This is a guest post by Gregor Macdonald. Gregor's blog is gregor.us.

It was the best of times for the developing world, and the worst of times for the developed world. In the developing world, they built savings. In the developed world, they groaned and sagged under the weight of debt. In a world where the credit of developed nations had always been believed, the serial monetizations and bailouts set loose an emerging incredulity–driving developing nations into gold, commodity currencies, and land. In the aftermath of the financial crisis the developing world, measured at about 4.5 billion people, lumbered forth with its insatiable demand for energy. Mostly coal.

In the developed world? They replaced their lost demand, lost credit, and the loss of cheap energy the best they knew how: with paper.

This is a guest post by Chris Cook. Chris Cook is a former director of the International Petroleum Exchange. He is now a strategic market consultant, entrepreneur and commentator.

Max Keiser Interview: Besides writing this post, Chris did a Max Keiser interview on this subject, which is linked here.

Gail thought it would be a good idea if I put my article for 'Asia Times' - reprinted below – into context. Bearing in mind past discussion, I agree wholeheartedly, and will attempt to do so in this introduction in order to allow Oil Drum readers who wish to do so to engage on my chosen ground, which is the operation and architecture of the global market in energy generally, and oil in particular.

I see two secular trends in relation to the oil price. Firstly, I agree with the Peak Oil case, and consider that if we are not at the Peak level of global production we are close to it. I am not qualified to enter into discussion on that subject, but have learnt a great deal from those on this site who are. Secondly, I see the dollar continuing to devalue against 'real' assets generally and energy in particular, as a result of the fiscal incontinence of the US. Again, there are many better qualified to discuss that issue than me.

The combination of these two secular trends in the long term is that the oil price will, I believe, rise relative to the dollar. It's not Rocket Science. In my view, the oil price will rise over time between trending boundary lines: an upper bound ('seller's market'), at which demand destruction kicks in; and a lower bound ('buyer's market'), where marginal cost of production is the limiting factor.

The main thesis of my article is that there is a comprehensive misunderstanding - particularly in the US – as to what is actually going on in the oil market, and in particular, who is benefiting from the gyrations between these boundary trend lines.

In one of my favorite non-science fiction novels, "Freddy and Fredericka", the future King and Queen of England are dropped naked from an airplane into America as sort of a rite of passage. Though heir to the throne and infinitely wealthy back home, Freddy must use only his wits, skills of persuasion and physical abilities to somehow rise to the unlikely position of the leader of the USA - if he manages this, basically from scratch, he will then have earned the throne of England not only due to hereditary decree but via his own merits. Kind of a neat concept. The book is a hilarious romp, but one of its themes, of what social and human capital might accomplish if financial capital suddenly vanished (from Freddy's perspective), is an interesting thought-parallel to today's fiat/currency situation. More below the fold.

Dr. Dennis Meadows is one of the authors of the well-known 1972 book "Limits to Growth," plus two updates of the book. He has received a number of awards for his work, most recently the prestigious Japan Prize from the Science and Technology Foundation of Japan.

Dr. Meadows recently gave a talk for the Population Institute. Both the presentation and a podcast of Dr. Meadows giving his talk can be downloaded from the Population Institute site. In this post, I summarize what I understand Dr. Meadows to be saying in that talk. Readers with time are encouraged to listen to the Podcast and look at the presentation themselves. Dr. Meadows did not cover all of his slides in his talk. This post relates only to those that he did cover.

The number one take-away for me from this talk is The end of growth does not come from depletion, but from rising capital costs. In some ways, this is intuitive. When you put this statement together with the work I have been doing that shows that debt cannot continue rising in the face of peak oil, it makes this issue even more important.

A second major take-away for me (besides the importance of population in the equation) is Changes in technology may delay the end of growth by a few years, but they do not avoid it, and do not avoid the decline. A third observation I found interesting is that the biggest stresses are likely to occur at the time when growth ceases--that is now--not, as is popularly believed, as the result of the decline itself.