What really causes falling productivity growth? The answer seems to be very much energy-related. Human labor by itself does not cause productivity growth. It is human labor, leveraged by various tools, that leads to productivity growth. These tools are made using energy, and they often use energy to operate. A decrease in energy consumption by the business sector can be expected to lead to falling productivity growth. In this post, I will explain why such a pattern can be expected, and show that, in fact, such a pattern is happening in the United States.
Preview of Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.
Background
The problem of falling productivity growth seems to be a concern to many economists. An August Wall Street Journal article is titled, Productivity Slump Threatens Economy’s Long-Term Growth. The article says, “Productivity is a key ingredient in determining future growth in wages, prices and overall economic output.”
The general trend in falling productivity growth does not seem to be particularly recent. OECD data shows a long-term pattern of slowing productivity growth, dating back to the 1970s for many developed economies.
Figure 1. Five-year average growth in productivity per hour worked based on OECD data.
Falling productivity can be expected to affect wages. Figure 2 shows that in the United States, wages for both low and high paid workers increased much faster than inflation between 1948 and 1968. Between 1968 and 1981, wages for both sets of workers stopped rising. After 1981, wages for high paid workers (“Top 10 percent”) have risen much faster than for the bottom 90%. This reflects the way this lower productivity has been distributed to the work force. Low-wage workers have been affected to a much greater extent than high-wage workers.
Figure 2. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.
A Major Culprit in Falling Productivity Seems to Be Diminishing Returns with Respect to Oil Extraction
Many people believe that the only oil problem we need to worry about is the possibility that supply will “run out” at some point in the future. In my opinion, the real problem is different. What we are experiencing is diminishing marginal returns with respect to oil supply. In other words, it is becoming increasingly expensive to extract and process oil. Total costs, including wages for human labor, the cost of capital, the cost of energy to extract the oil, and required tax payments, are rising ever higher. Businesses are finding it nearly impossible to earn a reasonable profit extracting oil. If oil producers want to cover all of their costs, they need to borrow an increasing amount of money simply to cover normal business expenses, including the development of new fields (to replace currently depleting fields) and the payment of dividends.
Figure 3. Bloomberg exhibit showing that returns for three large oil companies on a “cash” basis fell after 2008, and are now at 50-year lows. CROCI means “Cash Return On Capital Invested.” Bloomberg source.
The problem of diminishing marginal returns extends to other commodity types as well, such as coal, natural gas, fresh water, and metals. Oil is especially important, because it is energy-dense and easy to transport, making it the world’s most-used fossil fuel. At the same time, we are experiencing rising costs for pollution control of various kinds, including attempts to prevent climate change.
The combination of diminishing returns for commodity production together with rising pollution control costs tends to make the world economy increasingly inefficient. This increased inefficiency affects the cost of producing many things that consumers value, including food, fresh water, housing, and transportation. Indirectly, the ability of businesses to create jobs that pay well is affected, also. I believe that this growing inefficiency in producing goods and services is the basis for the falling growth in productivity that appears in Figure 1.
Why Diminishing Returns with Respect to Energy Supplies Are Likely to be the Culprit in Falling Productivity
There are several basic issues that make our economy vulnerable to the impacts of diminishing returns:
- Energy plays a critical role in creating goods and services, and thus in economic growth.
- Energy that is very inexpensive to produce is important in setting up a benevolent cycle of greater productivity and more economic growth.
- Diminishing returns for oil and other energy products lead to higher costs of production. If these higher costs of production are passed through to the consumer as higher prices, this leads to what we think of as a recession, and a slow-down in economic growth.
- The timing of falling productivity “matches up” with falling energy consumption on the part of employers, and also with high oil prices.
Energy plays a critical role in economic growth because energy is necessary for all kinds of economic activity. Energy allows transportation to take place; it allows heating to take place, so metals can be smelted and chemical reactions of many kinds can take place; it allows the use of computers and the internet. When workarounds for problems are needed–for example, increased pollution control, or deeper wells, or desalination plants–all of these workarounds also require the use of energy products. So, the problem is not simply that it takes more fossil fuel energy to create energy products. Many other parts of the economy, including pollution control and extraction of fresh water and minerals, become more demanding of energy supplies as well.
Cheap-to-produce oil and other types of energy are important in setting up a cycle of economic growth. We think of productivity growth as being something that an employee is able to do. In fact, productivity growth is enabled by the use of “tools” that the employer (or the government) gives workers, allowing these workers to create more goods and services per hour worked. These tools can be either physical tools, such as machinery, computers, vehicles, and roads, or they can be tools provided through more specialization and training. In the case of physical tools, it is clear that energy is used both to create and operate the tools. In the case of specialization, energy is needed in a more indirect way; extra energy allows the economy to have sufficient surpluses to permit training of specialized workers, and also to allow them to have higher wages later.
Thus, we can think of human labor as being increasingly leveraged by energy-related tools. In fact, if we divide energy consumption of businesses (commercial and industrial) by the total number of non-farm employees in the United States, we find that energy consumption per employee falls very much according to the pattern we might expect, based on the rise and then fall in productivity growth shown in Figures 1 and 2. A slowdown in energy leveraging seems to correlate with the decline in the rate of productivity growth.
Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.
Figure 4 shows that energy consumption per employee reached a peak in 1973. Energy consumption per employee started falling in 1974. This date corresponds to the first major run-up in oil prices (Figure 5). Oil prices, on an inflation-adjusted basis, have never returned to the very low level experienced prior to 1973.
Figure 5. Historical annual average price of oil, for a grade of crude similar to “Brent,” based on data of 2016 BP Statistical Review of World Energy.
The period between the end of World War II and the early 1970s was generally a period in which inflation-adjusted oil prices were under $20 per barrel. At this very low price level, it made sense to add a new interstate highway system and to greatly upgrade the electric grid and the oil pipeline distribution systems. Once oil became high-priced, the US greatly backed away from leveraging worker productivity with such big projects. Other changes began as well, including gradually shifting manufacturing to other countries. These countries typically had lower labor costs and a cheaper energy mix (more coal and hydroelectric, and less oil).
The first run-up in prices occurred after US oil supply reached a peak in 1970 (Figure 5). According to a presentation by Steve Kopits, the second run-up in prices started occurring about 1999 (Figure 6). By then, we reached a point where a disproportionate share of the cheap-to-extract oil had already been removed. Oil producers needed to start work on new oil fields in areas where extraction costs were higher.
Figure 6. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate.”
Oil’s diminishing returns affect the economy. As we reach diminishing returns with respect to oil production, the cost of producing additional barrels of oil tends to increase. If this higher cost is passed on to goods made directly and indirectly with oil products, we find that the prices of many products rise. Food costs are particularly affected, because oil is used extensively in agriculture and in transporting goods to market. Higher oil prices affect the cost of other types of goods, because many goods–even coal–are transported using oil. The higher cost of oil tends to ripple throughout the entire economy.
The problem, however, is that higher oil costs lead to lower productivity, because employers and governments tend to purchase fewer energy products for the benefit of their workers when oil prices are high. We end up with a mismatch:
- The cost of oil products, and many other products, tends to rise.
- The productivity of workers tends to grow more slowly. Wages rise very slowly, if at all. They certainly do not keep up with soaring oil prices.
The result of this mismatch is recession, as occurred in the 2007-2009 period. Economist James Hamilton has shown that 10 out of 11 post-World War II recessions were associated with oil price spikes. A 2004 IEA report states, “. . . a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. Inflation would rise by half a percentage point and unemployment would also increase.”
A Second Way Diminishing Returns Can Work Out Badly: Prices that Are Too Low and Oversupply
In the preceding section, I explained how oil prices, if passed on to the consumer via higher prices of other goods, could lead to recession. Because our economy is a networked system, the situation doesn’t need to work this way to come out badly. There is an alternative scenario in which oil prices stay too low for businesses extracting oil to make an adequate profit. In this scenario, it is businesses, rather than consumers, who find that they have a huge financial problem. This is the problem we are encountering now. In fact, it is not just oil-producers who have a profitability problem; the profitability problem extends to businesses producing coal, natural gas, metals, and many kinds of agricultural commodities.
The reason why this kind of low-price scenario can take place (despite rising costs) is because workers are also consumers. We saw in Figure 2 that the wages of the lower 90% of workers tend to lag behind when energy consumption per worker is falling. There are a very many workers in the bottom 90%. If the wages of these workers lag behind, homes, cars, vacations, and many other kinds of discretionary goods become less affordable. The reduced demand for these finished products leads to lower demand for a wide range of commodities. This lower demand tends to push commodity prices of many kinds lower, even though the cost of production is rising. As a result, profits for a wide range of commodity producers tend to fall in a way similar to that shown in Figure 3.
It may be that we can expect a recessionary impact, a short time after profits fall. According to Deutsche Bank:
Profit margins always peak in advance of recession. Indeed, there has not been one business cycle in the post-WWII era where this has not been the case. The reason margins are a leading indicator is simple: When corporate profitability declines, a pullback in spending and hiring eventually ensues.
The article goes on to show that there is a lag of about two years between the time of profit compression and the time when recession hits. The amount of variability is quite high, with one recession coming as soon as 4 quarters after a fall in profitability, and two coming as late as 15 or 16 quarters after a fall in profits. The median lag was 8 quarters, and the average lag was 9 quarters.
This Deutsche Bank description of the cause of recessions gives an explanation why Hamilton encountered recessions after oil price spikes. These rising oil prices affected one of the costs of production for most companies. These rising costs compressed profits, and eventually led to recession.
This description of the cause of recession shows how recession can also ensue if commodity prices remain too low for an extended period. We know that oil prices began falling in the third quarter of 2014. It is now two years later. Profit margins of many commodity producers have been squeezed. We have already seen layoffs in the oil and coal industries. In this low-priced situation, companies are affected unevenly: some benefit from low prices, while others are hurt by low prices.
Commodities are often essential to economies, especially for countries that export commodities. These exporters are especially likely to be affected by low prices. Impacts are likely to include civil disorder and falling production, similar to what we are now seeing in Venezuela.
Oil importers are dependent on oil exporters, so eventually oil imports must drop. Low oil prices are likely to lead to a drop in locally produced oil products as well. As a result, we can expect that less oil and fewer other energy products will be available for leveraging the labor of human workers. If past patterns hold, we can expect a further decline in productivity growth. Rising oil prices are not really a solution either, because, as we have seen, they tend to lead to recession.
Diminishing Marginal Returns Don’t Just Go Away by Themselves
Economists claim that the law of diminishing marginal returns operates only in the short run, because in the long run, all factors of production are variable. This statement might be true, if we lived in a world without limits. In fact, the amount of arable land is very close to fixed. We have not found a way to stop population growth, either. As a result, the amount of arable land per person is falling. We need to keep finding ways to produce increasing amounts of food per arable acre of land. Doing so typically requires energy products, including oil.
We are having similar problems with fresh water supply. We can solve our falling fresh water per capita problem with deeper wells, long-distance transport, or desalination. Any of these workarounds requires energy products.
Of course, we have had diminishing returns with respect to oil supply since the 1970s. We have not yet found a reasonable workaround. Intermittent electricity is not a reasonable substitute; it does not power existing airplanes, trucks and most cars. When all costs are considered, intermittent electricity tends to be very expensive. Experience shows that if subsidies are given for intermittent electricity, they are needed for other types of electricity generation as well.
Figure 7. Figure by Euan Mearns showing relationship between installed wind + solar capacity and European electricity rates. Source Energy Matters.
The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise.
As a result, when businesses use falling amounts of energy per capita, we should not be surprised if productivity lags, and if wages for many workers barely rise with inflation. It is possible to get some productivity gains through education, but it is very unlikely that these gains are as large as when more capital goods are used, as well as more direct use of energy. There are also clearly diminishing returns with respect to education and training; for example, if we need 10,000 additional dentists per year, training 50,000 additional dentists per year would not be helpful.
Can We Solve Our Productivity Problem with Lower Interest Rates, or with Increased Deficit Spending?
I wouldn’t count on it. Our problem is an energy problem.
Increased deficit spending could perhaps raise commodity prices a bit, and thus help the profitability of companies producing commodities. The reason commodity prices might rise is because increased spending by governments would act to supplement the low spending by workers who are suffering from low growth in wages. The sale of goods might rise for a while, but productivity of workers would still lag. Economic growth would, at best, remain very slow. If the economy were headed for recession or the collapse of commodity exporters, that situation would continue to be the case.
Lower interest rates would likely be even less helpful than deficit spending. There is no guarantee that these low interest rates would lead to increased spending on capital goods that would benefit workers. Banks in Europe and Japan would likely have even more problem with adequate profitability than they do now. Bank failure would become even more of a concern than it is now.
Our problem is really a lack of very cheap-to-produce energy that can be used to inexpensively leverage the labor of human workers. This energy needs to be of the correct kind to match the requirements of existing equipment. Without this leveraging, it is likely to be impossible to fix our productivity problem.
I doubt the Hills Group factored this into their calculations. BTW, it’s unlikely to be just end user efficiency in petroleum, electricity is showing something similar.
http://www.reuters.com/article/us-iea-energy-efficiency-idUSKCN12A0OM
“The more efficient use of energy was more than the 1.5 percent gain made in 2014 and was triple the annual average rate between 2003 and 2013, the IEA said.”
“Globally, car fuel economy standards saved 2.3 million barrels a day of oil last year, or 2.5 percent of global oil supply, it added. Energy intensity improvements were most marked in rapidly developing countries such as China where it rose by 5.6 percent last year, up from an annual rate of 3.5 percent over the previous decade.”
In only 40 years cars will run on no fuel. China will get there in only 18 years!
Didn’t you predict an oil price of USD 20?
Why hasn’t the oil price fallen to that price???
Who are you directing that question to ?
(I don’t predict prices)
http://oilprice.com/images/tinymce/Art0710G.jpg
VERY INTERESTING !
Is there really a glut ?
http://oilprice.com/Energy/Crude-Oil/The-Billion-Barrel-Oil-Swindle-80-Of-US-Oil-Reserves-Are-Unaccounted-For.html
Anybody in North Carolina on Oct.20, free at 7 p.m. ?
Would be interesting to hear what Paul Ehrilch is presenting there “basically we have lost about half the wildlife on the planet in the last 40 years” http://www.salisburypost.com/2016/10/09/xx-5/
I watched a movie last night called “Into the Forest”, about a family’s experiences after the grid goes down. Sad to report, it was only suitable for the kumbayaists amongst us. I advise any scriptwriters reading this to consult with Fast Eddy before submitting any such nonsense in future. A city rather than forest setting would be more entertaining also.
i think the bau lite scenario can only happen in a super- natural way what do i mean by this humanity needs rescuing by extraterrestrials.
The last thing we need are aliens stopping by at the gas station demanding: Fill her up with petroleum distillate !
https://youtu.be/YdyQu5Zx8xw
Just because I think things will be slow, does not mean I think the elite have everything under control.
Here in America, for example, they have done well with subsidized foodstuffs and entertainment. Absolutely necessary to keep the people fed and entertained. They have done very poorly, however, when it comes to ending speculative bubbles, such as housing, and healthcare costs.
I actually think housing and healthcare costs could and will drive America to civil war even though we have it better than 90% of the planet.
Dolph…things are the way they are for complex reasons. The complexity of our society means that attempting to “fix” one problem causes another problem somewhere else. Everything is interconnected. The soaring costs of housing, education and healthcare, I have long suspected are interconnected and cannot be addressed without breaking the system. My hypothesis is that soaring costs in housing, education and healthcare are related to two things, supporting a growing elderly population and finding something for people to do. The speculative bubbles are JOB PROGRAMS. ZIRP and other policies that encourage real estate price inflation allow older homeowners to use real estate to extract more and more money from everyone else. A similar phenomenon is happening in education. The people benefiting from high tuition and poor quality( ITT Tech) are Americans nearing retirement age or their (middle class) children who can get sinecure jobs in the education field.
Healthcare is cannibalism. Everyone is exploited in this system. It is a place where wealth goes to be destroyed. It is a sector where homeonwers and property owners spend a significant amount of the money they’ve made off their property on.
If anyone makes a genuine effort to reduce costs in healthcare, education, or real estate, that person or persons could potentially to cause unemployment to rise to 30% overnight, for starters.
The food and entertainment that is provided is cheap to produce. Technology does much of the work. The focus on franchises and new technology is a way of marginalizing human labor, therefore keeping costs low. Illegal immigration keeps the costs of food grown in America lower than they would be without it. Food production and entertainment have not been major job creators in over 50 years.
CTG does a better job of explaining why it’s possible to remove components of our society without consequences but I thought I’d respond to your particular complaint in general.
Our interests will be served.
One cannot compare “now/present” with situation 30, 50 or 100 years ago. Our needs now are significantly higher than what we need 20 or 30 years ago. This “need” can be a personal need or a regulatory need. These needs will translate to more “fossil fuel” use.
Examples of a personal need – Before tablets (iPads) comes out, there is no need for that kind of gadget but now, many of them cannot make do without it. Same goes for cell phone, computers, leisure/business flights, etc.
Some of the needs are indispensable – medication, kidney dialysis, glasses, etc. Actually, if you are not reading in poor light, playing computers, etc, you may not even have vision problem to begin with !
Some of the needs are regulatory – airbags for cars, food toxicity check, environment quality check and a huge amount of other regulations that many people find it useless or waste of time (actually it should be known as waste of energy).
For those who are more than 40 years old, can anyone remember that we don’t wear any helmets when we cycle around? Our parents more or less could not be bother if we fell down? We sat in cars that was rikety and has no safety features? We swing on the bus railings or do other things that are considered “dangerous” now. How come it was not dangerous then? Does it mean that our fatality rate now is much lower than last time?
If you think about it, NO. Cars go much faster now and waste more fuel. We felt confident that with airbags, ABS, EBD, TCS or whatever 3-letter acronym is there to save us from any accident. In fact, the best way to reduce accident to close to “zero” is not have an airbag but a stake/sharp knife on the steering wheel. The knife will just pierce through you if you brake suddenly or have a crash. All of a sudden, everyone will be very careful, driving 20 mph, everyone turns on the turn indicator and everyone is very polite on the road. Cars are checked very often and I am not surprised if no one dies on the road anymore.
Now, not only are cars goes much faster, we have more accidents. Jevon’s Paradox suggests that due to the marked efficiency of fuel injection, lower engine weight (aluminum engine) and other improvements, we should improve on the air conditioning, entertainment, GPS, fine leather seats, etc. We can make the car bigger and better.
Historically, every generation of cars goes through an improvement cycle that is not “fossil fuel friendly”. Longer, heavier, more features. With Jevon’s paradox, if we just maintain that same size from 1980s till today, we would not have used so much fossil fuel.
http://diminishedvalueofgeorgia.com/wp-content/uploads/2012/10/Honda-Accord-History.jpg
Personal needs
Do you think anyone would give us their needs? Simple put, do you think anyone would want to trade down their smartphones to feature phones like the old Nokias? Do you know how many people are employed in this “smartphone” field? The semiconductor designers, the chip factories, the logistic companies (planes to fly the engineers, phones, trucks to ship the capacitors, screens), the factories that build these phones, the plastic companies that produces the casing, the glass factory that does the glass, the machines that makes the casing, glass, the chemical used in making this phone, the software engineers that make the games like Candy Crush, the HR/facilities/cleaners personnel that maintains the headquarters of King Software (maker of Candy Crush), the phone shops that sells the phones, the repairman that repairs the phone, the people who mined lithium for the batteries, etc There are literally hundreds of thousand of livelihood that depends on smartphones. Mind you, smart phone took hold in 2006 and began its epic rise in 2010 onward. In a few years, it has given employment to so many people.
So, if anyone thinks of ‘living simpler” without smartphones would literally means that thousands of people from every corner of the world out of work. So, who is going to give them jobs? Who will feed them, clothe them.
Do we have a backup plan just in case smartphone fails ? Can we do everything a smartphone does with an old Nokia clamp shell phone or a fixed line phone? Can we do it without any efficiency loss? We are so primed for efficiency that we have no room for errors when we go down the efficiency curve (example: if our farming yield goes down from xx% to yy%, can we still sustain the same lifestyle?). A 5-man software company replies on 1Gb internet to work as they need that high speed to do the programming. If it drops to 100Mbs, does it mean that they will continue to function as a company? Probably not. Why? They are not used to that kind of speed and in the end, they will just not get anything done.
Medical needs
Do I need to say that without advanced kidney dialysis, MRIs, etc, do we still have today? Are the doctors trained to do diagnosis without the modern equipment. I can tell you now – NO. They cannot because they are being taught in school how to read the images from MRIs and not from talking to patients, examining them, etc. No MRIs, no diagnosis. All the old school method of checking, diagnosing. They are all but gone. It is the old doctors, like those in the 70s probably know what that is all about but not the young ones.
http://photos.newswire.ca/images/20140723_C8482_PHOTO_EN_42224.jpg
The MRI – I have no idea how to build one without BAU. Furthermore, they are filled with software and patented hardware that no one can replicate. I can give you an MRI, you can tear all down but you cannot know what software it is running inside its EEPROM, chips, PLDs, etc. Those are patented and no one can copy them. There are no substitutes.
Regulatory Needs
Government will grow in size, regardless of race, country and time. Even the Aztecs, Babylonians has way too many priests and artisans that needs to be supported by the productive society.
