Inflation, Deflation, or Discontinuity?

A question that seems to come up quite often is, “Are we going to have inflation or deflation?” People want to figure out how to invest. Because of this, they want to know whether to expect a rise in prices, or a fall in prices, either in general, or in commodities, in the future.

The traditional “peak oil” response to this question has been that oil prices will tend to rise over time. There will not be enough oil available, so demand will outstrip supply. As a result, prices will rise both for oil and for food which depends on oil.

I see things differently. I think the issue ahead is deflation for commodities as well as for other types of assets. At some point, deflation may “morph” into discontinuity. It is the fact that price falls too low that will ultimately cut off oil production, not the lack of oil in the ground.

Even with little oil, there will still be some goods and services produced. These goods and services will not necessarily be available to holders of assets of the kind we have today. Instead, they will tend to go to those who produced them, and to those who win them by fighting over them.

Up and Down Escalator Economies

It seems to me that economies operate on two kinds of escalators–an up escalator, and a down escalator. The up escalator is driven by a favorable feedback cycle; the down escalator is driven by an unfavorable feedback cycle.

For a long time, the US economy has been on an up escalator, fueled by growth in the use of cheap energy. This growth in cheap energy led to rising wages, as humans learned to use external energy to leverage their own meager ability to “perform work”–dig ditches, transport goods, perform computations, and do many other tasks that machines (powered by electricity or oil) could do much better, and more cheaply, than humans.

Debt helped lever this growth up even faster than it would otherwise ramp up. Continued growth in debt made sense, because growth seemed likely for as far in the future as anyone could see. We could borrow from the future, and have more now.

Unfortunately, there is also a down escalator for economies, and we seem to be headed in that direction now. Such down escalators have hit local economies before, but never a networked global economy. From this point of view, we are in uncharted territory.

Many economies have grown for many years, hit a period of stagflation, and ultimately collapsed. According to research of Turchin and Mefedov documented in the book Secular Cycles, such economies have typically gotten their start by learning to exploit a new resource, such as using land cleared for farming, or learning to use irrigation, or in our case more recently, learning to use fossil fuels. These economies typically start out by growing for many years, thanks to the opportunity for more population and more goods and services from the new resource.

After a while, a period of stagflation is reached. Population catches up to the new resource, and job opportunities for young people become less plentiful. Wage disparity grows, with wages of the common worker lagging behind. The cost of government rises. Because of the low wages of workers, it becomes increasingly difficult to collect enough taxes from workers to pay for rising government costs. To work around these problems, use of debt grows. Needless to say, this scenario tends to end very badly.

Our situation today sounds a great deal like the down escalator situation. As I have discussed previously, wages stagnate as oil prices rise. In fact, most increases in wages have taken place when the real price of oil was less than $30 barrel, in today’s dollars.

Figure 1. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

Figure 1. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

As oil prices rise, wage-earners hit a second problem–higher outgo for fuel and food, since fuel is used in growing and transporting food.  Thus, wage-earners are hit on two sides–flat income and higher outgo for necessities, leading to less discretionary income.  Governments find that they need more taxes to pay for increased benefits for the many who no longer have jobs. These higher taxes place another burden on those who are still working. Businesses find their profits pinched by higher oil prices, and respond by outsourcing to a low wage country, or automating processes to cut costs, lowering the amount local citizens earn in wages further. Furthermore, even apart from oil issues, globalization tends to pull US wages down.  All of these issues tend to add to the down-escalator phenomenon for the US economy.

In past years, governments and businesses have made promises of many types, such as bank account balances, pensions, Social Security, Medicare, insurance policies, stock certificates, and bonds. The question becomes: what happens to these promises, as we step off the up escalator, and onto the down escalator? All of these promises could be paid when we were on the up escalator. The amount that gets paid is much less clear, if we are on the down escalator.  In this post, I would like to examine what happens.

The General Price Trend: Downward, with Discontinuities

Each year, an economy produces various kinds of goods and services. It grows crops, and extracts minerals. It uses energy products to process the crops and minerals into finished goods, and to transport them to their final destination. The amount produced depends on the amount of goods and services potential buyers can afford. If wages are stagnant, and the government’s share keeps rising, the amount wage-earners can afford (in inflation adjusted dollars) keeps falling.

Since the early 2000s, the cost of extracting oil products has been rising, because the oil that was cheapest to extract was extracted first, and the “easy oil” is now gone. There tends to be a relatively small amount of a resource available cheaply, and increasing amounts available at higher and higher prices (Figure 2, below).

