Diminishing Returns, Energy Return on Energy Invested, and Collapse

What do diminishing returns, energy return on energy invested (EROI or EROEI), and collapse have to do with each other? Let me start by explaining the connection between Diminishing Returns and Collapse.

Diminishing Returns and Collapse

We know that historically, many economies that have collapsed were ones that have hit “diminishing returns” with respect to human labor–that is, new workers added less production than existing workers were producing (on average). For example, in an agricultural economy, available land might already have as many farmers as the land can optimally use. Adding more farmers might add a little more production–perhaps the new workers would keep weeds down a bit better. But the amount of additional food the new workers would produce would be less than what earlier workers were producing, on average. If new workers were paid on the basis of their additional food production, they would find that their wages dropped relative to those of the original farmers.

Lack of good paying jobs for everyone leads to a need for workarounds of various kinds. For example, swamp land might be drained to add more farmland, or irrigation ditches might be added to increase the amount produced per acre. Or the government might hire a larger army might to conquer more territory. Joseph Tainter (1990) talks about this need for workarounds as a need for greater “complexity.” In many cases, greater complexity translates to a need for more government services to handle the problems at hand.

Turchin and Nefedof (2009) in Secular Cycles took Tainter’s analysis a step further,  analyzing financial data relating to historical collapses of eight agricultural societies in operation between the years 30 B.C. E. and 1922 C. E.. Figure 1 shows my summary of the pattern they describe.

Figure 1. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov.

Figure 1. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov.

Typically, a civilization developed a new resource which increased food availability, such as clearing a large plot of land of trees so that crops could be planted, or irrigating an  existing plot of land. The economy tended to expand for well over 100 years, as the population grew in size to match the potential output of the new resource. Wages were relatively high.

Eventually, the civilization hit a period of stagflation, typically lasting 50 or 60 years, as the population hit the carrying capacity of the land, and as additional workers did not add proportionately more output. When this happened, the wages of common workers tended to stagnate or decrease, resulting in increased wage disparity. The price of food tended to spike. To counter these problems, the amount of government services rose, as did the amount of debt.

Ultimately, what brought the civilizations down was the inability of governments to collect enough taxes for expanded government services from the increasingly impoverished citizens. Other factors played a role as well–more resource wars, leading to more deaths; impoverished common workers not being able to afford an adequate diet, so plagues were more able to spread; overthrown or collapsing governments; and debt defaults. Populations tended to die off.  Such collapses took place over a long period, typically 20 to 50 years.

For those who are familiar with economic theory, the shape of the curve in Figure 1 is very similar to the production function mentioned in Two Views of our Current Economic and Energy Crisis. In fact, the three main phases are the same as well. The issue in both cases is diminishing returns ultimately leading to collapse.

There seems to be a parallel to the current world situation. The energy resource that we learned to develop this time is fossil fuels, starting with coal about 1800. World population was able to expand greatly because of additional food production permitted by fossil fuels and because of improvements in hygiene. A period of stagflation began in the 1970s, when we first encountered problems with US oil production and spiking oil prices.  Now, the question is whether we are approaching the Crisis Stage as described by Turchin and Nefedov.

Why Might an Economy Collapse?

Let’s think about how an economy operates. It is built up from many parts, over time. It includes one or more governments, together with the laws and regulations they pass and together with their financial systems. It includes businesses and consumers. It includes built infrastructure, such as roads and electricity transmission lines. It even includes traditions and customs, such as whether savings are held in gold jewelry or in banks, and whether farms are inherited by the oldest son. As each new business is formed, the owners make decisions based on the business environment at that time, including competing businesses, supporting businesses, and the number of customers available. Customers also make decisions on which product to buy, based on the choices available and the prices of these products.

Over time, the economy gradually changes. Some parts of the economy gradually wither and are replaced by new parts of the system. For example, as the economy moved from using horses to cars for transportation, the number of buggy whip manufacturers decreased, as did the number of businesses raising horses for use as draft animals. Customs and laws gradually changed, to reflect the availability of automobiles rather than horses for transportation. In some cases, governments changed over time, as increased wealth allowed more generous social programs and wider alliances, such as the European Union and the World Trade Organization.

In the academic field of systems science, an economy can be described as a complex adaptive system. Other examples of complex adaptive systems include ecosystems, the biosphere, and all living organisms, including humans. Because of the way the economy is knit together, changes in one part of the system tend to affect other parts of the system. Also, because of the way the system is knit together, the system has certain requirements–requirements which are gradually changing over time–to keep the economy operating. If these requirements are not met, the economy may collapse, just as the eight economies studied by Turchin and Nefedov collapsed. In many ways such a collapse is analogous to an animal dying, or climate changing, when conditions are not right for the complex adaptive systems that they are part of.

Clearly one of the requirements that an economy has, is that it needs to be wealthy enough to afford the government services that it has agreed to. Scaling back those government services is one option, but when these services are really needed because citizens are getting poorer and finding it harder to find a good-paying job, this is hard to do. The other option, unfortunately, seems to be collapse.

The wealth of an economy is very much tied to the availability of cheap energy. A huge uplift is added to an economy when the (value added to society) by an energy resource such as oil greatly exceeds its (cost of production). Over time, the cost of production tends to rise, something measured by declining EROI. The uplift added by the difference between (value added to society) and (cost of production) is gradually lost. Some would hypothesize that the falling gap between (value added to society) and the (cost of production) can be compensated for by technology changes and improvements in energy efficiency, but this has not been proven.

Our Economy is Already in a Precarious Position

As I indicated in my most recent post, if a person computes average wages by dividing total US wages by total US population (not just those employed), the average wage has flattened in recent years as oil prices rose. Median wages (not shown on Figure 2) have actually fallen. This is the same phenomenon observed in the 1970s, when oil prices rose. This is precisely the phenomenon that is expected when there are diminishing returns to human labor, as described above.

Figure 2. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

Figure 2. Average US wages compared to oil price, both in 2012$. US Wages are from Bureau of Labor Statistics Table 2.1, adjusted to 2012 using CPI-Urban inflation. Oil prices are Brent equivalent in 2012$, from BP’s 2013 Statistical Review of World Energy.

The reason for the flattening wages is too complicated to describe fully in this post, so I will only mention a couple of points. When consumers are forced to spend more for oil for commuting and food, they have less to spend on discretionary spending. The result is layoffs in discretionary sectors, leading to lower wage growth. Also, goods produced with high-priced oil are less competitive in the world market, if sellers try to recoup their higher costs of production. As a result, fewer of the products are sold, leading to layoffs and thus lower average wages for the economy.

In the last section, I mentioned that the economy is a complex adaptive system. Because of this, the economy acts as if there are hidden laws underlying the system, parallel to the laws of thermodynamics underlying physical systems. If oil supplies are excessively high-priced, very few new jobs are formed, and those that are created don’t pay very well. The economy doesn’t grow much, but it does stay in balance with the high-priced oil that is available.

The Government’s Role in Fixing Low Wages and Slow Economic Growth

The government ends up being the part of the economy most affected by slow economic growth and low job formation. This happens because tax revenue is reduced at the same time that government programs to help the poor and unemployed need to grow. The current approach to fixing the economy is (1) deficit spending and (2) interest rates that are kept artificially low, partly through Quantitative Easing.

The problem with Quantitative Easing is that it is a temporary “band-aid.” Once it is stopped, interest rates are likely to rise disproportionately. (See the recent Wall Street Journal editorial,” Janet Yellen’s Greatest Challenge.”) Once this happens, the economy is likely to fall into severe recession. This happens because higher interest rates lead to higher monthly payments for such diverse items as cars, homes, and factories, leading to a cutback in demand. Oil production may fall, because the cost of production will rise (because of higher interest rates), while the amount consumers have to spend on oil will fall–quite possibly reducing oil prices.  If interest rates rise, the amount the government will need to collect in taxes will also rise, because interest on government debt will also rise.

So we are already sitting on the edge, waiting for something to push the economy over. The Affordable Care Act (“Obamacare”) may provide a push in that direction. Inability to pass a federal budget could provide a push as well.  So could a European Union collapse. Debt defaults are another potential problem because debt defaults are likely to increase dramatically, as economic growth shrinks, as discussed in the next section.

Debt is Major Part of our Current Precarious Financial Situation

If an economy is growing, it is easy to add debt. People find it easy to find and keep jobs, so they can pay back debt. Businesses and governments find that their operations are growing, so borrowing from the future, even with interest, “makes sense.”

It is as also easy to add debt if the economy is not growing, but there is an ample supply of cheap oil that can be extracted if increasing debt can be used to ramp up demand. For example, after World War II, it was possible to ramp up demand for automobiles and trucks by allowing purchasers to use debt to finance their purchases. When this increased debt led to increased oil consumption, it greatly benefited the economy, because the (value to society) was much greater than the (cost of extraction). Governments were able to tax oil extraction heavily, and were also able to build new roads  and other infrastructure with the cheap oil. The combination of new cars, trucks, and roads helped enable economic growth. With the economic growth that was enabled, paying back debt with interest was relatively easy.

The situation we are facing now is different. High oil prices–even in the $100 barrel range–tend to push the economy toward contraction, making debt hard to pay back. (This happens because we are borrowing from the future, and the amount available to repay debt in the future will be less rather than more.) The problem can be temporarily covered up with deficit spending and Quantitative Easing, but is not a long-term solution. If interest rates rise, there is likely to be a large increase in debt defaults.

The Role of Energy Return on Energy Invested (EROI or EROEI)

EROI is the ratio of energy output over energy input, a measure that was developed by Professor Charles Hall. To calculate this ratio, one takes all of the identifiable energy inputs at the well-head (or where the energy product is produced) and converts them to a common basis. EROI is then the ratio of the gross energy output to total energy inputs. Hall and his associates have shown that EROI of oil extraction has decreased in recent years (for example, Murphy 2013), meaning that we are using increasing amounts of energy of various kinds to produce oil.

In previous sections, I have been discussing diminishing returns with respect to human labor. Oil and other energy products are forms of energy that we humans use to leverage our own human energy. So indirectly, diminishing returns with respect to the extraction of oil and other energy products, as measured by declining EROI, will be one portion of the diminishing returns with respect to human labor. In fact, declining EROI may be the single largest contributor to diminishing returns with respect to human labor. This will happen if, in fact, low EROI correlates with high oil price, and high oil prices leads to diminished wages (Figure 2). This may be the case, because David Murphy (2013) indicates that the relationship between EROI and the price of oil is in fact inverse, with oil prices rising rapidly at low EROI levels.

Contributors to Declining Return on Human Labor

Human labor is the most basic form of energy. We humans supplement our own energy with energy from many other sources. It is this combination of energy from many sources that is reflected in the productivity of humans. For example, we take it for granted that we will have tools made using fossil fuels and that we will have electricity to power computers. Before fossil fuels, humans supplemented their energy with energy from animals, burned biomass, wind, and flowing water.

What besides declining EROI of fossil fuels would lead to diminishing returns with respect to human labor? Clearly, the same problems that were problems years ago continue to be problems. For example, growing world population tends to lead to diminishing returns with respect to human labor, because resources such as arable land and fresh water are close to fixed. Greater world population means that on average, each gets person less. Oil production is not rising as rapidly as world population, so the quantity available per person tends to drop as world population rises.

Soil degradation is another issue, according to David Montgomery, in Dirt: The Erosion of Civilizations (2007). Declining quality of ores for metals is another issue. The ores that are cheapest to extract are extracted first. We later move on to poorer quality ores, and ores in less accessible locations. These require more oil and other fossil fuels for extraction, leaving less for other purposes.

There are other more-modern issues as well. Growing populations in areas where water is scarce lead to the need for desalination plants. These desalination plants use huge amounts of fossil fuel resources (oil in the case of Saudi Arabia) (Lee 2010), leaving less energy resources for other purposes.

Globalization is another issue. As the developing world uses more oil, less oil is available for the part of the world that historically has used more oil per capita. The countries with falling oil consumption tend to be the ones that recently have had the most problems with recession and job loss.

Figure 3. Oil consumption based on BP's 2013 Statistical Review of World Energy.

Figure 3. Oil consumption based on BP’s 2013 Statistical Review of World Energy.

An indirect part of diminishing returns with respect to human labor has to do with what proportion of the citizens is actually able to find full-time work in the paid labor force, and whether the jobs available are actually using their training and abilities. The Bureau of Labor Statistics calculates increases in output per hour of paid labor. I would argue that this is not a broad enough measure. We really need a measure of output per available full-time worker.

Obviously, there are potential offsets. We hear much about technology improvements and increased efficiency offsetting whatever other problems may occur. To me, the real test of whether there is diminishing returns with respect to human labor is how wages are trending, especially median wages. If these are not keeping up with inflation, there is a problem.


We don’t often think about the return on human labor, and how the return on human labor could reach diminishing returns. In fact, human labor is the most basic source of energy we have. Stagnating wages and higher unemployment of the type experienced recently by the United States, much of Europe, and Japan look distressingly like diminishing returns to human labor.

Stagnation of wages is happening despite attempts by governments to prop up the economy using deficit spending, artificially low interest rates, and Quantitative Easing. Without these interventions, the results would likely be even worse. If QE is removed, or if interest rates rise on their own, there seems to be a distinct possibility that these countries will be reaching the “crisis” phase as described by Turchin and Nefedov.

Historical experience suggests that a major danger of diminishing returns to human labor is that governments costs will rise so high, and wages will drop so low, that it will be impossible for the government to collect enough taxes from wage-earners. In fact, there seems to be evidence we are already headed in this direction. Figure 4 (below) shows that  the US ratio of government spending to wages has been rising since 1929. Government receipts have leveled off in recent years.

Figure 4. Based on Table 2.1 and Table 3.1 of Bureau of Economic Analysis data. Government spending includes Federal, State, and Local programs.

Figure 4. Based on Table 2.1 and Table 3.1 of Bureau of Economic Analysis data. Government spending includes Federal, State, and Local programs.

Adding more health care services under the Affordable Care Act will only increase this trend toward growing government expenditures.

One issue is how the financial benefit of human labor (together with the energy sources leveraging this labor) is split among businesses, governments, and humans. Businesses have the most control in this. If an endeavor is not profitable, they can discontinue it. If cheaper labor is available elsewhere, they can cut hold down wages in countries with higher wages. They also have the option of increased mechanization. Humans and governments both tend to get shortchanged. As the overall return of the system reaches limits, wages of humans tend to stagnate. Governments find themselves with greater and greater costs, and more and more difficulty collecting funds from increasingly impoverished citizens.

Most authors of academic articles assume that the challenge we are facing is one that can be solved over the next, say, fifty years. They also seem to believe that the fixes required are simply small adjustments to our current economy. This assumption seems optimistic, if we are really approaching financial collapse.

If we are in fact near the crisis stage described by Turchin and Nefedov, we will need to do something much closer to “start over”. We need to build a new economy that will work, rather than just “tweak” the current one. New (or radically changed) government and financial systems will likely be needed–ones that are much less expensive for taxpayers to fund. We are also likely to need to cut back on basic services, including maintaining paved roads and repairing long-distance electricity transmission lines.

Because of these changes, whole new ways of doing things will be needed. EROI analyses that have been to date represent analyses of how our current system operates. If major changes are needed, their indications may no longer be relevant. We cannot simply go backward, because methods that worked in the past, such as using draft horses and buggy whips, will no longer be available without a long development period. We are truly facing an unprecedented situation–one that is very hard to prepare for.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
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491 Responses to Diminishing Returns, Energy Return on Energy Invested, and Collapse

  1. wredwards says:

    Interesting thought sequence. Perhaps in your next post you will outlying remedial steps you might suggest.

    • Thanks for the suggestion. I wish there were an easy solution.

      • Gerry Hiles says:

        I cannot suggest a solution, but I do know what are not solutions, i.e. the whole array of “alternative energy” projects from solar, to wind, to tidal and so on.

        All suffer the same defect of relying on oil to mine, transport, refine and turn the refined minerals into such manufactured products as solar arrays and wind turbines … all of which comes back to diminishing returns on (conventional) energy inputs and probably compounding the problem further by China manufacturing solar arrays, for instance, at the cost of what could be local jobs.

        But at the core is the impossible expectation of infinite growth on our finite planet.

        • I agree with you. It is hard to get a lot of folks to see this.

        • I think the main problem with infinite growth is mainly the name: Growth. This is wrong. It should be: Acceleration. GDP/year . the /year is mostly forgotton. Compare it with speed. If we could see the economy as something that is accelerating, everyone would consider more speed as more dangerous and more unstable. A train that goes too fast. A car, a runner,.. When you go fast, and all of a sudden you’re on a curved path, accidents must happen. I also believe the energy consumption (labour and energy) is increased exponentially with a linear increase of speed if the same technology is used. That is why all the working people tend to have more and more stress and burnout, and why we consume more and more energy. A theory to explore.
          Kind Regards,

    • Leo Smith says:

      There is ‘A’ solution.