Safety requirements, be it real or not is energy intensive. Same goes for all others. Even if government shrinks, will be population accepts it? Example – less police to enforce the law, less checks on medicine? The population will just ask for more. So, in the end, more fossil fuel use.
I would like people to re-butt what I have written. Tell me that I am wrong but give me facts and evidence. I don’t want “just talk”.
For those who are not sure how a small disruption could jeopardize the entire economy, please have a look at this article http://www.iwar.org.uk/cip/resources/PSEPC/fuel-price-protests.htm
I have read somewhere but I have no reference that if the strike continued for a few more days or a week, UK’s economy would be so crippled that it may not be possible to recover.
In 2008 during the height of the financial crisis (just after Lehman), my workplace, a high tech factory that produces semiconductors nearly went bankrupt. JIT is widely used as parts and consumables are very expensive and we keep minimum stock. Our supplier also keeps minimum stock. Some very expensive and no-so-easy-to-spoil parts are not kept at all. It needs to be ordered from the supplier and it takes many weeks to get it fabricated and sent to us. Our raw materials have expiration dates and we cannot keep a large stock. At most, we have 1-2 weeks of supply. Why spend money to keep stock when you can ask your supplier to keep stock. The supplier also keeps minimum stock as they can ask their supplier to do the same. It goes all the way to the top.
At the height of the crisis where banks do not trust each other, some suppliers are cash crunched. These suppliers may be from China, Japan, USA, Europe. They request up-front cash payment as they need to pay their suppliers who are asking for up-front cash payment. Companies do not keep cash. They need to roll their money over and sometimes, take bridging loans when the payment period does not match. Payment period not matched simply means that your supplier gives you 3 months to pay and your customer says they can pay you only in 5 months. So, you have to pay your supplier first and you may not have the cash as your customer has not paid up. So, in this case, you need to get a bridging loan from the bank (i.e. to bridge you over). If your company’s performance is not good, then you may not get a loan. You will end up in liquidation overnight. That is the real facts of live.
So, our factory was in deep trouble as up-front cash payment was required before the parts were sent. If the parts were not available, we cannot produce the chips that our customer wants. If it went past the deadline (i.e. contract delivery date), then we have to pay penalty. So, somehow, we need to get money to get the parts. Why upfront? Letters of Credits (LoC) are not accepted as they are not sure if the banks are good enough to honour them. Luckily, Bernake rescued us by providing blanket guarantee for the banks in US and in Europe and the up-front cash payment subsided. Our suppliers in USA, Europe. Question is, what will the central banks do now ? The implicit guarantee is already there but “crisis” still happens.
If Ben Bernake did not come in with 1 week, I would be out of job without a single cent for salary. With millions of dollars worth of products being sold, with millions of dollars of parts, consumables and raw materials required, it is not possible for many companies to just have that kind of cash. Do bear in mind that most of the employees or workers work for small and medium-sized industries and they are the ones who are not cash-rich. A biscuit factory, a small outfit doing precision-steel parts, a commercial import-export trading firm. These are the companies that rely on trade financing and banking. They cannot issue bonds for their day-to-day expenses. They don’t have a large stash of cash. They are too big to sell their wares at Ebay. These companies may hold a lot of patents for their products that are used in systems all over the world.
With 7B people on this planet, things has to be carried out quickly and efficiently. Otherwise, things will just fall off. We need machines to make biscuits. Traditional baking methods (slow) does not provide enough quantity for the ever-growing appetite. We need large scale farming, and aqua-culture to ensure that we have enough food. Machine are required. We don’t have the will power, the time, the capability, the resource to do a change to other method without having a failure in between.
There will be people butting in to say : “You know, Mr XXX says that perma-culture or something similar will be able to feed the people in the world”. Again, falling back to the fallacy of “This farm can produce XXX calories per day and we have YYY people, therefore, with XXX/YYY, we have sufficient to feed them”.
Using the biscuit factory for example, the traditional method requires that a dome-shaped oven be used and it produces about 50 pieces per hour per dome. You need charcoal and you fire up the oven in the morning. By the end of the day, you have product about 500 pieces which is good for the village that you stay in. You have sufficient charcoal as you don’t use a lot and the supply is just nice for the demand. Now, fast forward 50 years and now, it is an industrial version. Why? the demand exceeds supply and you need to be efficient. The village is now a large city and the population has balloned 10 times. You don’t have space to build more domes, you cannot get more charcoal and manpower is just too expensive. Therefore, you have to use machines. The machine is made in China; the motor is from South Korea (it lasts longer); the steel is from Japan (lasts longer); the printed circuit board is from Hong Kong. The transformer is from Japan. The conveyor system is locally made but the belt is from Germany. The belt needs to be changed every week as wore out easily. The oven is customed made and so are all the parts for the oven. You have to get local companies and technicians to support that oven. The heating element is from Italy as that company has the most consistent heating element in the world. It gives a uniform temperature so that your 200 pieces of biscuit are heating quickly and uniformly. It costs a lot of money but at least you need to change it only once 1 year. You have run this process for 10 years and you have expanded the factory to have 5 ovens. The process of making the biscuit has changed from the domed to the oven-fired version.
Question – what does it take to move back to the domed oven? Can anyone still remember how to stick the biscuit to the wall of the dome? For how long do we need to heat the biscuit? Are there any methods to make few thousand biscuits per day? Do we have the charcoal? Do we have the people? the skill? Can we even go back to the traditional method without any disruption?
Same goes for semiconductor. All the machines that makes semiconductor uses the most sophisticated chips to control the process. To design the machines, they use super-fast computers to do so.
So, how do you have a step-down collapse? How do you want to de-globalized? The biscuit factory’s process has been set to use the Italian heating element. Can you ask them to use a local version? How many batches of burnt biscuits can the company take before going bankrupt? How about the penalty for slow delivery? Cash flow issue if you want to switch to to use all local parts? The factory employs hundreds of people and all of a sudden, there are not jobs for these hundreds? How about the knock-on effects of these jobless people in the local economy? If 4 or 5 of the biscuit company in the country collapses, all of a sudden, there will be a shortage of “portable dry food”. How about the loans that these company owes to the bank?
If someone were to put in some thoughts, they would have come out with a more detailed scenario for all the industries across the world. Yet, there are many people still claiming that “banks are not important”, “we can go local”, etc.
When you think about it …. you realize how fragile the system is….
If you don’t think about it… you might convince yourself that it is not.
@CTG
A very good explanation of the problem. And you also touch the problem, that all suppliers mentioned in your example have exactly the same problem – even the miners of raw materials….
But I can contribute a partly solution: For food, get rid of the processing at whole! No one needs cookies, you can eat the soaked or sprouted grains…. no one needs soup, you can make one yourself with basic food staples.
But still, this solves only a little part, as the whole system of agriculture and truck-delivery is ultra-dependent on JIT, loans and the whole embedded complexity of out techno-society. Maybe not in Cuba or Somalia…. but everywhere in the west.
So I hope for a prolongation of BAU – because there is (from my viewpoint) no other plausible way to get the system that supports 7.5 billion people (for better or worse) working.
You admit it yourself 🙂 but if we assumed everyone would volontarily start eating sprouted grains we could assume a whole lot of stuff that would make BAU lite possible.
@DJ
Yes, theoretically I think BAU lite is possible. But most people (from my viewpoint) would never voluntarily accept or engage in it. They would instead waste a lot of energy to find the “responsible” people for the “fraud” and misfortune happening to them… or even burn down things in their rage, exacerbating the problem.
For BAU lite to be possible se would have to admit BAU is not.
you have it exactly right
the vast majority of people will look (or are looking) for causes for the coming crises as some external force that ”someone” can be held responsible for, and that prosperity can be voted into office, that the right government will fix things
there is virtually no acceptance or awareness that our problems are caused by each and every one of us.
and yes once the fan is spattering everybody the reaction will be to riot loot and burn —we have countless examples of exactly that happening (its the immediate survival factor)—
Yes the military will try to stop it, but they too will run out of energy and thus run out of control
police/ soldiers have to survive too
Mostly it is the capitalists or immigrants that are to blame.
Food – you cannot do anything. We need the efficiency to get the food out in the shortest possible time. Your store is not going to wait for 3 months for the tomatoes or carrot to grow (example)
Yes, redesigning the whole food system without a supply-chain interruption and then giving the alternative system and economic viability while BAU still continues… that’s a huge challenge. Can’t see it happening without full government rule, subsidies, laws, etc. pp.
That that government wouldn’t be popular… even if it would be for the greater good / stability in regard of the future.
I have read somewhere this quote for politicians:
“Good decisions are seldom popular. Popular decisions are seldom good”
Those words are very true.
Now the words of a heretic: “democracy” does not respond adequately to the current situation. It is dysfunctional, and in fact, we can consider it as a big problem added.
Of course I am not advocating the dictatorship. I speak of this strange thing called “democracy” where the people elect the government that promises more toys.
Interesting examples!
i was reading one of my past issues of a conspiracy magazine when i came upon this nugget of information that i would like to share with ‘ofw’ bloggers ,the article was about a gathering of elites that occurs yearly’, it is the august-september 2005 issue. the paragraphs that caught my attention were as folllows ‘ of course,discussion turned to oil.an elitist expressed concern over the sky-rocketing oil price. one oil industry insider at the meeting remarked that growth is not possible without energy, and that according to all indicators the world’s energy supply is coming to an end much faster than anticipated. according to sources estimate the extractable world’s oil supply will last a maximum of 35 years under current economic development and population. however one of the representatives of an oil cartel remarked that they must factor into the equation the population explosion and economic growth as well as demand for uil in china and india. under the revised conditions, there is apparently only enough oil to last for 20 years. no oil spells the end of the world’s financial system.the conclusion expect a severe downturn in the world’s economy over the next two years as the elites try to safeguard the remaining oil supply by taking money out of people’s hands. in a recession or, at worst, a depression, the population will be forced to dramatically cut down their spending habits, thus ensuring a longer supply of oil to the world’s rich as they try to figure out what to do.’ Whether this is fact or fiction or a little bit of both it was interesting when i saw this
There would be decades of oil left — the problem is that it is too expensive to extract….
We are not finding any more cheap to extract oil
Deutsche Bank, Goldman warn of growing China property risks
China going through extreme investment cycles: JPMorgan Asset
Tai Hui is experiencing deja vu.
China’s surge in home prices reminds JPMorgan Asset Management’s chief Asia market strategist of last year’s stock market mania. Spiraling leverage and implicit state support are among the common denominators, he says. Shanghai property values jumped 31 percent in August from a year earlier, the latest data show. In 2015, a 60 percent rally in the city’s equities through June 12 was followed by a $5 trillion rout.
Deutsche Bank Group AG warned last month that China’s housing market is in a bubble, while Goldman Sachs Group AG said this week it sees growing risks across the real estate industry. Home prices started to take off last year in the wake of the stock market crash after the governments eased curbs on property purchases. In recent days, cities including Shenzhen have started re-imposing restrictions.
“It’s similar to the equity market where if you let things loose, it just runs like a stallion,” said Hui. “And then you have to really rein it back, then it’s like an ice bucket challenge. So you go through this extreme heat and cold. That’s not particularly good for the economy because then you’re going through very aggressive investment cycles.”
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iUQgBiat7G.w/v2/-1x-1.png
More http://www.bloomberg.com/news/articles/2016-10-06/china-s-housing-boom-looks-a-lot-like-last-year-s-stocks-bubble
There are an awfully lot of citizens owning properties that are very expensive relative to their income.This could end very badly–or maybe China would bail banks out as before. They might be able to get away with it better than some other countries.
German exports rising strongly in August
http://www.dw.com/en/german-exports-rising-strongly-in-august/a-36003187
German businesses shipped goods and services worth 96.5 billion euros ($107.8 billion) abroad in August, which was 5.4 percent more than in the previous month of July and a staggering 9.5 percent more than in the same month a year ago.
…………………………..
Germany is feeling immortal. The Chinese housing bubble is most likely behind this feeling of immortality.
We need the bubble to keep from collapsing for a while longer. How, I don’t know.
how would countries carry out these ‘climate change deals’ without collapsing the global economy? . and that is the $64000 question how would the world deal with a size-able reduction in energy production without the system imploding , perhaps with perpetual nirp,, ,free trade deals,, elimination of cash and more heli-copter money experiments and a way to keep the sheeple distracted as their standard of living evaporates .all these things i’ve mentioned have come up in the mainstream media but fossil fuel depletion gets nary a mention, i smell a rat
A refinery cannot smelt copper with free trade… NIRP or any other policy.
Some might suggest it can be hopium-fired…
But it cannot.
This is not a 64,000 question — it is a rhetorical question….
But what if its not actually about delivering on the climate deal, but rather the work involved in looking like we’re delivering on the deal? Remember cash for clunkers, and the push for shovel ready transportation projects (FASTER/TIGER grants)? Were any of them “about” getting old cars off the road or building nicer smoother streets? Of course not, they were fiscal stimulus schemes aimed at generating some kind of activity, any kind, to keep factories running, fuel burning, and people working. They might as well have been digging and then refilling holes.
For more than a decade now the stage has been set to prepare people for the biggest public works project ever undertaken. It doesn’t matter that the outcome doesn’t deliver the intended results. The opportunity here is to keep the fires burning a little longer, as demand for FF falls, artificially create new demand by ordering millions of solar panels and wind turbines, ship them all over the world, install them. It doesn’t matter that it actually ramps up GHG emissions in the short term to manufacture all of this stuff- that’s the idea. More GHG emissions means more manufacturing and commercial activity, when the people can no longer afford it. Governments can pay for it, directly monetized by central banks… for as long as it lasts.
That’s the best sense I can make of it anways. I just can’t believe all the posturing will be for nothing. TPTB will try, somehow, to use the push for RE as a tool to extend BAU and ultimately thier grip on power.
In sharper numbers:
A gallon of crude API 37.5 contains 140.000 BTU.
The extraction of 1 gallon of crude API 37.5 costs 15.000 BTU.
The ICE works at 20 percent efficiency.
The extraction costs 15.000 BTU * 5 = 75.000 BTU.
75.000 BTU / 140.000 BTU = 0.53 = 53 percent
Diesel costs $2.4 / gallon.
It cost $2.4 * 0.53 = $1.27 to extract a gallon of crude API 37.5
1 barrel equals 42 gallons
It costs $1.27 * 42 = $53 to extract 1 barrel of crude API 37.5
The WTI crude oil price is $50 a barrel.
The end consumer pays $2.4 * 42 = $100 for a barrel of Diesel
These numbers are close to the numbers from EIA.
What we pay for in a gallon of: gasoline and Diesel
http://www.eia.gov/petroleum/gasdiesel/
Gasoline $2.18 – Crude 47 Percent = 1 USD
to a real black person your on the same page as me when you state carbon reduction emissions stuff is just a cover for the taboo topic of fossil fuel depletion,the elites have been preparing for this for a long time and thankfully that they have because we would not be around enjoying ourselves on our finite world. my advise to anyone on this website don’t put all your eggs in one basket
Unfortunately, there is only one basket we call planet Earth.
This is (used to be?) very plausible, high degree scenario for me as well, however I’d say the world has become so fractured today, that the best opportunity window to force it just lapsed, although nominal deals on climate change have been already signed globally across the board (north/south, east/west). But I could be wrong, and with the first salvo from depletion imbalance, they might resurrect the push for action, in my book somewhat low probability at the moment.
On another note, the recent war drumbeats, seem more pressing and plausible danger now, as they can’t let Russia finish their conventional (nuclear to some extent as well) rearmament program run at this pace till 2020-25, by that point it will be giant, modern continental dominating and perhaps global force.
How would countries carry out these ‘climate change deals’ without collapsing the global economy?
Asked them not me, the UN deals are already signed (mostly of declaratory and/or unrealistic goals to fulfill), perhaps they meant to use it as a base – springboard to hide future urgent FW issues (mostly in energy depletion) behind the cloud of “good doers” climate change mitigation action plans..
But again, the world is now oversupplied in oil and other energy carriers, who knows how long this situation will last under the deflation/mild stagflation scenarios and consumer countries here and there falling into chaos..
The global economy is already a mirage, so mirage squared might be a modus operandi for a while kicking the can..
RealitySANT 101 – Learning how to play by the rules of a world based on fact and logic
I believe ARBM has already put forth a theory on this — that you disputed — if you are to dispute that theory you need to explain why…
“don’t put all your eggs in one basket” = diversification
I agree. None of us knows exactly how this will turn out, so it is good not to be too intent on changing things to match one future scenario.
Gail, please send Fast Eddy a PM and let him know, he seeks to think you feel otherwise.
Expecting to eat rat with stuffing this Christmas.
http://www.nytimes.com/interactive/2016/10/09/magazine/big-food-photo-essay.html?emc=edit_th_20161009&nl=todaysheadlines&nlid=43103417
This just in case the scale of our industrial agriculture hasn’t sunk in, the pictures here should show something about the energy equation.
Wow!
What a Beautiful World….
https://static01.nyt.com/images/2016/10/09/magazine/09-big-food-ss-slide-T39Z/09-big-food-ss-slide-T39Z-master1050.jpg
@FE
Did you see that all the picture are show the full absurdity in a very “picturesque! and “clean” and even sometime a kind of beautiful / artistic way?
Everything is fully propped-up…… even in this absurdity to feed the 7.5 billion including me. At least I dropped out of 98% of processed food calories – but I’m still affected by the absurdity of the organic fruit, grain and vegetables “industry”.
In round numbers:
A gallon of crude API 37.5 contains 140.000 BTU.
The extraction of 1 gallon of crude API 37.5 costs 10.000 BTU.
The ICE works at 20 percent efficiency.
The extraction costs 10.000 BTU * 5 = 50.000 BTU.
50.000 BTU / 140.000 BTU = 0.35 = 35 percent
Diesel costs $2.4 a gallon.
It cost $2.4 * 0.35 = $0.84 to extract a gallon of crude API 37.5
1 barrel equals 42 gallons
It costs $0.84 * 42 = $35 to extract 1 barrel of crude API 37.5
The WTI crude oil price is $50 a barrel.
The end consumer pays $2.4 * 42 = $100 for a barrel of Diesel
My last post did not go through, I’ll try again, keeping it shorter (but I can’t give you my whole view, understand this, so no snarky replies). I’m not trolling when I speak about how our system works. Central banks print money out of thin air, big private banks loan it to the rest of us. If the loans aren’t paid back, central banks print more money and transfer the loans to their balance sheet.
How long can this go on? To the end of our current system. Decades and possibly even half a century or longer.
How do the central banks get the money to the private banks?
In case you had not noticed we are not running out of money — money is infinite — we are running out of cheap energy — not infinite.
Money is just a representation of energy.
Let’s say you have 1000 barrels of oil — you assign a price of $100 to each barrel. You could easily assign a price of $100,000 to each barrel.
Doesn’t matter – you still have get one barrel for your money
QE forces interest rates down delaying the collapse of the system — it does not create more cheap energy
Where does the limit go for Non Performing Loans ? Who will be allowed to borrow the money ? Will they protect the Core and let the Periphery implode ? What do call this New Economy ?
Only the project of emulating Japan in the west: apart from direct monetization of gov debts, newly also buying up all the equities and commercial bonds, would take half a decade, perhaps more like ~15yrs. And as we reported from their scholarly papers, that’s not the only strategy or tools, how to effectively continue can kick in to the future. Plus we have the global triage and strategic resource (energy) access inhibition going on.
So, what is apparent, one of the last systems to go out is the jet fuel and spare parts for the jet set nobility.. In the meantime, lot of granted stuff is and will be going out of the window, like reliable grid, 24/365 re-stocked food shelf, fuel – infrastructure – spare parts for frivolous consumption (most of carz commuters), accessible health care (and e.g. the segment of hitech for elderly patients), environmental protection (subsidized sewage and drinking water plants), … and dozens and dozens of other stuff..
Shortly, the process will came in waves, punctuated by quick storms taking out clusters of the above stuff, yet that all still doesn’t make overnight instadoom shine..
They will of course try to arrange a organized demolition or implosion of the global economy. It will cause enormous stress to the system when everybody tries to hold on to their piece. The international system despite international organizations and international law is still in a form of anarchy with sovereign nations with national interests.
Something might just snap at some point.
No. The end will come when the high priests run out of bullets. As in 2008 with Lehman… all will appear awesome then it won’t. The difference this time is that the high priests are using up all their ammo trying to stop another Lehman type event. So they will be powerless when it comes
Back to reality. It was nice to visit the Neverland for a while. I could fly with fairies…
For those who are eternally with the fairies… try self diagnosing…
The less people know about important complex issues such as the economy, energy consumption and the environment, the more they want to avoid becoming well-informed, according to new research published by the American Psychological Association.
And the more urgent the issue, the more people want to remain unaware, according to a paper published online in APA’s Journal of Personality and Social Psychology.
“These studies were designed to help understand the so-called ‘ignorance is bliss’ approach to social issues,” said author Steven Shepherd, a graduate student with the University of Waterloo in Ontario. “The findings can assist educators in addressing significant barriers to getting people involved and engaged in social issues.”
Through a series of five studies conducted in 2010 and 2011 with 511 adults in the United States and Canada, the researchers described “a chain reaction from ignorance about a subject to dependence on and trust in the government to deal with the issue.”
In one study, participants who felt most affected by the economic recession avoided information challenging the government’s ability to manage the economy.
However, they did not avoid positive information, the study said.
The participants who received the complex description indicated higher levels of perceived helplessness in getting through the economic downturn, more dependence on and trust in the government to manage the economy, and less desire to learn more about the issue.