Figure 2. Resource triangle, with dotted line indicating uncertain financial cut-off.

Figure 2. Resource triangle, with dotted line indicating uncertain financial cut-off.

In fact, minerals of all types tend to follow the same pattern as oil for two reasons: (1) Mineral extraction follows the same pattern–cheapest to extract first, moving to the more expensive to extract, and (2) Oil is generally used in extraction. If the cost of oil is rising, its cost tends to get passed on. Of course, in some instances, technological improvements can offset rising prices, but for most of the time since the year 2000, cost of commodity extraction has tended to rise.

There has been a lot of publicity recently about more oil being available, and more natural gas being available. This additional availability is because of high price. It doesn’t bring the cost of extraction down. In fact, if price drops, extraction is likely to drop. This drop will not occur immediately, because much of the cost has already been paid on wells that have already been drilled, so extraction from these wells tends to continue. But future investment is likely to drop off quickly if prices drop, bringing supply down, with a lag.

Because of the downward escalator the economy is on, wage-earners don’t really have enough money to pay the higher prices that are needed for increasingly costly extraction of oil and other minerals. Instead, prices tend to be volatile. The general trend can be expected to be downward, because even if  oil prices rise when the economy is functioning fairly well, at some point, the higher price leads to adverse feedbacks, such as consumers defaulting on debt and cutting back on discretionary purchases. The result can be expected to be recession, and again lower oil prices.

The big danger is that lower oil prices will lead to lower oil production, and this lower oil production will become a problem for business and commerce around the world. The United States is likely to be one of the countries whose oil production will be affected most by lower oil prices, for three reasons:

(1) We tend to have most tight oil production, and tight oil production tends to be high-priced production. It also drops off quite quickly, if drilling stops.

(2) Shale gas drillers tend to use a lot of debt. Shale drillers will especially be hit if interest rates rise because of debt problems.

(3) Taxes and fees related to oil production in the US (unlike many countries) do not vary with the price of oil. The US government will continue to get most of its revenue (estimated to average $33.29 per barrel on a $80 barrel of US tight oil by Barry Rogers, Oil & Gas Journal, May 2013), even as companies find themselves short of funds for new drilling.

If oil production is down, US oil consumption to be lower as well. The reason for low oil price is likely to be recession and greater job loss. With fewer jobs, less oil is needed for making and shipping goods. Furthermore, the many unemployed cannot afford cars. The pattern of  declining demand in the European Union, and Japan is likely to continue, and get worse. (See my post, Peak Oil Demand is Already a Huge Problem.)

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

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

In 2008-2009, the economy was able to somewhat recover, so commodity prices increased again. This recovery was not based on US economy fundamentals–a large part of it seems to be related to artificially low interest rates and deficit spending. As interest rates rise, and as deficit spending is eliminated through higher taxes/lower benefits, the US economy seems likely to head back into recession, with more job loss, probably worse than last time.

Countries with low wages to begin with may be spared of some of the down-escalator economy dynamics for a few years, because their low wage levels will continue to make them competitive in a world economy. These countries will attract a disproportionate share of new jobs, allowing them to continue grow for a time, even as the US, the European Union, and Japan continue to lose jobs.  Thus, world oil prices may be able to bounce back, but probably not to as high a level as in the recent past. Eventually, these countries will tend to follow the rest of the world into stagflation and collapse, because of the interconnectedness of the global economy, and the similar dynamics that all countries are subject to.

Chance of Discontinuity

In order for the models to work in the expected way, business as usual must continue. A few obvious problems come into play:

(1) “Demand,” as defined by economists, is what consumers can afford to pay. Therefore, a jobless individual without any type of government compensation, would have no demand for food, clothing or shelter–at least using the term in the way economists use the word. All of us know that in the real world, lack of a job and lack of government benefits causes problems. At some point, marginalized people will riot and  overthrow governments. Civil war may take place, or war against another country.

(2) Part of Business as usual is continuing availability of debt. At some point, it will start to become clear that the economy has gotten off the up escalator, and moved to the down escalator. On the down escalator, much less debt makes sense. It probably still makes sense to use debt on a short-term basis to cover goods in transit, and it may make sense to use debt to finance investments with a high expected rate of return. But in general, debt is likely to become much less common, greatly worsening the down escalator problem.