      I wrote it up, but it is contingent on people recognising that it IS a solution, and that may prove impossible.


      • Jan Steinman says:

        From his link, Leo Smith writes: “Whilst all the arguments against renewable energy are valid, deep and intrinsically insoluble, all the arguments against nuclear power are superficial, emotional and not founded in fact… there is only one technology, or suite of technologies capable of mostly replacing fossil fuel as a primary energy source and that is nuclear power of one sort or another.”

        Yawn. Move along folks. Nothing new here.

        Leo, while I appreciate the time and effort you put into crafting that paper, I invite you to explore the works of William Catton, Joseph Tainter, and Howard Odum, et. al. who teach us that complexity is the problem, not the solution.

        Nuclear energy is astoundingly complex. Complexity requires large amounts of energy to maintain.

        Nuclear could easily replace coal, but it doesn’t travel well. Perhaps I missed it, but how will nuclear power drive our transportation industry? Will you bring all the materials needed to build a nuclear plant to the site using battery-powered vehicles? Will you remove and sequester the dangerous waste the same way? (Oh, never mind. We’ll just store the waste on-site, 30 metres up in the air.)

        • Gerry Hiles says:

          To add to your correct comments Jan, it is worth noting that nuclear power plants depend on conventional power plants to feed electricity in to run cooling systems … something I did not know until the Fukushima disaster and coverage by Enenews soon after.

          I recommend anyone to Enenews, if they have a desire to know what’s really going on with the “permanent radio-active volcano” which IS Fukushima.

          My only claim to fame is I was apparently the first to coin that phrase and amongst the first to know that Fukushima is an ongoing “global extinction event”, though only because I paid attention throughout the 1950s of both civilian and military expansion, whilst most people of my age (70) and older and younger were, and are, obsessed with the “idiot box” purveying the present version of Roman “bread and circus”.

      • I’m afraid nuclear requires fossil fuels, also.

  2. Lindon says:

    Gail, I eagerly await each of your new posts, but this is the first time that I’ve been able to be (one of) the first to post a comment. I was checking my email at work, received your automated notification (that I signed up to receive), and thus my Friday afternoon was “made”.

    As usual, your posts stir many thoughts in my mind. But here’s one that I would like to comment on, to start with. You write:

    “Most authors of academic articles assume that the challenge we are facing is one that can be solved over the next, say, the next fifty years. They also seem to believe that the fixes required are simply small adjustments to our current economy”

    I can’t remember exactly where, but I read a great article that explored the question of why so many academics and scientists and beaurocrats take public stances and produce written opinions that totally ignore or purposely attempt to debunk the possibility of economic collapse. To those legions of us who look at the evidence and wonder how the current system manages to creak along from day to day, much less how it will keep providing BAU well into the future, we find ourselves in a somewhat surreal world when the supposed “experts” and “leaders” are denying a reality that so clearly exists.

    The reason, I believe, is because the powers that be simply MUST keep BAU going, at least until they can no longer do so. The academics and the scientists and the beaurocrats MUST “bye in” to this doctrine — the doctrine of “lying one’s ass off to deny reality” — because to do otherwise would bring immediate ridicule and a “mini-collapse” of their own privileged position in society (in other words, they would lose their job and income, most likely). So, what we get is a “leadership” and a mass media that very actively promotes one “reality”, while denying or downplaying any possibility that collapse or breakdown is imminent, or anywhere on the horizen.

    It is a strange and surreal world that we live in these days, when we know that we are being lied to daily, and when we know that our current way of life is hanging on a thread, duct-taped and bubble-gummed together, destined to fail tomorrow or the next day or maybe a little further down the road. But fail it will. And then what?

    Thanks for being one of those strong and clear voices of reason who help people like me cut through the lies and propaganda, and who validate my perception of what reality REALLY is.

    • Thanks for your thoughts. I agree that the situation is surreal. It seems like someone needs to put in words what is happening. I hope to get some of these posts put together into a book sometime in early 2014. But even if that doesn’t happen, I want people to be able to read at least one reasonable opinion as to what is happening.

      • sheilach2 says:

        I’ll be looking forward to your new book Gail!
        Trying to find someone who has the facts & evidence to support is & isn’t afraid to spread it to us is so rare these days.
        So many people believe the lies the corporate controlled media tells them & too many also believe in impossible ancient belief systems.
        How are we to prepare for our down sliding future is we don’t know the truth?
        But on the other hand, the more the “sheeple” are kept in the dark, the more resources will be left for the knowledgeable who have prepared for the worse.
        Let the praying “sheeple” get shorn!

    • Isaac says:

      Excellent point. A good example is the lack of honesty from policy makers on health care spending. We obviously need strict rationing of government purchased (subsidized) health care, since we simply can’t afford everything for everyone.
      But it would be political suicide to be so clear on the need for strict limitations.
      I can hear the AARP knocking on my door right now…..

      • sheilach2 says:

        The AARP doesn’t really represent the retired people, their main interest is selling insurance. Your right, we shouldn’t be wasting $$ on the terminally ill, those will horrible birth defects or the very old who will soon die anyway.
        I have seen teens with horrible birth defects who only exist because of extraordinary care giving, meds, & health care. What a waste of time & effort.
        I’ve seen infants born very defective who would be better off euthanized, there is no way we can “fix” them to live even a halfway “normal” life. Their existence will be painful & short.
        How many billions of $$ are wasted each year warehousing these unfortunate defectives?

        • Brad says:

          I think that Nick Vujicic is a perfect counter example to your argument. He was born with no arms and no legs, and he is the most inspirational person that I have ever seen. He has travelled to almost every country in the world speaking and engaging with huge crowds everywhere.
          I don’t think that any of that money is ‘wasted’. Anything that helps us to be a more caring society is generally a good thing.

          • sheilach2 says:

            The people I was referring to are also severely mentally defective. They lie in their beds motionless in their own filth.
            Those like the person you referenced is not one of these, he is able to respond to others & act in his own limited way. But in our future, even those who are awake but helpless could still be neglected because of lack of resources.

            We will exist in a Darwinian world but even so, I know that even the Neanderthals took care of their crippled.
            Let’s hope that only the severely disabled & unaware will be euthanized.
            Let’s also hope we don’t have another Stalin or Hitler, he murdered even those who’s only “problem” was being old, sick, Polish, Jewish, Russian, crippled, defective or just not wanted by the Nazis.

        • I was talking today to someone today who was told me about how wonderful a friend of theirs thought pet insurance was. With pet insurance, the friend was able to pay for all kinds of expensive surgery and even physical therapy for their dog. I can understand wanting surgery for a child with a problem, but spending huge resources (in this example) to mitigate hip dysplasia and epilepsy in a dog seems ridiculous to me–with or without insurance. How about finding a different dog?

          • Paul says:

            Humans are becoming too sensitive, a sign that we’re distancing too much from nature and having life too easy. This idiocy is but one ramification.

            I don’t like this way of life because it’s clear by now that it’s destroying what I most treasure in life. I’m a pessimist, and peak oil interests me for this reason.

          • sheilach2 says:

            Right on Gail! Hip dysplasia, & epilepsy is genetic & such dogs should be excluded from breeding. Irresponsible breeders don’t seem to care about the welfare of their dogs, only profit.
            Such dogs should be painlessly euthanized if they show pain or have epilepsy, spending so much $$ on a pet seems rather irresponsible but I suppose if your rich, cost is of no consequence.
            I have a fundie friend who kept taking her cat to the vet every week for all kinds of treatments for it’s kidney failure.
            It finally managed to escape her to die alone in the bushes. Those treatments were only prolonging it’s suffering.
            I told her it would be kinder to put it to sleep, but she was too tied to it because it belonged to her dead male friend & she didn’t want to let it go.

            I felt sorry for that poor cat, I would have put it to sleep a long time ago when it showed signs of pain.
            But then I’m not a “believer”.

            • In this case, the approach was to buy pet insurance when these problems were suspected, but before they had been formally diagnosed. Then the insurance company got to pay for all of these procedures. Clearly the owner should be certain that this dog is not parenting any puppies. But the whole process raises questions about what seems to me to be a huge waste of resources, and is worsening the gene pool of dogs. Of course, I am not a pet lover. If I were, I might be arguing that we need universal pet health insurance.

          • Lindon says:

            My mother, bless her heart, has been in a nursing intensive rest home for five years now. She lies around all day, longing for death, longing to escape her pain. But “the system” keeps her alive, at taxpayer expense. I visit her, and the nursing home is filled with hollow-eyed shells of humanity, all of them miserable to the core wishing to move on, but either too afraid to take their own life, or unable to contemplate their end. In a better world, people are brave and unafraid of death, they accept their natural end and reject expensive remedies intended only to keep the heart beating, even though the ability to BE HUMAN has long ago passed. It is the insurance companies, the doctors and the entire “for profit” medical system that has so perverted our system. Keeping people alive long past their “due date” is exceedingly profitable — that’s why they do it. But that is all coming to an end, soon, I hope.

    • Lindon says:

      I read somewhere that Hitler and the Nazi party members surrounding him continued to pretend as if not only was defeat entirely avoidable, but victory was still possible, even as the Russians advanced. There were plenty of Nazis, including military and civilian, that knew very well what doom lay in store and not in the too-distant future, but they were obligated by regimen and by threat of punishment to PRETEND as if everything was going just fine. They went about their daily lives as best they could, plotting military counter-strikes with soldiers and equipment that didn’t exist and never would, themselves living in a surreal world of fake reality and actual reality, taking advantage of the calm before the storm to plot their escape routes.

      I don’t want to compare the current powers that be (and their minions) to Nazis in any other way except for one: Many if not most of them KNOW what is happening, what is coming, but they are not going to voice their fears in a public forum for pretty much the exact same reason the Nazis wouldn’t as described above. Nothing to gain, everything to lose.

      Besides, those “in the know” need BAU to continue, for the masses to remain calm, in order that preparations and strategic plans can be put in place so that WHEN TSHTF, they will be ready. We are in that calm before the storm period, and we better be making preparations — mental and/or physical — to deal with the coming storm.

      • Philip Backus says:

        You are spot on historically. Within days of the end Robert Ley{Minister of Labor} asked Albert Speer(Minister of Armaments) when Hitler would be unleashing the new wunderwaffe (secret weapons) at a gathering of higher ups. Speer being an in the know rational thinker replied to Ley (a notoriously delusional alcoholic) that one should not place too much hope in such things,and that the situation was dire. Minister Ley moved on to socialize with more optimistic guests. The root cause of this war was insufficient resources as was the root cause of defeat.

        • xabier says:

          Albert Speer was fantastically good at spinning out things until the very last. I propose him for patron saint of our current ‘leaders’.

          The eventual loss of the war was clear to most informed Germans by 1941 at the latest.

          We shouldn’t underestimate for how long the fragile plates can be kept spinning.

          I should say the lies which we of the general public are expected to swallow on the economy, on a daily basis, makes a direct comparison to the Nazis quite appropriate.

          • dashui says:

            I went to hitler’s greenhouse up in the alps. Towards the end of the war it was destroyed by allied bombing, but Hitler’s associates went to great lengths to procure glass to rebuild it.
            Im not afraid to admit I cried.
            But I know he’s in a better place now.

      • I think you are right–now is the calm before the storm. Many don’t understand how bad things really are.

  3. dashui says:

    I was recently surprised at how fast the productivity per worker was dropping in american coal mines.
    How good is this type of metric if applied to oil extraction?

    • I am not aware of what industry statistics are available.

      I know it takes a lot more wells to extract the oil that now is being extracted. There are a lot more workers in extraction as well.

      • Kathy Brown says:

        Hi Gail,
        Check out James Hamilton’s blog http://www.econbrowser.com , the December 17th post on lower oil prices. Near the bottom of the thread is a reply by Jeffry Brown that has a lot of industry data that confirms your thesis on diminishing returns.

        • Kathy Brown says:

          Sorry about that. The date of that post was November 17th.

          • I think you are referring to the post of Jeffrey Brown summarizing some of the things Steve Kopits reported on in a presentation recently. Thanks! Steve sent me a copy of that presentation.

        • I am not sure if I was looking at this right. It isn’t December 17 yet, so I was looking at December 07. Did you mean December 17, 2012?

          • Kathy Brown says:

            Hi Gail,
            It was the Nov. 17th, 2013 post, and it was the summary of Steven Kopits presentation. I read your Dec. 9 comment on econbrowser right next to Jeffery’s post on the natural gas situation. Those numbers are do not look good.

  4. James says:

    It is optimistic to suggest that we will have a “start over” moment with a new financial system that benefits the taxpayer. Last I checked, the Dodd-Frank act was 9000 pages, and “less than a third” finished. It outlines among other things what happens in a doomsday financial meltdown. To be sure, the taxpayers get the short end of the stick and have even less control over the matter. Fear tends to suppress smaller voices and amplify authorities’.

    Human labor is quickly becoming the most costly expense for businesses (that, and debt maintenance). After a financial “reset” with presumably overwhelming unemployment, I doubt we will have a “middle class” at all. There will be too much supply of expensive human labor for the demand. While you and I can see societal trouble with paying less than a living wage, businesses don’t have the same scruples and planners have seen the same thing. With cheap, ubiquitous drones overhead in the next few years it will be more cost effective to “manage” the unemployed population than to appease them.

    • A person wonders how these things will work out–whether the 9,000 pages will be followed, or whether there will be a break-up. I suppose we could follow one approach for a while, and eventually move to another. Historical systems seemed to be a lot simpler than today though–tribal leader or king, for example.

    • Jan Steinman says:

      “While you and I can see societal trouble with paying less than a living wage, businesses don’t have the same scruples and planners have seen the same thing.”

      And yet, if customer/consumers can no longer afford to buy products, the businesses will suffer, no? Or is this the “greater fool” theory, in that there will always be someone willing to buy cheap plastic crap from China?

      • St. Roy says:

        The more stuff people don’t buy because they don’t have a job the fewer workers that are needed make the stuff who in turn will also then not have the money to buy stuff. Isn’t it a vicious ciycle downward to where only the farmers and gardners are left? After that it is just starvation and death.

        • Jan Steinman says:

          “Isn’t it a vicious ciycle downward to where only the farmers and gardners are left?”

          Thank you for sparing me.

          As long as I can produce food, I’m thinking someone will want to keep me around.

        • St.Roy. Nearly right. It is a VIRTUOUS circle upward to where farmers, gardeners, labourers doctors, nurses, some new teachers, the army, armed police, bus drivers, (add your own categories) are left. Jan, please – the farmers will prevent starvation, and nobody will prevent death.

        • The question is whether the farmers and gardeners can support themselves. In a much poorer world–which is where we are headed–we end up with mostly farmers and gardeners. Or a world of hunter-gatherers (really gatherers, with a little hunting added), which is closer to sustainable.

          • Dirt Dweller says:

            At anywhere close to current population levels there are not enough animals or plant resources to sustain a “hunter-gatherer” world. It is only through modern farming techniques that we are able to feed today’s numbers.

            • I agree. It seems like a reasonable guess as to world population with a hunter-gatherer lifestyle would be 5 million or less. The fact that resources are degraded from the original (for example, fish stocks down, large animals mostly killed off by earlier hunter-gatherers, mercury polluting lakes and rivers) may make the carrying capacity less than it otherwise would be.

      • Jan, a great point. The ‘plastic crap’ is where oil and energy are still going – because the fools who buy it are still making a profit for the greedy animals who produce and market it. However , if business spends as much effort promoting a better life of less consumption, as it did promoting consumption at any cost to the consumer’s health, and if the government will start promoting the truth (alongside Gail and others) the future need not be so dreadful. Technology will not disappear, people are mostly much smarter than ever before, but cannot expect to be allowed to vote in the kind of liars who promise ‘business as usual’

        • Technology largely depends on oil and electricity. It may not disappear overnight, but we can expect it to be pretty much gone in 50 years.

          • Hi Gail! Great post as always. I agree with your comment that oil extraction/use inte the economy in 50 years will be pretty much gone (in my eyes probably much earlier). Yet in terms of electricity I wonder how you come to the same conclucsion (if that is what you meant). I am aware that 40 % of the electricity in the world is generated by coal, and coal indeed is finite. Prof. Kjell Aleklett and the researchers at Uppsala University in Sweden has estimated to world coal production will peak in 2030 (China coal prod to peak already in 2020). I am also aware that coal has much lower EROI than oil and that today´s coal has a decreasing EROI because of lower quality (lower energy density).

            But my point is that solar energy for electric generation, today (and for the forseeeable future) with a much lower EROI than oil and fossil fuels, is only in its infancy in terms of our understanding of how to make use of the photosynthesis. After all, our whole planet runs on solar energy. Elon Musk (founder and CEO of both Tesla Motors and SpaceX) often mentions that 70-90 % of the solar energy that reaches earth´s surface can potentially be harnessed.