“This is despite the fact that, all else equal, one should have less trust in someone to effectively manage something that is more complex,” said co-author Aaron C. Kay, PhD, of Duke University. “Instead, people tend to respond by psychologically ‘outsourcing’ the issue to the government, which in turn causes them to trust and feel more dependent on the government. Ultimately, they avoid learning about the issue because that could shatter their faith in the government.”
More https://www.sciencedaily.com/releases/2011/11/111121142446.htm
F’ocus on this paragraph….
‘The participants who received the complex description indicated higher levels of perceived helplessness in getting through the economic downturn, more dependence on and trust in the government to manage the economy, and less desire to learn more about the issue.’
There is absolutely no final proof/guarantee we are separated from the collapse by only one last critical event (similar to Lehman). The ongoing process ahead could be likely protracted and punctuated by a series, sequence of events and attempted reactions to it.. Lets be a bit humble and not predict future with 100% accuracy.
If I hold an egg in my hand shoulder height above a rock — and I let go of it — it will fall and it will smash.
If growth stops — BAU will smash.
Neither of these are predictions. They are the way it is.
Just because you do not want to accept that – does not change anything.
Thanks for certainly great example of compressing very complex subjects into beyond trivial narratives. Obviously, the world doesn’t work like this, at least among the adults or history aware – sentient beings.
The DelusiSTANIS are high fiving each other thinking they’ve sunk a 3 pointer…
Unfortunately ….
http://agentpiercesaid.com/wp-content/uploads/2016/01/AirBallll.jpg
” If the loans aren’t paid back, central banks print more money and transfer the loans to their balance sheet.” Central banks are part of governments. I don’t see governments and central banks as separate entities. There’s a limit to how much debt a government can take on. If lenders don’t think they will get their money back, the belief that they will not get their money back threatens the value of the currency. If Greece was allowed to borrow to infinity, at some point the Euro would become worthless. No one knows what that point would be because the point would be largely is psychological–if investors come to believe a government’s debt cannot be paid back, that government’s currency is not accepted in exchange for good and services.
“Decades and possibly even half a century or longer.” If the majority of borrowers cannot pay back their loans plus interest, the system will not last “Decades and possibly even half a century or longer.” The private banks are doing a lot less lending than they could could be because they believe most potential borrowers will not be able to pay back their debt. The period of time a low volume of lending can last depends remains to be seen.
“No one knows what that point would be because the point would be largely is psychological–if investors come to believe a government’s debt cannot be paid back, that government’s currency is not accepted in exchange for good and services.”
The psychological aspect of the money system is the only thing I understand about money thus far. Thanks for making this very useful point.
First of all, I want to thank Gail for her outstanding work throughout the years. Please keep up the good work and continue to share your brilliant insights with us readers. I also want to give a bit shout-out to FE who is giving his best to defend this sanctuary.of ours tirelessly. Anyway, I have some more breaking news from DELUSIStan for you guys:
>>>Germany wants to ban the sale of new petrol- and diesel-powered cars by 2030, leaving only electric and hydrogen vehicles in showrooms. The dramatic move comes as the country pledges to reduce its carbon dioxide output by between 80 and 95% by 2050.<<<
http://www.ibtimes.co.uk/germany-targets-2030-ban-new-petrol-diesel-car-sales-1565570
Earlier today, German policy makers agreed upon the measures outlined in the newspaper article cited.
“Germany wants to ban the sale of new petrol- and diesel-powered cars by 2030, leaving only electric and hydrogen vehicles in showrooms.”
It is as if the government Españistán says:In 2030 we only flying cars will be sold at showrooms.
“The dramatic move comes as the country pledges to reduce its carbon dioxide output by between 80 and 95% by 2050.”
That I do not doubt.
https://gailtheactuary.files.wordpress.com/2014/01/tverberg-estimate-of-future-energy-production.png?w=640&h=384
Germany is clearly losing northern irreversibly.
Now I have no doubt: the collapse is not an option.
Could this be the next BMW?
https://upload.wikimedia.org/wikipedia/commons/0/0f/Lancaster_County_Amish_03.jpg
It actually looks better than this one.
http://www.sosmoviers.com/wp-content/gallery/the-road-la-carretera/the-road-la-carretera-014.jpg
https://s-media-cache-ak0.pinimg.com/736x/e8/82/ad/e882ad50ff3931e63aee50992a5927f0.jpg
Ha ha ha…!!!!
I like this image better than the others. The kids and dog are smiling. The road is clean. At least one donkey’s stomach is full. The roadside is not a strip mall, and the sun is shining brightly.
Splendid image. The dog looks remarkably well-fed. Clearly they are prospering. Or does it get to eat lots of bandits?
I would imagine that the same people who created the solar mess — are behind this brilliant idea…
Germany’s Expensive Gamble on Renewable Energy : Germany’s electricity prices soar to more than double that of the USA because when the sun doesn’t shine and the wind does not blow they have to operate and pay for a completely separate back up system that is fueled by lignite coal http://www.wsj.com/articles/germanys-expensive-gamble-on-renewable-energy-1409106602
There is a rumour that Derek Zoolander and his team of experts are advising the German government on these sorts of issues…
They have this deep hatred for fossil fuels after The Incident
Death to the ecologists!
It’s interesting that the choose the year 2050. Isn’t 2050 around the time The Club of Rome predicted that industrialization would cease?
Why am I thinking that this carbon emission reduction stuff is just a cover for the scarier topic of fossil fuel depletion? It is practically a taboo topic.
2030 is when saudi expects to be importing oil
interesting coincidence date there
Thanks for the kind words…
Keith and World and the rest of the D-Krowd are ripping their hair out and beating their dogs (again) after reading that 🙂
Colonel Fast Eddy (esc.) is back in business, and the imminent threat, of too much BS to strategically valuable blogs is thwarted, for now.
The CO of the specials forces search and rescue teams has gone on a prolonged R&R. Unofficial sources claim the CO might never recuperate after meeting Fast Eddy in person. The only words uttered by the CO upon his return were; “facts, logic, facts, logic, facts, logic.”
So, suddenly I’m reclassified as the member of the Delus-club, by arguing and providing factual concepts for step-wise collapse discussion, only few decades longer in to the future anyway, than insta-radicals message, who for the most time here only engage in pamphleteering, posting – spamming childish “entertainment” pictures/videos? Evidently, times have not changed, as the most vitriolic relationships are usually confined inside the same family (broader doom-collapsniks), interestingly quite similar to warring cult factions under the same tree, lolz. What a humanoid joke, again, ha ha ha.
Worldofhanumanotg, do you understand or comprehend fully how everything is tied and interconnected and when one falls, it will bring everything down? It is not a matter of belief or you like it or not. I want to be wrong but from all my analysis and experience, I don’t think I will be wrong.
I too want to be wrong … I also want to fly … but I know that if I jump of a building … I will die
I am not on this blog to convince people but to discuss with like-minded people on this issue.
You have provided no facts to support your position.
Our most recent history shows that the slightest slowdown of our current economy by just a few percentage points brings an immediate chaos of unemployment and global destabilisation. Yet somehow that won’t apply to a permanent ‘downsizing’
http://www.endofmore.com/?p=1464
For a comprehensive explanation of what happens when the system breaks… see page 56
V. Financial System
-Supply-chain Cross Contagion
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world
W. B. Yeats The Second Coming
http://www.feasta.org/wp-content/uploads/2012/10/Trade_Off_Korowicz.pdf
Bleat on… or learn….
You submitted the very same link numerous times already.
My arguments varied in scope were posted on numerous occasions, usually centering on the issue of the trend towards deglobalization, attempted autarky and or regional cooperation blocks, etc. These are not solutions per se, only natural attempts to survive, can kick by other means, at the expense of the less prepared, less organized, less endowed with natural resources competitors, and so on.. Basic history stuff in essence, which apparently is not forte of the proponents of the overnight collapse fantasies.
Repeating again this is not the realm of BAU-lite or pleasure town utopias, it’s about relative poverty, relative degree of chaos and suffering..
They are indeed kicking can… and will kick it as long as possible…. and that is keeping the global economy growing…
This is not collapse. Anymore than the run up to 2008 was collapse.
When growth stops — when the central banks are unable to prop things up — then you will see what collapse looks like — it will be rapid.
Sadly I will not be able to say I told you so — because collapse begins when the electricity goes off – forever.
Again, the same trap you always manage to fall into right in the deep bottom.
What is not to be understood about “relative !” ?
The grid won’t come instantly off everywhere anyway (triage of legacy/inertia infrastructure under authoritarian rule), perhaps only under the full blown global nuclear war and even at that point, chances are that some gov enclaves would soldier on, slowly re-purposing the fraction of the legacy stuff laying around, enlarging slowly the perimeter, likely allowing for bridge to “steam retro” or “retro peasant/draft animal/feudal” level of complexities, and sort of continuation of the project on different line.
Is this the world for +7B, no.
Is this the world for several B of people living in frivolous consumption (OECD+EM countries of today), no.
Is this the world of initial great biosphere/diversity, technical, social, cultural setback, yes indeed.
If commodity prices are too low worldwide, it would seem as though the results from this could flow back in to electricity availability pretty quickly–perhaps 2 or 3 years. There wouldn’t be a simultaneous, but it could be pretty close.
Of banks failing, and not being able to pay workers could be a problem.
https://understandinginnovation.files.wordpress.com/2015/06/dunning-kruger-0011.jpg
Allow me to show some back up regarding the reality of macroeconomics:
https://www.youtube.com/watch?v=11J_914RZ-o
https://www.youtube.com/watch?list=PL85C3640A1C6F23DA&v=HYXASbjErx0
https://www.youtube.com/watch?v=wpW_KMHlAmo&index=3&list=PL85C3640A1C6F23DAhttps://www.youtube.com/watch?v=ge-g3ef3iCQ&index=5&list=PL85C3640A1C6F23DA
https://www.youtube.com/watch?v=4HJ54RRB7OU&list=PL85C3640A1C6F23DA&index=6
https://www.youtube.com/watch?v=Dv_D4PVA3jo&list=PL85C3640A1C6F23DA&index=7
And many more. These are all about the monetary sovereign ability to create[“print”] money
There are many other lies out there also in dire need of correction.
we live on expectations—collectively that is.
We expect supermarkets/gas stations to be full and lights to come on at the flick of a switch.
If those things fail, it doesn’t matter how dedicated to a downsized life you are on a personal basis, you will be trampled in the rush for the last can of beans by the panicked masses unless you live on an uncharted island somewhere
It’s what is called human nature. We are nice to each other because our bellies are full and we have jobs and homes and families (any FW hermits need say nothing here–we know where you live anyway)—Altruism on a broad scale is the product of assured prosperity.
In the UK in 2001 we had a fuel tanker drivers strike, the government was told that the nation had only 3 days of food as static backup stock. We live on a mobile warehouse powered by oil–not batteries. The strike ended in days.
THAT is the reality of what we face.
the crash of 2008/9 was a foretaste of what is to come, and was the first of many. each will get closer than the last as they get more severe. Our economic system is predicated on ever faster forward movement. It cannot stop or even slow down.
Oil energy will become unaffordable as it gets more difficult to extract from the ground.
Wages are the pretty much the difference in cost of fuel extraction, and the means by which we burn them. We are getting caught in the closing vice between the two. Thats also why 60 years ago you had (relatively) high wages and cheap goods.
We ignore/downplay it because it is in our nature to do so. Most of me agrees with you—the remaining me calls me an idiot—but there’s very little i can do about it anyway short of move in with Eddy—-on second thoughts I’ll take my doom chances here.
worldofhanumanotg, I would certainly like to live another month or year or decade. Why not, life is great. I plan to go everywhere in the world and I have two children.
All these links are meaningless if you have yet to think through in detail or experience it. I have stopped explaining all these to all other people as most of them do not comprehend. To these people, we are the “chicken little” who cried that the sky will fall down. Fall it will but we don’t know when it will.
Those who understand this situation, sometimes fail to under Dunning-Kruger effect. https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect . No matter how hard one try to explain, people will never understand or do not wish to understand. They listen, they thought about it but at the end, they will say “I am pretty sure someone in the government will take care of that”. It is my problem anyway. Yes, it is not his problem. That is definite. So, nobody cares about it and it will continue going forward until the whole thing collapses.
You need to be multi-disciplinary and have a very very wide view on a lot of things. You need to have knowledge and experience ranging from IT, physics, finance and most important of all, the “will” to learn new things and admit to yourself that what you have known so far is wrong.
In my own life, I have many times where I did 180-degree change in my viewpoints. I admit that I was wrong on it after I have seen/experience/get to know about it. Most of the highly educated ones are always in the “silo” mentality. “All else being equal”, “assume there is no friction when you do this question”, “Assume this”, “Assume that”. “Assume that you increase the tax 20%, state revenue will also increase 20%” These are not real life experiences that people are going through. They are totally detached from what is happening. What they are confronted with all these, they will say “no one saw it coming”.
We humans have come to point where we have kicked away all the old support in favour of the new. We have no other backup plans except going forward. There will be no “de-globalization”. No one, will ever tell me how de-globalization” work. Can you tell me step by step how it will work? Do we have time?
All those who “deny” anything in any website will just “say”. They have nothing extra to support it. worldofhanumanotg, you are here for many years. can you list down exactly how it will work? How de-globalization will work? If you are so sure that it will work, why don’t you list down step by step how it will work.
I can list down step-by-step how a financial meltdown will cause total collapse. It can be done with an uncanny accuracy. Why? I was in the middle of it in 2008. I have that experience. I have read about it. My viewpoint was changed 180-degree in 2008.
There are many new commenters who came in, talk about something, trying to troll people and get them agitated.
Regardless of what it is, the fact that there are people coming in and troll is not a good sign for homo sapiens. There are big and real issues that can lead to ELE but people literally bickering and picking pennies in front of a giant steamroller and no efforts are made to even address the big steamroller. They are just interested to see which year the pennies are coined and how clean/dirty they are.
This is a new term for me…. ties in nicely withe axiom about why one should avoid arguing with fools….
So we know have a term to describe the disease that afflicts all DelusiSTANIS …
The Dunning–Kruger effect is a cognitive bias in which low-ability individuals suffer from illusory superiority, mistakenly assessing their ability as much higher than it really is.
Dunning and Kruger attributed this bias to a metacognitive inability of those of low ability to recognize their ineptitude and evaluate their ability accurately.
Their research also suggests corollaries: high-ability individuals may underestimate their relative competence and may erroneously assume that tasks which are easy for them are also easy for others.[1]
Dunning and Kruger have postulated that the effect is the result of internal illusion in those of low ability, and external misperception in those of high ability: “The miscalibration of the incompetent stems from an error about the self, whereas the miscalibration of the highly competent stems from an error about others.”[1]
CTG,
Step by step deglobalization or degrowth.. (these steps should have been taken in the -70s, now its too late)
Ok, CTG, here goes;
1. UN or other such global institution to have the power to superimpose heavy financial sanctions on international laws
2. Private banks and/or privately owned banks, forbidden by law
3. Co-operative banks instituted instead
(Co-operative; one person one vote, not one dollar one vote)
4. All privately owned businesses, also transformed in to co-operatives
5. All stock exchanges globally, forbidden by law
6. A (small) global tax on every single financial transaction in the world
7. That taxation money used for free education of every girl and woman in the world, as long and as many diciplines they might ever want, and also free contraceptives for everyone, everywhere
8. Taxation used heavily to incentivise food grown in household garden plots
9. Basic product minimum lifespan of 50y and 99% circular economy of raw materials, or subject to heavy fines
10. Composting and composting toilets, or equivalent local infrastructure, required by law, everywhere
11. 50% of all lands and seas confiscated as off limits natural parks, permanently, everywhere
12. Heavy taxation on international trade
13. Local trade and sustainability incentiviced heavily with that tax money
14. Locally built and maintened wind and geothermal power incentivised heavily
15. Cars and truck infrastrucure changed to bikes, trains and canals infrastructure, everywhere
16. All democracies globally forced to decide policies within the limits of a finite planet. Therefore the end of democracy.
17. All free markets heavily taxed and subsidised. Therefore the end of free markets.
18. All private ownership outside of co-operatives forbidden. Therefore the end of capitalism.
19. Livestock on an industrial scale taxed heavily.
20. Chickens, wabbits, bugfarms, fishfarms etc. to satisfy household protein intake needs, incentivised heavily
Of course one has to realize, even one of these was an mission impossible. Not to mention all of these and more..
Van Kent, you’re talking about a planned global economy, the USSR style. The problem is that we forget physics when designing these roadmaps. The planned economy is tremendously inefficient energetically, which would only make things worse. This is counterintuitive, but I think it’s true what I say.
Crates,
Nope..
just one institution to have rights to sanction, on a global level. Everything else on a local level.. And with some “market dynamics” working by those rules.. most economic activity would eventually be extremely local. Except information..
When Dennis Meadows co-wrote the limits to growth, and expected some actions.. I have been wondering what kind of actions he actually expected 43y ago??
In my opinion, this economy you describe does not hold the necessary complexity to avoid collapse. The collapse is the most efficient out of the impasse in which we find ourselves and that is why it is the one that has best chance of winning this game. The orderly decline is tremendously inefficient because despite increasing weight of local economies, it takes a great global planning. Very difficult to explain using google translator. I am sorry.
It is true what he says, many analysts and divulgators peak oil, continually tell us how the world should be, but no one is able to tell us how we can make it happen. That’s because you can not.
It is a utopia.
Crates,
CTG, asked for a step by step de-globalization plan. THAT was the tought experiment above. AND it can not be implemented in 2016-2020 because of debt, JIT economy and derivatives.. its too late in the game for that sort of plan.. it was just an thought experiment of what should have been done when the world that has limits to growth..
The only thing that could help NOW, are an abundant energy source, abundant raw materials, habitat loss negated, CO2 sucked out of the atmosphere, and instant global wealth, currency and benefit re-allocation, within minutes of a financial crash, globally = MAGIC..
There is no need to try and actually solve this predicament of ours, because that is impossible. Unless you belive in magic that is..
Okay, but what I’m saying is that you never could have implemented a plan to have avoided reach this situation. The population has always been within the limits of maximum load capacity and the only way to avoid the negative consequences of this fact (collapse) is going forward increasing complexity. You can not decrease orderly or 2016 or 1970.
It is a fallacy to believe otherwise. Meadows says: “now, there is nothing we can do”, but in reality, we could never do another thing.
This is very hard to accept, but I think so.
Globalisation, Trump angst looms over economic elite at IMF meetings
Global policymakers fret discreetly about Republican candidate
OCTOBER 7, 2016 by: Shawn Donnan and Claire Jones in Washington
https://www.ft.com/content/e4743282-8ca5-11e6-8cb7-e7ada1d123b1
—
Lou Jiwei, China’s finance minister, told reporters on Friday, the current “political risks” would in the immediate future lead only to “superficial changes” for the global economy. But underlying them was a deeper trend of “deglobalisation”.
—
Now the only straight talker is a Chinese?
Compare and contrast with the rest of the interviewed..
A companion article: http://www.zerohedge.com/news/2016-10-08/globalization-done
ps lot of good prediction (nationalization or national privatization of formerly globalized assets like water, food, shelter) take notice!
We are shrinking! The neglected drop in Gross Planet Product
Presenting the October 2015 IMF World Economic Outlook, Maurice Obstfeld (2015) identified the fall of commodity prices as one of the powerful forces shaping the outlook for the world economy. The strength of this force, however, is underestimated by the official forecasts in the IMF’s flagship publication. As illustrated in Figure 1 the IMF world economic outlook database reports a reduction of Gross Planet Product (GPP) for the year 2015 by -3,8 trillion dollar (-4.9%). A nominal reduction of GPP of this size has occurred only once since 1980 (the starting year of the IMF database), namely at the start of the Great Recession when GPP contracted by -5.3%. Table 1 illustrates that all previous contractions of nominal GPP are associated with major crises in the world economy.
http://www.voxeu.org/sites/default/files/image/FromMay2014/van%20bergelijk%20fig1%204%20dec.png
http://voxeu.org/article/shrinking-planetary-gdp
When converted to US dollars using currency relativities, 2015 world GDP is down relative to earlier years, because of the rise in the dollar and fall of other currencies, starting in mid 2014. There is another way of estimating world GDP (using PPPs which give more weight to developing countries). I am fairly sure it doesn’t show an absolute drop in world GDP in 2015. This is how some leaders can say that world growth has been slow recently.
The massive drop in the oil price and commodities in dollars should perhaps have caused a crash. Somehow the devaluation of emerging markets currencies seems to have soften the impact. This must still have caused enormous stress on financial institutions in emerging markets and financial institutions in the west that are exposed to emerging markets.
I believe it was IMF who warned that the Third Leg in the global economy, the emerging markets, are now about to enter the financial crisis that first hit the U.S and then the EU. I just don’t see how a financial crisis bringing down the emerging markets could be controlled, managed or contained by the FED and the ECB.
Global Elites Step Up Defense of Openness as Populism Rises
http://www.bloomberg.com/news/articles/2016-10-08/world-outlook-clouded-by-protectionism-imf-nations-said-to-warn
Tepid Growth
The global recovery remains slow and uneven, with growth expected to pick up only slightly next year, mostly on account of emerging markets, the panel said. Persistently low growth has exposed “underlying structural weaknesses, and risks further dampening potential growth and prospects for inclusiveness.”