(3) As long as the economy was on an up escalator, increasing economies of scale were part of what caused a positive feedbacks. When the economy is on a down elevator, we have the reverse effect–higher fixed costs relative to production. This is even an issue when reduction in sales are intentional–for example, increased water conservation tends to lead to higher fixed costs, per unit of water sold, and greater use of high-efficiency light bulbs leads to greater electricity fixed costs (such as grid costs) per kWh sold. These higher fixed costs tend to push up prices for services further, increasing the down escalator effect.

(4) Investment in a capitalistic system does not work on a down economic escalator. Who wants to invest, if it is probable that the economy will shrink, leading to increasing diseconomies of scale?

What Happens to Government and Business Promises?

There are many kinds of promises currently outstanding:

1. Government promises

  • Social Security
  • Medicare
  • Unemployment insurance
  • Continued maintenance of roads
  • Free education for all through high school
  • Government debt (Federal, state, and local)
  • Financial help after hurricane damage
  • Guarantees of bank accounts and pension plans

2. Insurance and bank promises

  • Life insurance policies
  • Annuities
  • Long term care policies
  • Pension plans
  • Auto and homeowners policies, etc.
  • Bank account balances

3. Promises by companies of all types

  • Stock – implied promise it will be worth more in the future
  • Loans borrowed will be paid back (to banks or on bonds)
  • Pension plans
  • Implied guarantee of future 24/7 electricity availability; grid maintenance

What happens to these promises? Over time, it is clear that pretty much all of them will disappear. They are up-escalator benefits that work when there are plenty of fossil fuels and the economy is expanding. They don’t work for very long on a down escalator.

Promises to Individuals

At the level of the individual, one of the implied promises has been is that an individual who gets a good education will be able to get a good paying job. This is one of the promises that is already disappearing.

There is also a second implied promise–people who actually perform the work, will be compensated for it. This promise is falling by the wayside, as wages fall (partly due to globalization, and partly due to other down escalator effects). At the same time, governments need higher tax rates, to pay for all the promises made to those who are retired, unemployed, or have wages that are too low to support a family.

Goods and Services Produced in a Given Year

In any year, there will be a mixture of people buying goods and services:

  • People who are currently in the work force
  • Retirees
  • People who own assets and want to sell them

One thing that may not be obvious without thinking about it, is that all of the people wanting goods and services have to compete for the same set of goods and services that are available at that time.

For example, we grow a certain amount of corn and rice, and we extract a certain amount of oil and coal and copper, and we make a certain amount of electricity in electric power plants. Because of inventories, there is a little flexibility in these amounts, but basically, the amount that is available is determined by market prices and availability of supply lines. If the amount of goods and services produced is decreasing, because we are on a down escalator economy, this smaller quantity of goods and services needs to be shared by the entire population.

If there is relatively little available in total, and those who produced it don’t want to part with it, a person trying to trade accumulated “assets” for current production will not receive very much scarce production in return for his accumulated wealth, no matter what form it may take. In the case of most assets (stocks, bond, gold, silver, etc,) this means that the value of the asset tends toward $0. If currency is viewed as another asset, its value may go to close to zero as well. In fact, if there has been a government change, its value of the currency may be exactly zero.

How about Quantitative Easing?

Quantitative Easing (QE) represents an attempt to reinflate the economy by making more credit available to the economy, at lower interest rates. It also has the effect of reducing the interest rate the government pays on its own long-term debt, thus holding down that taxes the government needs to collect.

In terms of inflation/deflation effects QE has, its primary effect seems to be to artificially inflate asset prices–stocks, bonds, home prices, and agricultural land prices. The announced goal of the Japanese QE attempt was to try to raise the inflation rate (generally) in Japan to 2%, but it has not had that effect. In fact, the same link shows that in general, QE has not led to inflation.

In my view, the primary effect of QE is to create asset price bubbles. The price of bonds is raised, because of the artificially low interest rates.  The price of stocks is raised, because people switch from bonds to stocks, to try to get yield (or capital gains). To get better yield, businesses find it worthwhile investing in homes, with the idea of renting then out on a long-term basis. Very little of QE actually gets through to wages, which is where the major shortfall is.

QE will at some point stop, and the asset price bubble will deflate. (Crunch Time: Fiscal Crises and the Role of Monetary Policy by David Greenlaw, James Hamilton, Peter Hooper, and Frederic Mishkin points out that QE is not viable as a long-term strategy.) This is likely to add to deflation woes. The higher interest rates and the need for higher taxes to cover the higher interest the government needs to pay will add to the down escalator effects, making the trends noted previously even worse.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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348 Responses to Inflation, Deflation, or Discontinuity?

