Money-based economies have a tendency toward boom-and-bust cycles. The US in the 19th century saw a string of bank failures, financial panics, currency collapses, and depressions; in the 20th we enjoyed somewhat more economic stability, but still the nation had to endure the convulsions of 1907, the 1930s, and the 1970s.

We are now seeing the dire results of yet another bubble popping—in this case the real estate bubble. As home prices escalated during the early years of the new century, homeowners found themselves with new paper wealth, which they exploited by taking out new mortgages that left them with cash to spend. Creators of mortgages found new ways of selling their loans to people who really couldn’t afford to buy homes at inflated prices. Investment bankers found innovative means of leveraging the new money floating through the system. It all worked beautifully until home prices started to fall, effectively weakening the balloon at its most vulnerable spot so that it could not maintain its integrity.

Something similar is happening with energy. During the past couple of centuries we started using coal, then oil and natural gas—fuels that yielded an unprecedented energy profit from the enterprises of exploration, mining, and drilling. The pattern at first was to move from lower-quality fuels (coal) to higher-quality ones (oil and natural gas). All of this cheap, high-quality energy enabled us to build an industrial world of cars, trucks, airplanes, and tractors in which only a small portion of the populace needed to work at basic productive tasks, thus freeing up an enormous (and growing) work force that could leverage energy in a million ways through advertising, tourism, packaging, industrial chemistry, and on and on.

Now the energy bubble is bursting. Not only is global oil production peaking, but resource quality is declining (we are turning from conventional natural gas to shale gas and coal bed methane; from anthracite to bituminous to sub-bituminous coal), and net energy is plummeting (for example, making oil from tar sands has a net energy yield perhaps one-tenth or less that of crude oil from a good reservoir).

The problem with bubbles is that they create euphoria. Everyone forgets that the source of their new-found abundance is temporary, and starts thinking that somehow the rules of existence have changed: from now on, it’s nothing but good times. Champagne for everyone! It’s on the house!

But while unheeded warning signs are there to be detected by those few who are alert to such things, bubbles burst quickly and surprise nearly everyone.

The financial bust has everyone worried at the moment, but the energy implosion will be fundamentally more consequential by far.

The global population bubble (which has drawn air from the energy bubble) may be the most terrifying of all.

There are of course lessons to be learned from all of this, but it’s too late in the game to use our newfound realizations in such a way as to deflate these bubbles harmlessly. Nevertheless, in each instance we must salvage what we can of the situation and build the foundations for a bubble-free (i.e., sustainable) future.