IMF nations reiterated their commitment to use all policy tools — including monetary policy and fiscal policy, as well as structural reforms — to boost growth.
“We certainly have decided to come out more loudly to say ‘Central bankers can’t be the only game in town. Let’s get on with it, and see some action from the other authorities,’” IMF Managing Director Christine Lagarde told reporters.
Christine Lagarde, who assured us that 2014 was going to be a year of Growth because 2+0+1+4 = (Magick?) 7!
She predicted 7 hard years after 7 fat years. Black Magic ?
The Slovak National Bank is going to limit 100% mortgages. A similar measure to what was done after 2008. Now, again, you will have to have some savings to be eligible for a mortgage.
http://ekonomika.sme.sk/c/20348091/zadlzuje-sa-privela-ludi-preto-hypoteku-uz-nedaju-tym-co-nemaju-uspory.html
My guess is that the construction sector in Slovakia is going to have tough times…
Instead of getting rich, Slovaks go extremely into debt:
https://www.allianz.com/v_1474281539000/media/economic_research/publications/specials/en/AGWR2016e.pdf
(Based on the article: http://ekonomika.sme.sk/c/20348967/slovaci-nebohatnu-extremne-sa-zadlzuju-ukazala-studia-50-krajin.html)
Sweden limited to 85% a couple of years ago.
Problem is, that only works as long as prices are rising. With these levels it is “impossible” to save the cash to trade up, the cash must come from rising value of current home.
With a real estate “crash” of 10% most everyone will be locked in where they are. Especially couples looking to separate.
I don’t know how the commenters here play the game…. but I for my part opted out of taking on any (especially long-term) debt at this late stage of the game.
I want to be flexible whatever comes… regardless of the slow or fast crash, regardless of the policies taken, regardless if my employer at the time survives or I can get a new job.
Lots of stuff, PV-Installations, houses, etc. have down-payment periods of 20 or even more years. It seems to me ridiculous at the current stage to engage in such plays.
How do other OFW commenters see that issue?
In debt (<30%) and full-ish time job.
In case of sudden collapse those with 100+% debt will have been winners. Slower, contraction, stair step, I will at least be better off than a large majority.
All is about energy: the ownership of real estates consumes energy. As far as I know, the poorest people survive in the real estates that have no clear ownership structure (i.e. several owners, burdened with distraint orders, land charges etc.). Such real estates are “untouchable”, as the cost of getting the ownership of them in a legal way exceeds the value of such real estates. In such a way these people represent the energy that prolongs the life of these “dead real estates”.
Trying to own things that are losing their value at all costs due to the available energy going down is a nonsense. The future value of more and more real estates is in fact zero, the owners can be satisfied with low rents. The problem is how long the grid electricity, heating, water supply and sewage pipes etc. will be functioning. The vicinity of food and healthcare is also important.
Some people think that we can “return” to something like brutal predator behaviour and get hold of the properties of others via fraud (there are numerous cases in Slovakia of people fraudulently acquiring real estates and selling them furhter).
Firstly: The apes were not predators, but frugivores.
Secondly: If you behave aggressively, no one will provide you health(care).
That is why aggressive behaviour as regards the ownership is in human communities punished with isolation of such individuals, not tolerated.
The biggest problem of the future is isolation of individuals, as the cases of people dying alone in Japan (kodokushi) show.
I meant to say if sudden collapse someone with economy in order have nothing to show for it.
It is a hard thing to know what to do. From a point of view of not worrying, not taking on more debt is the way to go.
I expect that there is really no alternative for a lot of readers, however. They need to have a car for commuting. Without debt (or a lease) this becomes impossible. Their family expects to live in a house. But of course, moving to a more expensive house is not necessary. The debt on an existing home remains.
I doubt that homes will be taken away from those who cannot pay for them, if everyone is defaulting. We have enough other things to worry about. If you already have quite a bit of debt, I wouldn’t add more. But I wouldn’t spend a whole of time worrying about the debt that is already there.
I doubt that homes will be taken away from those who cannot pay for them, if everyone is defaulting.
Very good advice, Gail. One must make sure to have enough money saved so as to outlast a fair percentage of defaulters and not be one of the early defaulters. Similar to being able to outrun one’s friends but not necessarily the bear.
Do you expect an increased interest?
The problem is probably not paying interest, but utilities and maintenance. At least if you have a house most maintenance is optional for a long time.
That is a good way of putting the situation.
we can’t readily see it as such, but a house represents a block of embodied energy
It returns its capital value—ie the energy that went into building it only so long as additional energy is pumped in by the people who live in it, and wish to go on living it over a number of years—or even hundreds of years.
If people don’t live in it (a ruined castle say) then its value as living accomodation reverts to zero. If i left my house empty an unattended, in 20 years it would be uninhabitable, in 50 years it would fall down. You can see this in the collapsed suburbs of Detroit. Nobody wants to live there–hence houses that were valuable and desirable 50 years ago are now worth nothing at all, the people who walked away from them were convinced that they still had an asset worth $XXX until reality kicked in
Thus houses remain valuable only so long as there is a surplus of people wanting them. If there isn’t values drop. This is the basis on which builders sustain their profits and their market.
I’m finishing 1,000sqft of the basement in my 3000sqft house in the exurbs. I am basically living a stereotypical high consumption lifestyle, while simultaneously buying all of the chattel accoutrements of a survivalist. My wife and I are both professionals, and if we get to the point where we can’t survive financially, the Courts will have long been clogged with foreclosures, collection actions, etc. As an attorney, I feel confident that I can drag out any foreclosure or collection proceedings for several years.
Basically, I have accepted that this high consumption lifestyle can’t last, wasn’t ever going to last, and have made peace with the fact that it is going away. I am going to eat the steak and drink the wine as long as possible, and when/if forced, give a stiff middle finger to my creditors. I’ll walk away confident in the knowledge that it wasn’t ever going to end any other way. I’ve been poor before, and can survive being poor again. Frankly, I suspect I have clawed my way high enough up the food chain that society would break down before I would get booted to the streets.
Karl,
When SHTF starts, either invite a dozen or so familymembers to live with you guys. Immediately. Or get the he-ll out of that house.
Big houses will be the first ones to have night time visitors.
If in doubt of this. Then please read stories from Bosnia and Venezuela..
If you are staying. Please nail shut every window and door in the lower floors. And be prepaired to go in and out of the house by ladder from an upperstory window..
Thanks for the reminder. My working class family (everyone but me, basically) are all in post ww2 suburbs closer to “the big city” and I am expecting they will all be moving in. While not ideal, my place is further out and on 2.5 acres, and better equipped to give us options. Some of the old neighborhood is now occupied by members of the fsa and will be in a bad way when the lights go out. Because the family all thinks I’m crazy I have laid back some extra supplies for them as well. It’s not perfect, but I will hopefully have more options than most.
With the population getting older, there will be a big surplus of empty houses. There is a lot of big houses in Slovakia that are becoming unsaleable also due to the low interest rates of mortgages that you can use for building a smaller house or buying a smaller flat.
This situation will only accelerate. The weeds, forests and ruins are returning…
No surplus in Sweden, 100k homes lacking.
But I don’t doubt there will be empty houses in the future.
George Monbiot call it rewilding.
https://www.theguardian.com/environment/blog/video/2013/may/30/rewilding-animation-george-monbiot-video
Trends and Super Cycles in Crude Oil and Coal Prices
http://inside.mines.edu/~jcudding/papers/Super_Cycles/Zellou-Cuddington-2012-09-14-Trends_supercycles_energy_w_AppC_D(WP201210).pdf
Dr Fast Eddy reported on dropping air fares on one of the world’s biggest airlines last week…. and now we have further symptoms of The Deflation that is beginning to strangle the Beast:
Synopsis
After huge numbers for January and February, with import volume up a total of 12.84% at the start the year, volume is negative year to date. Since March, import volume is down 5.09% globally. China is down 7.57%.
Global import volumes were down 1.33% in June, 3.51% in July, and 4.26% in August, progressively worsening numbers.
Year to date, shipping volume is down 1.8% globally and 2.26% in China.
In dollar terms, global imports are down 4.46% year to date. China is down 7.73% year to date.
Demand was strong in January and February, but overall demand is very soft.
The numbers for September will come out on November 4.
Key Numbers
By volume, apparel imports are down 1.8% globally, and 2.26% from China
By price, apparel imports are down 4.46% globally, and 7.73% from China.
China accounts for 41.52% of volume and 35.1% of price.
Price is weakening much faster than volume.
https://mishtalk.com/2016/10/08/spotlight-on-apparel-whats-going-on/#more-41316
Mish and similar are interesting and entertaining as commentators, but the predicting value is lacking at best. The latest credit bubble now printed by ECB+BOJ+BOC will have to work through the system, so it looks as not allowed freefall into the end of normal <10years biz cycle, and in case of not enough, FED will join the print fest again. Under these policies, actually, we can have mild stagflation with propped up equities for a few years time.. Very disgusting solid state soup of no growth, yet no shorts, …
Angela Merkel now has her finger on the nuclear button to “financial weapons of mass destruction”.
The DOJ is asking Deutsche Bank for $14 billion.
Angela responded: No.
Is she bluffing ?
Why is the DOJ asking DB for $14 billion in this economic situation ?
Are we entering a financial war ?
The TTIP deal has broken down and is now called a failure… Germany doesn’t really know where it stand between America and Russia… Germany wants a new Gas pipe line from Russia… America is working to stop the pipe line deal… Germany was flooded with Muslim refugees… UK voted for Brexit…
Or is the DOJ just putting pressure on EU to drop the $13 billion in taxes from Apple Co. ?
Is it just a nice little poker game ? Are they enjoying them selves ? Is it just politics ?
Under the previous chancellor, throughout 2000s, Germans where buddy-buddy on the economic terms with Russians. Then the pre-planted rotten fruits (crazies) started appear just everywhere: EU Commission and Parliament, ECB, national governments from Holland to Merkel, and so on.. now are they parked and cemented even on the IOC and UN, lolz.
One can assume it will take at the minimum half a decade, perhaps 10-20yrs to purge these traitors out. Funnily enough, most of these institutions (perhaps even couple of states as we know them today) by that time won’t be with us anymore or dramatically transformed in scope and size anyway.
I’m not trolling, I’m actually describing to you guys how the system works. Read through it again if you have to.
1) Central banks create money out of thin air
2) They loan the money first to big private commercial banks, who then loan the money to governments and big industrial corporations, creating a money multiplier; these loans are what the rest of us refer to, and use, as money
3) The interest rates are driven to zero and then negative, in effect making it easier to pay back the loans
4) The rest of us pay back the loans through our participation in the economy – working, buying, paying taxes
5) If the loans can’t be paid back, the central bank creates more money out of thin air and takes the bad loans onto it’s balance sheet
How large can the central bank balance sheet go? To infinity. Remember, this money isn’t real in the first place. As such, no systemically important bank – the central bank and big private banks – need fail; they are immortal. Of if one does, the contagion is easily contained by absorbing that bank into another.
How long does this system continue? It’s anybody’s guess but since human beings have a preference for credit, or money now rather than money later, and since credit based systems overwhelm other systems based on more efficient means of resource extraction and war, the answer seems to be that this system will last until human extinction. The nazis and communists of the 20th century tried to put an end to this system, look what happened to them.
Which is not to say that the system won’t change! I predict our present one will be done for in less than a few decades. But it won’t be an end to the basic architecture, which will continue to survive in different forms as the collapse proceeds.
We have an international system that need to hold together. Adding more currency in one country will tend to lower its value, when it comes to buying things in the world economy. When the US is not printing money, and everyone else is, the other currencies fall far below the US dollar.
This currency can only buy the physical goods that are made. (It can also promise future physical goods, but these may never appear.) Buying physical goods becomes increasingly difficult, as the country becomes more like Venezuela. No one trusts the currency. The country has only what it can make itself, without access to the goods of other countries.
One of the things that is likely to happen is that the European Union falls apart, and the Euro goes out of usage. Another thing that happens is that pension funds find it impossible to pay what they promised–there simply aren’t enough goods in the world for everyone. Eventually banks fail and governments fail. I don’t have a good enough crystal ball to say exactly how this happens. Perhaps it happens when countries stop bailing out failing banks. Or perhaps there will be no one to bail out Japan.
These are good musings.
Usually, the problem with big system like these throughout history is that formerly regionally defined, individual economic enclaves competing with others, suddenly at some point won everything as they co-opted or swallowed several of the former competitors.
Now you have a problem a former semi-autark enclave and its institutions geared for such status, but after this enlargement now serving also in the dual role as the top dog for everybody for credit, balance of payment, rulez, and other functions.
No wonder this doesn’t work from the day one, or is corrupted in few years/decades into complete monstrosity, which is about to stop. That’s a point we are here, untangling this mess is obviously very messy. Some call this natural reset process a collapse proper, but this is not necessarily always the case, as the renewal from different base might bring new arrangement on several forms: economic and political organization, ideology and mindset, economic base, culture..
In our case and due to large number of such reset cycles occurring in aggregate of the entire past history, the path dependencies are now skewing the result for some specific outcomes. I’d venture here to name a few: large depopulation, emergence of strong lasting taboo (with respect to ecosystems) and so on.
Norway using sovereign funds to cover deficit..
http://www.zerohedge.com/news/2016-10-07/norway-announces-massive-2017-withdrawals-sovereign-wealth-fund-cover-deficits#comments
4% return, 3% withdrawal.
Even IF we assume no financial collapse, how long is it reasonable to expect the fund to last? 40 years? 100 years? Forever?
Sorry,
225 billion krona withdrawal, 240 billion return. Around 3% of net assets.
Meanwhile Sweden can’t afford spending 300 billion on railroad maintenance spread over 20 years.
Modern Sweden is an amazing study case in how to possibly self destruct a nice country in as short time as possible. Bravo! Perhaps it was all illusion anyway, karma blow-back for past centuries of barbaric pillage, mostly prior 1648.
Do not blame on karma what could be attributed to plain stupidity. Or arrogance.
Sweden is a huge social experiment initiated. This experiment was initiated in the 70ies by the socialists. A recent documentary describes this fairly well (mostly in english):
http://www.svtplay.se/video/10458343/the-swedish-theory-of-love/dox-the-swedish-theory-of-love-avsnitt-1
This level of state sanctioned indiviualism seems to make people stupid/crazy. Many other european states followed Sweden in this process but no one else managed to reach the same level of state sanctioned individualism.
Thanks for the link.
What a fukced up country …
Artleads,
I recommend you watching the video. Fast forward to about min 55. Swedish doctor emigrated to Ethiopia and working with common hardware store stuff.
Sweden CAN afford to keep it’s infrastructure working. AND it can do so without bank borrowing. The government just has to pay for it as it goes. The value will be seen in improved GDP.
If Sweden just spends more and more in excess of what it takes in in revenue, its currency will drop lower and lower relative to the dollar. It won’t really be able to buy the additional infrastructure it planned.
The basic worldwide problem will still be too low prices of commodities. There is no way that enough countries can print enough money for all of its workers so that they can buy the houses and cars that would bring up commodity prices. If the countries tried, their currency would fall very far relative to the dollar, and the new wealth of the workers wouldn’t go very far.
We need to get efficiency in generating energy back to fix the problem. Then it can be heavily taxed, to give the government the revenue it needs.
https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
How do you mean? Highest income tax in the world and it still doesn’t cover running expenses.
Norway made a mistake establishing this fund… they should have just blown the whole lot as it came in…
As we are going to see when the storm they have been saving for arrives — the value of their fund is going to collapse….
“Norway made a mistake establishing this fund… they should have just blown the whole lot as it came in…”
And you keep thinking that just because we will all die (except for Keith) it does not matter when or how.
If you are wrong and the time axis of the collapse is not three days, but three years or decades, Norway can be grateful they didn’t blow it all on booze, girls and cars.
That’s another matter altogether.
Do you have a pension fund?
Do you think you will someday retire and get paid by that fund?
Think of Norway’s sovereign wealth fund as a gigantic pension fund.
That is going to vapourize.
Tip of the Day: If there is an option to take a lump sum on a pension — Fast Eddy investment advisory LLC recommends taking that option asap.
Yes I have a (mandatory) pension fund.
No, I won’t retire.
I would chose to not contribute if I could.
Norway is retired now and withdrawing from that fund. Seems like they’re aiming for 40+ years pay out period.
If they get 3-5 years from now that is still way better than Venezuela or Arabia.
Fortunately for the moment it is only drizzling …
When the full force of the storm hits tearing BAU to shreds — the fund will be worthless… so why not just blow the whole lot living large now?
Unlike you – they have that option
No one knows when it will be worthless. You said before christmas, I am guessing 3-5 years. Perhaps it could be extended much longer?
You don’t think Norway are in contact with the el.Ders? If they were they should withdraw 10-100% each year, not 3%.
When it vapourizes dow not matter…. what is the point in continuing to build it if it’s going to be worthless at some point?
It’s like having a bank account with 10M in it… and every month you add another 100k and you log into your online banking and squeal with delight at all the zeros after the 1….
You are getting old — death is approaching ….. you have always wanted to take a world tour … but instead you stay home enthralled by the zero’s on the computer screen….
But they have started withdrawing. Just not fast enough.
I have always aspired to live within my means. We are not talking about being mean here nor keeping to some golden mean, nor of living a meaningful existence. What I mean is I’ve always tried to spend less than I earned, preferring to squirrel some away for a rainy day, or seven thin years, or a long hard winter. However, given my age and the state of the economy, I think Norway’s idea of drawing down a bit on the savings and FE’s financial advice to take those pension payouts as a lump sum make a lot of sense.
I find it less stressful not trying to extend and keep up with the Joneses.
Some people find it very stressful to not keep up with the Joneses.
Death to the Joneses. Gee-had on the Joneses. Allah Kadabara –I cast a wicked spell on the Joneses.
I meant to say it would be mean to future generations, which they obviously believe in, to pay it out lump sum.
Why bother with holding all those funds as precious metals and cash, which could be burnt or melted in a fire or stolen, when you can trust perfect strangers to hold it for you as electronic numbers on a screen you can visit on your computer? They have promised to keep it safe for you, and what could possibly go wrong with the global banking system or the internet in the future that might limit or completely wipe your access to that wealth? Seems a bit wobbly right now, but I’m sure it’s just a temporary problem, no worries.
See Cyprus…
Also — see debasement of currency…
One reason I hold gold rather than cash is that it has held its value fairly well over time.
LOL!
“That is not science. ”
No, it’s https://en.wikipedia.org/wiki/Exploratory_engineering
“Keith is a (old) man of science,”
Engineer actually. I got a Tee shirt for my birthday that reads: “Never underestimate an old man with an engineering degree.”
” that doesn’t mean we should entertain them on FW.”
This is Gail’s blog. She can ban me at any time. But do you really want a blog that’s 100% Fast Eddy? I should also note that Gail edited and sponsored 3 articles I wrote for the Oil Drum, two early ones on power satellites and one on StratoSolar.
Unlike some of you, I am not certain about the future. It may go very bad indeed. Venezuela has become a failed state facing starvation. It’s possible the whole world could go the same direction. I work on projects to to try to prevent that from happening. I used to work on evolutionary psychology, but that’s more depressing than Fast Eddy postings.
If the DelusiSTANIS would retreat then I would not have to spend half my day posting rebuttals to their nonsense.
That would reduce my total input by 93.7%
” But do you really want a blog that’s 100% Fast Eddy?”
https://www.youtube.com/watch?v=iGLh9hRmRcM
Nooooooooooooooo!
I think it’s not that hard to guess the background for the displayed frenzy attacks, as he already on several occasions mentioned here, he blew it putting bets on far earlier and possibly one stage/fast collapse scenario. Nobody’s perfect, but it doesn’t mean individual’s problems should be over-ventilated on such contribution driven public forums as this one.
As we know the first/second generation oil peakers made some serious impact in the halls of power, probably in ways not anticipated by them, as the world went suddenly very “crazy” since the very late 1990s, very early 2000s. It was also at its core an over reaction from desperation-insecurity fears, but it evidently “succeeded” in securing at least two decades of comfy lives for the owners of the old system. As we look around the chips are going to be distributed differently from now on, nevertheless some factions even resurrected the talk from the highest (or beyond) points of the cold war in recent days, as the two decade extension was not enough for them..
All options are open, but realistically the preponderance of the evidence is still more on global triage process (escalated), de globalization move at least from the unilateral form dominating up to this point, and so on..
to try to lay the space colony thing to rest—-(not that I’m hopeful there)
No biological species can function without some form of external energy balance.
Doesn’t matter how it’s arrived at, but it must be there.
Human beings, and our infinite ancestors followed that universal law. We ate what was around us, thrived and died. If other organisms used us as a food source, we died early—if we lived to old age—same thing happened once we were underground.
We fulfilled our purpose—which was (and is) to eat and reproduce our species. And then supply sustenance to other species.
There is no other purpose than that, no matter how many gods we dream up, or interplanetary journeys we think we might make.
We fulfill our purpose by consuming what is around us. If there is nothing around us, then the choice is stark:
1—ship in support
2— die
If we ship in support, ie moon colonies, then those colonies must have a purpose because shipping in requires energy, (ie from Earth) and energy cannot be expended without the purpose of gain (note—I didn’t say profit)
Thus a colony would have no purpose. Colonising the Moon or Mars wouldn’t have a purpose, because no organism can live outside the support system
Despite the daydreams, this why there are NO permanent moon colonies, because there’s nothing there to achieve gain,
If there was, commercial ventures would have been there decades ago.