  1. Don Stewart says:

    Dear Jan Steinman and Others
    One other curious article in the magazine that I did not mention. One fellow argues that social security and medicare unfunded liabilities are not a problem. He reckons that global wealth is growing at 2 percent per year, while global population is only growing at 1 percent per year. If you compound those two curves, you get a steadily increasing population which is ever getting richer.

    Unless one thinks in terms of ‘Limits To Growth’, the argument is seductive. If one thinks in terms of Limits, then one expects a crash.

    Don Stewart

  2. Christopher Johnson says:

    You are entirely right at this point in time (as they used to say when R Nixon and his men were facing the cameras). But you will agree, I trust, that prices can and do change. Gradual relief of the pricing pressure on petroleum can relieve some of the pricing pressure on petroleum. I’m not forecasting the how or the when, only the fact that considerable work has been done and the scientific community claims they are making progress in batteries and other related technologies.

    BTW, they’re also making electric airplanes — light singles with 800 mile range, as well as more substantial ones. They’re also blending algae-based fuels into aviation fuel. Similar efforts with rail, trucks and buses.

    Your admirer in British Columbia had a pertinent response: ‘Because we’re not phytoplankton.’

    Cheers, Chris

  3. Christopher Johnson says:

    Battery and Electric Vehicle Developments. The Tesla vehicle is now selling a 300 mile model, and intends to market a 1,000 mile model soon. Others are designing new vehicles. It turns out that all the academic communities’ continuing efforts to make better batteries (faster charge, longer life, etc., are beginning to yield results. The race is on: will the electric cars win or will human population growth overwhelm all?

    • Scott says:

      Very interesting Chris, what a beautiful car, but, like most, I cannot afford one – unless I put a huge mortgage on my home. I still think that they will come out with some pretty cheap electric cars that perhaps can do 300 miles or so, perhaps in a few years.

      If only we could we had a cleaner way to make all of that electric power that will be needed and not use these coal fired plants,

      I see Thorium reactors as our best know option, otherwise we are going to burn the coal and get much hotter.

      But ball is already rolling due to industrial factories and all the cars, it would only take away part of the problem.

      I do believe we have plenty of lithium to build the batteries, other things may get short like oil, metals, based plastics in the future, but enough for now.

      Kind of gives me hope if was not for the financial disaster looming which we have all been studying… and, If it was not for this financial disaster, I think we could make it for many years, but you know abundance will deplete, as it is now and we will have less choices as things become extinct or discontinued.

    • We can’t afford electric cars. They won’t do much–my view.

      • Scott says:

        Gail, Still looking at world bond markets…Portuguese 10-year government bond yields rose to 7.77 percent, I think this could happen in the USA too someday… Watch out if it does.|finance|headline|headline|story&par=yahoo&doc=100882198|Portugalsbondmarketta

        • 7.7 % on a Government bond sounds reasonable, put another way, being forced to pay 7.7% to borrow money medium term is a reflection of the opinion of moneylenders on Portugal’s ability to repay debt. They may be able to do that for a while, but soon their economy will crash because that borrowed money is being used to support an unproductive (ie non profit making) economy. The moneylenders simply spread their risks.
          the USA will reach the same situation, when (not if) it does, life is going to get very interesting.

          • Scott says:

            Hello, Hope you are having a good day. I agree, most of us are used to paying 7 percent interest. But since the USA owes something like 14 trillion dollars, a seven percent rate would be devastating. That is the crisis looming that I see and I think Gail also sees. Other countries such as we discussed are over indebted and rates rise we will see austerity and unrest. These governments have put themselves in a corner and they need near zero interest rates to keep the game rolling onward. Otherwise it could be very inflationary if they had to print so much new currency, but that is the part we have debated and we will have to wait and see how it plays out. I have been surprised that inflation has remained as low as it has, but may not be the case in the future. We are not sure yet on that one. Gail any comments?

            • Without economic growth and inflation, it is hard to support 7% interest rates. Of course, pension plans are generally assuming rates of return higher than 7%, already. If interest rates don’t rise, pension problems are in trouble, over the long run. To the extent there are guarantees on pension plans, the government already has a problem–with or without interest rate rises. The timing just varies.

              With respect to money printing causing inflation, we have already have had attempts at money printing. There is inflation in asset prices, but the money tends not to get back into the hands of those purchasing goods and services, and employing more workers. The issue could very well be discontinuity of some type. Countries stop trusting one another. International trade gets disrupted. There is a need for more taxes, but the government cannot raise taxes by nearly enough, and there is revolution. I would move “inflation” out of my mind as an explanation of what is likely to happen.