            I am by no means talking about giant solar parks in the dessert of Sahara, transporting energy long distances to be used for use in the energy intensive world we live in today (this is a mediahype). Rather, I am thinking of solar panels used locally but improved in material and used even in countries up North, like here in Sweden where I live.

            Solar vacuum tubes for heating (This Swedish guy built one from old beer cans-see: http://www.brunzell.com/projekt/solfangare/index.httm) and solar panels, moving with the sun or in an optimal 45 degrees angle in combination with small wind mills is very promising. (I will experiment with this on my mothers farm soon). I don´t see this a an universal solution to peak oil or the financial crisis but my point is that we very well may see solar energy solutions that are either totally produced/transported without fossil fuels and capable of supplying local communities with enough electricity/heat to make life quite manageable.

            Maybe Hyperloop and Mars is stopped by financial collapse and energy crisis but I am quite convinced that electricity will survice much longer than the oil age, in fact I think it can be used in many more ways (sustainably) than what is convetional/possible today.

            What are your thoughts?


            • The problem is that we are dealing with a complex adaptive system. You can’t assume that one system, such as coal or wind turbines, will continue to work, when the rest of the system dies. It is in some ways like assuming that one human system, say hearing, can continue to work, after a patient dies of blood loss.

              Coal as it is extracted today requires machinery made from metals, using oil in their contraction and transport. The coal, once it is extracted, needs to be transported using some method, nearly always using oil–certainly for track or road maintenance, if nothing else. Once electricity is created using coal or wind, it needs to be transported to via long distance transmission lines. These require oil for maintenance. The whole system needs to be balanced using computers. Building and maintaining computers requires a system of international trade, which is dependent on cheap oil.

              Actually, the most vulnerable part of the whole system is probably the political system. It fails as the economy fails to generate enough tax revenue to pay for the promises that have been made. The international financial system and international trade system are tied in with the political system.

              Suppose the US governmental system fails, in the same way the Former Soviet Union’s governmental system failed. Then it would suddenly be “every state for itself.” Some states might band together, but there would suddenly be a need for a whole lot of different new currencies, and different new international treaties. Some states themselves might fail, leading to smaller grouping yet–say Northern California vs Southern California. The European Union could go away as well. In such a changed political landscape, trade would suddenly become more difficult–it would depend on, for example, Texas setting up a trade agreement with Louisiana. It could very well be this kind of problem that brings an end to electrical system, among many other things.

          • Jan Steinman says:

            “Technology largely depends on oil and electricity. It may not disappear overnight, but we can expect it to be pretty much gone in 50 years.”

            That’s a pretty broad brush, Gail!

            I agree heartily that technology will be simplified, but “gone?”

            I’m hoping locally-fueled diesel engines can last for my lifetime, and I expect the wheel, fire use, and written language will probably be around as long as there are humans.

            Or are you implying that you believe humans will be “gone in 50 years?” :-)

            As long as there are humans, there will be technology. The question is, how much technology will we be able to afford with our energy budget? Human numbers will be reduced, and “appropriate technology” should be available to those who remain, no?

            • Perhaps we will be able to make rope out of hemp, by hand, and use those ropes to leverage our human strength. I suppose this would be a use of technology.

              All of our systems are so intertwined, it is very hard for me to see them continuing for 20 years, much less 50. As I indicated in my response to Johan Landgren, we are dealing with a complex adaptive system. The political system is way up at the top in terms of what is likely to fail. When it fails, and all transactions are much more local, it will be difficult to make systems like trains even operate. There will need to be treaties among local governments to cover them.

              One reason I see little point in building systems like long distance trains is because we will not build them in a way that can be maintained for a long period, say 50 years, with only local materials. If we build trains, we want them to be as simple and as easy to maintain as possible–not with fancy doors, imported from around the world, and air conditioning, and high-tech engines that use as little fuel as possible. We instead want them as low tech as possible. Parts need to be replaceable with parts made locally, using charcoal and local iron deposits, or recycled metal that is mixed with impurities. They need to be able to burn wood as fuel, if need be–I think biodiesel will be beyond our capabilities in any quantity–it requires too much of current technology.

            • Jan Steinman says:

              I largely agree, but as a student and fan of “appropriate technology,” I see a possible path to “a prosperous way down,” as HT Odum put it.

              “biodiesel will be beyond our capabilities in any quantity–it requires too much of current technology.”

              It is actually quite simple! It requires no semiconductors, for one thing — I agree that anything that requires chips won’t survive long.

              The basic ingredients: vegetable oil or animal fat, methanol, and lye, are all attainable at the village level. It requires fairly imprecise and unregulated heat — you could brew biodiesel over a wood fire — and agitation (wooden paddle!), and some means of moving fluids, which could be a simple Archimedean Screw pump, carved from wood with stone tools, if necessary.

              Oil can be extracted from vegetable seeds via a simple crusher, made from stones, if necessary.

              Lye is fairly simple to come up with from wood ash.

              Methanol is the hardest one, one I don’t fully understand. It is produced by steam reformation of methane gas (currently, from natural gas), which is easily produced from anaerobic fermentation. That suggests some moderate control of temperature and perhaps some metal piping and perhaps a catalyst.

              I highly recommend the “Foxfire” series of books to anyone planning to do any of these things in the future.

              I’m not set on having diesel engines for ever and ever. There are other nuts to crack, like lubrication oils, rubber parts, etc. But I think non-computerized diesel power run from local sources is the best chance for “a prosperous way down.”

            • Making the engines that use biodiesel and keeping them repaired without fossil fuels will be a huge challenge. Also, keeping roads in repair is likely to be a huge challenge without fossil fuels. If we can work around those two difficulties, than perhaps some biodiesel can be used for fuel for those vehicles that can be kept in repair and don’t have much need for roads.

            • Jan Steinman says:

              Yes, roads and manufacturing are a huge challenge.

              I’m mainly thinking about keeping the current fleet running, for some agricultural mechanization and food delivery.

              I think manufacturing of new engines will go away long before the old engines are unable to be maintained. Perhaps what manufacturing resources that remain functional will re-tool to supply spare parts — I think fixing things will be a growing market, as embedded energy becomes more dear and labour becomes more plentiful and cheap.

              Again, this is not a “business as usual” fantasy, with highway trucks hauling 80,000 pounds of food over the Interstate highway system. I’m thinking more of farmers taking their 4WD vehicles into the local market — more of a decentralized model. A decent 4WD can cover roads that would challenge an ox cart.

        • sheilach2 says:

          I think our preindustrial ancestors were smarter because the stupid didn’t live very long but today, even the very defective & stupid not only survive, they reproduce. I think the average smarts has declined on average, I’ve just seen too many people do such stupid things & too many of them DRIVE!
          I think the approaching collapse will sort things out.

  5. dolph says:

    We live in a topsy turvy world. Everybody insists that “growth” is the solution, but in fact it is the problem.

    You see, the problem is too deep now. The all conquering private capital system defeated all resistance, whether it was from indigenous peoples, nazis, communists, unions, religious fundamentalists, environmentalists, and even national governments themselves.

    Its success is its downfall, because there is nobody left to place a check, to oppose it. The whole world must be commoditized, and all of the fossil fuels must be burnt. The system does not stop until it burns itself out. It doesn’t recognize any limits, it never has and never will. In fact the idea of limits is the existential threat to it. Private capital must expand everywhere…it must dig up everything from the earth, pave over the globe, and move into the solar system and beyond.

    There are times when it expends considerable effort (great depression, current financial crisis) to survive, but it always does, because there is always more out there to exploit. This system is perfectly adapted to humans as biological and cultural creatures with the urge for life and expansion.

    Is it starting to dawn on people that we won’t even write the history of our own demise, because all 7 billion of us are connected to and captured by the system? Is it starting to dawn on you that a ragtag group of human survivors 500 years from now, living in the ruins, will have to place together a narrative of what happened?

    • James says:

      Since “growth” is an absolute requirement of our current system, expect to see warping of what constitutes growth. The last few years’ growth has been in financial magic. That is likely to continue but I expect things like intellectual property to become a larger share of the “growth”, as well as systematically converting commons like fresh water into institutions that can convert either quantity or price of drinking water into “growth”. Things that were free or assumed were common for all will be “priced”, leading to more “growth”.

    • In fact, it is not even growth that is the problem, from the point of fossil fuel resources. Simply extracting the same amount of resources years after year would be a problem, because total supply is limited. Population at current levels also seems to be too high for resources, excluding fossil fuels.

      I think you are right–we may not even be able to write the story of our own demise. The few survivors 500 years from now may have to piece together the story.

      • St. Roy says:

        As Paul Chefurka and George Mobus discussed earlier this week, will some evolved hominin get through the bottleneck or will it be extinction of the genus? I rather think that the story will not be written.

      • No Gail – several rich people will have computers and satellites and stuff, and your very own words will tell part of the story.

        • Those computers and the electrical system that operates the satellites will not operate for very long (perhaps a few years, but 50 or 100). Today’s rich people will be poor as well. My words on the Internet will disappear, because the Internet will disappear.

      • When simple tools (but only the best available) cost $1000 each, and jeans $400, you will preoccupied with getting them – not having a vast choice of styles! Will you be unhappier? No.

        Choice HAS to be removed – nobody will suffer. Rubbish HAS to be removed from the inventory of consumables, and good stuff must cost a fortune. Nothing wrong with that. You will be proud of your tools and your strength to use them. You will be admired for contributing to the reputation of the local area. Liars and cheats will be KNOWN, and they will not prosper.

        If cities figure in this scenario, they will NOT be so densely populated, but will be a natural environment for the brainy as opposed to the brawny – designing and making the tools – making and servicing the computers – redefining and constructing the government. Shame will become more manageable.

        • I question whether we will be able to make jeans at all, in a collapsing world. Putting together supply chains based on local materials will be difficult. We will likely mostly be trading in used clothing.

          Our choices will be much less than you even can imagine–probably not tomorrow, but 20 or 50 years from now.

          • Danny says:

            20 to 50 years? How do you extrapolate that? If there is going to be a crash like that; we would start to see collapse happening right now…a fall so to speak. I see a lot of people talking about financial collapse happening first and if that is the case won’t that draw out the peak oil crash…I guess we are all in agreement of the crash all that is left is to see how long this is drawn out. I think we are all and will be surprised at how far it can be drawn out. Too bad we can’t mathematically figure it out. I personally find it so hard to have one foot in the present world pretending everything is fine and the future world where a mad crash might happen. sometimes I think ignorance is bliss because there is really nothing we can do…..Danny

            • madronehill1 says:

              Hello, Well – Danny, I think we have some time before things really fall apart…. But our kids and their kids may be witness to the new depression and experience shortages, also we will likely see it, as my wife and I already pay almost twice what we paid in food along with several children just in the 1990′s. We also could likely see this next year or so young and old.

              They say inflation is tame but all of us know we are paying big bucks for food these days. I have been saying this for awhile now, I see a slow decline unless something happens to escalate things.

              The threat of nuclear war seems to wane as — The good news I see lately is that the situation in the Middle East seems to be calming for now — so let us try to look at some positive news, as the rest of the news only worries us. Hopefully things will continue and limp along for a generation or so before severe trouble sets in. So for now lets hope things calm for a time and the current system status will prevail as we are not prepared yet to change over to a new system.


            • If you understand the financial situation, you would be more worried. All it takes is rising interest rates to mess up the current situation.

            • I don’t go out of my way to tell young people about the problems. They have enough problems already, with the job situation they are facing.

          • sheilach2 says:

            Once the obstructionist federal government has fallen, I expect people will be growing hemp all over the country. Good sturdy pants, shirts & gowns can be made from hemp as can strong ropes & sails, it all depends upon how closely you grow the plants. We won’t be stuck with just used clothing although for a while that may be true until things get sorted out.
            Hemp has many uses, medicine, clothing, rope, food, oils, even plastics & recreation & it’s sustainable as it doesn’t require chemical fertilizers or pesticides.

            Cotton can still be grown in the steamy south but everywhere else, HEMP will be KING!

      • sheilach2 says:

        I think the survivors will be too busy trying to survive to care much about how we messed up. The digital library will be unreadable, the paper libraries will be burned for fuel & the old who might have remembers will have long died off.

      • yt75 says:

        “In fact, it is not even growth that is the problem”
        Yes, that is a point that is often over looked, the key problem is the use of non renewable resources for our current “society”, growth or not.
        And a steady state economy in the current set up just means burning the same amount of barrels per year (and building the same amount of cars, houses, etc).

        To me this is also linked to the “fashion” of externalities in economics, which could be summarized as :
        - Ok using this thing pollutes, let’s just compute the “cost” of this pollution, and take it into account.

        But nowhere the “internalities” approach is taken :
        - How much does it costs to use that amount of this non renewable resource stock ?. what should be its price ?

        Which is quite understandable, as if you had to define a cost or price for the above, and staying in an “optimistic progress mindset” doing it, then it means that what you leave to future generations is at least as good as what you now have, which for non renewable resources (and especially when used as fuel), would mean putting an infinite price tag on it.
        Otherwise you end up with things like “it is reasonable to use that amount per year”, but why not “that amount”/2 or “that amount”*2.

        • I hadn’t thought of the fashion to compute externalities as being part of reason economists can support the idea of a steady state economy. I have complained about a steady state economy being ridiculous, unless we can get our resource use down to zero, which we can’t. Not being an economist myself, it is hard for me to think in their terms.

          • yt75 says:

            I think you –should– consider yourself as an economist Gail :)
            Even if one, more in the “reality based” Malthus or Jaevons tradition (or maybe even the physiocrats before), than in the current kind of “compulsory wonderful world ahead” dogma.

          • donsailorman says:

            At least some economists agree with many of your main points regarding the end of economic growth. In today’s “Wall Street Journal” on the Opinion page is an article by William A. Galston that discusses recent papers by economist Robert J. Gordon. The gist of Gordon’s thinking is that there are at least six “headwinds” that will tend to reduce long term economic growth in the U.S. The original papers by Robert J. Gordon are highly readable and easy to find with Google. One of Gordon’s main points is that we face diminishing marginal returns to innovations in technology–one of your main points.

            Robert J. Gordon is a mainstream economist of impeccable credentials. When he writes, other economists take notice. I also find it quite interesting that the “Wall Street Journal,” a mainstream conservative publication, would put Gaston’s short article on its Op Ed page.

            I don’t know of any mainstream economist who emphasizes your point that increasing debt (or any debt for that matter) is hard to service in a no-growth economy, but this lack probably reflects my ignorance of what is current in economic thought. Simple arithmetic is all the math you need to show that large quantities of debt are untenable without economic growth. Small amounts of debt can be serviced in no-growth economies such as those in Europe of the Dark Ages, but increasing debt requires economic growth–or the result will be default of some kind. Typically, governments use increased rates of inflation to repudiate national debts, but some governments (e.g. several in Latin America, or the Soviet Union after the overthrow of the czarist regime) directly repudiate national debts.

  6. Denis Frith says:

    This article is an insightful view of the demand situation. However, the continuing irreversible supply of natural material sources from the limited crustal stock is the bottom line. That is an unsustainable process whatever decisions are made by society or the processes that use this stock.

    • I am afraid I don’t understand. Without our society economy sticking together in something close to our current form, the vast majority of the fossil fuel resources and uranium resources that now seem to be left will stay right where they are–in the ground. Extraction will fall, far more quickly than the most ardent climate change advocate would ever hope. Whether this will make a difference is not entirely clear–but if most of us aren’t around to find out, perhaps it won’t matter. The world is set up to cycle from state to state, with different climates and different species that are dominant. The earth will recover, with or without humans.

      • St. Roy says:

        YEP. I have been pondering which one of the social insects will next be the Earth’s dominant life form. Higher intelligence, as E. Mayr asserted some time ago, is a lethal mutation.

      • Denis Frith says:

        The stock of natural material resources is running out because systems of civilization are irreversibly using them. That is what is happening. Mentioning that fossil fuels will remain in the ground is a hypothetical future situation. I was commenting on the reality of what is happening now and is likely to continue while the systems of civilization (cities and the like can continue to operate)

        • It is as if the blood supply of civilization is running out. The possibility that the fossil fuels will remain in the ground is not really a hypothetical future civilization, any more than saying that a patient that it quickly losing its life blood will die. Our civilization as it is formed today cannot exist without cheap fossil fuels. The oil that is essential is already risen to such a high price that governments of countries that use much of it need Quantitative Easing to hide its problems. QE is only a temporary band-aid. The economy acts like a complex adaptive system, so If doesn’t take much foresight to figure out that it will collapse, in the not too distant future. There are so many different things that could crash the system (removal of QE being one of them) that is it hard to see precisely what will bring the whole system down. But without our current high tech system, the vast majority of our fossil fuel supply cannot be extracted.

