreversible expenditure of energy: from cutting a client’s hair, to melting or forging steel. Take energy away and all economic activity stops, starting with the ones using the highest amount of energy and continuing with the rest as the loss of one business leads to the loss of another.
There is a very important point to understand here though. Complex self-adapting systems, like the Economy, very rarely collapse completely. As the knock-on effects take their toll, the falling of dominoes usually stops at a certain point. It’s like an avalanche: it starts slowly beneath the surface. As the fundamentals deep inside the snow-pack slowly give way to gravity, a large piece breaks away: all of a sudden half of the mountain is on it’s way towards the valley! However, there are many natural stopgaps in the process, and the avalanche remains concentrated to a certain area. It destroys everything in its path, but it eventually stops.
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