              As I pointed out in my last article, we just have the goods and services to allocate that are made in a given year (more or less). Money is a means for allocation. But it is necessary to maintain many types of equity as well. Printing money has no magical qualities.

  4. xabier says:

    Some news items of interest:

    The US Energy Dpt. has just stated that the US energy grid ‘is not robust’, and that ‘we can’t hide our heads in the sand anymore.’

    In one State at least, there is talk of charging higher tariffs to those with PV panels, in order to make them ‘contribute fairly’ to grid maintenance.

    And legislation is being passed on a global basis to make the seizure of ordinary deposits in banks possible, in order to assist banks in their internal rebalancing (as occurred in Cyprus) and to make sure that people ‘contribute fairly.’ (That ‘fair’ word again, how nice!)

    Three things which Gail has firmly emphasized in her posts as aspects of the energy/banking/fiscal crisis going forward: declining, vulnerable, and perhaps impossible to maintain infrastructure; rising fixed energy supply costs to consumers in order to help with propping the system up, counteracting any measures they may take to reduce bills; and continuing financial collapse placing ever heavier burdens on those who have any kind of savings and assets whatsoever. The shape of the future is pretty damn clear, even if things only decline steadily and slowly, but I don’t see any of these important developments making headlines anywhere in the MSM.

    I’d say that’s Gail 3, MSM and Cornucopians, 0.

    • Do you have a link to the new DOE report? I tried to look, and came across this one, but don’t think it is the right one:

      US Energy Sector Vulnerabilities to Climate Change and Extreme Weather. It focuses on some specific situations–not the more general case. I also ran across this New York Times article: Ideas to Bolster Power Grid Run Up Against System’s Many Owners.

      I have written several articles about the US Electric Grid over the years–or the same one over again. For example

      The US Electric Grid–Will it be our Undoing- Revisited?

      and Upgrading the US Electric Grid – Many pluses but some minuses too.

      The people who add intermittent electricity to the grid do not seem to realize that they make the grid situation worse. EROI calculations are apples to oranges comparisons, because they don’t consider the cost of fixing the mess the added intermittent electricity creates.

      • xabier says:


        I’m afraid not: I just noted in passing a brief mention in an Oil Drum comment, the frankness of the statement struck me.

    • Christopher Johnson says:


      Some cynics might opine that the MSM will do what the goverment tells it to do. I would never venture such a thought, or the parallel one that the keepers of the secrets prefer to avoid rocking the boat, at least at the current moment. Whatever their reasons might be, do you think it would be difficult to tip public opinion drastically against our current status quo? Personally, I’m not sure, but I’d rather keep the ‘springs’ in distant places that need change even more than we might. Paris ’68 might be a little more than Europe or anybody else needs right now.
      And I’m confident that our leaders will entrust us with their understandings and concerns in their good time… Aren’t you?

      Cheers, Chris

      • xabier says:


        I’ve come to conclude that if you want to see what is not worth knowing, read the MSM. Even the old ‘heavy-weight’ press in England seem to have turned into something like comic books for adults.

        Having personal experience, through the lives of relations in Spain, of the consequences of radical politics, I heartily concur with you that political upheaval of the Arab Spring variety is not what is needed at this moment. Street protests are something of a national game in places like France and Spain.

        As regards our general energy and environmental predicament, I believe many people have their eyes firmly shut, and perhaps they are all better and happier for it…….

        • Scott says:

          Xabier, what was that movie? Eyes Wide Shut? Sometimes I wish I had never learned about our problems too, people that are ignorant may be happier- but I choose to face this thing myself. I have never really been an Ostrich.

        • Christopher Johnson says:


          Thanks for your comments, sir. I think we’ve all got a lot on our collective plate. Europe really doesn’t need any more problems than it already has. Ditto middle east. Just a few months ago many of us were congratulating Brazil and Turkey for doing well economically and politically. And looking forward to China becoming the biggest economy. Ooops…

          The Economist cover three weeks ago highlighted the growth of protest since 1789 (Haitian Slave Revolt?). Today we read that Chinese administrators face 500 ‘incidents’ or ‘demonstrations’ per day. Earlier this week the demonstrators won and the PRC government promised to not build a nuclear fuel processing plant in a heavily populated area.

          I used to think the ‘liberal press’ bias was responsible for ganging up on GWB and giving his D opponents a free ride. The European press, especially, seemed to be offended just by the way the man walked — with a West Texas swagger, or something. All the non-Texans from New York and Boston and London and Frankfurt used to gang up on him every doggone day. Remember? There appears to be some truth to the notion that right wingers get hammered by the ‘liberal’ press more than lefties.