          • Denis Frith says:

            The technological systems of civilization (the cities, roads, factories, etc) are what consumes most of the natural resources, including the fossil fuels, The population has become very dependent on the goods and services provided by this aging infrastructure. Operating and maintaining this infrastructure with the declining stock of natural resources is an unsustainable process. It is this tangible infrastructure that will inevitably collapse. Society will have to cope with the loss of the goods and services as best they can with intangible money having an impact obn the decisions being made.

            • Dennis–You are right. It is the technological systems of civilization (the cities, roads, factories, etc.) that consume most of the natural resources.

              There are a couple of related issues. EROI calculations don’t really look directly at these systems, yet these are the systems that we lack the “wealth” in terms of resources to maintain. This is why the minimum EROI has to be very high–probably 11 or more. This minimum EROI keeps increasing, as population rises and other problems continue to make our current system less able to handle the situation.

              Also, we can’t have solar panels and wind turbines without the cities, roads, factories, and schools we have now, and we can’t build the cities, roads, factories and schools we need with wind turbines and solar PV. Thus, these ideas are a dead-end from the point of view of keeping society going. It is an open question as to how much they can do for individuals, on a local basis.

      • Small pox was eradicated despite some who wanted to keep a live supply – just because. The future is green and bright, and the human equivalent of small pox – the greedy, ambitious, hyper-active, ignorant youth now taking over everywhere, will be eradicated. The US is preparing, and perhaps the Chinese will join forces. Not exactly ‘close to our current form’ Gail, but I was a bit surprised to hear you stating this a possibility. My father was a farmer, born at the end of the 19th century. Green fields – unlocked doors – policeman on bike – phone number, South Molton 64…….

  7. davekimble2 says:

    > We cannot simply go backward, because methods that worked in the past, such as using draft horses and buggy whips, will no longer be available without a long development period.

    Yes, but also this means spending MORE money and energy on infrastructure and labour that produces a LESS efficient outcome. Any society that values efficiency over resilience will NEVER take the political decision to go down that road, wise though it may be in the face of imminent collapse.

    One might imagine a society that sensibly values resilience over efficiency, the “powerdown society”, but this threatens so much of the current paradigm that it won’t happen without a bloody revolution – the 1% will not allow it. It won’t have escaped your notice that that is precisely what the 1% is preparing to confront – mass spying on the population, censorship and repression of dissent and whistleblowers, stockpiling of bullets, equipping and training the police with ever-greater weapons of mass control, building interment camps.

    Despite all this the 1% will fail, so we are condemned to a financial/industrial implosion, with the 1% still trying to accelerate the bus as it approaches the cliff. Once that implosion has played out, with efficent supermarket food shortages leading to mass starvation, a point will be reached where that inefficient, but resilient, society that was shunned before the collapse, will look like an IMPROVEMENT to the survivors, and maybe we can begin again with the new paradigm.

    This kind of societal change will be played out over a time period of decades, if not centuries. So there is little that we do, or even plan for, at this stage except how to survive the early stages of the collapse. Mad Max scenarios look increasingly likely.

    • I suppose if we were smart, we would decide what kinds of metal tools would be most helpful and last longest, and work on making them. But governments are in such poor condition, they could not finance such an effort. Or permaculture advocates might have a different idea of what investment might be most helpful for the longest time.

      As a practical matter, I expect whatever investment is made will need to be made by individuals. These individuals will have different ideas. Some of them may work for a while. Things like metal tools and clothing will last for a while, so not all problems will need to be solved immediately.

      • xabier says:


        All governments are Soviet now, backing the wrong horses with massive expenditure of money they don’t have and lying about the results or prospects.

        The British Government, for instance, is concentrating on creating a ‘high-speed’ (it won’t be really) railway to some economically insignificant regions with poorly-educated populations. The population of the UK be so glad of that in 100 years time! And importing vast numbers of low-grade ‘workers’ from Asia, Africa and Eastern Europe (admittedly some skilled workers from the latter region.) Whilst proclaiming that Growth (Oh Allah, or whatever God you may choose, I think a Voodoo deity is appropriate now) be praised!) is back and making the UK the envy of the developed world!

        One watches in amazement……..

        • Paul says:

          It’s sad to watch euroskeptics attacking immigration from Eastern Europe. Not that I don’t agree with them on the need to leave the EU. In fact, I want it abolished. But when they pick on these Eastern Europeans in order to attack mass immigration (which the majority of citizens resent), they show themselves to be complete cowards. it’s harder to be accused of racism when you attack fellow Europeans. If not these Eastern European immigrants, then who do you think the government will import?

          Europe will either go down on history, slowly but steadily (unlikely if the economy continues to go downhill) or it will burst into flames and new leaders will surge and reform the entire continent, and the current political and social views will disappear.

          What’s your bet?

          • xabier says:


            No, I’m not a closet racist as you imply. Freedom of movement in the EU has profoundly de-stabilised the British employment market, and played into the hands of exploitative capitalists who just love cheap and desperate labour, above all semi-skilled. Not to mention the movement and spread of professional and very brutal criminal gangs from that region.

        • dolph says:

          The UK in particular is in complete denial. But you can’t blame them, it’s all they have left.

          I wouldn’t be surprised to see it eventually break apart.

  8. Comparison with previous societies going back to pre-christian times tell us little about our present situation. As the saying goes: “This time is different.” But — it really is different in a really differnent way: The societies of the past that are referenced were all based on agriculture for which the fundamental resource is fertile land. For us the fundamental resources are a constellation of NON-renewable commodaties. For agracural society, each inter-cycle will end. For us, the inter-cycle may very well last forever.

  9. The observed response of the financial community to Quantative Easing seems to be to accept the money from the Fed — and, figuratively speaking, stash in under the mattress. Why? Perhaps those who have really good information about various proposed investment opportunities have run the numbers and found them wanting. The numbers don’t indicate that the proposal will yield a return for the investors, whatever is the return for the entreprenure. Why no good investment opportunities? Maybe there is no resource base that can be exploited with current technology in a way that will yield sufficient return. Conclusion: BAU will never return, no matter what the Fed does.

    • This article from Zerohedge seems to suggest that the excess reserves are being used as a basis for speculation. According to the article:

      1. Excess reserves (assets) are represented as cash deposits (liability)
      2. The excess cash is then used as collateral for margined securities – futures, swaps, options, and any other derivatives – that express a risky position, such as IG9 (long or short), or for that matter any security that simply needs initial margin, and better yet, allows massive leverage. For example the ES, aka E-mini contract, which as everyone knows is the main driver of market risk in the US capital markets, and which allows for constant resetting of risk-levels higher (in alignment with the Fed’s primary directive).

      This is a little out of my area of expertise, though.

      • Excess reserves cannot appear outside the central bank reserve account unless there is a corresponding shrinking of private sector banking liabilities. Reserves are never ‘new money’, the arguments of certain archaic economists suggest that they are … for political reasons.

        What sort of private sector shrinkage? A severe bank run.

        During a bank run the balance sheet of the bank collapses. The bank closes before it is able to return its depositors’ funds. The bank will ALWAYS run out of reserves before it can meet all the claims of the depositors.

        Zero Hedge has tried since the crisis began to promote the idea that central banks create new money (‘money printing’) thereby causing hyperinflation. This is completely wrong and Zero Hedge knows it.

  10. DaShui says:

    I work in a bank and the government just mandated that 6% of our employees must be veterans. we already have 10 or so and we must hire 40 more. Sounds like the government knows it can’t afford veterans benefits and wants to avoid another bonus army by pushing the cost on to private business.

  11. dashui says:

    Also 2 days ago my father went to a luncheon with some big shots, including Newt Gingrich. The topic was domestic energy and the consensus was that we have huge amounts of Nat gas and shale oil but it is Obama who is stoping us from exploiting them. The figure they gave was 90 billion barrels of oil, of course I said,”you do know that the world uses 1 barrel every 10 days don’t you?” The big shots were also for no gas exports, which is of course resource nationalism.

    • Thanks for these observations. I imagine most of them only know (part of) what they have been told. In fact, they may be gullible enough to believe what they read in the papers.

      Domestic natural gas will not be extracted unless the price is quite a bit higher. Natural gas producers figure that exports will drive the price higher, and also give them a reasonable return for extraction. We will see what really happens–debt collapse could prevent price from ever going high enough.

      By the way, I think you meant to say in your comment that you said, “you do know that the world uses 1 billion barrels every 10 days, don’t you?”

      • DaShui says:

        Actually ex senator Jim Demint is a friend of the family. At least he is a businessman not a lawyer. He, in my living room, said America has 200 years of natural gas. 200 years seems a little too perfect a number. 2000 years no one would believe, 20 years and people would worry, 200 is perfect near enough to be believable, far away enough not to worry.
        Demint also said he was in the market for a 30 foot sailboat, maybe he has been reading D. Orlov, and wants a escape from dc pod?

        • The 200 years of natural gas is based on extra-ordinarily optimistic view of what is available. The truth of the matter is that we can’t get the US price of natural gas up high enough to encourage extraction the gas from US shale formations, even at today’s very low interest rates. This is the reason for the interest in exporting the natural gas. The price might be higher, and the shortage might raise US prices.

          Another issue is that the extraction of this gas is hugely dependent on large amounts of credit being available at very low interest rates. Our current situation is very temporary.

          The technology also is not really exportable to other countries, either. Being able to do this extraction as cheaply as in the US depends on several conditions in the US that are not available elsewhere–plenty of fresh water for fracking, property laws that allow the property owner to get a share of the profits, so the property owner will not object too much to the fracking, and the fact that we already have extensive pipelines in place, enabling this extraction.

          The situation that will stop natural gas extraction is the upcoming crash. This is not factored into any reserve numbers.

          • Danny says:

            This is interesting Gail,
            as Natural Gas is always brought out as a bright spot in the U.S economy…I think were I live Natural Gas has gone up 13 percent; but when I tell people that they are shocked they have no idea….they don’t pay attention. I cringe when I see these giant houses with wasted space and we have been below 0 degrees F for over a week. What will happen with the price of Natural Gas? Will it shoot up eventually….over in the Baakan they are flaring it to get it out of the way…Any government official that ends his or her talk on Government problems will end it with a positive caveat ie….look at how much NG and Shale Oil we have!!! What do you believe the supply of NG to be and is it possible to export it? I remember the last few months of Greenspans reign he was talking about exporting NG…..Thanks Danny

            • If we run into financial collapse, then natural gas will be as much a dead end as oil will be. Our problems will be political and financial, and they will bring down international trade as well. These problems will spill over into natural gas production as well.

              I don’t really expect natural gas prices to rise, any more than I expect oil prices to rise, although I suppose, over the short term natural gas prices may rise. Debt defaults can be expected to lead to lower demand and lower prices, not higher prices.

              I think we will have major problems before the natural gas export facilities ever get built. The reason why producers of natural gas from shale deposits want to export natural gas is because they cannot get a high enough price for natural gas to make extracting it worth their while. (Thus the amount available at current prices is very low.) They think that by exporting it they can get a higher price for it, and perhaps drive the US price higher. In the absence of other problems, this reasoning might work–I am doubtful that it really will work now, though.

        • Lindon says:

          The politicians and the public figures who are part of the establishment will continue to PRETEND that everything is just fine, that BAU can continue forever, right up until the day it stops. I’m betting that secretly, 90% or more of these same individuals (like Demint) are making plans for the inevitable that they know for a fact is coming, perhaps at a time and with a catalyst that they are privy too. The fact that figures like Demint publicly and even privately PRETEND that BAU is safe far into the future means zero — they are just putting on a show. It is all part of the establishment plan to keep the masses calm and unaware, all the better to take advantage of BAU so as to secretly leverage themselves into a position of long-term survival once TSHTF. You and I should be doing the same.

        • xabier says:

          Da Shui

          20 years, 20, 2000:

          For some time now, the EU leaders, when they make a lying statement on ‘recovery’, have used the following formula:

          ‘The rest year will be bad, (and we feel for you!) most of next year will also be like that, but at the very end of next year, Growth Will Be Back!

          Dangle the carrot in front of the starving donkey, but make sure it doesn’t lose hope and die or try to bite you……

          Now we are getting wise to this, a new version has been formulated: ‘The recession is over, but there is still a lot to do!’

          A Stalin said: ‘Things Are Getting Better Comrades!’

    • Lindon says:

      dashui — The Republicans blame Obama for everything, don’t they? Always have. Always will. True or not, deserved or not, everything is Obama’s fault if you ask a Republican. I’m not even an Obama supporter, or a supporter of any particular political party. I’m just making an observation here. He gets blamed for bad weather, for the Mexican hijacking of radioactive material, for — everything. Maybe he deserves it, who knows?

      The take-away from your father’s meeting with the Republican big-shots is that they are part of the establishment and they either truly believe (Cornucopian) that the world will never run out of fossil fuels to burn (they are truly ignorant) or, more likely, they are PRETENDING, engaging in the well-documented establishment attempt to keep the masses calm and in the dark with false predictions and a constant stream of propaganda.

    • Danny says:

      well yes I went to to see former treasury secretary snow speak recently and he is totally drunk on the Shale oil story. If you ever questioned any of this you would be a laughing stock. Politicians are like a beauty pageant contestant…smart ones don’t make it though only the dumb ones make it. I live in Mt and Max Bacchus is the the most dull knives
      in the drawer but he is one of the highest ranking senators….sad but true. The dumber you are the more you advance. ……danny

  12. todd cory says:

    “Oil production is not rising as rapidly as world production, so the quantity available per person tends to drop as world population rises.”

    i think this is supposed to say: Oil production is not rising as rapidly as world population, so the quantity available per person tends to drop as world population rises.

    great assessment… it would be nice if the powers in charge would at least admit the world is finite and a growth based economic system no longer works. but, “the american way of life is not negotiable”… so i assume the train will continue on until it goes off the cliff. wise people are doing what they can to mitigate this.

    • Thanks for the pointing out the typo–I fixed it.

      Admitting the real situation seems out of the question. Commenter “Lindon” said earlier,

      . . . we find ourselves in a somewhat surreal world when the supposed “experts” and “leaders” are denying a reality that so clearly exists.

      The reason, I believe, is because the powers that be simply MUST keep BAU going, at least until they can no longer do so. The academics and the scientists and the beaurocrats MUST “bye in” to this doctrine — the doctrine of “lying one’s ass off to deny reality” — because to do otherwise would bring immediate ridicule and a “mini-collapse” of their own privileged position in society (in other words, they would lose their job and income, most likely). So, what we get is a “leadership” and a mass media that very actively promotes one “reality”, while denying or downplaying any possibility that collapse or breakdown is imminent, or anywhere on the horizen.

      I think this is a pretty good assessment of the situation.

      • circusmaestro says:

        Absolutely. If the “elites” say that the world gonna crash soon, the world gonna crash for sure. It is all about trust in the system! If they say so, people will loose confidence instantly and stop buying stuff which is of course unthinkable for the system itself…. So even if they know that the situation is out of control, they will never never never aknowledge it in public…. they are not paid nor elected to tell such things…. they are elected to keep the system up and running, not to crash it….

  13. kiwichick says:

    @ dashui; ” 1 barrel every 10 days ” ?

  14. DaShui says:

    Let me clarify-

    Maybe For me:1 barrel every 10 days.
    For the world: 1 billion barrels
    every 10 days.

  15. kiwichick says:

    we are still adding 70-80 million extra humans to the planet each year

    the fact that there are over 7 billion of us is the fundamental problem because
    the vast majority of us want to be consumers

    the only scenarios in The Limits to Growth that avoid collapse are the ones
    where population is stabilised

    that means policies to encourage women globally to stop at two children

    no it won’t solve every problem but it is fundamental to bending the curve

    • The scenario that at least temporarily worked in the 1972 Limits to Growth book was based on a much lower population than today. Encouraging women globally to stop at two children (or one) would still be a good idea now, as you say.

      • sheilach2 says:

        The problem with that is irrational belief systems. Even here in the US, we have “leaders” who are fighting tooth & nails to prevent women from having access to birth control or abortion & children from sex education. These ignoramuses have power in many countries all over the world whether christian, islamic or hindu, they make rational actions impossible.
        It is too late to prevent the collapse. We use more & more fossil resources to mine poorer & poorer ores, to grow food on poor soils & yet because of uncontrollable population growth, we are falling further behind in meeting the need.

        Our grain carryovers are shrinking, we have gotten to the point where we are consuming more than we can grow. When we start eating our seed grain, the game will be over.

        With all the information & technology we have had for decades now, why do we continue to ignore the lessons we should have learned from past failed civilizations?

        Why do so many people continue to insist that we are not “animals” & that the laws of physics & geology don’t apply to us? Even most of our so called “leaders” hold these false, insane beliefs.
        As many have said, the best we can do now is to save what non electric tools, open pollinated seeds, low tec. weapons, & technology we have, get to know others who also know what is needed & prepare for the worse. We need to find & preserve those books that will give us the knowledge to live in a new, sustainable way by combining that knowledge with the information we now have about how planetary systems function.