There isn’t so they are not,
There is no gain of any sort to be had that is to our collective benefit.
To put this in more Earthly terms—if you go on a trip and bring back souvenirs and photographs—what do you call it?
A holiday —-or a vacation if you live in the colonies.
So far moon trips have done exactly that. Mars looks to be just the same.
NASA has in effect, been a job creation scheme for Phds.
But let’s take this fantasy a step further. Suppose unlimited Hopium seams are discovered on Mars.
You have to get it back to Earth. (it will of course hope itself back here—which is why it’s called hopium –silly question)
Unfortunately Earthlings don’t like using legs, they insist on using wheels, and eating. So if Hopium doesn’t make wheels go round and make food growing redundant, it ain’t much use. (no gain you see).
Next stage—interstellar journeys….same rules apply—there has to be a purpose of gain. If somebody invents the warp drive tomorrow, there has to be something worthwhile wherever you’re going.
If you send an ark, filled with our organisms, and they find a benign world to land on, then you can be certain the organisms already there would be as welcoming as Trump on the Mexican border.
“to try to lay the space colony thing to rest”
I have not promoted space colonies since L5 Society merged into the National Space Society. That’s 30 years ago. Freeman Dyson’s arguments in “Pilgrims, Saints and Spacemen” killed the idea. The cost was 300 times more than the colonists could afford.
500 or even 10,000 people building power satellites in orbit would be a lot of people, but it would be a company town and not a colony. Now if we build the last half of them from material mined out of the asteroids, that could morph into space colonies eventually.
Though it’s in a race with people uploading into hardware–sunk in the deep oceans for cooling. Do I know what the future will be like? Nope. Can you imagine someone from 50 years ago coming back with to a world of smart phones?
unfortunately people like musk are putting out the idea of space colonisation
and as with “making America great again” people are taking comfort in this loopy idea in the sense that “we are going to be Ok then”’.
“unfortunately people like musk are putting out the idea of space colonisation”
Musk is talking about colonizing Mars, not space in the O’Neill mode. Very different.
well thats a relief
wouldn’t want the riff raff messin up the sirius planetary system—got enough trouble here
on second thoughts—“not promoted space conies”
and
“could morph into space colonies”
Would appear to be something of a contradiction?—correct me if I’m wrong
Oh not at all….
Try this …. pretend you have no ability to think logically… reject all facts … believe that if you can imagine it then it can happen…. that engineers and scientists are omnipotent gods…
Then re-read Keith’s seemingly contradictory comments…. you will see what I mean.
sheesh
did i really say space conies?
You know what happened when they released 2 wabbits in Australia
space cojones….
ah—course—makes sense
” that engineers and scientists are omnipotent gods… ”
I wonder what stone age man would think of a Saturn V? Or even Hoover Dam?
And herein lies the problem — Keith believes he is god….
Ooops…
https://s-media-cache-ak0.pinimg.com/originals/6e/b2/15/6eb21536f9f082e139b617fdda7b82d0.jpg
my significant other says I’M god
the vacancy has been filled, no further applicant needapply
“God created Heaven and Earth…”.
Did I ?
I don’t have any memory of that.
I thought Norman was the creator…..
I am willing to throw my support behind you though —- what can you promise me? I am not so keen on virgins nor milk and honey …. if you can make this happen I am your acolyte http://www.si.com/swimsuit
don’t try pinning all the crap on me
Trump and me share the same lawyer
I thought you might try to up the ante to support you as the true god…. https://www.victoriassecret.com/vsallaccess/angels
0o ok then
but anyone i take a dislike to can expect a pestilence in the morning.
(The Jwitnesses are my hit squad btw) they do most of my dirty work on sunday mornings—i make them do it then cos thats when they catch the sinners doing sinful pressups
Let’s borrow an idea from Tim… this could be where you send people who do not pay you homage — and do not pay the entry fee to Nirvana….
https://s-media-cache-ak0.pinimg.com/originals/08/11/5d/08115d7bceea0e205f19dc08893839f2.jpg
anyway
nobody is sharing 70virgins
god with altzheimers—no wonder things are a mess
you need a full time carer
Keith – instead of space solar — why don’t you focus on finding and getting us to another earth?
Us????—whats the us caper??
Our problem is deeply connected with the fact that the Reverend Thomas Malthus was broadly correct that population growth outpaced food supply growth, which inevitably leads to famine or collapse, as most 19th century thinkers assented, but that in the 20th century it became fashionable to declare that Malthus had been wrong because technological advances could outpace population growth. What’ve we’ve seen in practice is population growth keeping up with advances in technology including both agricultural, distribution and medical. Hence we have continued to advance while remaining close to the edge of a Malthusian catastrophe. This advance—this march of progress—is what’s known around hear as BAU. Moreover, once our technology falters, or critical resources become insufficient, or the climate cools, or the complexities of the system become too great to maintain balance, we enter a period of Malthusian catastrophe on steroids—otherwise known as SHTF.
Getting us another earth, or “terraforming” the parts of this earth that are currently wilderness, might give us some temporary respite, but unless we can we stop our numbers from expanding in response to the additional resources available, we are still fated to go through a Malthusian catastrophe at some point.
I was thinking that Keith could find a string of planets… and we could just keep moving around concerting them and burning them out as we have the earth….
isnt that what the mormons do already?
or the scientologists?
The Moon’s regolith is enriched in helium-3 (3He) from solar wind bombardment. IF 3He fusion could be achieved, it would be both high energy yield and relatively aneutronic (no neutron output), therefore a highly desireable form of nuclear fusion. One problem here on Earth is 3He is very rare and expensive. Therefore the idea has been suggested (by the Chinese) to mine the Moon’s regolith for 3He. That gives you the gain you are looking for, sorta like beaver pelts in North America back in the 1700-early 1800s, but perhaps more useful.
so all we have to do is wait for fusion to invented
i’d guess we have less than 20 years for that if to come about
but we’ll ignore that nuisance of a detail for the moment.
We (or the Chinese) produce Helium 3 on the moon—forgive my ignorance on this, but what exactly do you do with it? (not being in the least sarcastic here)
As Ive pointed out ad nauseam, our existence here or anywhere else in any civilised context is predicated on continuation of unlimited rotary motion. We cannot sit at spaceship controls and journey outwards forever.
Ive just taken the trouble to read upon it—in no learned document have I read an answer to that—only that we would have a “colossal new power source” or somesuch
I assume its a power source which is then somehow shipped back to earth—no use on the moon, because moon colonies are just –well– colonies
As to your beaver pelt analogy, the USA could hardly have become viable as a series of Jamestowns in stockades could it?
It does get frustrating having to address the epic levels of complete nonsense….
I sometimes wonder – based on the insane ideas that some are posting here — if I am being trolled.
But no — I am quite certain these people actually believe what they say.
They are well and truly Delusional. Borderline insane….
insanity
noun in·san·i·ty \in-ˈsa-nə-tē\
Popularity: Top 10% of words
Simple Definition of insanity
: severe mental illness : the condition of being insane
: something that is very foolish or unreasonable
Actually… well past the border line….
posting replies but they seem to vanish
just posting this short one to see if it works this time
I let out the missing post. Sometimes I am a bit slow.
“Engineer actually”………says it all. Engineering is what humans do, since the adaption of fire, humans have “engineered”. It is simply what defines us and it will wipe us out.
Your faith in the future based on engineering is astonishing. Engineering is what got us to here and into this predicament. EVERYTHING can be related back to how we overused and exploited ours and every living thing’s habitat by engineering. Now to expect that more of the same is the cure for our predicament is nothing short of psychopathic.
Keith,
If you see FW as valuable.. why not join in discussions other than your own topics?
Maybe enough of space solar already??
hkeithhenson has made it a habit to jump in and insist that a technological fix to our problems is plausible. It’s not just that he believes in a tech-fix, he has revealed that he believes in the secular religion called Transhumanism. Transhumanist beliefs are not informed by science. Transhumanism is a belief system informed by wishes by human for what technology can do in the future for them. People who are proposing solutions to complexity that are reinforced by Transhumanist beliefs, by beliefs that involve humans achieving immortality in the near future by uploading their consciousness to machines shouldn’t be taken seriously.
hkeithhenson says : “I should add that I don’t expect this to happen. I think a “solution” where people move out of biological bodies and into something like the Matrix is more likely.” We can’t even provide to most people on this planet comprehensive healthcare. How are we going to provide something that will be significantly be more complicated than the most complex surgery there is…and will be more expensive than the most expensive surgical procedure today…assuming it is even possible?
hkeithhenson says :In the long run, the human race–if it stays on one planet–has no future. The only way to get off is to industrialize space.”
I hate to burst your bubble but humans are not going to become machines. Machines consume much more resources than humans because they are less efficient than living organisms. An android would use more energy than a human to perform mundane tasks. It’s unclear as to where that energy would come from, other than fossil fuels. The density of resources in space, like renewable energy on Earth, is too low to make any effort at industrializing space possible. The Singularity isn’t going to happen, especially without a dense form energy. Humans are not entitled to exist forever. Humans, just like most lifeforms on this planet will go extinct at some point and will not be replaced by AI.
Science is the pursuit of empirical evidence of reality and the theoretisation thereoff. Science can not be pursued about empirical evidence that does not exist a.k.a. “the future”. That is not science.
So.. science always lives in the past. For an example, the science of Economics was born during a timeperiod when “growth” indeed was possible and indeed happened. Thereby the science of Economics can not fathom anything but growth.
For a new science of “Economics” to be born, that does not include growth, we must first have a global SHTF collapse..
Keith is an old man. Who still lives his reality of the -60s and -70s. Keith is a (old) man of science, and will not let his childhood fantasies of tech utopia go. I can’t really blame Keith of his delusions. If I was as old as Keith is, I might want to find solace in the same fantasy stories as Keith. But even if Keith is somehow entiteled to his fantasies, that doesn’t mean we should entertain them on FW. They belong elsewhere.
Bravo! Down with Keith and his nonsense.
https://m.popkey.co/aa5635/86gLK.gif
Keith is an old man. Who still lives his reality of the -60s and -70s.
Well the music, the TV shows and the science fiction novels were all a lot more interesting back then.
Apart from that, I don’t think we should either criticize or excuse somebody’s failure to distinguish scientific fact from myth or fantasy on the grounds of their age, even though it has long been observed that old people do have a tendency to become stick-in-the-muds. After all, youngsters have a considerable tendency to fall for the latest bovine excrement just because it’s presented in a slick fashionable style.
Keith has been entertaining us with tales of space-based solar energy systems that, on paper, are feasible and potentially worthwhile partial solutions to our energy predicament. The 1960s science fiction aficionado in me says, “let’s go for it!!” But the post-9/11 post-Lehman post-Fukushima old man in may says, “there are just too many potential snags; we in the West no longer have the “can do” spirit to innovate on this scale.” So I’m thinking, if it’s going to be attempted, it will be the Chinese and the Russians that will lead the effort.
” music, the TV shows and the science fiction novels”
Never was deeply attracted to music (except Tom Lehrer). Because I worked at a TV station for a while I always felt like I should be paid to watch it. There was a time when a person could read all the SF being published. That’s not been true for decades. Most of it is not very good. But there are recent authors I like, Vernor Vinge and Charles Stross being my current favorite ones.
“Chinese and the Russians”
Japanese too. They are the most advanced in microwave power beaming. There is an excellent article here: http://spectrum.ieee.org/green-tech/solar/how-japan-plans-to-build-an-orbital-solar-farm By Susumu Sasaki (JAXA emeritus professor)
I have corresponded with him since his article came out.
@hkeithhenson
I was already wondering, If I should suggest to you reading Accelerando… but as you know Stross you have already. The story is not outstanding, but lots of ideas and concepts are! I still prefer Vinge very much… Deepness.. und Fire upon.. are astonishing novels.
“Accelerando…”
That story was really amusing. One plot element, the vile offspring resimulating authors out of the past, is derived from a series of exchanges on the Extropian mailing list back in the early 90s between Hans Moravec and me. Stross was reading that list in those days. I thought it was really cool for Stross to have worked that.into Accelerando.
The early Extropian list had some interesting characters on it. Among them was Julian Assange.
I know Vinge, he lives in San Diego and i see him from time to time. A big chuck of “Rainbows End” was printed in the IEEE Spectrum a few years ago. I read that magazine starting in the late 60s and that’s the only fiction I have ever seen there. Both Vinge and Stross have written on how hard it is to write SF when the future includes AI and nanotech. Having tried it, I agree. You have to cheat to get characters the readers can identify with.
Re Transhumanism, I wouldn’t claim to have invented it, but I was involved in all the elements (space colonies, AI, nanotechnology, cryonics, etc.) that make up the current state before the word was coined.
“How are we going to provide something”
I think I still have a couple of CK 722 transistors. I paid several dollars each for those when I bought them in the late 50s. Your smart phone contains many billions of transistors. When transistors are a few dollars each, how are you going to provide tens of billions of them in smart phones most people carry now? It took a while, but engineers have brought the cost of transistors down by at least 6 orders of magnitude. I don’t know exactly how we will do it, but cheap manipulation of matter, including living matter is something we can expect if BAU stays up long enough. If you want another example, consider how fast the cost of genome sequences came down. https://en.wikipedia.org/wiki/Human_Genome_Project
Re density of resource in space, you just don’t need a lot of material to collect an awful lot of power. A kW of solar energy on the earth takes something in the range of 500 kg/kW. Out in space, with no gravity and no wind, we expect the hardware to collect a kW to mass no more than 6.5 kg/kW. That’s about a 100 to one advantage for going into space.
“Machines . . . . less efficient than living organisms.”
It depends. The best photosynthesis is around 3% efficient. PV of 30% is not hard to do. I could list a lot. For example, computers use tiny amounts of energy to make computations of vast complexity. The ratio would be hard to characterize, but for some tasks, machines are millions to billions of times more efficient than humans.
The technological singularity is a subject that’s really hard to discuss. Talk to Ray Kurzweil about it.
“PV of 30% is not hard to do”
Still it is not usually done.
And then you have electricity, and has to do something useful with it.
What is the efficiency in artificially creating food?
“Still it is not usually done.”
https://en.wikipedia.org/wiki/Concentrator_photovoltaics#Efficiency
It’s becoming more common.
“What is the efficiency in artificially creating food?”
I don’t know. Humans don’t typically eat food produced by industrial chemistry.. By analogy from making fuels out of electric power, we might get 75% of 30% of the sunlight energy into something “food like.”
We can make methanol at high efficiency. Bacteria will grow on methanol providing single cell protein. It’s not a popular human food, but chickens well eat it and we can eat the chickens.
Photosynthesis works spontaneusly and could feed a human almost without work. If we only could get 99% to upload themselves somewhere
I think “downloading” 99% percent and using them as compost / nutrients for the plants that then grow via photosynthesis is simpler. The only issue is to speed up the natural download process a bit 😉
“get 99% to upload themselves”
If if happens at all, I suspect that it will not stop at 99% and that the human race could go biologically extinct. That’s the larger story “the Clinic seed” is set within. Even with full blown nanotechnology, the difficulty a 99% reduction in population would cause is extreme. It’s sort of discussed in Chapter 3.
Keith… have you ever thought of writing sci-fi novels?
“thought of writing sci-fi novels?”
Fast Eddy, can you read?
If you just copy all the stuff you have posted in the past 24 hours you’d have a nearly book…. ring up Chris Martenson and Dicky Heinberg… they’ve got receptive audiences who will actually pay for this stuff…
You can package the novel with one of your awesome videos….
did watch the Paul Erlich lecture from the link in here—now he really shows how thingsare
didnt watch it all—have to back and finish it—brilliant man
I must have missed that ….
it was a day on 2 ago—well worth finding
Transhumanism: ism’t that Bruce Jenner in a dress?
You don’t seem to show enough understanding in any domain that would make you appear competent to work on any solutions. I’m not trying to be mean but the stakes are high. When you throw out statements like
” Out in space, with no gravity and no wind”
I have to wonder if you are actually scientifically literate.
Solar panels are subject to a lot more stress in space than on Earth thanks to solar wind from the sun. I can cite numerous statements you have made recently that call into question your competence.
“Gail edited and sponsored 3 articles I wrote for the Oil Drum, two early ones on power satellites and one on StratoSolar.” Those events are no validation of the viability of your ideas. There’s no evidence that any of the ideas you have devised or support have are viable or have made any progress towards being viable. How long has it been since you helped found the L5 Society? What is the excuse that the L5 Society has for why space colonization has not received any significant private investment or government investment since 1975?
Do you see any hypocrisy in you going after Scientology for practicing psudeo-science while supporting theories that are not backed by science, economics, or evolutionary psychology as viable concrete solutions to our current problems? Is that not some kind of fraud in of itself?
Space solar is being discussed by academic groups in the US associated with the IEEE. It doesn’t get mentioned a lot in the news.
The “Innovation for Cool Earth Forum” in Japan, which just concluded (Oct. 5-6) is another example of a place where it is being considered. https://www.icef-forum.org
The Space Studies Institute of Princeton N.J. concluded in the 1980s that the way to build SPS was to use lunar material. Materials can be lifted off the moon using electromagnet accelerators. If we want to avoid sending humans to the moon we can use robots and telepresence to operate the mines, foundries, factories, and launching facilities.
Give that we sincerely believe many billions of people are going to die on the current path a massive investment seems justified.
Once we have meet the needs of earth for clean energy we can barge a few SPS over to Mars for energy for the Mars cities.
Do I believe this is possible? Yes. Do I believe the psychopaths that rule the world will look up from their murder and mayhem long enough to do this? No.
“The Space Studies Institute”
I was there. Presented papers in ’75, 77, and 79, the last two with (now Dr) Eric Drexler. Inflated to the present, O’Neill’s estimate would be about $425 B. The problems were formidable. Look up Heppenheimer achromatic orbits to get a taste of how hard. We can avoid electromagnet accelerators now https://en.wikipedia.org/wiki/Jerome_Pearson
But the industrial processing to turn moon rock into power satellites takes a long time to build up, and a considerable input of elements that are not available on the moon.
“SPS over to Mars”
I have proposed to send the 100th power sat to Mars or give the Mars supporters an equal mass in GEO (at least 30,000 tons). If you are going to mess with Mars at all, you might as well do it in style.
Eddy—
Can I use your wall again
I’ll pay for any damage
accellerators I cant wait to see
shifting moonrocks as spaceport baggage
http://2.bp.blogspot.com/-D18VMUKM8yc/VDTXtW9KL4I/AAAAAAAABI4/9kEtyLWqzdA/s1600/maxresdefault.jpg
looks like were gonna need a bigger wall
Are you trying to turn FW into The Onion – or do you really believe this stuff?
You are repeating the Left-wring argument that it is corrupt leaders that are preventing us from meet the need, by humans, for massive amounts of energy. It’s the 0.1% is holding us hostage from a better future because they want to preserve a environment of artificial scarcity. Riiiight.
“Give that we sincerely believe many billions of people are going to die on the current path a massive investment seems justified. ” The end of the world doesn’t make a bad investment suddenly worthwhile. It doesn’t even mean that people are going to overlook their differences to work on a project with an uncertain payoff.
Inter-cultural cooperation is coming under attack around the world. The attack on inter-cultural cooperation is not primarily coming from wealthy psychopaths.
How am I not surprised… after all Germany now has the most expensive electricity of any OECD country thanks to their adoption of DelusiSTANI recommendations to roll out their Dumb and Dumber Solar Panel Plan…
Upton Sinclair — ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’
Fast Eddy — “It is easy to get a man to promote an absurd theory if you give him a dose of fear of extinction followed by a big puff of hopium and a big fat round of funding to use to carry out research on a theory that makes zero sense’
“competent to work on any solutions”
I have a degree in engineering. Long list of peer reviewed published papers dating back to 1975. I am intensely aware of my limits. What is your background?
“Solar panels”
I am not a fan of using solar panels for power satellites, but do you know that they have been used for a number of decades on communication satellites? “Solar wind” is actually a harder vacuum than what we can make on earth. It doesn’t blow satellites around, a big CME disturbs their orbital path by nanometers per second out of km/s velocity. Light pressure is a bigger problem. Radiation does slowly damage some kind of PV. Thermal cycles are more efficient and not subject to such damage.
“What is the excuse”
Cost has to come down by about a factor of 300. That even worse than the 100 to one reduction in transport cost for power satellites to make economic sense. See https://en.wikipedia.org/wiki/L5_Society
” hypocrisy . . . psudeo-science ” The net went after scientology because the scam leader attacked and tried to destroy part of the net. They are much smaller and much less intimidating to the media and publishers now.
“supporting theories”
Power satellites are an engineering project, like Hoover dam was in its day. What theory do you think I support?
Drawbacks
The SBSP concept also has a number of problems:
The large cost of launching a satellite into space
Inaccessibility: Maintenance of an earth-based solar panel is relatively simple, but construction and maintenance on a solar panel in space would typically be done telerobotically. In addition to cost, astronauts working in GEO orbit are exposed to unacceptably high radiation dangers and risk and cost about one thousand times more than the same task done telerobotically.