          Recently, however, it’s become apparent that the ‘apparent differences’ in treatment are much broader in extent and intensity than what we may have suspected. The best example of this is the series of Snowden, PRISM, NSA, etc. news. Other than a few articles per week in a few ‘very left / liberal’ media, it’s been pretty ho-hum. Would that relative calm prevail if GWB were in office? Maybe not, I don’t know. But maybe the MSM would tone it down, because the entire world seems to be more fragile now, much closer to the point of mass fracture.

          Does the MSM generally suppress all ‘non-helpful’ stories? Well, at best it’s a maybe. The US east coast has just experienced 38 out of 40 days in which 1/4 inches of rain fell. That’s a monsoon rainy season similar to what is experienced annually in Southeast Asia. Would the MSM want to burden a nice supportive D president and congress with tough stories about climate change? Along with all the other problems we’re facing? Am I full of acid rain or just hot air? Should we expect the MSM to just do their bit for peace and tranquility?

          Goodness knows Gail Tverberg’s hypotheses about impending (imminent??) collapse will not capture the hearts and minds of the MSM, or inspire them to sell a few more newspapers by flogging stories that would only come back to haunt. No centrist politician can be expected to mention or tolerate ‘space cadet’ stories.of the kind bantered on these pages. ‘Return to hunter-gatherer lifestyle…’

          Nope, MSM and Status Quo politicians aren’t gonna buy even a teaspoon of it… Bad for business.

          Cheers, Chris

  5. xabier says:

    Interesting discussion on realities of livestock!

    Killing pigs is not very pleasant at all: quite near to killing a human as they know what’s coming and make a lot of noise. Pigs are smart creatures. In Spain, even the peasants have to drink quite a bit of brandy on pig killing days.

    The most gruesome and surreal meal I ever had was on a balcony of a 16th century farmhouse in the Pyrenees, eating pork, – which were thrown to you at as you sat at the table – while photos of the killing of the pig were handed round (luckily with lots of local cider)! When killing the pig they had put the knife the wrong way into the neck, and the blood gushed all over the young girl who was holding the blood bucket – to be used in making black pudding. Not a pretty sight…..

    In some families, stirring the blood bucket with the bare arm is a rite of initiation for a son-in-law.
    ‘You’re a pig, and I’m going to make you bleed like one’ is a traditional insult in rural Spain.

    Myself, I don’t have the guts for it. A neighbour was trying to get me to take a pig or two to feed up for meat, but I turned it down: just one and I’d get to know it in a personal way and killing it would be a kind of treachery. I was talking about this to my Polish friend, who is a real peasant at heart, and he agreed: ‘It would be like killing your dog’ he said, looking at my gundog!

    Squirrels scream loudly when in fear (I’ve killed them a few times to put them out of their pain when caught in nasty wire traps).

    Small birds like chickens are no real problem as they can’t squeal or scream. But I’d run a mile from the plucking!

    A friend of mine who was a ‘gaucho’ in Argentina and ranch manager in Australia, says that he hated the killing at first, but then you just become callous: if you don’t kill, you don’t eat. ( He was always sickened by the punishments they inflicted on bulls though – there was an element of sadism in that. )

    • collectively we are still hunter gatherers, the only difference between ourselves and our distant ancestors is that our ‘civilised’ society allows us to pay somebody to do it for us.

      • Christopher Johnson says:

        To End of More:
        Whoever coined the phrase ‘hunter – gatherer’ did a moral disservice to the species, as the difference between a calloused hunter and a fair-skinned picker of fruits and nuts is probably as great a distinction as can be found. Similar perhaps to that between a pirate and a nun?
        Cheers, Chris

        • Chris
          Always seemed a reasonable description to me.
          If you hunt what you can for meat consumption (likely to be sparse) and gather what you can, nuts and berries etc, (more plentiful) that seems to fit the description of hunter gatherer. Primates consume both, we are merely big brained primates. we consume protien and carbohydrates from any available source
          It’s a pet theory of mine that women invented the first real tools, because they needed to dig for tubers and lever open shellfish as a static food source to feed kids. A woman can’t go off hunting, so needs to use her brain instead. You cannot chase food and care for children. She was forced to gather what she could while caring for offspring. Her knuckle dragging mate might get eaten himself and not come back at all.
          I think ‘fair skinned picker of fruits’ is coined from some imagined fantasy of prehistoric utopia. Aboriginal peoples are not like that.