        One thing we need to free ourselves from are these ancient, irrational belief systems as they are our greatest hindrance from acting rationally.

        I think governments will be our worse enemy, they are dangerous to we the people, not supportive.

        • I am afraid you are right. I think at least part of the answer to why this is happening is the reason given by Lindon earlier in the comments is a big part of the problem. He said:

          The reason, I believe, is because the powers that be simply MUST keep BAU going, at least until they can no longer do so. The academics and the scientists and the beaurocrats MUST “bye in” to this doctrine — the doctrine of “lying one’s ass off to deny reality” — because to do otherwise would bring immediate ridicule and a “mini-collapse” of their own privileged position in society (in other words, they would lose their job and income, most likely). So, what we get is a “leadership” and a mass media that very actively promotes one “reality”, while denying or downplaying any possibility that collapse or breakdown is imminent, or anywhere on the horizen.

          So even if those in leadership positions understand the problem, they can’t say anything about it. And as you say, there are a lot of people who are morally opposed to birth control, and even more morally opposed to abortion.

        • Stilgar Wilcox says:

          sheilach2, in the 3rd grade I got in an argument with all the other kids in class one day, in which I said we are animals and they all insisted we are not and back and forth we went. Seemed obvious to me and they did not change my mind then or since, but I’ve met many people that think people are something different. A reflection of that attitude can be seen in the question; if a tree falls but no one hears it, did it make a noise? Well, of course it did, but some people think things only matter if at least someone hears it, and if not they really think it didn’t make a sound. It’s time for a wake up call, titled ‘contraction followed by collapse’. They will all know then we are indeed animals.

    • Paul says:

      You have to be realistic, it’s not “women all over the world” that are responsible for the increase. How are European women with their 1.3 ~ 1.5 fertility rate pushing the population up? Do they have to sacrifice themselves for other nations, say, if Africans give birth to 4 children, must European women give birth to 0.2 children so that the the total birthrate is equalled to 2.1 children per woman? Now that’s fair, huh?

      The problem is related to continental populations and races. It does not matter that you have the Duggars in the West if the average continues below replacement level.

      Don’t treat a complex issue with an universal brush, you will punish those who don’t deserve. When you see the Singers of the world preaching to American students that they are to blame for the world’s misery, and must avoid having children, for me there’s an agenda there. You know who the targets are.

      And, worse yet, WHAT if the population in the West starts to shrink? One would think that the result is just what the likes of Singer wanted, but lo and behold! We have a demographic problem now, it’s time to tear down the borders, because — gasp — we need immigrants!!!

      You cannot win with these people, because they are driven by hatred of you-know-who, not by genuine compassion.

      • Jan Steinman says:

        The impact of a western baby is many times that of a third-world baby.

        It’s been said that every time some celebrity adopts a third-world brown baby, the CO2 burden shoots up by about 50 time what it would have had that baby stayed in the third world.

      • dolph says:

        Yes these are interesting thoughts but let’s understand a few things.

        Mortality is much higher in the developing world. Yes, the growth still outpaces, but it may not for much longer. Yet in the developed world, we somehow think it’s a good idea to spend enormous amount of resources to keep people with failing minds and failing bodies going forever on machines.

        Also, the idea of “infinite growth in all things including population” is in fact a western one, which originated in the capitalist and industrial system. Without these, and without massive fossil fuel agribusiness and aid, the population of third world places would have long ago stabilized.

        It’s easy to point the figure at the the illiterate browns and blacks. It’s much harder to point the finger to the white scientists, priests and celebrities who kept telling you that you need to feed all of them.

      • Unfortunately, I think that allowing immigration and infant adoption is part of our problem as well (even though that I know my own grandparents came here from Norway, because conditions were bad there). Such practices allow people who would otherwise use very little resources to use a lot of resources. It also relieves population pressures in the homelands. Children who would not live without medical treatment are brought to a country where they can live, also adding to world population. Good in some ways, but bad from a world population point of view.

        Globalization, where we outsource what we buy to developing countries, adds a great amount of fossil fuel use to these countries, helping the populations of these countries to expand as well.

      • I live in the deepest darkest heart of the so called Bible Belt in the southern Appalachians, and most of my family, as well as most people I know, are the sort of fundamentalist christians so often ridiculed in forums such as this one.

        ( For what it’s worth , I’m a Darwinist and quite well educated in the physical and biological sciences, and put no stock in Christian or any other dogma.)

        I seldom attend any church services, except weddings and funerals, but i do know quite well what is going on in American christian churches and families; and what is going on is by and large a very far cry from what the mass media and liberal elite would have you believe.

        In respect to population and birth control for instance, in my “Primitive Baptist’ family church, and a couple of nearby “Missionary” baptist churches, and any number of churches associated with the Southern Baptists organization, this is the real story in relation to family size and birth control:

        My great grandparents had very large families, but a lot of infant and childhood mortality and my grand parents somewhat smaller ones, four on my Mom’s side , nine on my Dad’s, for an average of 6.5 .

        My own parents had five kids who lived to grow up.My gray haired siblings and I have seven kids between us for an average of 1.4.

        The next generation of grown up already women in the family are quite adamant that one or possibly two children is all they will ever have , no matter what. they are quire plainspoken in saying the only conceivable way one of them might have a third child is to make a second husband happy by having the third, in the event of being divorced or widowed.

        You can visit as many churches as you like in my part of the world, and you will seldom ever see a woman with more than three kids, and not more than maybe one woman out of a dozen has three. two is the usual number planned for, but just one is a very common choice.

        You can hear a Baptist preacher preach against abortion, premarital sex, and same sex marriage almost any random Sunday, but you will have to attend a one hell of a lot of services before you will ever hear one say a single word about birth control. It wouldn’t accomplish a thing if he did, any more than it has accomplished anything for the Pope for telling the Italians, the Brazilians, and the Poles not to use birth control.

        People like the Duggars are looked on by every Christian I ever met as irresponsible or worse , in the event they have heard of them at all.Only a very ,very few have even heard of them.

        I used to post at The Oil Drum as Oldfarmermac.

        • reply to myself since I forgot something:

          My aunts and uncles all have small families with one exception who has five kids and another who has four. But taken as a group, my parents generation averaged only about 2.4 kids.

          My own generation of cousins mirrors the birth rate of my own siblings- well under two kids per woman.

          I’m quite sure that even those who remain devout church goers will average well under two kids per woman in the rising generations.

        • Thanks for your observations.

          I think that religions as they develop and change, pass on values about family size of the day. But as the external situations changes, some religions are slow to change. The show change of some religions does not stop the population from picking up on the external queues. Not having enough wealth/resources to support a large family greatly decreases a couple’s interest in having a large family. Having plenty of resources encourages large families.

          I am one of seven children, but the large number of children in the family had nothing to do with my parents’ religious views. My mother said, “If I am staying at home with one, I can just as well stay home with several.” My father had a strong interest in having a son (because in Norway, inheritance what through the son, and the son passed on the family name). Unfortunately, the first five were girls, of which I am the oldest. (The last child was unplanned, when my mother was 45.) My parents could afford to raise seven children–in fact, they could afford to send all of us to private colleges, without my mother working and without any of us children ever paying a cent. My mother has a masters degree, and worked up until practically the time I was born–concealed her pregnancy with a lab gown.

          None of my own three children are married, even though the youngest is turning 30 in March.

          My husband has one sister, and only one of her two children is married, even though both of them are in their 30s.

    • Denis Frith says:

      Even if the population were to stabilize in the near future, the infrastructure would continue to use up the limited natural resources. This is an unsustainable process and society will be hard pressed to cope with the withdrawal of the goods and services they have become very dependent on

      • justnobody says:

        People don’t seem to be able to understand the complexity of systems. Obamare care is a perfect example of failure of complexity. Complexity of human invented technology, depletion of natural resources, human survival behaviour leave only one solution to this problem : brutal and rapid collapse of human civilization and probably die off of human. The collapse cannot be managed. We cannot control and managed the collapse of such a complex system. We can barely get obama care web site working.

  16. Michael Kirby says:

    Interesting post. Although I think one element that is missing in the analysis is the effect of increase in efficiency per unit work.

    The efficiency can be in terms of human labor (at a cost of energy). For example a truck is more efficient than horse but uses more energy.

    But it may also be increase in energy efficiency for the same basic technology (better has mileage )

    I think our (American) society has significant improvements that can be made in energy efficiency that would offset declines in energy production efficiency.

    At some point if eroei becomes too high (or too high too fast). The effect you describe becomes catastrophic. But we are not there yet.


    • One problem with increased energy efficiency is that it takes increased investment in new vehicles and other devices that use oil. It is not clear that we have the time or the money to do this.

      Another problem with increased energy efficiency is Jevron’s paradox. People tend to spend the income they have earned. If they less on oil for one usage, they will use the money on something else, which probably also uses oil (but perhaps less oil).

      By the way, I think you mean “if EROEI becomes too low.” (rather than too high). Too low EROEI is the problem we seem to be having already. If we were doing better, we wouldn’t have so much of a problem with low wages.

      • Dear Gail,
        Very nice post. I am wondering about your comment that “People tend to spend the income they have earned. If they less on oil for one usage, they will use the money on something else, which probably also uses oil (but perhaps less oil)”.

        Does Jevon’s paradox still apply when we are in a period of declining resources, higher prices, and falling wages? I can see how it applies when our economy is growing and oil is still cheap, but that is no longer the case. Smaller wages and higher prices mean that we can’t buy as much as we used to. Easy access to credit allowed American families to make up the difference for the last few decades but that access has declined. Families are being forced to eliminate or reduce purchases they can no longer purchase.

        If we choose to improve energy efficiency in our home or we buy a Prius, it may not mean that we will use the savings by buying more stuff. It may mean that we don’t have to eliminate things we are already purchasing.

        If you are correct in your analyses of the direction our economy is likely to go, then we are faced with austerity at the least or deprivation due to collapse. If our future is going to be one of declining resources, wages, and payments from government entitlement programs, then having smaller energy efficient homes will mean we don’t need as much money (or resources) to heat and cool our home if we lose our job or the government cuts social security benefits. It seems to me that it is in our best long-term and short-term interest to reduce our consumption of goods and services in order to plan for a future with much less.


        • I really don’t know to what extent downsizing will be helpful. It really depends on how long the current system “works”.

          My concern is that we will very quickly get to a point where the financial system doesn’t work. If this happens, there may not be many things to buy in the marketplace. The things that will be in the marketplace are likely to be local things that others are willing to trade–used clothing and tools, for example. The electricity system won’t work, and oil, gas, and coal won’t be available. If we live in our houses, it will be without heat, cooling, and probably running water. If people happen to have a some solar panels, they can use them assuming they have them hooked up right–with an inverter and perhaps with back-up batteries. But banks won’t be operating, nor will the Internet, nor fuel stations. Replacing the batteries and the inverter for the solar panels is likely to be a problem, so over time the usefulness of solar panels will become more restricted. Shovels and seed would have been much better investments.

          I am afraid in such circumstance, many people would decide that just can’t continue to live in their current homes, with or without solar panels. They will need a way of getting enough food and water, and will leave their homes to get that food and water.

          The big question is how long our current system lasts. If our current system last a long time, then fixes to downsize could be helpful.

          • Jan Steinman says:

            Sounds like there will be a booming market for services from a time-honoured profession: tinker.

            I fancy myself a tinker. I can hot-wire solar panels. I can refurbish lead-acid batteries. I can re-build many electrical and electronic things. I can maintain a diesel engine — and make fuel for it.

            Just today, someone in our household threw out an expensive 7W LED lamp. “Oh, the inverter’s probably fried,” he said, “You can’t really fix them these days.” I took off the front and noted it was intermittent, that flexing the LED circuit board would make it go on and off. I re-soldered the connections on the circuit board, and all is well.

            That’s not to say that electricity for soldering irons will be available forever. I could heat up a copper soldering iron tip in a fire and still fix things, if I have access to solder and flux. I think I could make the flux from turpentine and pine pitch, and I could probably make turpentine, and the actual solder could be scavenged from old circuit boards, but all this has a cost in the effort needed.

            The survival of the generalists will require a somewhat orderly regression, and I don’t know if that is possible or not. Even the smallest, least expensive consumer electronic item rests on the pinnacle of a pyramid of other technologies. They put microprocessors in electric tea-kettles these days!

            I look at the technology that was available in the first part of the 20th century, and I think, “Yea, I could do that.” It rested on a much smaller technology pyramid, mostly revolving around basic refinement of resource materials, and much of those refined materials are available in dumps and landfills. You won’t necessarily need to mine, transport, and smelt iron ore — all you’ll need to do is re-process existing steel.

            At least for a while. But if we can stair-step down the technology pyramid in a more-or-less graceful manner, there might be a way to proceed.

            At least that’s my theory, and I think it’s as good as anyone else’s, and certainly much more likely than a future with thorium reactors and mining the other planets.

            • An orderly regression might be possible if all of the parts for tinkering can be kept in place. If we lose too much, though, the process just gets frustrating.

              One thought would be if we all decided to aim for a specific lower level of technology–say trains at the level when we first made them–we could perhaps make trains that could be repaired with parts made locally. But no one would agree to step back that far–it would be inconceivable that we couldn’t keep up our current way of doing things.

            • Hi Gail, you mentioned somewhere that ‘nobody would go back that far’ to certain old technologies – like steam for instance? You are not helping by categorizing moving to older technologies as moving ‘back’. Let the remaining oil and derivatives cost $5000 a barrel, and be prohibited from burning for personal transportation and heating. Let plastics not be wasted on luxury leisure items and toys. Deny the ‘needs’ created by marketeers and supplied by manufacturing for profit. Bring back the horses and the horse-drawn canal barges. Plant some more trees NOW – so what if profit is 40 years down the road? (The oxygen will come in handy as well!) Let fossil fuels be used to create their own alternatives.

              Jan Steinman and his friends cannot do everything themselves, but show the people that his skills and wisdom matter more than the skills of CEOs who manipulate power and resources destructively. Their days are over, and not because fossil fuels are getting scarce, but because the people are vermin. Fortunately for them they can become human again when they are forced to do human-sized tasks for other humans. Like the rest of us.

              What will it take the hand-full of governments to accept that a central world government is going to be the only way the population will be brought back to the pre-industrial levels needed for sustainable and humane governance? Human rights? Stupid dreams! What about the right of the human race to survive without wars of ambition, or without leaving disease and starvation to limit population growth in the ‘natural way’ ( by evolution)?

            • Jan Steinman says:

              “Jan Steinman and his friends cannot do everything themselves…”

              It’s frustrating. I feel a strong sense of vorsicht (a fine German word that combines “foresight” and “caution”) and I don’t understand why more people aren’t doing more.

              While agreeing that change will happen, people seem to be in willing denial with regards to their own actions. “Yea, what you’re doing is necessary, but I need to stay in this job for three more years to max out my pension.” AAARRRGGGHHH!!! Pensions are going away left and right! OPEN YOUR EYES, FOLKS!

              That’s just one example. I could write a book on all the excuses for inaction I’ve heard!

              But on another level, I don’t hold EcoReality up as an example or template for everyone to follow. Diversity is important! What I’m trying to do might fail, and something else may succeed. There’s likely to be a large mix of approaches that succeed or fail for a large variety of reasons. A “social darwinism” approach is the most likely to have some success. The days of “one size fits all” civilization is over, thank Goddess!

              “What will it take the hand-full of governments to accept that a central world government is going to be the only way the population will be brought back to the pre-industrial levels needed for sustainable and humane governance?”

              Sorry, we’ll have to agree to disagree on this one.

              I see lots of ways that “population will be brought back to pre-industrial levels.” The pretty ones aren’t possible, and the likely ones aren’t pretty.

              I’m not sure a world government is either possible, nor pretty. I’m convinced that even if it does happen, it would be ineffective. Diversity will win out in low-energy situations.

              A world government is only possible in an energy-rich environment, and any effort to that end is bound to be frustrated by falling energy availability. This is not just some guy expressing an opinion; this is Ecology 101, and civilization is nothing if not the ecology of human interaction.

              But when all you have is a hammer, all the world looks like a nail. Perhaps my bias toward ecology and natural systems overly biases me against human exceptionalism. That’s where diversity comes in — prove me wrong!

            • “A social darwinism” approach is the most likely to have some success.” What characterizes the natural world is the general lack of cooperation between species, and the unpretty existence of food chains. How societies evolve is easy to see, but how the strongest survive without violent domination across borders and anarchism within borders is what defines civilization, at the moment.

              I was brought up in the kind of environment you might appreciate Jan, an old style farm in Devon, England – large underground waterwheel used for milling grain, sawing logs, chopping chaff and sweeds (turnips) – one small Ferguson tractor, etc. My father retired just before they started paying farmers to let the land go to pot, as the only known way to keep food prices high. Different times eh? Or not.

              If population explosion and widespread starvation IS a problem, can it be dealt with by social groups independently unless under local dictators? Solutions are ugly – mostly from the resistance to them.

