NationStates Jolt Archive

I need some help writing the economic history for my RP The World to Come (http://forums.jolt.co.uk/showthread.php?t=546907) if anyone understands economics and how world markets work, I am willing to give you first picks on nations when the RP is ready to roll, any help would be nice.

Thanks.

I need some help writing the economic history for my RP The World to Come (http://forums.jolt.co.uk/showthread.php?t=546907) if anyone understands economics and how world markets work, I am willing to give you first picks on nations when the RP is ready to roll, any help would be nice.

Thanks.

I know some, what exactly do you need help with.

Basically, I am unsure of effects the credit crunch and rising gasoline prices will have on the world economy, also, what effects might globalization have when coupled with this? Could it cause stagflation?

It could, how far into the future are you going?

2012

Basically, I am unsure of effects the credit crunch and rising gasoline prices will have on the world economy, also, what effects might globalization have when coupled with this? Could it cause stagflation?

It could, how far into the future are you going?

Basically, I am unsure of effects the credit crunch and rising gasoline prices will have on the world economy, also, what effects might globalization have when coupled with this? Could it cause stagflation?

Rising gasoline prices = Everything, assuming the world is still operating on gas and not alternatives, will become more expensive. Universally. Transportation in particular. Even if the product doesn't use fuels to make, you have to get it to the market, so that costs money. Every world currency, again assuming alternatives aren't good enough, will spike in inflation levels. There would be wars for the full purpose of getting oil, and alternatives would jump in researching and development instantly. Any stability in oil rich African areas or the Middle East would be gone, and Russians would probably try to take Alaska back. Also, recolonisation of oil rich areas would happen during those oil wars. One last thing: China gets itself an empire in oil rich nations. It's got to feed itself, and to do that it has to feed it's factories. In fact, concerning the below section, I wouldn't be surprised if China surplanted the US as a superpower.
Credit Crunch = This one I'm not as sure of, but combined with the gas prices, you could see the American Empire (http://en.wikipedia.org/wiki/American_Empire) crumble. Remember that war over Alaska? It's feasible that the Americans could lose it. Remember the Civil War? It's altogether feasible that you'd have that again, with different lines. (Greater Californian Independence, anyone?) The overseas territories, like Guam or Puerto Rico would likely be nabbed away by some other force, maybe even Hawai'i. America wouldn't fair well in these economic conditions. China would, to an extent atleast.

There are two things going on here, but they're related.

First, you have a limited supply of energy. The world has reached what they call "peak oil," or so many claim, and won't ever be able to make as much of the stuff as they did, oh, two or three years ago. (Mind you, I'm writing about the ability to get the stuff out of the ground, not total world reserves. When one factors in things like the Venezuelan oil shale and untapped oil fields in the gulf coast, it becomes obvious that there's still quite a bit of the stuff left. That's not relevant to this discussion, however, because we need it refined and we need it now, not raw and not in a few months.)

On the other hand, world demand for oil is increasing. The Chinese economy is roaring to life. So, more and more countries are using committing more of their currency to try to buy this limited resource. Naturally, prices are rising.

Unfortunately, energy is a ubiquitous commodity. As other posters have pointed out, it's used so many ways that one can even regard the cost of things like labor as, in part, nothing more than a deferred energy cost (a worker has to pay for the energy to get to work and back, heat or cool his or her residence, etc., etc.). (Remember that when some financial type tries to tell you that labor is the greatest cost to business.) So, when the price of energy goes up, the price of anything of which energy is a component (and that's a lot of stuff) will go up, too.

The corporate monopoly that controls our money supply will notice this, and respond in the standard manner. Money is, like so many other things, a commodity, and, when prices rise, it's worth less. So, to keep its income coming in, the big bank will raise its interest rates so that the number of dollars coming in will increase enough to offset the decrease in the worth of each one. Thus, the credit crunch is nothing more than a byproduct of the energy crunch.

The only ones who are ever happy when that happens are the bankers. Seeing that money is harder to come by, just about everyone is going to hold onto it a little tighter. People won't buy as much, and the folks who sell stuff won't be getting as much of it either. They might have to let a few little guys on the bottom of the wage slave totem pole go. These, in turn, will start pinching THEIR pennies, and so forth, and upwards and onwards.

Government sometimes tries to break the cycle by taxing those who have the money and redistributing the wealth to working-class people through public works jobs. This has a limited effect, because it's treating the symptom rather than the disease.

Two things act to stop this.

First, the people who make things do a better job. This is an ongoing process and has been happening throughout the world since forever, but it's still happening. Highfalutin' types call it a "productivity increase." When that happens, the people who are selling what the other people are making can afford to sell it a little cheaper, or can make a little more money in profit on the ones that they do sell. In an ideal world, where corporations don't run the government, this extra profit will be spread around the work force, and not just go into the pockets of the CEO and a few well-placed shareholders. When that happens, there's more to spend, and the people who have it spend some of it. This gives others a few more pennies, and they relax their grip on 'em just a little, and so on and upwards and onwards.