The space environment is hostile; panels suffer about 8 times the degradation they would on Earth (except at orbits that are protected by the magnetosphere).[38]
Space debris is a major hazard to large objects in space, and all large structures such as SBSP systems have been mentioned as potential sources of orbital debris.[39]
The broadcast frequency of the microwave downlink (if used) would require isolating the SBSP systems away from other satellites. GEO space is already well used and it is considered unlikely the ITU would allow an SPS to be launched.[40]
The large size and corresponding cost of the receiving station on the ground.[citation needed]
Energy losses during several phases of conversion from “photon to electron to photon back to electron,” as Elon Musk has stated.[41]
I support the Sun Pipe Pie in the Sky Project… we suck the energy from the sun down a pipe to earth….
Actually … Keith is no different than the millions who believe solar panels and windmills will save the day – or thorium — or electric cars …
Like them he has convinced himself of that his flavour of hopium is the saviour.
You can bombard him with facts and logic as you can a solar groupie — as you could a god groupie…. it will not matter.
Like a 4 year old who believes in Santa you cannot change his mind.
Because Keith cannot accept that extinction is near…
Poor Keith – instead of tinkering in the basement and attending new-age seminars in the Marriot with other delusional people — he could be enjoying the last months of BAU — smelling a few roses….
Oh well….
Prior the Hoover Dam, water power was successfully used at a smaller scale around the world. Power satellites have not been proven to even work on a small scale. The analogy you have tried to make does not work.
“Long list of peer reviewed published papers dating back to 1975. I am intensely aware of my limits. What is your background?” I don’t think you are intensely aware of your limits because you have yet to acknowledge the statement I called you out i not true.
All I am is a well-read layman.
hkeithhenson says : “What theory do you think I support?”
https://ourfiniteworld.com/2016/09/20/why-really-causes-falling-productivity-growth-an-energy-based-explanation/comment-page-17/#comment-102344
Re Hoover dam, what I was replying to is what one of our stone age ancestors would have thought about the people who designed and built it. We know such people are not gods, but what would they have thought?
We have been building relatively small (tens of kW) communication satellites for decades, just like we made small dams before building the big ones. But take Apollo and the Manhattan Project. There was no precedence for either of those.
I am not trying to minimize the effort that would go into building 15 TW of power satellites. Even getting started with a 10 per year pilot production project takes a long time and costs 50-100 B, maybe more. The option of sitting on our butts like FE would have us do is a disaster. A few months ago I showed the beamed energy propulsion video at http://www.htyp.org/DTC to Freeman Dyson. He didn’t like it because the physics (which he understood) will not allow starting small. But he didn’t have any technical complaints.
The link you posted didn’t work.
Ah … no. The option is to enjoy the time that remains because there is nothing we can do.
Case in point — I drove to the west coast of NZ this morning — and did a trek along the ocean front watch massive waves crash into the rocks…. and now I am sitting on the balcony having a sip of wine listening the waves roll in ….
And you are where – in your garage? — fretting over something that is an impossibility.
There are other options ….
as god—i send bolts of lightning on the heads of gloaters
++++++++++++++++++++
I am not sure why Keith is allowed to clog up discussions with this rubbish…. if I spent my entire day on FW discussing the Sun Pipe…. I reckon I’d be carted off to the insane asylum….
http://media.ruralradio.co/wordpress/2015/10/Machine-Gun.jpg
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Dear DelusionalDreamer;
The singularity is trivially easy to explain:
https://www.youtube.com/watch?v=qnreVTKtpMs
Get Real,
Pintada
“The singularity is trivially easy to explain:”
Two essential, necessary and probably sufficient, pieces are nanotechnology and AI. AI is Watson in one direction and autodriving cars in the other. Couple of guys won the Nobel prize in chemistry for advances in nanotechnology last week.
I am not entirely happy about the singularity, but I don’t see any way short of instant and total collapse or an asteroid strike to avoid it.
Can you make a case backed up by physical limits that it won’t happen?
“An android would use more energy than a human to perform mundane tasks.”
I totally disagree!
When you consider the footprint of energy and resources which are required to raise, keep up and retire a human – which all the “side” costs (energy, resources) of having a socio-economic system that keeps this organism up (and its environment) then a machine is in my opinion much more efficient. You develop the machine once… then you copy it. For humans you have to raise and educate them always with the same up-front big effort, where it is very hard to respond in a very short time to new or changing (dis-)demand or even re-educate the human in later life.
Androids don’t grow on trees….
http://cdn.trend.az/media/pictures/2013/08/21/plant_metallirg_210813.jpg
You are totally wrong.
Machines have larger footprints than living organisms. Machines made from metal largely did not exist until a cheap and abundant form of energy was discovered. Highly advanced machinery tend to use just about every element on the Periodic Table. Humans don’t require large amounts of metals or large concentrations of energy to survive. Machines created by humans in industrial societies, which are in current use, do.
Machines. at this time. are not self-replicating and are capable of a limited amount of learning. Machines require a global system maintained by humans to make them and to program them, because they have no innate capacity to learn.
Machines tend to be highly specialized. You lament about the high costs of training a human but at least some humans can be re-trained. A lawnmower can not be re purposed to be a snow blower without human intervention. There are plenty of discarded machines in landfills.
This post doesn’t even cover the tasks humans and animals can learn easily but machines struggle with.
“they have no innate capacity to learn.”
You are way behind the times. Google “machine learning”. Thirty million hits for that combination of words.
They cannot learn within our understanding of the term. They adapt to eventualities within a very narrow parameter. They are programmed by humans to adapt to strictly limited eventualities and to the also, narrow capabilities of the machine itself. If “the eventualities” have not been programmed the machine doesn’t adapt. It has to be that way or the machine would be sentient. Machine “fights” prove that machines don’t learn and they can’t repair themselves. Computers play chess against one another and the best programmed and most processing power wins. If they were capable of learning YOU, would be out of business.
Many claim that the machines can learn but everyone of them is programmed to learn something specific, that to me is hardly learning as it needs human input. To “learn” what a cat is, or programmed to “learn” from a mistake, as in chess. Get back to us when a machine talks back.
Currently most machine learning is supervised training of neural networks. The next wave will be machines that learn without supervision.
DARPA has been pouring significant money into into machine learning over the last 10 years and is continuing. Information related to the subject is contained as national security related.
This was a tee vee series… not real … they actually stayed in hotels in Hawaii when filming….
http://vignette2.wikia.nocookie.net/lostpedia/images/1/16/Lost-season1.jpg
Yes, because DARPA is pooring money into AI the research is classified, that absolutely means they are succeeding in making machines that can learn and evolve without human input.
https://deepmind.com/
Attend, Infer, Repeat:
Fast Scene Understanding with Generative Models
S. M. Ali Eslami, Nicolas Heess, Theophane Weber, Yuval Tassa,
David Szepesvari, Koray Kavukcuoglu, Geoffrey E. Hinton
{aeslami,heess,theophane,tassa,dsz,korayk,geoffhinton}@google.com
Google DeepMind, London, UK
Abstract
We present a framework for efficient inference in structured image models that ex-
plicitly reason about objects. We achieve this by performing probabilistic inference
using a recurrent neural network that attends to scene elements and processes them
one at a time. Crucially, the model itself learns to choose the appropriate number
of inference steps. We use this scheme to learn to perform inference in partially
specified 2D models (variable-sized variational auto-encoders) and fully specified
3D models (probabilistic renderers). We show that such models learn to identify
multiple objects – counting, locating and classifying the elements of a scene –
without any supervision, e.g., decomposing 3D images with various numbers of
objects in a single forward pass of a neural network at unprecedented speed. We
further show that the networks produce accurate inferences when compared to
supervised counterparts, and that their structure leads to improved generalization.
The fact that autonomous cars are still having difficulty driving on roads without marks or in bad weather tells me that machine learning is STILL in its infancy.
The fact that money is pouring into it doesn’t mean much. It might just express a strong desire by the elite, , to minimize human labor and to share the output of the global industrial economy with a small group of people, in other words, something that will allow them to have “BAU lite”.
Could what current autonomous cars do even be called AI?
A map, a gps, a cruise control, an auto brake, lane following logic. Perhaps some hard wired logic trying to solve jams, but more likely just calling on human help.
Breaking News! Wikileaks has just released classifieds emails from an Man Named Keith that indicate he has discovered a way to breed robots. This is a major breakthrough because it means that there is no need to mine and smelt any of the materials that go into the manufacturing of these complex machines. Instead Keith just dresses the robots in short skirts and let’s nature take its course
Stay tuned as Keith announces that he is capturing the sun and beaming it down in small chunks to earth.
Keith has Star Trek syndrome…
http://tng.trekcore.com/gallery/albums/s4/4×01/bestofbothworldstwo414.jpg
Probably just death anxiety.
Normal development: you realize your parents will die, you realize you will die, you realize every human will die, you realize the sun will die.
Keith: everything will be forever
Space is extremely cold…
If one wants to live forever then freeze yourself into a block of ice — have it loaded into a capsule — then blast it into space…. it might take a million years but some day you might be found and thawed by the Borg…
I will be calling Elon Musk to front this …. I’ve already got a website up and runnning. wwwBodyinaBottlec.om
“Keith has Star Trek syndrome”
I am actually not much of a Star Trek fan. It came along at a time in my life when I didn’t have a TV around much of the time.
I know Steve Mann slightly. https://en.wikipedia.org/wiki/Steve_Mann I wonder what syndrome you would figure out for him?
part of the masterplan would involve unloading the junk debt onto pension plans which has already occurred keeping interest rates at ultra-low levels forever as gail has previously mentioned, beginning world war 3 to keep growth growing slowly to offset the contracting world economy, we already see evidence of this in the news, so the defaults may never happen
I wonder if most people in Spain are aware of/understand this… if they do then one has to wonder why there are not mass riots …. essentially their pension funds are totally worthless…
http://www.zerohedge.com/news/2013-01-03/spain-plunders-90-social-security-fund-buy-its-own-debt
http://www.wsj.com/articles/SB10001424127887323374504578217384062120520
“I wonder if most people in Spain are aware of/understand this… if they do then one has to wonder why there are not mass riots … ”
We’re watching the football.
http://s03.s3c.es/imag/_v0/630×300/1/f/a/bares-futbol.jpg
And drinking the sangria…. might as well… they will only shoot to kill if anyone gets too upset…
Honeywell Cuts Sales Projections
Conglomerate sees business slowdown, delays
The Morris Plains, N.J.-based conglomerate now projects adjusted profit of $6.60 to $6.64 a share with sales down 1% to 2% from the year ago. It previously projected $6.60 to $6.70 a share in profit with sales declining about 1%.
Honeywell said sales would fall 3% in the third quarter and that segment margin would narrow to a range of 17.3% to 17.5%. In July, Honeywell had projected sales in the quarter to remaining flat or increase 1% from the year-ago period with segment margin in the 18.7% to 18.9% range.
http://www.wsj.com/articles/honeywell-cuts-sales-projections-1475797403
MEGA oil find in Alaska http://nordic.businessinsider.com/caelus-oil-discovery-in-alaska-arctic-2016-10?r=US&IR=T
Hmm.. these “mega” finds seem kinda small.. if my long division is right, IF any of this can be recovered it will amount to about 100 days of US consumption.
Yep, estimated ~10B investment, starting not sooner than ~2022.. if actually approved in the first place..
so if oil prices stay steady at $50 and slowly rise over the next couple of years this might just get ihe other commodity prices to slowly rise slow growth for the world is a lot better than no growth,
Keeping something important range bound, “inside a snake” is one of the primal urges of every autocratic bureaucrat in times of uncertainty. Few years of calm seas, very good opportunity for executing various shady deeds, especially how to offload junk on the stupids, aka the public at large, tax payers, wage earners, human farm dwellers and so on..
According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf
Are you for real or is this suppose to mean trolling for the 7yrs old category now?
Linking early 2000s article, while today we have completely different debt-taxes-budget-inflation levels.. not mentioning the prop-up/can kicking armada nexus of QE/NIRP/ZIRP and what not.
Adonis rightly puts forward a case for artificial plateau at these prices.. slow inflation uptick (TPTB happy) and its implications..
Sir Isaac Newton’s handwritten notes about momentous discovery of laws of motion and gravity now available online
More than 4,000 pages of scientist’s works uploaded
Includes seminal Philosophiae Naturalis Principia Mathematica
http://www.dailymail.co.uk/sciencetech/article-2072992/Sir-Isaac-Newtons-handwritten-notes-laws-motion-gravity-online.html
http://i.dailymail.co.uk/i/pix/2011/12/12/article-2072992-0F2506BC00000578-133_468x574.jpg
Is this any less true because it was written 300+ years ago?
When the cost of extraction of oil increases — economic growth falls.
Just as an apple — when detached from the tree – falls.
Always
Ooops….. not always…
In DelusiSTAN it stays on the tree…. right?
When posting it, I seriously believed you will not pick up such silly argumentation position. So gain, hopefully lets put it in even more understandable frame.
Unless you put forward a model of affordability (approx lower/upper bound) of oil/energy in today’s quite different circumstances, that linked article from early 2000s has almost zero information value.
What’s very different today, certainly not exclusive list.
The producer’s (vendor financing) cost and their customer’s affordability structure is certainly very different now, as “they print/support demand” also using global macro in a way of much policy stronger tools than in the past. In terms of energy carriers that’s also not only the question of oil/natgas price, but also for example the huge renewable subsidies skewing the electricity market and its participants, also helped transform the equation very much so from that time indeed.
One anecdotal evidence, Putin few weeks ago said, they budgeted for $40 oil around the time of the slump, so today they sort of manage and many planned projects therefore continue, but that doesn’t mean “today’s” price in the high 40s could be called good enough for their economy or their biz clients on the other end. Now, where is the good enough floor, is it $50-60, a bit more?, what kind of tiny growth for at least plateauing balance for a few years is needed?
You don’t know, hardly anybody knows exactly, try and error, it’s a guess game.
And please don’t respond by some silly years old statistics by some ngo about which country needs what levels of energy pricing and stitching forcefully in today’s world.
It’s a fluid system, always was and always will be.
Even if we made it past peak conventional oil, there is likely a different, very real collapse ahead. This collapse will occur because the economy cannot really afford high-priced energy products.
https://ourfiniteworld.com/2016/08/08/an-updated-version-of-the-peak-oil-story/comment-page-12/
Again, non answer from you. Gail’s basic idea is correct, but don’t spin it into generalizations. What exactly are the ranges for high priced energy products, $50-60 oil or 1/3 above that, even less or more? In which demographic sector and under which can kicking regime (system) measured and applied, as Asians use slightly different means than the west at the moment. And so on..
This is not a difficult concept… when the price of oil goes up …. growth goes down.
It is an undulating plateau trending downward. That is the bigger picture if you zoom out.
the strange thing is that the oil price is on at least $50 a barrel which should keep the system going for quite a while theres been no sudden drop in the 40s or lower maybe the elites have got this colllapse all under control, wouldnt that be funny if they had a masterplan for peak oil after all
The world problem is that it is not just oil prices that are low; it is commodity prices of many types that are low–food prices, coal, natural gas, quite a few metals. Keeping oil prices at $50 solves only part of the problem.
What about gold?
The Plan?
– drive the price above $100 — incentivizing oil producers and investors to find and sink wells to extract unconventional oil
– invent the Saudi America meme
– offset the $100 price of oil with stimulus – subprime housing/autos — QE ZIRP
– when the toxic side effects of the stimulus threaten to blow up the economy — drop the price of oil to a more manageable level (goldilocks)
– the trillions that have gone into unconventional oil essentially create a nice sized bank of oil reserves that by rights should not exist — but now do
– draw down those reserves as well as remaining unconventional
– make sure producers remain solvent (whatever it takes)
– slap each other on the back for a job well done
– wait to die
– keep the price of gold artificially low http://www.zerohedge.com/news/2016-10-07/gold-pounded-someone-dumps-over-2-billion-under-minute
– make world CB:s buy up stocks.. Switzerland’s central bank now owns more publicly-traded shares in Facebook than Mark Zuckerberg http://www.reuters.com/article/swiss-snb-stocks-idUSL8N1B7383
– keep the MSM dead silent about the different aspects of this predicament http://www.truthdig.com/report/item/where_is_climate_change_in_the_debates_20161006
Free markets — hahahahahhahahahahahahahahahahahahaha…..
If we had free markets — just as if we had true democracy….. we’d eat our tails for breakfast.
Free markets is a crock of dodo. Always was. Free market capitalism is even worse. Yet people believe that crap. Like it is something tangible and real. At best it is vapor-ware. Everything, I mean everything in our walled-off-from-nature world is unreal, virtual, illusions, spectres, ghosts … well you get the picture. When it collapses what will a dollar be? What will a derivative be? What will it mean to own stocks?
Yup, when the banks go, we will enter the Twilight Zone.
On a Monday everything will seem fine. On Tuesday morning there will be rumors of trouble. On Tuesday afternoon what had a value of $1000 in the morning, could be valued $0.001 or $1.000.000.000.000 depending on if you’re selling or buying.
And a week or so after, everything usefull will have new values, fruits $10.000, alchohol $10.000, antibiotics $100.000, a fuel truck $10.000.000
I like that part in The Black Swan where Taleb would be in meetings with ‘very important people’ in his bank… very serious people … and he’d be thinking what a total crock of sh&t it all was… he could barely control himself from bursting out laughing…
Banks are not in trouble. Systemically important banks do not fail, because they get zero interest loans (free money) from the central bank.
Hard to understand? Then I suggest you are too low on the totem pole. This is not elitist or an insult or anything, it’s just a fact. You’ve worked all your life for money, so you don’t understand money and where it comes from. Those at the top understand, even if only subconsciously, that money is created out of nothing and handed to them first.
No they don’t get free money. It’s a bit different. For starters money only is created to buy stuff or pay for debts. The banks complain to anyone who will listen The central bank gets permission, from Treasury, to buy the banks’ non performing loans. This is QE. The supposed aim was to allow the banks more space in which to make loans, and eventually to redeem the ones paid for by QE. Toxic loans were covered by TARP.
Of course it didn’t work but that’s another story.
That post belongs in the DelusiSTAN Hall of Fame…..
It is so incredibly delusional that I have no idea where to begin to respond without staring you all over in grade 1…. and time is far too short for that!!!
To be honest — even if I were to mainline heroin…. smoke a bag of strong weed…. drop 6 LSD tabs… and down a large bottle of whiskey ….. then ram my head into the Brick Wall 20x …. I could not come even remotely close to uttering a series of comments so delusional.
So let’s just hang your jersey from the rafters and give you a well-deserved round of applause
https://s-media-cache-ak0.pinimg.com/736x/41/5b/e3/415be3398e964c871fd59872f4a961f6.jpg
He is just “trolling” you….. to elicit a good response.
Reverse psychology at its finest!
Fast Eddy is an easy mark, always takes the bait…just ask Scott Nearing!
The banks will of course do just fine as long as they don’t lend the money they get to anyone.
LOL!
“Banks are not in trouble. Systemically important banks do not fail, because they get zero interest loans (free money) from the central bank.”
Close, but no cigar. Yes, they get “free” loans from the Central Bank, and they then lend the money to the Treasury at interest. What a Deal!
It was a deal before the basically global ZIRP…. now the banks find it much harder to get their cash for free.
I am not clear why ZIRP money would mean banks cannot ‘get into trouble’
Plenty of banks are in very big trouble with rates at 0…. how can it be????
Its the NIRP/ZIRP bonds that are the trouble. That the banks have access to ZIRP cash from the central bank doesn’t matter – the banks only need that for the interbanking system balance purposes (overnight settling).
Banks core business is to lend out money they create in the leading process (by pure balance sheet extension/expansion). Some years ago they got 3…6% for government bonds they bought with money created out of thin air… a good deal! Now they get nothing or even negative rates….. bad deal.
At the end of the day the business of banking is to make money on the spread between their cost of cash and what they lend it out at …. if they get cash at 0 and lend it at 4% that is not really any different than getting it at 4 and lending it at 8…
As has been pointed out the problem you run into is when you lend it out to entities who are unable to pay it back…. and/or you run out of people who are willing to borrow the money…
The premise that banks cannot fail because of zirp is ridiculous.
Getting it at 0% and lending to governments for -0.2% or people for 1.3% …
4%+ for a mortgage here in NZ….autos are around 11% credit cards in most places carry 20% or more…. personal loans in most places are high single digits…
I think that the difference between short and long term rates is also important. Banks tend to pay deposits based on short term rates, but interest rates on loans they lend out on long term rates (adjusted for the higher risk in the particular situation). If short and long term rates are about the same, banks can’t gain anything on this difference, either.
@FE
“The premise that banks cannot fail because of zirp is ridiculous.”
Never wrote that, never meant that – quite the opposite. Read my first reply to Richard in full.
I think it was Richard who stated that… my comment was aimed at him
Sweden,
Typical mortgage 1.6%, you can get lower.
Auto 3.6-5.5%, you can get lower, no money down.
Consumption, no collateral, 5.3% or lower.
Many 10 year bonds around 0%.
interesting blog jason thanks for the link more goodies to read
Governor Mary Fallin is has proclaimed October 13 as Oilfield Prayer Day:
“We’re asking churches all over Oklahoma to open their doors, put on a pot of coffee and pray for the oil field, and not only for the oil field but the state, because the economy of our state is so connected to the oil field.”
Jeff Hubbard, with Oilfield Christian Fellowship- Oklahoma City, agreed.
“We have a saying: The oil field trickles down to everyone,” he said
wouldn’t want to miss that
Did someone say that the Saudis are crazy ?
no that was El trumpo
but compared to this—His sanity claus is still intact
El trumpo 🙂
We need to bring George Carlin back…. remember his bit on worshiping the sun god?