            • Jan Steinman says:

              “What characterizes the natural world is the general lack of cooperation between species…”

              I disagree.

              In university-level ecology classes, I was taught that competition dominates in high energy environments; co-operation dominates in low-energy environments.

              In tropical biomes, there may be 4-5 flying predators. In arctic and alpine biomes, there are generally just 2 or 3, and they “co-operate” by splitting the “harvest” temporally, a hawk by day, an owl by night.

              “and the unpretty existence of food chains…”

              Again, less true of low-energy biomes than high-energy biomes. Cannibalism, for example, is more prevalent among high-energy biome species, while “opportunivores” are more prevalent in low-energy biome species.

              “If population explosion and widespread starvation IS a problem, can it be dealt with by social groups independently unless under local dictators?”

              Most low-energy social groups have flat, egalitarian social structures, primarily based on age. It’s the high-energy social systems that tend to have deep hierarchies, based on ability to hoard.

              There need not be “dictators” involved in a low-energy situation.

              What is volatile is “changing energy” situations, which is the case we find ourselves in. Then you can see artifacts of both high-energy and low-energy systems.

            • ‘Lack of cooperation between species’ Coexistence yes – occupation of different niches, competing for the same ones. Cooperation in the sense I meant – modification of behaviour deliberately (not instinctively) to allow for that of another if very rare even among primates. And nonexistent between other species.

              Large poor populations are never aware of or concerned with population statistics. If a new category comes into existence – poor, numerous, connected, and cooperative – the situation will evolve, and as someone has mentioned, social norms may evolve to find a way of reducing the population. And I don’t mean reducing the expansion of population.

              When people like us draw on intellectual analyses of natural forces and trends I am afraid we are contributing absolutely zero to the real problems of human survival. But when people also like us – well, you anyway – can spread the message about living with less, then we can justify the space we take up.

              I appreciate your comments Jan.

            • What I thought would happen is that the supporting businesses would not be there to “go back”. In theory, you can get there, but it will take a lot of work, and combined effort of different businesses. The oil won’t be there are any price. The price will be too low, so it won’t be extracted.

            • sheilach2s says:

              Don’t you mean the price will be too high for “consumers” but not high enough to cover the cost of extracting it? At least that’s how I see the problem, the cost of extracting keeps rising but the wages of the remaining “consumers” are either stagnant or declining.
              Also I read today that Bernekki is going to reduce to amount of bond buying the fed has been doing, so here comes the decline of the QE. I wonder how that’s going to play out.
              He believes that the economy is strong enough to continue growth without so much QE.
              what growth? Only the top 1% have seen much growth. In the meantime the gov. is still pushing through TPP that will result in even more jobs being moved to 3rd world rat hole countries with slave labor & no regulations, hence the thick smog in Beijing & their dead rivers.
              We are so very very SCREWED!!
              Dig in “sheeple” here comes the shears!

          • Jan Steinman says:

            “One thought would be if we all decided to aim for a specific lower level of technology–say trains at the level when we first made them–we could perhaps make trains that could be repaired with parts made locally. But no one would agree to step back that far–it would be inconceivable that we couldn’t keep up our current way of doing things.”

            What a lovely thought! How long would a politician last who espoused such a philosophy?

            I try not to buy things with microprocessors in them — and I used to design the damn things! So perhaps there can be a grass-roots movement to simplify our artifacts, and to select for maintainability, rather than for the latest and greatest whiz-bang functionality.

    • Mike,
      I agree with your comment that “our (American) society has significant improvements that can be made in energy efficiency that would offset declines in energy production efficiency.” We don’t seem to be learning that lesson.

      Locally I am seeing the housing recovery in full action. Hundreds of acres of farmland have been cleared this year and construction of small cheaply built single family homes (starting in the 90′s) are slapped up as quickly as possible. The attached double garage is bigger than the main part of the house. Why is it that planners, developers, and bankers still approve of this type of housing? It is a very inefficient a use of current and future resources. JHK discussed the future prospects of urban sprawl so well.

      • sheilach2 says:

        They keep doing that because that’s all they know what to do to encourage “growth” & make profits. It will fail of course & more valuable irreplaceable farmland will be lost under more concrete.
        That’s not “recovery” that’s just an economists idea of prayer, if they build it “they” will come – NOT.
        Our “planners” are considering approving yet another sure to fail golf course on an even windier part of the coast !
        Does stupidity have any limits? Apparently not.

          • sheilach2 says:

            I hope she can sue more than their pants off. What kind of “logic” are they using to justify posting her off the grid home as “uninhabitable”? Looks habitable to me.

            The portable gas stove inside could be a carbon monoxide problem though as CO2 has a greater affiliation to red blood cells than O2. Those stoves have warnings on them that say for outdoor use only.
            She would be better off perhaps with a vented wood stove for both heating & cooking.

            Where does she get her water if no inside plumbing?
            Does she have a well? Living in Florida, any well might just pump up salt water.

            Certainly living in that home is a far better option than losing her paid for home & existing on the cruel streets, but those city guys probably couldn’t care less, it’s all about power & CONTROL!
            (Note the emphasis on CONTROL!)

  17. Hiruit Nguyse says:

    I am new here. I have been watching your site for a Few Months now. Big fan of JHK…he directed me to your blog some months back. It has occured to me that I have never seen a Graph of Average US Wages Priced in Oil before…similar to the Priced in Gold, (or Oil Priced in Gold) charts for example.
    Since Crude Oil is about 97% of US transportation and a Primary function of our Whole Economy, it seems that a Chart of US Wages Priced in Crude Oil might be an interesting thing to look at.


    • I am a big fan of JHK too, but don’t always get a chance to read his blog.

      Attached is a chart I made showing the number of barrels of oil that average wages (defined as total wages divided by total population) can buy. There are only five years that the amount dropped below 200. Those were 1979, 1980, 1981, and 2011 and 2012. You can see why we have a problem now. Making the graph was a good idea. I may use it elsewhere.

      Number of barrels of oil the average US wage can buy

      • Hiruit Nguyse says:

        I appreciate that so much…The peak years for one of Businesses coincide with the peak around late 80′s – Early 90′s. I meet so many young Persons Today that have Work experience in the 90′s but have no Idea why they are so Poor Today. Many of these people born in 80s. Now this chart clearly shows the Crushing Poverty that is resulting from Products ( in the Form of Energy…both to Manufacture, and Distribute) including Food, Shelter, & Transportation Falling rapidly away from their paycheck.

        Now if I could just get perople to think in terms of the Energy Embed of a product (that fan belt, those 4 Tyres) instead of just the Dollar Price Tag. The Obverse of this chart is thus your Real Inflation rate.

        Thanks Again.


        • You are welcome. It was a good idea.

          It is hard to get “real” energy embedded, because our whole system works together. A lot of what we are paying for is embedded energy in things like roads, bridges, electric transmission lines, hospitals, and the world’s education system. All that we can measure is the small fraction that seems to create the goods we use today. But without the whole system, the supposedly “low energy” goods are not possible.

          I think of our human bodies. It is as if we are losing all our blood, and want to save our bodily system. Someone does a study, and determines that hair, fingernails, and toenails are least dependent on blood. Then someone else decides that we will expend huge funds to modify our bodies so that hair, fingernails, and toenails are a much bigger percentage of the total. Does this work? Not really.

          • Another way we can think of ‘our human body’ is to make a virtue of voluntary denial of stuff it does not need, and trusting ourselves to find self-respect in so doing.

      • Ert says:


        Interesting chart (barrel oil with average wage). If may be even more interesting to use the “median wage” instead of the “average wage” – because later is distorted to the upside by the “1%”. The median wage does much better reflect the buying power the “average” citizen has available.

  18. Phil B. says:

    How would American society react in lieu of an economic collapse? One cannot speak with any certainty about such a question, yet it is not purely a rhetorical question. Our society grows more fragmented with each day. We’re increasingly divided based on political views that often lack any congruent beliefs. Many of us are heavily caught in the daily grind of commuting and work. We become isolated from all but our co-workers and co-dwelllers. More and more we see each other as separate, not as a community. The enormous quantity of firearms in our population coupled with mass desperation, and a sense of righteousness and retribution could easily result in a great deal of chaos and bloodshed. It is very difficult to imagine the reaction of the government being anything except a brutal martial law in which citizens would be better off scavenging than seeking refuge with the government.

    • I think part of our problem is that it is quite possible to see to possible fixes to the problems we have today, if a person doesn’t really understand the situation:

      1. Work on climate change, because that appears to be our long-range problem. Use government funds to subsidize intermittent renewables. And give funds to all of the needy, because we have more and more needy.

      2. Fix our financial situation, by cutting back programs.

      I can understand the reasoning behind both of these views. My own background, if I didn’t know what I know today, would lead me to solution (1). (In fact, my husband and children have voted Democrat in every election I can remember. My son and my sister both own Priuses, and other cars in the family were chosen for low fuel use/ low energy use in construction.)

      I can also understand wanting to cut programs, although probably for somewhat different reasons from the reasons some Republicans want to cut the programs. My reason is that there is no possible way we can afford them.

      The fact that there are two possible understandings of our current predicament based on the partial facts given leads to this huge polarization of beliefs. Unfortunately, I am afraid we end up with a financial collapse regardless of which we follow. The route of the Democrats may get us there a tiny bit quicker, but maybe the collapse is so close that it really doesn’t matter.

      The polarization is probably unavoidable, given the two views of the situation. It may look like this polarization is what brings the system down–gridlock on passing legislation of any kind.

      • In relation to the US situation- and it has been well over a decade since I last visited and the polarisation in recent years and guns will restrict where I visit if I do- as a European observer is the US could be a leader given that even in a post peak world it has the technology and ability shown in the space program and Manhattan project- unfortunately capitalism is seen as the free world rather than the route to a highly restricted one.

        What amazes me as an observer is no-one looks to radically reduce the US military machine. what is it? $600- 700 billion, plus veterans, plus proxy armies as part of US aid to Egypt/Israel etc, and the funding of private business- ie- the war machine. There isn’t a country any where near US might. Your article reminded me of the fall of the Roman Empire- in their case it was EROEI concerning the lengths of roads and running out of countries to economically conquer- when they got to Scotland there was neither the slaves or resources or farm land to justify such an investment in the military. and some of the Empire’s methods to stave off collapse were equal to those of today- we haven’t quite adopted the rule that made children follow in their father’s profession but lack of social mobility [another indicator perhaps] is restricting choice.

        stripping the military down to a fifth would free up a lot of debt and buy time. Unless the plan is to conquer to acquire wealth!

        and yes it is amazing that governments commission reports by academics on peak oil/ climate change/ environmental limits, water etc etc and it gets ignored.

        maybe they really think we have time. smart people I know say ‘they will come up with something’ not too sure who ‘they’ are- wizards perhaps.

        • madronehill1 says:

          Hello, Yes, they are expanding things like that at a time that we are running into roadblocks or so called limits on resources. The whole world seems to have taken it for granted that the cheap oil and gas we have enjoyed in the last 75 or so years will continue. What a surprise the world at large is facing, especially the younger generations that expect things to remain the same as their parents generations, I believe we are all in for some changes, but I think they will be slow unless war breaks out in a bad way. But it is going to be a big change ahead for us all.

          It is so easy to get used to the comforts of our economy which relatively cheap oil and we are all used to the comforts including us, a warm shower for example. In the old days the cowboys were lucky to take a bath once a month.

          Let’s face it we are not really ready for what is coming if we cannot get the things we think we need, but you know if you think about it we really could do with much less, and that may be what is ahead. For our generation if we understand this I think most of us will survive and perhaps those that live in the lap of luxury are the most vulnerable to the first leg down.

        • Lindon says:

          I think we can all rest assured that the HUGE American military is there to insure two things: 1) A guarantor of safe world trade commons as clearly described in the Joint Operating Environment 2010, and 2) A protector of the United States (and protected nations), a guarantor of order and rule of law in post-collapse America (and protected nations) also as described in the JOE of 2010.


          For all who doubt: The American military command knows that collapse is coming and they are preparing to deal with that situation. People who think the American government and American military are going to dissolve due to lack of “money” in a post-collapse world need to realize that some things are more important than money — food, shelter, guarantee of safety, commitment to ideals, a common goal to rebuild a better world. The American military will not “fall apart” due to lack of funding. And either will America. We should welcome this reality, because the alternative is local despots and strong men and religious fantatics springing up all across America, imposing their own “rule of law”. And we all know how that would work out.

          • Jan Steinman says:

            “People who think the American government and American military are going to dissolve due to lack of “money” in a post-collapse world need to realize that some things are more important than money… The American military will not “fall apart” due to lack of funding. And either will America. We should welcome this reality, because the alternative is local despots and strong men and religious fantatics springing up all across America, imposing their own “rule of law”. And we all know how that would work out.”

            Replace “America” with “Roman Empire” in that paragraph.

            Don’t you think the ruling elite of other fallen civilizations had similar expectations of exceptionalism? Pray tell, why is this time different?

            Perhaps you are right, and things are different, just this once.

            • sheilach2 says:

              I think the government & military will fail when there is no longer enough fuel to power their war machines & energy intense farming. “Money” is not a resource, it’s a artificial means of exchange for resources, it has no value in itself.
              How many military people will fight to preserve this government when their families are starving?

              For a short time, we could become like N.Korea is now but with the absence of fuel, how long would even the dictatorship of communist N.Korea or China last?

              World governments would become no more dangerous than the people they rule without oil, coal & natural gas to build, maintain & fuel their weapons.
              A return to a “stone age” like economy can’t support large imperial armies. Governments would again be susceptible to civil uprisings & being overthrown if they become too burdensome.

          • As you no doubt noticed, this PDF talks about peak oil, and its limits on oil consumption.

            The peak oil view of how these limits work is wrong–the impact is likely to be much more through the political system and international financial system and international trade. I am not as optimistic as you that the military will be able to work around them.

      • Jan Steinman says:

        “2. Fix our financial situation, by cutting back programs.”

        You paint this as a “Republican” approach, and yet it depends on which programs are cut, no?

        I’m in favour of cutting back the military and corporate welfare. Does this make me a Republican?

        Both the military and the corporatocracy can be seen as arms of the government, as they “govern” what we are allowed or required to do, and yet, neither of them get “haircuts” when the notion of austerity comes up.

        • There are not enough military programs and corporate welfare programs to provide enough dollars. It unfortunately becomes necessary to add programs aimed at individual citizens as well. Corporations also tend to stay out of the reach of the government, through offshore tax havens.

    • Nothing wrong with ‘scavenging’ except the word…

  19. Keith Akers says:

    One interesting facet of Turchin and Nefedov’s book which I don’t see you mentioning, is the idea that the government and the society cannot correct the problem because it doesn’t want to. The situation of the masses starts declining because their wages start falling due to overpopulation. But this actually benefits the elite class because they can hire more and more cheaper labor and thus increase their profits. The system doesn’t collapse until the elite class becomes overcrowded from everyone wanting to be a millionaire, and they start fighting with each other. It is really quite Marxist, and “Secular Cycles” explicitly credits Marx with understanding key things about what drives collapse.

    Because collapse is a political event, as Joseph Tainter also argues, it might be argued that political action could accelerate societal change in the needed direction. In other words, we might have a rational society in which there would be a massive, organized scale-down, sort of like Richard Heinberg’s “Powerdown” scenario. Tainter’s question is, why doesn’t this happen? He seems to be clear that resource shortages (declining EROEI, for example) do not by themselves cause collapse; it is the political collapse that determines the outcome. Turchin and Nefedov seem to answer Tainter’s question by saying that it is the elites who (in effect) cause the collapse. I am not sure I agree with either of them on these points, but this seems to be the argument.

    • Vineyard says:

      Plus, actually has reformulated the model from Secular Cycles, since the model only fit to Agrarian Societies. He presented the new model, which covers the United States, a few months ago, in a book lengh manusscript, which will be his new book, when it’s finished.

      It’s current name is “A Structural-Demographic Analysis of American History”

    • Those are good points.

      The current situation is that the government is so tied to business (even though they don’t get much in the way of tax revenue from them) that they seem to cheer for increased efficiency in the form of fewer workers. They don’t even object much to jobs being sent overseas, because doing so keeps prices lower for American consumers. And businesses clearly have no problem with lower wages for workers–it helps them get higher profits.

      From what I have seen of recent collapses, I would agree that government collapse seems to play a huge role–although not necessarily in precisely the same way as Turchin and Nefedov suggested. High wages seem to come now from business positions, rather than government positions.

      One of the recent collapses I am thinking of are the collapse of the Former Soviet Union in 1991. The government collapse clearly played a big role. This happened after low oil prices made it non-economic to expand oil production and also cut back funds for the government.

      Other oil related collapses include Egypt and Syria. Even the collapse of Argentina seems to be connected to the drop in oil exports. There were definitely political changes that came to the forefront, hiding the oil problems from view.