          • Christopher Johnson says:

            Elaine Morgan, ‘The Descent of Woman’, and Jared Diamond have both written about these matters, as have many others including Desmond Morris and Robert Ardrey. So you are in good company assigning leading roles to women, especially for their ‘gathering’ activities, while the male hunters made tools of another sort. You can also see how women — as you intimated — are primarily responsible for inventing agriculture. Including fertilizer from the latrine, because the family / clan latrine always seemed to generate better crops… ‘Fair skinned picker of fruits’ she was not, but there is more than a bit of difference between the shrieks of a stuck pig and the complaints of nuts and berries while being being picked.

        • It’s funny but I’ve never thought of ‘hunter – gatherer’ as male and female, or young and old. When I hear the terms I usually think of them as activities…hunting and gathering. First we go out hunting and when we find it we gather it. This could be true of meat or nuts, berries, or tubers.
          I grew up living on a small farm surrounded by woods and spent much time in the woods. I often imagined what my ancestors would be doing while out in the woods. Even though adults had more knowledge than children, and men hunted for big game, women and children practiced their hunting skills on small game. Both men and women were knowledgeable about herbs and tubers.
          Although their abilities were different, I don’t think there was much difference between men, women, and children when it came to a consciousness of woodcraft. Anyone who has walked deeply into the woods finds their awareness is heightened and they become part of their natural surroundings. While there, any food they found they ate, they gathered, and they shared with their tribe.

          • Christopher Johnson says:

            A comedian’s routine several years ago highlighted the difference between the shopping habits of women and men, as derived from the earliest, perhaps pre-human experience. While women have superior peripheral vision and are continually distracted to come inspect something new and different and, thus being patient with the process, the male much prefers to ‘spear’ the shirt and be out of the store as soon as possible. He doesn’t need extensive comparison tests of touch and scent. He wants a shirt! She, however, entertains a broader panoply of considerations.

            If ‘The Hunting Hypothesis’ might reflect reality, then there is a reasonable likelihood that some specialization occurred: the females tended gardens and bambini while the males hunted in cooperative groups. One other evolving skill was pharmacology, perhaps a highly regarded female duty for the most part.

        • I have seen at least one author who called them “gatherer-hunters”, because he felt the amount of gathering greatly exceeded the hunting.

          • Christopher Johnson says:

            That’s probably pretty accurate, since the hunters were not exactly fleet of foot. They had to figure out how to set ambushes that would maximize their opportunities to actually stick a spear into some potential food. It’s one of the reasons males are more spatially oriented than women: thousands of generations of drawing plans in the dirt. Then sitting for hour waiting for some game to wander by. And far more failures than successes. Just think, even when they did succeed they had a big challenge protecting their kill from scavengers. The women, on the other hand, anticipating another hunting failure and wishing to avoid acrimony, were quick to expand the recipe book and prepare wholesome meals from available nuts and berries.

    • Scott says:

      Yes, It is hard for many people to cull their own meat, it is good that there are many that are strong and able to do it for those that do not want to. Everyone seems to have their own special talents and place in the world. Some people are talented surgeons and others are fearless rescuers and some are hunters etc. while others are not yet sure what they are. Our maker seems to have intended it that way.

  6. Part 2 of the George Mobus Podcast, Sapience, Evolution & Eugenics is now UP on the Doomstead Diner!
    In this post, the Eggheads discuss how to Select for Higher Sapience as 7B Homo Sapiens go to the Great Beyond.
    Coming Saturday, David Korowicz of FEASTA explains why Industrial Civilization will TANK in short order, and we won’t be coming back for a new 1st Turning this time, sorry Neil Howe.

    • Scott says:

      Interesting you mention Neal Howe, I have read his stuff. Interesting remark about the 1st turning as now are in the 4th. I believe the 1st turning may be seen by smaller group of survivors. I imagine the world population may only be a few million by then. Any thoughts on that?

  7. Don Stewart says:

    Dear Gail and Others

    Quick search gives quite a few answers to some of the issues raised by The End of More:

    How to build a homestead: (7 minutes)

    How to live, disease free, to a hundred: (7 Minutes)

    How to give yourself Superimmunity: (13 Minutes)

    Don Stewart

    PS But the stagnant weather patterns which are apparently the result of the warming Arctic are taking their toll. A note from a local farmer says ‘be glad that you didn’t have to grow the tomato you buy today at the farmer’s market.’ The continual rain is promoting splitting and disease.