He got that wrong… it’s the oil god that demands our prayers…
The reason we are in this situation is because we have offended the oil god.
And he is shutting off the tap….
Is that the “new technology” they’re hyping about?
@CTG – I’ll try one more time to see if I can close the gulf that exists between our perceptions of the world. You do understand the some 80 percent of bank lending is based on retail and commercial mortgages. That business was undertaken for many years by Building Societies in the UK, and by Savings and Loan Institutions in the USA.
For most of Europe, inter-generational savings was used for home purchases. Clearly, if banks got out of the mortgage business they would be a fraction of their present size. If we can agree on that, we can move on to money laundering for the drug cartels. (Eventually we get to JIT, I promise)
Richard, can you point to me where you get the 80% lending to retail and commercial? Banks facilitates and lubricates trades. As indicated by FE earlier, he copied and pasted the meaning of “letter of credit”. There are many different types of banks ranging from those who has a large percentage of their loans to ships, airplanes, factories, etc. Mortgages is just a small part of the business that banks do.
How about loans to oil drillers like those operating shale oil drilling?
If you have been an entrepreneur before, you will know much better on financing. I need to expand my shop/factory and I need to buy equipment. I need to lease a ship to send my produce overseas. I need to buy tractors for my farm. Most of the entrepreneurs don’t go to venture capital. Start up a shop or business is relatively easy without going through VC.
Some companies, especially those in the logistics and import/export need a bank. That is 100% certain. I have experience on that. If you sell your product to an overseas client, say USA and you have secured a letter of credit (LOC) from Bank of America (BoA). I will not get the payment until the goods arrive many weeks later. What if I need to buy from my neighbouring country some raw materials and it will arrive in 3 days? I take the LOC from BoA to my local bank. Based on the “trust” from my bank on LoA issued by BoA, they will extend a credit line for me to pay for the raw materials that is coming in 3 days. So, once my shipment to USA arrives, BoA will release the funds to me and I will pay back to my local bank for taking out a loan to buy the raw materials.
The problem now is – what if the bank is not BoA but Deutsche Bank (DB)? It has already happened that many banks do not take LoC from DB anymore as they may not pay up. Once LoC is issued, I will definitely get a payment even though my buyer went bankrupt. The bank must honour it. The issuing bank has to do the due diligence on my buyer, not me. I may not meet up with my buyer before but I trust the LoC from BoA.
What we find lacking currently is multi-disciplinary people who understands both the technical and financial side of things. If you are brilliant engineer and your purchase/logistics/finance department cannot get you the part or the raw material did not arrive? If I did not get the loan to buy the raw materials, my business is dead. I need to pay out to my suppliers but my buyer has yet to pay me. In this case, even if I have a large company, with this type of cash flow issue, I will be bankrupt within a day. Therefore, I as an entrepreneur, I am very careful with my cash flow. However, not many people are careful with their cash flow.
Do you see why finance is one of the most critical cog on earth?
I’ll give some numbers, I’ll leave you to do the math, as a response to your question:
https://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm
http://www.zerohedge.com/news/2016-10-06/great-debt-unwind-business-bankruptcies-soar-38
And you didn’t think to look for yourself? I’m surprised you even had to ask BTW.
Before we move on, a tale from my ex-boss. He worked in a small enginering firm and the accounts were a mess. So, in his own time, he put together a proposal to create cost centers and streamline the accounting. The owner listened carefully, thanked him, and then asked “How do I hide the cost of resurfacing my driveway in the company accounts?” At that point my ex-boss realised he’d wasted his time.
The point of this, at many levels, will become clear later.
I’ll assume that you now understand what I’ve said thus far. Another link:
https://archive.org/details/TheEmpireOftheCity
I don’t expect you to read it, and lots of important stuff could be added, but it does cover international trade before JIT was “invented”. I’ll suggest you check out the first opium wars. The Brits ran the international maritime trade, they wanted to ship stuff to India, then from India to China, and bring silk and tea back from China to Britain. The problem was, despite economic theories, there was noting that China wanted to buy, So the Brits began shipping opium to China. The Emperor objected, so the Royal Navy bombarded the cities causing him to change his mind. And the Hong Kong and Shanghai Banking Corporation was set up to handle the trade (HSBC). Today, illegal drugs make up one percent of world GDP.
https://en.wikipedia.org/wiki/Illegal_drug_trade
Can I suggest not much has changed?
Richard, I have no idea where to start. It looks like what you are saying and what I am saying is totally different. There are no connections.
The link to the Federal Reserve – the title is Mortgage Debt Outstanding. It has no mention (As far as I can see) on other types of loans
The other like is to Wolf Richter’s website. I have read it. Where did it say about 80% loans are mortgages to retail and industrial? The chart shows Commercial and industrial loans and it did not say anything about 80% number. Can you point me to that number? Where did you get the “retail and commercial mortgages”?
What has opium war go to do with modern banking? What has your boss’s tale got to do with trade financing? I really have no idea how you link trade financing with JIt and your boss and opium war? What has trade financing got to do with ilicit drugs?
You may want to have a look at
https://en.wikipedia.org/wiki/Trade_finance
I am talking about apples and you talking about cars.
I thought if you worked the numbers out for yourself it would help. OK. Read this:
http://michael-hudson.com/2012/08/overview-the-bubble-and-beyond/
(BTW recent figures for Australia say 62%, but no explanation or detail, so you don’t really know.)
Part of the reason the financial systems are in such a mess since 1945 is because of the way international finance was set up – Bretton Woods etc – and like the owner in the earlier post, they wanted to hide transactions – allegedly. There are four or five videos in this link, I’d suggest downloading them as the narrator skips from one document to the next quite quickly.
http://www.marketskeptics.com/2011/06/the-esf-and-its-history.html
I only found out about these videos a few weeks ago, so I’m not totally convinced on the credibility of the detail. Where I’ve been able to check, it seems to hold up on the facts, but opinion may differ.
Whatever. Back to the narrative. The system failed in 2008. (You might want to think about AAA securities defaulting once in 1000 years vs BAU-NOT) At that time two banks handled most of the Letters of Credit for the world – Lehman Brothers and the Royal Bank of Scotland (don’t ask for a link!). Other banks had connections to money laundering and the Drug Cartels.
So, which banks get bailed out and which go into bankruptcy/nationalization? The ones that issue LoC’s essential for international JIT? Bear in mind that LoC’s were probably a fraction of one percent of the business, and could have been guaranteed by government if the need arose?
This is a link to what shows up on the website of the Federal Reserve Bank of New York. https://www.newyorkfed.org/aboutthefed/fedpoint/fed14.html
This is part of what it says:
This seems to contradict some of what the first video says. I didn’t watch the later videos.
One small comment, even though the report is from 2007, is the miniscule size of this fund. The Forex market is far and away the largest market in the world. It trades $4TRILLION every day, so $28Billion is barely a mosquito bite, although it would be more now.
I think we are on different wavelength. What you mention is for the entire global system. What I am saying is just a small subset of what you are saying and it is an extremely critical subset of the financial system. Do note that there many banks in the world in every country. So, nothing is independent. If the Chinese banks or the Thai banks do not trust DB or some other US or European Banks, things will slide pretty quickly.
You thought that my statement to the effect that life would go on without banks couldn’t be supported, and that I knew little about finance.
I’m making the point that if the financial system decides to collapse, we had better decide how a world without banks will function.
It’s kind of the next step to Turner’s point about fast and slow collapse.
Regarding your JIT and cashflow problems, a) we seem to agree it’s a small subset of the whole, and b) given enough time, systems adapt.
With regard to ESF, I’ll have a look at the link.
A world without banks looks like this
https://www.elitefts.com/wp/wp-content/uploads/2009/11/Starvation-and-Survival11.jpg
http://i.dailymail.co.uk/i/pix/2016/03/29/09/32A1E9D600000578-3513429-image-a-1_1459239079417.jpg
https://socioecohistory.files.wordpress.com/2012/03/g10_debt_distribution_mar2012.jpg
Look at UK financial debt!
looking closely at that chart
i think they forgot to add my bit
The Pound Sterling had a flash crash earlier today.. http://www.independent.co.uk/news/business/news/pound-flash-crash-mystery-value-sterling-dollar-euro-new-low-brexit-latest-a7349636.html
Let’s see if this works …
https://docs.google.com/spreadsheets/d/1UivlvdzIGIIGOSs2SYTf_rsfKLFp1rHPyvQwazKlV-w/pubchart?oid=6&format=interactive
The graph is from Neil Wilson’s page:
http://www.3spoken.co.uk/
I think that part of the confusion about different kinds of loans in banks has to do with the fact that in the United States, a lot of debt carried by businesses does not end up in the balance sheets of banks; instead it consists of bonds issued by businesses, and held by insurance companies, pension funds, and investors of various types. (It is my understanding that the use of bonds to finance business debt varies by country. In the US, the use of bonds is quite high. Europe uses banks to a much greater degree to finance debt.)
For example, in the US, the church on the corner may have issued bonds to finance its construction, rather than going through a bank, if it found it could get a better interest rate this way. A lot of the oil and gas debt is in the form of bonds, rather than debt to banks. It is now buried on the balance sheets of insurance companies and pension funds. This is one reason why some people think that the oil and gas debt will not be a huge problem for banks. Part of the lending is off in the bond market, and not the problem of banks.
Also, please be aware that in all countries, the majority of the business activities are carried out by small and medium scale companies. They are the ones who drive the economy and they are the ones who hires the most people. They are also the ones who are screwed by having to bear the unfair burden or taxes and high interest rate loans. It is always the politically-connected MNCs (multinational companies) that gets good deals and good cash flows. The retail shops, wholesaler, 3-man machine-shop, specialty coffee producer, the 5-man architect firm, the 10-man consulting firm, the 50-person landscape company, etc are the ones who generate a great deal of economic activities not the 100,000-person Intel, Monsanto or HSBC. They are more interested in cost-cutting and relocating their business to cheaper overseas locations.
I agree with your statement but not your example of Intel and Monsanto. First of all, small and medium sized businesses cannot afford $5B fabs nor can they target next gen lithography etc nor survive critical mistakes (that in many cases can’t be predicted, like the P4 thermal wall). Yes, Intel has gone back to its greedy/lazy mode for consumers (not so in the HPC or server space where competition is still fierce) and given up on mobile (where they’d have to lose money to gain marketshare) but they still provide critical technology that the world needs and most of their R&D is still in the US. Monsanto is similar in that it generally lowers prices on agricultural products and reduces fossil fuel use. Yes they do have a history of some predatory behavior in third world markets and even in the US (suing farmers who received wind-blown Monsanto seeds without contract) but by and large their products as a whole is helping sustain our global society.
Finance companies were useful to increase leverage, flexibility, and confidence in the growth phase. That phase is over…now they are just expensive leeches who also sow chaos and magnify risk (unlike governments, lawyers, and healthcare/insurance which are just leeches) to increase/diversify their take. Trade needs to revert to cash on the barrelhead, even if said cash is digital and barrelhead is an international transfer between buyer and seller (with banks competing on low margin transfers). Some kind of Net30 etc arrangements can still be worked out but it needn’t involve banks.
Even the electric generation and grid requires bank and financial systems to function. So electricity, nothing works.
Back in the 1960’s, I was told that banks wouldn’t advance more than the equity in a small company. That meant the company operated 50:50 equity:debt.
A year or two back I was looking at the finances of a small US company making refrigeration equipment. They decided to expand and took out a loan from their bank to finance the expansion, without seeking further equity. All the company’s profit went to pay the interest on the debt. They’re working for the bank.
I think what’s happening is that debt is being squeezed into every crack in the economy, like toopase out of a tube.
’80 percent of bank lending is based on retail and commercial mortgages’
Reference?
What happens at Peak Energy and Peak real GDP ?
Is falling productivity growth the cause behind falling inflation or is it behind the deflation ?
Falling productivity growth… leading to falling profits… leading to falling income… leading to falling prices ?
What happens at the Peak ? Will inflation start to pick up when the central banks continues to print money at the Peak… or will deflation really start to kick in when we reach zero growth… bankruptcies… defaults on debt and a credit crunch ?
The central banks will of course open up the taps at full at a credit crunch event… but who will borrow that money ? Governments will of course(US and EU)… the companies just to be able to pay their bills and interest on the principal (Chinas State Owned Enterprises)…
It feels like we are very close to the Peak… or are we already past the Peak and on the other side ?
“What happens at Peak Energy and Peak real GDP ?” Since we must have growth, the statistics used to establish GDP and energy availability will be manipulated to make it appear that there is no peak. Myself, personally, I feel we are (in the USA) past peak in just about everything productive you can think of. Talking with old folks and even my own personal experiences (I am 50) tell me things are trending downward and it is accelerating. The real question in my mind is when does the weakest link in the global economy fail that brings the financial system down. Judging by all of the irreversible schemes being played by the global central banks, I would say we are getting very close.
“The real question in my mind is when does the weakest link in the global economy fail that brings the financial system down.”
Germany is the strongest link in the global economy. The irony would in a sense be perfect if it is Deutsche Bank that brings the financial system down. Germany is of course only as strong as its global consumers are of Made in Germany.
Germany does appear to be the strongest link, at least in Europe. But, looks can be deceiving. Looks like the global central banks will be undergoing a real stress test soon. We shall see where the weak links are shortly .
You might find as a good primer this presentation just performed at NY FED by Mr. Dalio
http://www.zerohedge.com/news/2016-10-06/what-bridgewaters-ray-dalio-told-new-york-fed
It’s a good overview summary of the situation, sort of a base on which you have to add-on our very recent discussion here at FW, what kind of “helicopter money drop” implementation strategies going forward are being discussed in the upper circles, so what’s to expect at least in the rough sketch.
In terms of sequencing of events, still very likely remains the classic option: threat of hell freezing over deflation, followed by huge money drop, resulting eventually in uncontrollable spike of inflation, which destroys the current longer term cycle (since WWII) and its institutions and preferred vehicles of debt in the wake. What’s on the other end of the carnage, who knows, most likely some form or regionalized world, with much slower trade exchange, very downward slashed consumption patterns and overall destroyed living standard, meaning severely altered to negative by dozens of percent. Some countries-societies able to provide relatively better for their citizens than others due to better social climate, natural resources endowment, comparatively better management of the legacy infrastructure etc.
I’m still not hot on the very near term timing for the big event though as the major demographic hit is scheduled more towards ~2025-35 horizon, so one can assume lotsa can kicking effort front running it by TPTB, which they in fact openly address in their “scholarly papers” and media appearances.
Thanks, a great and very informative article.
Dalio seems to point to a zero growth environment where the economy will grind to a halt.
http://3.bp.blogspot.com/-S8GHSLPq4J8/U4vobqdNdlI/AAAAAAAAC5M/2LE7kc5zSN0/s1600/Velocity-Of-Money-M21.jpg
Forgive me if I disagree with your 2025-2035 horizon for major collapse. If you live in countries like: Nigeria, Zimbabwe, Venezuela, Libya, Syria, Yemen, Iraq or Afghanistan collapse has arrived. In the USA I think the majority of the population will feel an incredible and precedented (in US history) decrease in living standards before 2020.
Not at all. I do expect asymmetry and triage/resource access inhibition..
The 2025-2035 window scenario is more related to the countries with the newest infrastructure (key components domestically sourced/time limited autarky) and means of defense. In the meantime situation might escalate on the peripheries..
The world of Koombaya intrudes… on the sacred ground….
Jan Baudrillard [know him?] said;
“prophesying catastrophe is incredibly banal. The more original move is to assume it has already happened”
Of course, Mr. Dalio didn’t understand the energy issue underlying the problem he was describing, so he gives the other parts of the problem.
Yes, but Yoshua asked more along the lines of the economy and reaction to inflation, so I provided accordingly. Well, as we can see Dalio said we are over saturated and over stretched in debt, plus the longer ~75 cycle is ripe about to be reset. That’s precisely when most of the energy leveraged derived expansion upswing took place anyway. In summary that’s assembling more clues put together than most of his peers acknowledged so far..
So, even in case he doesn’t have FW related clue at all (we don’t know for sure), he sort of smells the phase shift around the corner, direct effects of going over the energy cliff, i.e. debts, saturation, public going crazy, investors looking for non systemic exit etc.
’75 cycle is ripe about to be reset’
Ray is about to be profoundly disappointed….
He wrote about “long” ~75years cycle reset, which is for most of us here a mere exponential final stage included in the real longer ~250years of techno cycle, which is in itself just a spike in the domesticated human cycle clocking for thousands of years, again obviously being just a part of even larger time span of humanoid cycle..
It never ceases to amaze me how very smart people who make big bucks off of their prescience and ability to understand complex situations are unable to see the disease.
Perhaps they do see the disease but say nothing because they have no idea when the end game is — and they are dancing while the music plays… if they say something they get labelled as heretics and their business blows up ….
Or
Perhaps because there is no way to profit from this situation they cannot or refuse to see the disease.
Or
Perhaps they are afraid to see the disease. So they cannot see the disease.
Some of the smartest people I know, whose job it is to work in the area of climate change mitigation, don’t understand that its a hopeless problem. These are highly educated professionals with degrees in environmental science and engineering, and years of experience working in development and utilities. They are enthusiastically at work figuring out how to get more solar panels on rooftops and more EVs in garages.
I have to put on a show like I believe this stuff (for my job), but I’ve tried subtly testing whether these other people really believe they’re saving the world or not. You know, like maybe they know it too but have to hide thier true beliefs as well. But across the board, they are all believers. 100%.
Its completely taboo to admit a problem is unsolvable, and that things will come to an abrupt end. I think its built in to society, and maybe into our psychology itself. Its powerful enough to put blinders on the smartest people, so that they can’t see what’s in plain sight right in front of them.
All in all I’ve met, in person, three people who have told me outright that yes, it’s ELE.
Everybody else I’ve met, refuse to think about such things through and through.. the common theme in their argumentation is: “well, if we start to think about such things, in such a manner, why not do yourself in right this moment..”
With acceptance “fear” goes away. We are capable of smelling the roses, despite we have an certainty, that we will NOT live to be 100, we will NOT die peacefully surrounded by our great grandchildren, we will NOT leave this earth better than how we got it and we will NOT be rich, affluent or any means safe when we die.
By all likelihood our story is just like a billion other stories. Before the end, there will be nothing special about us. We will be one of the Grey Men, just one piece of a gigantic starving mass of peoples.. And before it all comes to an end, we will not like what we have become. The things we had to do. The ugly, terryfying things we had to do to keep our families safe..
But that doesn’t keep me from being happy right now.. with acceptance I get to enjoy where I am and the people I’m with. With acceptance.. I would call it.. freedom..
@Froggman,
To see the futility it required systems thinking. If you are only concerned with PV or renewable energy alone – you don’t see the whole picture. That same issue goes for all areas.
But Paul Ehrlich speaks his and other opinions about the probability of total collapse here:
https://www.youtube.com/watch?v=r8mEMxDRU9Q#t=6m40s
Carpe diem!
I have a hard time finding time to listen to 1.5 hour videos, but I found the first part interesting.
He clearly doesn’t understand our financial predicament, or he would be even more concerned about collapse.
Thanks! Found 6:45.
@Gail
The panel discussion isn’t that interesting, thats why i put a time-index to the link, starting at 6:45. Still, I like his whole speech.
And you are right, even people like Ehrlich don’t get the whole picture – or not communicating it, because adding the financial aspect certainly would make the whole thing even harder to communicate…. and the outlook even worse.
But that seems to be the general picture.. not getting the whole picture. Listens some minutes ago to Radio Ecoshock. Proposing to voluntarily drop out of fossils…. and seeing not, that their panacea (renewables and the “has to be figured out” part….) are even worse from a carbon budget standpoint, neglecting the indirect emissions a fossil usage.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it”
I really think the vast majority of humans cannot think in general terms and see the bigger picture of what we are really doing. We are literally burning finite fuel sources that took millions of years to accrue to build increasing amounts of stuff (most of which last less than 10 years). People make money (which is nothing more than a claim on future resources) based on how much more stuff we can turn and burn each year. Then, we celebrate this on Jan 1st. Inevitably, all this stuff winds up as pollution, mostly in landfills. Some pollution makes it into the air and water supply. Much of it is toxic. The pollution becomes so great (just like alcohol in a jar of yeast) we begin to suffocate on our effluent. And none of this is linear. It is all exponentially increasing with time so most won’t even see pollution as a problem until it is too late. In laymen’s terms we are: “We are shitting in the bed we sleep in.”
Greg,
I think a lot of people “feel” there is something seriously wrong with the world.
But the vast majority will outright refuse to entertain any rational thoughts of our predicament. Any fantasy BS story to calm their nerves will do. What a pathetic, weak species it turned out we are..
“a hopeless problem.”
For sure it’s a really big problem, but I don’t think you can make a case for “hopeless.” There are at least three ways to solve it I can see. Lots and lots of GW nuclear plants, something like 15,000 of them, StratoSolar, again around 15,000 one GW size with gravity storage on a about a third of them, or 3000 power satellites. There may be other ways I either don’t know about or that have not been invented yet.
If those are the only options then this is beyond hopeless
I suggest uploading.
You don’t have to make it actually work, just convince the majority.
“You don’t have to make it actually work, just convince the majority.”