  20. http://davecoop.net/seneca.htm has a graph & equation for a hypothetical “Seneca curve” of world crude oil production.

    • Thanks! Yes, I know you sent it to me. It is based on a 20 year crash assumption with respect to oil supply. This is what it looks like.

      David Cooper -Seneca Curve

      Now that I think about the situation, it is not clear to me exactly which aspects of the economy would drop over a twenty year period. For example, oil production might drop more quickly, and population decline more slowly.

      • Aware says:

        David, Gail, and everyone,
        I have followed PO, including PO web sites, for many years, I have grown a little skeptical about seeing new oil production graphs which depict peaks in the next year or two (as this one does) from the date of posting, followed by a very steep decline to zero production in a relatively short time. I wonder what data and assumptions went into the analysis making this graph? I cold imagine a global nuclear war, an asteroid strike, or perhaps a very-high mortality pandemic leading to such a production curve. Short of those situations, I wonder if the graph would feature a drawn-out peak-plateau for a decade or two followed by a ‘fat tail’ production decline function? Or perhaps a steeper decline function, punctuated by secondary and tertiary peaks, such as the case for the United States? A global financial system collapse without recovery would lead to a graph such as this due to the demand crash leading to no money to pay for high-cost production, but I have been very surprised by TPTB’s ability to ‘extend and pretend’, and I am not able to nail down a limit to that charade…the day will come, but perhaps further off than some of us think. Graphs resembling this were in vogue circa 2006-2007, with peaks depicted at 2009, 2010, ’11,’12 and so forth as time went on…

        All tat being said…time is running out for society to prepare for life with much less fossil fuels.

        • The issue I am writing about is not “peak oil”. I am talking about collapse of a financial and political type, that is brought about by the disruptions high oil prices are already bringing to the economy. The collapse doesn’t have anything to do with the amount of oil or gas or coal in the ground–it is more like the collapse of the Soviet Union, only worse. If we lose the political system, we are likely to lose the international financial system and the international trade system.

          Read my full article again, especially the part about complex adaptive systems.

          • Aware says:

            Gail, I truly enjoy your articles, including this one, which I read thoroughly before I posted my comment.

            I think this text was ‘lost in the sauce’ in my post:

            ‘…but I have been very surprised by TPTB’s ability to ‘extend and pretend’, and I am not able to nail down a limit to that charade…the day will come, but perhaps further off than some of us think. ‘

            I imagine the types and magnitude of ‘creative accounting’ and public/private ‘messaging (propaganda) and other measure to maintain control of the situation exceed most of our imaginations.

            I do think the threat of collapse has /something/ to do with the amount of /easy and cheap-to-extract/ oil in the ground…the migration of production to smaller, more widely scattered, and lower-quality resources has been a primary cause of the increased oil prices, along with strong demand from countries such as China and India, and geo-political factors in Iran and Iraq and Vz and other places. In turn, these high prices will likely cause destabilization of political-business systems, leading to difficulty financing ever more expensive FF extraction.

            The resilience (this far and perhaps for another decade or maybe two) of our globalized complex adaptive system has been and may continue to be surprising,

            Unfortunately, the effort spent to maintain some semblance of BAU so far and for as long as that charade holds up would be better spent on transitioning to societal systems better suited for the age of declining FFs. No politicians in power are going to level with the people, because many of the people are not well educated in science, math, and critical thinking, and many are deluded into thinking things will stay the same or even improve – ‘people will invent the ‘next big things and it will be OK”…

            I will summarize my previous post and my point: I do not disagree with your premises, just with the shape of your graph (and the timing of the ‘great decline’ phase of oil). It will be interesting to see how this all plays out.

  21. So you don’t see US shale oil as a game-changer? WSJ had a report recently on US oil glut. WTI moved up a bit the last few days after dropping to low $90s after US shale oil companies are selling off as media is full of stories about the oil glut and coming low prices.

    Jeffrey Currie from GS writes, the boom in U.S. shale oil output should keep oil prices in the US low and lead to a “substantial acceleration” in its economic activity.

    Stronger U.S. growth will lead the Federal Reserve to scale back its monetary support, which is likely to strengthen the dollar. That should put pressure on emerging market demand by making oil and other commodities priced in the greenback more expensive for users of other currencies.

    Weaker oil demand growth in countries including China and India should help keep markets well supplied, limiting inflation in developed countries.

    “This new emerging commodity cycle is the exact opposite of the ‘super cycle’ where weak U.S. economic growth, exacerbated by a lack of domestic energy supplies and conflicts in key commodity-producing regions, helped facilitate more accommodative monetary policy,” Currie said.

    “U.S. policy reinforced emerging market demand growth and a weaker U.S. dollar, which largely offset the higher oil and commodity prices to emerging market countries,” in the last decade.

    Ultimately, the reversed trend will lead emerging market economies to “shift from being consumers to producers”, Currie said forcing countries such as China to follow the U.S. path in tapping unconventional resources.

    • Like the man said, “If you close the door on reality, it comes in through the window”; “real life” will answer these questions.

    • Danny says:

      Mark if you look at the background of these so called reporters…. one has a degree in History and the other in English Literature but they are from Ivy league schools so that means daddy probably got them their jobs but we are supposed to read their stories as the gospel truth!! What industry can take someone with no knowledge or experience in a particular field and make them an expert? Danny

    • I wrote a post on a little bit broader topic recently–It is Our Oil Problems are Not Over. Basically, high oil prices cause financial problems, like the ones that lead to low wage growth and the need for super-low interest rates. But we can’t get the shale oil out without these high oil prices and super low interest rates. If interest rates go up, everything falls apart, from oil production to our ability to buy houses and cars.

      There are some details I didn’t get into in that post either. Oil from shale formations is very “light”. It doesn’t produce much diesel, which is what we are short of.

      • Paul says:

        Excuse my ignorance, but isn’t “light” oil the “good stuff”? I thought that “light” was better than “heavy” oil.

        Can you tell me the basic difference betweem them?

        • Mike Dill says:

          the stuff coming out of the ground in the ‘Oil Shale’ is gas with some Very light liquids like propane and things slightly less volatile that they call liquids but used to be called gas. The stuff from the Tar sands are tar, and combining the two make a sludge that will flow in a pipe to a refinery that can break some of it down to gas and use the volatile liquids as a fuel source. While ‘true’ light oil is actually oil, and the lack of sulphate is what makes oil ‘sweet’, the stuff from the shale is not oil as you or I would understand it.

        • Let me start out by explaining what petroleum is. Everywhere petroleum is found, it is a mixture, ranging from very short chain hydrocarbon molecules to very long chain hydrocarbon molecules. The very shortest molecules are Methane (with only one carbon molecule), which is the primary component of Natural Gas.

          The next longer molecules with about 2 to 5 carbon atoms make up natural gas liquids. Natural gas liquids are gases at room temperature, but become liquids when chilled enough. They are known by the names ethane, propane, butane, and pentane. These are often used as fuels, and as input for making plastics.

          The next longer hydrocarbon chains are ones that are liquids at room temperature–those with about 5 to 19 carbon atoms. Those with 5, 6 or 7 carbon atoms are very light, easily vaporized liquids called naphthas. These are used as dry cleaning fluid and as paint solvents. The chains with 7 to 11 carbon molecules are blended together and used for gasoline. Chains with 12 to 15 carbon atoms are used for kerosine and for diesel fuel. Those with 15 to 20 length carbon chains are used as lubricating oils and semi-solid greases.

          Chains with more than 20 carbons are solids at room temperature. They range from paraffin wax, to asphalt, to bitumen.

          When we first started drilling for oil in the US, some of the mixtures we found were heavy on the carbon chains in the 7 to 11 range. These are the carbons that could be used directly for gasoline, with little need for refining. If there weren’t too many pollutants like sulphur, all the refiner really needed to do was separate the gasoline, and sell it in its original form. Oil that was heavy on chains in with 7 to 11 hydrocarbons, and didn’t have much sulphur polluting the mixture, were known as “light, sweet oil”. In the US, we built cars to use gasoline, because our wells produced a lot of light sweet oil, and this light, sweet oil in turn produced a lot of gasoline.

          As time went on, we discovered that it was possible to get better mileage using diesel than gasoline. Refiners also figured out how to “crack” long molecules to make shorter molecules, so the preference for light sweet oil went away, except in the cases where a particular refinery was set up only to handle only light sweet oil. In fact, now there is almost a preference for heavy oils, because (1) heavy oils are available more cheaply, (2) they make more diesel, and other products that are more in demand than gasoline now, and (3) refiners can make more money refining these oils than they can the light sweet oils. In addition (4) US natural gas sells for less than in other countries, so US refineries have a price advantage when it comes to refining very heavy oils into products such as diesel.

          At this point, gasoline is not as much in demand for a variety of reasons including the fact that (1) a lot of young people don’t have jobs, so can’t afford cars, (2) the cars that are built are more fuel efficient, and (3) ethanol is substituting for about 10% of gasoline use.

          A major problem with oil from shale formations such as the Bakken and Eagle Ford is that this oil is producing many hydrocarbons with short chains in the range of 2 to 6 carbons. These chains are not good for powering our vehicles. We don’t have an economic process for making longer chains out of short chains–that is the wrong direction–we can go from long to short, but not from short to long. So in that sense, oil from the shale formations is “too light”–it is too close to a gas. The data doesn’t really distinguish how much of crude oil is “condensate” which is the very light stuff, so if inventories are building, we can’t tell whether the excess is in the very short chains that are in low demand.

          • Jan Steinman says:

            Thanks for that, Gail!

            It’s all information I have seen elsewhere, but I’ve never seen it put together so succinctly.

          • Paul says:

            Thanks for clearing it up for me.

          • Rainwater says:

            Awesome summary, Gail. You have a great talent for that. One addition:

            “Natural gas liquids are gases at room temperature, but become liquids when chilled enough.”

            Don’t know about the other two examples, but butane and propane are often compressed, rather than “chilled,” to convert them to “storable” liquids that are used as fuels. I sent this to a couple of friends who are intelligent but not scientific with an asterisk that included “or compressed.”

            I wish our so-smart media moguls cared enough to EXPLAIN things to at least this extent. The general population, I think, is not really stupid at all — just often ignorant due to lack of even basic instruction in such matters that they never “studied in school.” A television media that were more than pure entertainment might very well serve to edify the general population to a very beneficial end. People, most people, simply do not “appreciate” the pickle we are in. They don’t know how to.

            The archiving of The Oil Drum was sad in that respect. I often referred friends to articles or Drumbeat comments there, during discussions in which I had not the knowledge to edity, but a contributor at TOD most certainly did. You are “filling” in that gap to some extent, but I miss the “gang.”.


      • That makes sense. Oil price is high enough and technology is keeping costs low enough for shale producers producing flat out. Low interest rate also helps marginal projects. Ban on US oil exports, low demand and infrastructure bottlenecks have created divergences where Brent is at 110, WTI at 97, Bakken at 84 and WCS at 65. I know you are talking about years down the road but we have localized gluts. Emerging market economies are struggling and Libya, Iraq and Iran are off-line. Once they start exporting Brent may fall. I wonder what that will do to WTI and WCS. Personally I don’t see QE ending anytime soon as households keep on de-leveraging.

        • SlowRider says:

          Just a quick look at Wikipedia – as of 2010 it gives the following ranking for oil exporting countries:
          Iran 4.
          Iraq 7.
          Lybia 14.
          That may have changed a bit, but “off-line”?

        • Ken Barrows says:

          Technology is keeping costs low enough? Only finance is keeping shale producers producing–for now. Take a look at this table. If a well is at least $6M, then the marginal costs of oil productions are extremely high. $1B in additional wells per month for about 1M additional barrels


          • It probably helps to have optimistic auditors and lenders who will provide ever-more debt. At some point, the treadmill stops. If interest rates rise, or if oil prices drop a bit, that could be enough to push the system over.

    • Also, I do have an interview up now on my Presentations/Podcasts page, done by Chris Martenson. He titled the interview, “The Shale Oil Boom is More Mirage than Miracle.”

  22. Barry Cooper says:

    Reblogged this on Orcop: A Connected Community?.

  23. madronehill1 says:

    Hello Gail, Thanks for another comprehensive article. That seems to sum things up, just like it take something like 20 days to catch the same amount of fish using the same boat that could be caught in only one day about 100 years ago. The lower grade ores and oil deposit will take more energy and it is surely slowly degrade and decrease production making things scarce. I do hope that world oil production chart that portrays that deep decline in the next twenty years is wrong.

    I read articles like the one I linked below about expanding world trade which would lengthen already too long supply lines. It seems like the big push is to create a more globalized economy, but instead we should be moving the opposite direction and shortening our supply lines.

    It seems like the world today is speeding ever faster towards the cliff of UN-sustainability and an eventual collapse looks like sometime in the first half of this century it appears to me.

    The “Simple Village Lifestyle” using permaculture etc. that Don, Jan, Xabier and Jody etc and many of us have discussed – using mostly only local items is not being embraced by the world currently. Instead the world has embraced and ever expanding global trade. In the simple village lifestyle some things could still be imported, but all the the “junk” that we get today. Things like coffee and tea and certain healing herbs could be imported much as the way they were old days. Our supply line is too long for most of the goods we buy. We send the raw materials across the world and finished products are returned back across the sea. The world does not yet see any problem with energy or other finite resources, Exxon commercials touting growing supplies from new sources etc.



    • Dear Scott,
      I agree that a “Simple Village Lifestyle” is probably the one that makes the most sense in the absence of cheap oil to transport goods around the world. It not be easy, however, for large urban city dwellers to move or desert regions to grow their own food without land, good soil or water. We definitely need smaller localized economies but there are many people for whom this will not be an option if collapse happens rapidly.

      I am probably dreaming, but I am hoping that we can downsize our large Federal government without a revolution and revert more decision making back to smaller local governments. It will be easier for smaller groups to govern their own individual situation because one size fits all solutions are likely to apply everywhere. People will certainly make mistakes, but better to make a decision and do something than waffle in confusion.

      I noticed you have a different login name with new picture. Nice to see what you and your wife look like.


      • madronehill1 says:

        Hi Jody and All, Yes it is still the same Scott – I had to set up that new account put up our photo and that is our picture my wife Tessie and our little cute little dog Maple from last summer during those wonderful warm days, snow on the ground here now! No sign of global warming here today with the temps in the 20′s for the high of the day. So it is cold over a large area this winter here, that does not mean that the planet is cooling, We will have to look at the ice melt maps next summer to see if the ice form on the poles more this year.

        My new login name is named after a cabin in California we used to have we called it Madrone hill because it had lots of Madrone Trees there. We sold the place in order to move to Oregon a few years ago, it was a place that I had in order to go to in case of bad times, but we sold it because we decided better to head north into the wilds of Oregon… Although we live small town but has been nice so far. I just worry that too many people even here depend on the government, I am one of them to a point since I get a government pension from my nearly 30 year job working in a courthouse collecting taxes.

        I have been reading this old book Lonesome Dove and I am like page 500 and it is a 1000 page book, pretty good book it is fiction but like many books of the old west it describes folks living in the elements walking of across great open places sometimes in snow and rain and soak clothes cold to the bone or dry to the bone looking for water. They were some pretty tough folks in those days out there, not to mention the Indians they best suited to live on the wild lands. I wonder if we are going back to that again in our future.

        I was thinking about something Gail said about how fragile our power grids and systems we use and I had come across a really good version of this old song from 1970 called Wichita Lineman – by Glen Campbell. It is true our power grids would not survive more than a winter or two without constant attention and maintenance, availability of spare parts. A financial collapse like we almost saw in 2008 almost brought down the system. I think the next financial emergency will be worse and I have followed this for years. Since the fed has inflated its balance sheet so far and I wonder how long they can keep adding zeroes before we see problems with inflation or just deflation due to inability to pay the higher prices for scarce commodities.

        For any interested….Here is the link to that great Glen Campbell live video from 1970 —

        Kind Regards,


    • I think you are right. The push is for longer supply lines in a more globalized economy. No one wants to tell the truth.

  24. FrY10cK says:

    Lindon said:
    Many if not most of them KNOW what is happening, what is coming, but they are not going to voice their fears in a public forum for pretty much the exact same reason the Nazis wouldn’t as described above. Nothing to gain, everything to lose.
    U.S. politicians also have learned the lesson that Jimmy Carter learned in April of 1977 when he gave the “moral equavlent of war” speech just four months after his inauguration.

    He told the American people that ending our dependence on foreign oil was the “moral equivalent of war.” He put solar hot water heaters on the White House and turned down the thermostat as an example to the nation.

    In response, the nation elected a Hollywood actor to tell them to buy a bigger truck and go shopping because, “It’s morning in America!” Reagan defunded NREL, ripped down the solar panels and turned up the thermostats immediately after inauguration.

    For a politician, there’s nothing to be gained by telling Americans the truth.

