OK, so I’m a typical guy who finds that when there’s a problem, I’m not interested in sharing, I’m interested in a solution. After some consideration, this is my solution to the present crisis in the USA:

1. Nationalise the banks, forthwith. They will no longer be “for profit” institutions. Since they don’t need fancy investment instrument designs, they don’t need hotdog CEOs etc. Therefore: they keep their jobs with a top salary of $300k p.a. They can’t make a living on that? Fine. Leave. In this model, they’re little more than managers anyway. We don’t need geniuses running banks, we just need people who are honest, ethical, and competent.

2. By nationalising the banks the USgov repudiates the bank debt. Life continues on, the Chinese still own huge amounts of American Paper, and they will get paid. Over Time. Like everyone else. Because this is money eating debt, it has no velocity in the economy and will not result in inflation. Allowing for low interest rates to boot.

3. And the money? Next step: disband the Federal Reserve. The USgov will be responsible for its money supply. My, just like an adult would do.

4. Nationalise USA Health Care. Face facts: This whole nonsense about “your health care decisions should be between you and your doctor” is total freaking bullcrap. You know who makes your health care decisions? The insurance company. I would absorb the health care industry directly (on the one end) and I would get really pretty damn stiff with Americans on the other end. But a lot of that will fall out naturally.

5. Gas will be USD$5 gallon. If gas is cheaper than that due to over production or demand destruction, then the remainder goes directly into alternative energy systems. No ifs and or buts. If it is over $5, then it rises to what ever price that is.

6. Car makers will do chap 11, and restructure under strict supervision. The focus will be: the development of hybrid trucking to last 10 years to be replaced by electric vehicles and electric trains. The largest private vehicle will be the equivalent of a minivan. Gas will be rationed, viz WW2. The auto industry will focus on making superlightweight electric vehicles. Electric Bicycles (viz Stokemonkey or Crystalite systems) will be subsidised and encouraged, as well as enclosed electric tadpole trikes.

7. The USA will abandon Empire. The Pentagon will cut its budget by 50% a year until it is the size of the Chinese rate of spending. American Troops will be brought home, decomissioned, and retrained for the powerdown.

#7 is actually #1, but the banks need attention.

8. Crash Infrastructure improvements geared around livable homes and communities worth caring about. LOTS of insulation. Lots of geothermal. Lots of all that joy. Not so much in the massive giant office box development.

The above should result in a vastly improved economy.

Jeavons is correct if prices are stable or supply meets demand, on demand. When that ceases to happen, conservation is the only path to economic growth: if demand falls below production consistently year over year, then conservation will result in “economic growth”. Such a curve is not sustainble due to granularities in energy requirements – i.e., you can only drive down the energy curve so far before people die of starvation. These inelasticities can be seen as “granularities”: things that don’t divide.

But we are FAR from there (yet) and once we get a new energy / economic regime into common practice, then substitution can come to the fore and the machines can run, albeit fewer of them, and on a tiny fraction of the energy they once used – it will never get to granularity.

What I described above can happen and work. I would expect countries with more centralised govts (China, Russia, etc.) would do the above by decree. Nations filled with citizens may also find the political will to co-operate and bring the system down to reality. (Denmark, EU, etc.) but nations composed of TAXPAYERS, are screwed, as they have replaced their social contract with an economic one: they buy gov’t services as consumers. And consumers want one thing: SOMETHING FOR NOTHING. Hence, countries with taxpayer mentalities will fail.

That’s my opinion and I’m stickin’ to it… for now…