Second, we can get out of the oil racket. We can be the rats who jump off of that sinking ship before we drown. We can develop other, cheaper sources of energy to compete with oil. Then, the demand for oil goes down, but, more importantly, no matter what the source, the price of energy goes down.

Rising gasoline prices = Everything, assuming the world is still operating on gas and not alternatives, will become more expensive. Universally. Transportation in particular. Even if the product doesn't use fuels to make, you have to get it to the market, so that costs money. Every world currency, again assuming alternatives aren't good enough, will spike in inflation levels. There would be wars for the full purpose of getting oil, and alternatives would jump in researching and development instantly. Any stability in oil rich African areas or the Middle East would be gone, and Russians would probably try to take Alaska back. Also, recolonisation of oil rich areas would happen during those oil wars. One last thing: China gets itself an empire in oil rich nations. It's got to feed itself, and to do that it has to feed it's factories. In fact, concerning the below section, I wouldn't be surprised if China surplanted the US as a superpower.
Credit Crunch = This one I'm not as sure of, but combined with the gas prices, you could see the American Empire (http://en.wikipedia.org/wiki/American_Empire) crumble. Remember that war over Alaska? It's feasible that the Americans could lose it. Remember the Civil War? It's altogether feasible that you'd have that again, with different lines. (Greater Californian Independence, anyone?) The overseas territories, like Guam or Puerto Rico would likely be nabbed away by some other force, maybe even Hawai'i. America wouldn't fair well in these economic conditions. China would, to an extent atleast.

Just to respond to a few of your points.

1. There's a thing called Power Projection (http://en.wikipedia.org/wiki/Power_projection). It's often overlooked by the China and EU wankers who infest the Internet and contantly predict the end of the "American Empire". All the military forces in the world mean exactly nothing if you can't deploy them to areas in which you have an interest. Russia does not, nor will it possess anytime soon, the ability to invade Alaska.

2. No nation in the world can protect enough power to retake Guam, and the idea of someone invading Puerto Rico is just stupid.

3. High oil prices will have a substanial economic impact for the forseeable future, but a combination of conservation, increased interest in renewable energy (and the increased viability of oil shale and other pertroleum sources),and increased fuel economy (the average car is supposed to reach 35 mpg by 2020) will eventually correct the situation.

4. The main influences of the credit crunch will be spikes in foreclosures and decreased home prices (which were already overvalued in many markets to begin with). Hopefully though we will finally see mortgage companies held to the same regulatory standards as banks. Of course this mess could have been averted if most of the people who took out ARMs weren't completely ignorant and short sighted when they signed on. Of course the government and lenders are working to try and minimize the fallout from the situation.

5. Proably the most serious economic issue right now (at least from an American perspective) is the decline of the dollar's purchasing power. Of course even this has an upside, it makes US exports more attractive as they cost less and makes importing in to the US less attractive. Some would say this is the market adjusting to bring the US trade deficit back into more reasonable ranges.

Basically, I am unsure of effects the credit crunch and rising gasoline prices will have on the world economy, also, what effects might globalization have when coupled with this? Could it cause stagflation?
No one can tell you what the global economy will do in the next twenty years. If you ask a group of economists all you will get is an argument. However if you want to hear the various sides of this argument, broadsheet newspapers and magazines like The Economist are much better sources than nationstates players.

Buristan in reply to your question, the rising prices in oil will have some effect on the world economy, while these prices seem to have increased by a large amount recently, it is important to remember that this has increased by about 50% comapred to the 1970's oil crisis where oil increased by 400% almost overnight which had devastating effects on the world economy. This current increase will cause a increase in prices (even if it is used as an excuse by firms to increase their prices even if their costs haven't increased), The issue of stagflation should not be a major problem provided governments maintain a hold on their fiscal policy (less spending) to keep aggregate demand down and monetary policy must be strictly enforced, it may not cause stagflation or be as large as the 70's as most developed economies in the world (US, EU countries, Japan and Australia, etc.) their government run supply side economic policies rather than demand side policies. As for the credit crunch I am unsure how it has effected people in the US (anyone?), by that I mean spending habits and investment, but in Australia where they has been some flow on effect which I presume may be the same for the EU (again anyone?) but it has not effected inflation that much nor has it effected spending habits or investment inflation is still higher than the accepted range currently 4% perhaps you can give me some info on what has happened within the US economy since the credit crunch? so that I can give you more info.

No one can tell you what the global economy will do in the next twenty years. If you ask a group of economists all you will get is an argument. However if you want to hear the various sides of this argument, broadsheet newspapers and magazines like The Economist are much better sources than nationstates players.

That may be true in some NS players however there are some NS players who have studied this field with some of those having degrees within the field being discussed and so have some knowledge on the issue. Your point on different views from economists on the future is true however reading The economist you will get this argument as well as their are many different contributers for The Economist belonging to different schools of thought

There are some nationstates players who claim to have university educations in economics. People on the internet generally aren't all that reliable.

There are some nationstates players who claim to have university educations in economics. People on the internet generally aren't all that reliable.

Good point but if someone with knowledge on this issue reads a post by someone that is clearly wrong they will be caught out. Not to hijack this thread but you can ask me any question an economics student should know