Maybe. For marketing reasons, I don’t think people will be much interested in uploading unless they can try it. People would be reluctant to buy a car without a test drive, a one way trip into an uploaded state seems like a difficult sale to me. That means that you have to make it work both directions so you can upload for the weekend and go back to work in a body Monday. Technically, it’s not much harder. I describe it in some detail in “the clinic seed” story.
Maybe nuclear doesn’t work either
http://euanmearns.com/do-we-have-enough-uranium-to-go-nuclear/
“Technically, it’s not much harder.”
🙂
@Greg
” The pollution becomes so great (just like alcohol in a jar of yeast) we begin to suffocate on our effluent.”
Big issue… most people have this thing not on their radar. There is a book from Crib that I ordered recently and which discusses / presents the current status quo. This videoo here from the autor:
https://www.youtube.com/watch?v=Xwq3hL9I8PE
is scary enough. So even if we avoid the outright collapse somehow, the increasing burden on the natural health is immense. Think only on all the new forms of illness and defects which are arising. And that is basically from the last 50-80 years only…. in increasing amounts!
Thats the reason I try to ban plastics as much as possible from my foods, cook / prepare everything myself and use homegrown / organic when possible. Milk/Meats/Fish are especially dangerous as the fats concentrate lot of pollutants – from the animal during the lifetime and from the packaging, processing and the like.
Admirable disciplin. What do you eat in a day?
I ate ice cream yesterday. So I cant feel it matters I also ate 150g fish, 75g red meat and 250g dairy.
New forms of illness.. a tick bite that causes severe meat allergy https://www.theguardian.com/society/2016/oct/07/tick-bites-that-trigger-severe-meat-allergy-on-rise-around-the-world
Weird stuff happening..
“Weird stuff happening..”
That *is* weird.
Vegan propaganda
@DJ
Its not even a discipline… depending on your aims and motivation (which are very directed If I commit myself to a goal, target, etc.) it becomes quickly very normal – even without thinking about. Humans are a very habitual species…. only challenge is to change the habits 😉
What I eat? For example I had some minutes ago part of my breakfast. Lightly steamed zucchini (protein) + tomato with garlic and ginger + spices (turmeric and pepper). After swimming (of in some minutes) I will have my muesli (oat, lupines, buckwheat, sunflower-, flax-, hemp-, pumpkin-seeds, spices, etc. + water and some fresh fruit). Light lunch with vegetables and leafy greens + sprouted lentils. Dinner is full grain rice + yellow lentils (protein) in a onion/tomato/sauce + (indian) spices and steamed Hokkaido pumpkin.
Sounds like a great side dish 😉
Zucchini 1.2% protein.
I suppose that lentils, like beans (and peas?) can combine with rice or grains to make complete protein.
Ticks …
I actually read it now. It really sounds like delusion or disinformation from a vegan.
We seem to be at/past peak energy. Coal is past its peak, and oil production/consumption seems to down recently as well. US natural gas production is down too in recent months as well.
This is it ?
No. I have not seen a single car commuting with more than one person. That is no car pooling yet. We have a ways to go.
The cutbacks have not been divided up evenly. US workers are doing relatively well, with energy prices low and jobs relatively abundant. US gasoline usage is up, as is US jet fuel use. In the US, the big oil cutback seems to be in diesel fuel use–less transport of goods; less drilling for oil; less coal extraction and transport. US coal exports are down a lot.
It is the countries whose currencies are low relative to the dollar who are doing less well. Countries that are oil exporters are especially doing poorly. We read about Venezuela, but I imagine that most of the OPEC countries are doing badly. I wish that we had better data. EIA has cut back on the amount of international data it provides–or I can’t find it among their new beta test reports.
World oil stocks–or at least US oil stocks–seem to be starting downward. The peak seems to have been at the end of August, if we believe the weekly stock figures. Falling stocks seem to be what are behind the higher prices we have been seeing lately.
Looking back at an example in history, Germany in the 1920s was a nation with a dysfunctional government, an economy steadily improving, a lively arts and culture scene. This came to a very sudden end with the Wall Street crash. Hyperinflation set in, the economy was a mess, the nation was fertile ground for the rise of someone to provide strong leadership and a promise of a return to greatness.
Things may seem okay now for most people in the sense of well-stocked supermarket shelves and the ongoing frustration of traffic jams. We can still withdraw money from the ATM, the wages still show up in the account every pay day. Sport teams still travel overseas to play in the mud.
With all the systems and resources trends we see, the current situation is clearly unsustainable. Personally, though collapse looks to me to be a process in progress at this time, I would expect a sharp crash or series of crashes to hasten that process. We see leaders planning and preparing for the past they know with the various infrastructure projects started or announced (or promised).
The lack of recognition of the present, the refusal to plan and prepare for the most probable future, the insistence upon consuming depleting resources to prepare for the past, the news media assuring us we need only worry about how we can handle greater prosperity (such as stories warning about ever worsening traffic jams and the expectation of more people living longer leading to problems with paying for tax-funded retirement schemes)… everything points to our being utterly unprepared for what lies ahead.
In such an environment, and given what we have seen in the past where collapse is concerned, how can we expect such collapse to be gradual and benign? All it takes is something to shake the confidence of a significant share of the population.
“All it takes is something to shake the confidence of a significant share of the population.”
Absolute agreement to your full comment.
And something is also societally broken. More and more people I know thinking, talking or actually dropping out of work… especially office and IT jobs… burnout, depression, no purpose, no goals worth pursuing, no real connectedness to the work or co-workers, to much pressure but no clear goals and the like.
Lot of those, even if they do not understand it like the commenters here do, have also the feeling and even some understanding that something goes wrong with humanity as whole.
I’m interested how all those collapse-lines will develop in the next months and years.
A creeping … global… cafard…
I agree. The situation now is brittle. We are at the point where fossil fuel consumption is close to flat, or even edging down slightly. The financial system is more vulnerable than ever before. Some little trigger could start a rapid downward slide.
It very well may be. Can prices go up enough to encourage more production? Will we see defaults if prices go up much?
Danger Will Robinson….DANGER!
http://www.naturalnews.com/055462_Deutche_Bank_debt_collapse_financial_catastrophe.html#ixzz4LfMPtWrL
From the article: My best German source informs me that 3 major banks are in trouble, and these 3 banks are fighting every single night to fight off insolvency and failure. He says CitiGroup in New York, Barclays in London, and Deutsche Bank in Germany- every single night are in trouble… In conclusion, Deutsche Bank owns $25 trillion in OTC swaps with the Central banks and other major banks, so expect a daisy chain of derivative failures for the $1.6 quadrillion derivative market if it were to fail! Deutsche Bank cannot break down by itself. It would result in the complete breakdown of the European Monetary Union!”
Those are some scary numbers. But, Deutsche Bank’s troubles have been brewing for years though. Symptoms of a greater disease I would suspect. So, hopefully they will brew a little longer.
Here is a breakdown of Italy’s banking problem, and its causes and consequences — in charts.
https://www.ft.com/content/921dee0a-4737-11e6-b387-64ab0a67014c
How this ship remains afloat is beyond me….
No entrance for me. Subscription… was it 1 USD ? 🙂
Here is the link: https://webcache.googleusercontent.com/search?q=cache:92qAvyDTeggJ:https://www.ft.com/content/921dee0a-4737-11e6-b387-64ab0a67014c+&cd=1&hl=de&ct=clnk&gl=de&client=firefox-b
You have to search the article via Google and then watch the cached version 😉
Thanks.
For most sites behind pay walls including FT —- copy paste the headline into a google search
Super Mario has everything under control ? The Italian mafia has its own printing press…
Wow!
I read that the employment rate in the US is at its historical lows. My question is has lowered the salaries of workers?
If I have 4 workers who work and earn U $ 100 each, and another unemployed person who has no salary, the calculation is 400 U $
But if I have 5 workers employed but with a salary 20% lower, also gives me 400 Us
Danger Will Robinson….DANGER!
http://www.naturalnews.com/055462_Deutche_Bank_debt_collapse_financial_catastrophe.html#ixzz4LfMPtWrL
A couple of things:
1. The calculation of the unemployment rate in the US is strange. Wages are sufficiently low that quite a few people have dropped out of the work force. The cost of child care, owning an extra car, fuel and insurance for the car, and extra clothes for the job is more than what benefit would be obtained by the job.
2. It is true that you can get equal wage amounts two ways (a) more people working, each earning a smaller amount or (2) fewer people working, each making a larger amount. The thing that changes is the fact that everyone needs to eat and have a place to live. They also need to have clothes to wear. The unemployed person ends up living with family indefinitely, and never starts a household of his own. His “demand” remains very low. This affects prices of commodities–keeps them below the cost of production.
Diminishing returns is very difficult thing to paper over.
I have been a short holiday in my hometown Cordoba, which is the hometown of great philosophers like the latin Seneca, the muslim Averroes and the jewish Maimonides.
Cordoba is a good place to reflect on the idea of collapse. One can see on a short walk through all phases monuments we would lead inexorably to the abyss.
Someday my city will be a lot of debris romans, muslims, jews and christians mingled with those of the oil era. It will be an ontological reminder of the futility of human endeavors. A reminder for rats and cockroaches… probably.
https://cdn.civitatis.com/imagenes/actividades/espana/cordoba/fotos/cordoba-noche.jpg
That we live with this kind of thoughts every day without going crazy, we proved to be disciples of the first order of the Stoic school of philosophy. Congratulations!
Just I wanted to share this thought with you, unpretentious.
“we live with this kind of thoughts every day without going crazy,” 🙂
I thought it was worse not being collapse-aware, just sensing something was very wrong.
The thing is…
I know of quite a few people who feel some traumatic event is imminent … but they believe they can weather the storm…. I think some of them believe this is an opportunity … just like 2008 was for those who profited from the Lehman situation….
If they understood the true nature of the problem…. I doubt they would be so optimistic….
I’ve always thought that ignorance does not give us happiness. There is something in the broad knowledge of reality which provides a serene happiness. However be convinced of a brutal and imminent collapse is excessive even for the most hardened person. That’s why I find it strange. Perhaps a kind of very deep denial is activated: rationally know what will happen but basically my animal instinct denies and that allows to continue my life relatively normal. Or maybe it is that we are made of different stuff. I do not know…
Here’s an article that is related:
https://www.sciencedaily.com/releases/2011/11/111121142446.htm
I recognize that living with a gray cloud over my head permanently. But I’ve gotten used hehe …
http://static.wixstatic.com/media/c5c4ef_f9c1cd3377c54df0b2363ea4df3b0dff.jpg
Thanks for the link to that article about people’s response to challenging social issues. Some excerpts:
The pursuit of bliss
“The pursuit of bliss produces monsters.”
Crates.
https://i1.wp.com/slimcelebrity.com/wp-content/uploads/2013/11/Michaela-Romanini-Plastic-Surgery-Before-and-After-Photos-Lip-Collagen-Injections-Botox-and-Lifts-wiki-bio-story-8.jpg
https://lh4.googleusercontent.com/-aQK0N25oZ4A/TYIXjzRmZtI/AAAAAAAAHI4/wlYMDle9Sf8/s1600/Mickey-Rourke-antes-y-despues.jpg
Is the left image the ‘after’ — if so that surgeon must be a billionaire…
I am very grateful for people like Nate Hagan’s who has worked to inform others of our predicament and his courage to leave the financial world to spread the message of eminent collapse coming soon and ways to live your life today.
Nate Hagens, what does it say about how we should live today?
I don’t know how your experience was growing up in Cordoba, but speaking as a visitor years ago, what a phenomenal city! One of my favorite places.
Speaking of travel …. I just received an email from Cathay Pacific with business class fares to a few destinations in Europe… for USD2500….. that is two long haul flights on one of the world’s best airlines…
They reported a plunge in profits last quarter…. a lot of their dollars come from finance people flying at the front of the plane….
I am also told the fares for 2017 for all classes will be more aggressive than 2016….
Hmmmm….. the doctor is picking up a weak pulse… symptoms of deflation ….
Well — on the positive side…. it’s about time to show my mug in Hong Kong and take a side trip to the Swiss Alps….
Those are nice words to the ears of an Andalusian.
To us makes us happy that our land please the visitor. I know it’s a little silly, but that’s our indiosincracia.
By the way, I follow your blog carefully.
Thank you for your effort.
“Carefully” think that it does not seem to be suitable. With a lot of interest, it wanted to say.
Gail, I’ve been following your work for a long time. I have the answer! I have the answer to everything! I solved the problem of peak oil!
The answer to peak oil is that Jesus Christ is the son of God! I’m not even kidding!
https://penzu.com/public/5a59bb84
I really wish you did because you had a great punchline.
That said, I don’t think your faith will not prevent you from suffering , but it will make it easier to kill other people (non-believers) over resources.
I really wish you did because you had a great punchline.
That said, I don’t think your faith will prevent you from suffering during the Armageddon( the world being the civilized world.) , but it will make it easier to kill other people (non-believers) over resources.
I think a lot of what is in the Bible comes from people living in difficult times. The Bible seems to justify actions such as slavery (which is mentioned and sanctioned many times in the Bible) that we abhor today. If the people can be convinced that the Bible is the word of God and slavery is sanctioned by the Bible then it offloads the guilt from the slave owners and justifies slavery as a necessary evil. The slaves then see their free labor as doing God’s work so they conform. It is all a way to get people to cooperate when times are tough. We live in times of plenty in the USA and fossil fuels are our slaves. Many people see their right to burn fossil fuels as a God given right. And rightly so, the Bible says so. Humans can never escape the reality of how nature works. In nature there will always be winners and losers. Humans are clever though. The well-off humans have convinced the losers that they are winning.
well. Inhofe, your resident senate nutter and godbotherer in chief, is adamant that his god will not allow climate change to happen
he should know—they made him chair of the environmental climate change house committee!!! (or something like that)
https://www.washingtonpost.com/politics/inhofe-an-epa-foe-likely-to-lead-senate-environment-committee/2014/11/05/d0b4221e-64f4-11e4-836c-83bc4f26eb67_story.html
he even brought a snowball into the house to disprove global warming.
Dunno what everyone is worrying about
Perhaps. Or perhaps it is the losers who have figured out for themselves that if they are going to have a reasonable life in the here and now, they need to make the best of a bad situation. Perhaps things will be better later. (Or perhaps not, but for the present time, it is best to imagine they will be better.)
I have the antidote:
Jason,
You have a lot of interesting things in your long treatise. For example, I don’t remember running across the reference to Herbert Hoover’s memoirs before, and his reference to the trigger for the depression being the increase in interest rates. I know that there was a recession when Volker raised interest rates leading up to 1981. It was “Steve from Virginia” who figured out that the Federal Reserve raised interest rates prior to the 2007-2009 crash, in an attempt to get rid of the inflationary effects of rising food and oil prices. So the pattern seems to hold, over and over again, as we might expect.
When it comes to all of the prophesies and whether or not they are being fulfilled in our time, I think there is room for differences of opinion. The prophesies tend to be very general. Exactly what is meant by them, and whether they are being fulfilled, can be interpreted differently.
It would seem to be possible that coming of a collapse scenario could coincide with what was seen as the end of an age in earlier prophesies. Jesus said (Matthew 28:20), “I am with you always, even to the end of the age.” In a sense, it would be comforting to know that Biblical and other ancient prophesies line up with what we are seeing now. At the same time, Matthew 24:36 says,”But about that day and hour, no one knows, not even the angels in heaven, nor the Son, but only the Father.” This doesn’t give a person much confidence regarding predicting when end times will occur. Perhaps there are things we can’t really know.
Thanks for your write up.
Wow, you read that fast! You got it Gail. I don’t know exactly when it’ll happen, but because of your studies, we can safely say the tribulation will be a naturally occurring event! We know THAT it will happen!
Jesus Christ is coming back, flying on a white horse. No one expects it. I love it! Just the thought of it makes me chuckle!
Dang! I was waiting for Muhammed to be back on that white flying horse. No.. wait.. it was Krishna I was waiting for. The looong awaited tenth avatar of Vishnu! Oh.. but.. hmm.. maybe it was Ishtar.. nope it was Mithra who was coming back.. dang. It had to have been Vohu Manah, no.. wait.. it was Ahura Mazda..
Sorry, I get confused sometimes with these fantasy stories.
Anyways can’t wait forwhomever was on that white flying horse. It’s going to be sooooo great!
Breaking News – South Island New Zealand:
Fast Eddy Enterprises announced a soon to launch new aggregator website — this site will allow users to immediately compare what is on offer from the major religions of the world…. the rewards… the punishments… their versions of eternal life… the levels of difficulty in getting into their VIP clubs (e.g. heaven)….time commitments while on earth (e.g. Jihad… Crusades…number of times praying each day)
Once you have compared the various plans you can then choose the religion that is best for you and sign up on the spot by committing to a monthly donation plan paying online for the reminder of your life.
There will also be an option to set up a trust fund that pays cash into the coffers even after you are dead thereby ensuring eternal bliss… an extra ration of milk and honey for Christians and for those choosing Islam … guaranteed centrefold quality virgins.
Fast Eddy Enterprises will retain 25% of all donations.
Fast Eddy Enterprises mastermind Fast Eddy (esquire) commenting on this new site said, “We believe this is the killer app – bigger than Facebook and Google combined. My biggest concern is that the Nelson Airport runway cannot handle the large private jet that I will be purchasing shortly”
http://www.fasteddyreligionareus.com
LOL! There seem to be a lot of similarities among religions. Perhaps there is something behind them that we don’t fully understand.
Breaking Breaking News….
Beavis and Butthead just announced that they have declared Gee-Had on Fast Eddy for taking the piss of the Is. Lam. In a joint comment they said “Death to Fast Eddy. Fast Eddy has gone too far. Death to Fast Eddy”
Let’s go live to the scene for more:
https://www.youtube.com/watch?v=CAJ6xYuaDlM
Fast Eddy has apparently locked himself in a heavily fortified container somewhere in the bush in New Zealand
This just in from joint chiefs of N.O. B.S. PLZ
Due to imminent rise of BS levels on strategically valuable blogs, the joint chiefs have decided to imminently launch search and rescue parties deep in to the bush of New Zealand.
The joint chiefs have detected accelerated BS levels in strategically valuable blogs. And if unchecked, by Fast Eddy Enterprises mastermind Fast Eddy (esquire), will cause obsessive-compulsive actions, anorexia-like refusal to eat, severe anxiety and violent outbursts.
“bush of NZ, Fuuu-k” was the only comment available from the special operations CO. That and an unofficial outburst of: “that Fast Eddy.. he’s an complete animal..”.
This was monitored out New Zealand earlier this morning — it is believed to be Colonel Fast Eddy….
Dear Van Kent;
You missed one: https://cthulhuforamerica.com
His horse is black,
Pintada
Debt certainly is near the breakdown point but I fail to understand why renewables are dismissed in relation to productively. Joe Romm and Armory Lovins of RMI would take issue with your lock step idea that GDP will continue to follow energy costs. They show energy costs dropping due to renewables being already competitive with fossil energy even with nuclear considered. They even go as far as saying no new nuclear power plants will be built. While I do hesitate to agree with the nuclear part since plans are being finalised for construction of another one in the south, I do believe the tend of GDP decoupling from fossil energy has merit.
Others would take issue with the idea that GDP has been decoupling from fossil fuel use overall. Although there is ample scope for people to wave conflicting stats at each other.
Here, for example, is a critical look at solar PV that argues that IN THE REAL WORLD it has actually INCREASED fossil fuel use overall so far.
It’s generally assumed that it only takes a few years before solar panels have generated as much energy as it took to make them, resulting in very low greenhouse gas emissions compared to conventional grid electricity.
However, a more critical analysis shows that the cumulative energy and CO2 balance of the industry is negative, meaning that solar PV has actually increased energy use and greenhouse gas emissions instead of lowering them.
The problem is that we use and produce solar panels in the wrong places. By carefully selecting the location of both manufacturing and installation, the potential of solar power could be huge.
http://www.lowtechmagazine.com/2015/04/how-sustainable-is-pv-solar-power.html
Kris de Decker is a good analyst. I need to look at this article in more detail. I agree that energy consumption occurs on a “flow” basis, not on an “accrual” basis, as most analysts seem to assume. We use more now, with the hope of using less later. We have no guarantee of the later consumption ever happening. This mismatch is at least part of what distorts EROI calculations of expected benefit.
Solar panels are one of the worst things we can do for the environment …. from the manufacture of them using lignite coal… to disposing of the toxic elements in them…
The MSM has convinced joe public that a circle is a square.
It is liars poker. China burns coal and send us PV panels, we deposit federal reverse notes in the Chinese account. They get the pollution we get the panels for 30 years. The debt will never be honored. Who wins?
Definitely not China!
If all it took was money to make solar panes we would be in great shape. Unfortunately, it takes fossil fuels and its supporting infrastructure to produce “renewables.” You must consider the life-cycle costs of these energy capturing devices not just the specs quoted on the box they come in. If you do that you are assuming “renewables” just pop into existence via magic.
Let us just assume that a solar panel is 100% efficient at converting sunlight into electricity. It will still use fossil fuels and a multitude of raw materials in its production, maintenance and disposal. They cannot scale on their own merits. Fossil fuels, especially crude oil, not only scale well they are an irreplaceable feed-stock for an innumerable number of products we use everyday: plastics, semiconductors, clothing, agriculture and so forth. Renewable cannot replace fossil fuels. And to make matters even worse, they have been show to increase fossil fuel usage