  25. madronehill1 says:

    Hello Lindon, I Agree with you they are not telling us the truth about the state of the world. Correct that no politician speaks of doom and advocating ending reducing world trade to conserve oil would get elected. Only those that promise things like free health care will be in office as they cater to a more and more Nanny State.
    Best Regards,

    • Lindon says:

      madronehill1 — I see the attempt to provide “free” health care to everybody as setting the stage for the “new world order” that is just down the road a ways. I’m not one of those that believe economic collapse will bring on total chaos and disintegration of civilization — at least, not in America. The American military is too strong, too disciplined, and I guarantee you that they are making plans to deal with collapse. Those plans, I’m sure, involve martial law and population control. The widget factories will be shut down. The ships bringing exotic items from halfway around the world will rust in port. The hundreds of millions of personal cars and trucks will burn their last drops of fuel and remain where they sit until they are hauled away and melted down for other purposes. The military and security structures including militarized police will suppress riots, facilitate command economy decisions, eliminate instigators and provide material support. The military WILL maintain guaranteed sources of oil and fossil fuel energy, far into the future. Masses of unemployed will be organized into local community work groups to grow food, restore the environment, and other work projects. Millions of elderly and feeble and sick will pass into eternity, deprived of their medicines and specialty treatments and critical care. Billions of barrels of oil annually will be conserved on a world-wide basis. The remaining fossil fuels will be distributed in command-economy style to keep basic community needs (water, electricity, public transportation, limited commerce) going. Radio, television and internet will be converted to highly regulated government educational and informational (propaganda) broadcasts. Porn and pop-ups and commerce will disappear from the internet — millions of web servers will be shut down forever, conserving vast amounts of energy, and providing unlimited replacement part supplies to keep critical computer systems operational. Medical care will still exist in this new world order and it will be FREE and provided by the government, because there won’t be any insurance companies — the “for profit” medical system will end. Yes, we’ll have much less medical options available, but on the plus side, individuals who are so weak or ill that they serve no use to society will not be artificially kept alive for years and years, at unbearable expense to society. I see the ACA — backed by the supreme court, an idea originally proposed by Republicans and one implemented by Romney, and one that enjoys elite support whether they publicly state so or not — as the prelude to the “free” socialist medical system that we will have in the not too distant future. All pure speculation on my part, of course…:-)

      • FrY10cK says:

        I agree with your “Nothing to gain, everything to lose” statement regarding U.S. leader’s non-discussion of fossil fuel power-down but this post is far too speculative.

        The future of humanity could be better than you portend. It could be worse. It could be not extant at all due to asteroid impact or what have you. No one knows the future.

        • Denis Frith says:

          Knowledgeable people know that the technological systems of civilization are irreversibly using up the limited natural material resources, including the fossil fuels. They know that is an unsustainable process. Consequently, they know the demise of the infrastructure in the future is certain. But we do not know how people will cope with the loss of the goods and services the infrastructure currently provides

        • Lindon says:

          OK, you’re right — it was very speculative. Except about the part where the military and militarized police force(s) ARE planning to implement strict population control when collapse arrives. And except about the part where the for-profit medical system will cease to exist, as will the greedy rapacious health insurance companies that are a significant component of that for-profit system. I still believe that the move toward “medical insurance (read: treatment) for all” is a part of a grander long term strategy that has significant support, despite all the right-wing/left-wing bickering — but THAT IS pure speculation.

      • you live in a pretty scary world- I’m glad we have free at the point of delivery health care, few guns and diminishing armed forces, and it is something that our imperfect democracy has voted for.

      • SlowRider says:

        Although I’m not sure about the “New World Order” stuff, I agree about most that you say. Centralized state control in a severe crisis will be accepted by most poeple. Resources will be confiscated in the name of national security. I don’t know why to believe in local farming as an option. It is much more likely that some kind of command economy will take over and continue our industrial agriculture.

        • Lindon says:

          I agree that after collapse, in a command-economy, industrial agriculture will continue to be used, along with all the oil-based pesticides and herbicides and fertilizers that must be dumped onto the land in huge quantities to support industrial agriculture. But I firmly believe that long term, the trend will be to move away from industrial agriculture and all of the oil-based inputs that are required, toward a more localized and community-based system of productive organic farming. I personally grow all my own stuff, well mostly, and find it much better tasting, always organic and much healthier. It doesn’t even take a lot of land — but you have to know how to preserve and have the capabilities to do so. Read “Mini Farming” by Brett L. Markham — he tells you how to do it. Look for people who survive the collapse to quickly come to the same conclusion — they can grow their own and be more self-reliant and healthy.

        • Paul says:

          I think that by doing this, the façade of democracy will be no more. It’s a dangerous path, because from this type of change to a fullblown dictatorship is a possible outcome. If you are not a democracy, you can’t blame your opponents if they topple you by force.

          The feeling of moral superiority will no longer be a weapon used to attack non-democracies by those in power, nor their ideas.

          The pandora’s box will be opened.

      • The problem is paying for the governmental system. We can’t pay for our governmental system now. I don’t see how we will be able to pay for such an elaborate system in the future. Adding ACA is going to make paying for our current governmental system even more difficult, so pushes the system toward collapse, in my view.

        • madronehill1 says:

          Hello, I have been watching the government expand in recent years adding all of these new federal agency names mostly “three letter agencies” and the tax base is not growing fast enough to support this type of big government.
          Just look how huge this has gotten…


  26. Steve Szydlowski says:

    A lot of people have been comparing the great financial crisis to the great depression of the 1930s. While reading Gail and quite a few others in the “alternative” narrative blogsphere, I am becoming more convinced the great financial crisis is actually a mirror image of the great depression. Much like James Howard Kunstler gave us the vocabulary to describe the tragedy that is suburbia, what we need now is a blending of these alternative narratives to develop a vocabulary for the emerging physics/chemistry/thermodynamics-based economics to counter Keynesianism. With inputs from this great author (Gail), and the likes of Herman Daly, Tad Patzek, and Tom Murphy on the technical side, and observers like Kunstler and John Michael Greer on the philosophical side, I’d like to see new resource-constrained modern economic theories injected into the discourse of the early 21st century.

    • FrY10cK says:

      I think your’s is a good phrase: “resource-constrained modern economic” theory. I’d like to have taken that class circa 1984-1988. As it was, the econ classes I took seemed to be like trying to quantify the supenatural. Drawing graphs of things thatcould not be reliably predicted (human behavior that comprises “markets”) seemed to be a waste of time to me.

      Alan Greenspan finally wised up in 2008. https://www.google.com/search?q=alan+greenspan+i+made+a+mistake&oq=alan+greenspan+i+made+a+mistake&aqs=chrome..69i57j0.29559j0j4&sourceid=chrome&espv=210&es_sm=122&ie=UTF-8

      • FrY10cK says:

        That link may not work.

        Anyway, Alan Greenspan walked the corridors of power for almost 20 years as Chairman of the Fed. Too bad he didn’t start ‘fessing up to his human shortcomings until after his tenure was over. He ‘fessed up in his 2007 book (right smack dab in the middle) that the second war on Iraq was about oil (he didn’t mention “defense” contractor profits) and finally eschewed Ayn Rand in 2008: http://www.youtube.com/watch?v=bAH-o7oEiyY

    • I would agree with you, but I am not sure if we will have long enough for these discussions to even go on.

      Our ability to discuss these issues depends on the continued availability of the Internet, and political systems that allow free expression of views different from what the political establishment is espousing. It is not clear how long we will have our current capability of discussing these issues.

  27. Scott says:

    Hello for you that are fans of: Glen Campbell – Wichita Lineman – this is the live video I had meant to send you all. http://www.youtube.com/watch?v=-HFCuBLAjXo

    We need strong people out there working to maintain these systems, do not under estimate them they will surprise you in time of crisis as to their abilities to deal with emergencies.

    If we run short on money, fuel etc. then we can only hope for able folks to deal with the emergencies, aside from the Giant Star Ships arriving to move us to our new garden planet. But seriously there are many strong able folks out there that is why I do not see a sudden collapse.

    I do see our future full of band aid fixes, moving from crisis to crisis but hopefully limping along.


  28. Stilgar Wilcox says:

    Gail, you wrote: “Clearly one of the requirements that an economy has, is that it needs to be wealthy enough to afford the government services that it has agreed to. Scaling back those government services is one option, but when these services are really needed because citizens are getting poorer and finding it harder to find a good-paying job, this is hard to do. The other option, unfortunately, seems to be collapse.”

    Looks like we are headed for another battle in Feb. for keeping all our commitments vs. cutting back to come closer to balancing the budget. We over committed during cheap oil times, and now it’s logical to cut back, but, ah yes, alas, if they cut back too much many people will suffer and if there are too many people suffering it can always lead to unrest, and power hungry politicians don’t like that because it possibly endangers their livelihood and golden parachute. What a conundrum as eroei continues its inexorable downward march.

  29. SlowRider says:

    If I read this right, QE and zero interest rates have been postponing the crash until now. They try to avoid the deflationary chain reaction at all cost. You also bring up the possible end of this support.
    If the economic policy of Japan – one of the top 5 economies of the world – proves anything, it seems a rather safe bet that QE won’t end, but will turn into overdrive. Yes there will be crash in the end anyway, but I’m interested in how we get there.

    • Stilgar Wilcox says:

      I am too slowrider. My question is happens to stop QE? I know that back in May 2013 the Fed broached the topic of tapering and one result was the 10 year treasury rate rose to close to 3%, and at that point Bernanke retracted the idea of tapering. The reason why (which you probably already know) is because the Fed is trying to keep interest rates low on the 10 year so banks do not turn QE into investments in 10 year bonds, but instead have a greater incentive to lend to people for business and home purchases. Why the Fed simply doesn’t require a certain minimum percentage of QE funds received (that are paid for usually at .25%) by the banks to in turn be lent out, I do not understand.

      Your statement that QE won’t end, seems to be what a lot of experts think as well because of the above scenario. Once QE tapers the stock market will correct but more importantly interest rates will rise reducing the amount of loans being issued, reducing GDP/growth, and the amount paid on the US long term debt will rise too. Higher interest rates will also cause more defaults. Part of QE is to monetize the debt by reducing the value of the dollar and I keep wondering if that in itself is the overriding reason the Fed is set on more QE.

      What I can’t figure out and have never read or heard a coherent explanation of is what causes QE to have to stop (overriding the Fed’s desire to QE)? Gail, do you have an idea?

      • For one thing, too much QE takes up too much of US debt, leaving little to be used a collateral for other types of loans.

        Another issue is that when it come time to unwind, the selling will need to be done, instead of buying. The amount of selling would ridiculously affect markets. So perhaps it is best to stop earlier than later.

      • SlowRider says:

        Yes this is interesting. I think you mentioned some of the real reasons for QE. Another one would be that international demand for treasuries is declining while the trade deficit remains high, and the Fed has to jump in ever more. It might also be the international bond market who crashes (not really ends) QE. When foreign investors stop supporting US debt because it is no longer in their interest, the game will be exposed and the dollar is finished, first as world reserve currency and soon as currency itself.

        It is kind of funny to tell banks “you have to lend more into the real economy”. Well, if nobody wants to invest (except for housing at low interest rates) that is a little difficult. Corporations are sitting on mountains of cash, waiting what to do.

        Yes, many ask “How long can this go on?”
        JM Greer has the concept of a LONG DESCENT, saying it will take decades. And that it happens individually. Someone loses a good job and has difficulty finding a good one again, so for him collapse has already happened. That’s how it will start anyway, like in Greece, Portugal: life goes on very normal considering 30-50% unemployment.

        • I think the collapse has in some sense already started, as well. The question is what shape it takes from here. He is looking back generally at past collapses. I am not sure how much of the modern research he has looked at. I don’t think he is taking into account the interdependencies that we have today that we didn’t have in the past. In particular, electricity is essential for a lot of processes. Once that goes, we are in very tough shape. Roads are essential for any kind of vehicle. Some of our roads will last for a while, but bridges are likely to be washed out in not too many years, leading to loss of long distance travel, without fording rivers. The international trade we have now, especially going into making high tech goods like computers, mean that they likely can’t be made for long. So computerized processes are gone for manufacturing, within a few years even if we have electricity.

    • Rising interest rates would be enough to do it. Or defaulting on our debt.

      Japan has been able to get away with excessive borrowing longer than a person would ever think might be possible, so that does raise the possibility that things can go on for a while.

      • Scott Walker says:

        Hi Gail, I have also wondered about Japan and about how long they put on their QE. Program.

        Kind of like to project an artificial economy, Wizards in charge…

        Do you think the US and the Euro zone can do this for like nearly 20 years like Japan?

        I would say yes. Perhaps the status Qou can last another generation or so.

        We can do it for a long time maybe longer than Japan which stared earlier, the reason why is that we still hold the world reserve currency, the US Dollar. But we are also walking on an ice pond.

        I am still confused whether inflation or deflation will take the main stage?


        • Either deflation, or a completely missing financial system. The latter could happen because the government disappears (similar to the Former Soviet Union).

          • Scott Walker says:

            Hello Gal,Interesting a new system will surely be in place awaiting to replace the old one?
            Most likely not a good deal for us trading in our old money for a new “money”.


            • Back thousands of years ago, the equivalent of general stores ran tabs for individuals, giving them credit for what they brought in, and charging them for what they took out. In doing this, they converted everything to a common basis, say bushels of wheat. This could easily be done again. The problem is that the choice of goods one gets is very limited. There is no way that such a system will lead to the creation of a computer or other high tech device using raw materials from all over the world, for example. Instead, such a system gives you only local goods made with local materials. This is the problem.

          • Steve Boyles says:

            One theory proposes that the core, today being the US, is the last to collapse. So far this seems to be true as Japan and EU look even shakier than the US.
            Will the US be the last to fall?

          • Scott Walker says:

            Hi Gail and all I would still argue that deflation would be the end result if not for the Fed and World Central banks like in the EU injecting so many new digits…

            They are able to make inflation and they have the ability to direct money into public hands if they wish, thus far they have not really done so except for the low mortgage rates.

            Remember those checks Bush sent out to all Americans from Bush. They can write them for any amount and that money would be inflationary if they went that route and I think that is their only choice after they try to taper the fed bond buys and see the economy crater.

            I think that so far the inflation has been exported overseas and also into the bond and stocks.

            All and all I think we had a pretty good 2013 compared to the possible outlooks we have studied that are down the road a ways (I hope).


      • Stilgar Wilcox says:

        Thanks Gail. So once the Fed has bought up all that dubious paper, they must at some point go about the business of selling it. That will be interesting.

        Yes, like Japan this could go on for a while, but it seems the longer it goes on the higher the crest of the wave must rise and extend before crashing. Not meaning collapse, but certainly asset bubbles bursting.

        • SlowRider says:

          They don’t care how deep the fall will be, their job is to postpone it. Look at former East Germany or Greece. The old powers stayed in place as long as possible. But when they had to default, just in time they put some unknown technocrats in place to make the tough announcements, who were immediately replaced by a new government making a “new start”.

          • Stilgar Wilcox says:

            I think you’ve hit on the operative word, postpone. Print fiat, borrow from ourselves, whatever it takes.

    • Ert says:


      In my opinion and also in the opinion of Mr. Heinsohn (https://blog.malik-management.com/stand-der-deflation/) we have only seen the start. I try to summarize the article from Mr. Heinsohn.

      What has happened up to now?

      1. Zero-Interest (first 1996 in Japan) – this makes positions in wealth and assets with low interests profitable. This first step insured the artificial creation of markets and the upward driving of asset prices (which – by the way – secure debt).

      2. „Forward guidance“ (first 1999 in Japan) – the public promise of a long-term low- or zero-interest period, so that everyone can happily and risk-free participate in (1.)

      3. „Quantitative easing“ (first 2001 in Japan) – the purchase of bonds and mortgages by the central banks, so that their value stays above the market price. Also to assure that these are still accepted as securities for debts and their value stays at least constant.

      4. „Qualitative easing“ – the acceptance of unsellable papers assets (bonds, etc.) for their nominal value – so that private and national central banks get fresh liquidity (a special discipline of the southern EU states)..

      Thats whats done… first Japan, then the US – and at last the EU.

      This is all done to avoid a lower price of real- and paper assets. Then those are often the security for debt. If the asset prices fall, debts can’t be repaid and the balances of the under capitalized banks, the pumped-up markets, etc. implode. What would be a normal event (debt deflation) – isn’t normal now – because this event got pushed ahead to long now. It would implode the whole global system.

  30. “Economy’ in current parlance is an abstraction. It is an artifact of having a lot of surplus and then finding a means to distribute that surplus. If the surplus does not exist, the “economy” does not either.

    The trick you have to accomplish in creating a system which works sustainably is to live within the boundaries of what nature provides, augmented by what you can do to more efficiently harvest that energy, and then leave more than you take out of the system.

    Has to be reworked from the ground up. That is what we are engaged with on SUN,



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