    • to deal with the videos one at a time
      No1—-First buy your land—whoa right there. Are we looking at 5 acres here–10 maybe–hard to tell. A big piece of land–essential to support a family sustainably
      An area that big is going to need a lot of ‘keep off the grass’ signs when things get difficult. I seem to recall that usable land divided by humanity gives everybody less than an acre each
      Virtually all the components used in this eco friendly dwelling are recycled from an industrial society…unwanted I grant you, but my original comment that you have to use ‘stuff’ to make ‘stuff’ still holds good
      At that level of sophistication you can only recycle once, within a society that has a lot to discard. And solar panels?—how did they get in on this? I could go on.
      Like I said, this dwelling can only exist on the back of an otherwise industrial society. So it’s a pleasant fantasy.
      Wasn’t a guy featured on here a while back—living the ‘frontier life’, where everybody had to drive miles out into his wilderness to learn how to do it? Hmmm
      As to the diet vids, they are pretty much common sense. Humans are merely primates, all evolved from the same stock. Primates live on nuts, seeds, vegetation and occasional meat intake. It is only logical that our bodies should function in the same way. Lifestyle causes sickness of one form or another, unfortunately most people are stuck with it.

      • Don Stewart says:

        Dear End of More
        So long as there is an abundant supply of trash from the industrial economy, a person would be foolish not to use it. I guess you noticed the straw bales. Some of the buildings are straw bale buildings, which are likely to be around for as long as humans eat grains. If you are interested in learning how to make a building with entirely non-industrial products, I suggest you sign up to work on some of the buildings being constructed at Pickard’s Mountain near Chapel Hill, NC–or a location near you.

        I guess I really don’t understand what you think the problem is. I can show you houses which have been constructed from clay and straw and water and sweat and cast off windows and soda bottles which people are living in which cost less than two thousand dollars. They can’t get occupancy permits…but so far in our county the Powers That Be have turned a blind eye on them and have not yet persecuted them. Other counties not so lucky.

        What is your problem with people being resourceful and building and living in very simple and inexpensive houses?

        Don Stewart

        • I have no problem with resourcefulness at all.
          The problem lies not in all the factors shown in your documentation–which was seriously fascinating btw…but in the naivety that imagines that ten acres (or whatever) of productive land will somehow remain inviolate in the midst of mayhem. (and there is no argument in this discourse that there is going to be mayhem, or we wouldn’t be discussing alternative lifestyles).
          Differences of opinion on that lie only in whether we are going to have a gentle decline or something of the cliff edge variety. You choose one of those and plan (as far as is possible) accordingly.
          In that planning, we must take human nature into account, not as individuals, but collectively. With that in mind, we must accept that humanity has survived several million years of evolution with the use of physical violence in order to gain survival advantage. (just like every other species). To expect us to change now, within a single generation, to benign pastoralists is taking naivety into the realms of fantasy.
          The fundamental problem, at least as I see it, lies in numbers. Once energy inflow to a city of say, 5 million, ceases, you must decide whether ‘gentle decline’ is likely, or the more unpleasant alternative.
          Right now, Egypt is showing us what we are up against. Their problem is not religious or political. it is food and fuel. Religion is merely masking the truth. (it always has)

          When you start to ration fuel, food is next. They are effectively the same thing.
          Syria’s conflict was brought on mainly by drought stricken farmers migrating into over stressed cities. By and large, people are not nice to one another when under stress. Throughout world history, stress has thrown up conflict. That is well documented.
          The thought of millions of people spreading out into the countryside in some benign, good natured fashion, building ‘recycled’ homesteads on their 5 acres stretches credulity a little, but maybe I’m just too pessimistic.
          Or am I facing the reality that the vast majority of people have lost any skills of resourcefulness. They expect food to appear on supermarket shelves and water to flow out of taps and fuel to flow out of pumps.
          When that doesn’t happen they are going to get very annoyed.

          • xabier says:

            End of More

            I have the impression that in the anarchic war/civil war situations which develop in the Middle East, fundamentalist religious groups able to distribute bread to the masses – who are desperate – use the situation to gain credit and take control. I’ve heard that Golden Dawn are doing much the same thing in Greece: they seem to have lots of financial backing, too, from the stories I’ve heard from people there. Who is the dog’s master? The one who feeds it. …..

            Of course, this assumes that resources are still available for them to distribute. In a scenario of an absolute lack of adequate resources, then all bets as to human behaviour are off, I agree. I suppose the life in besieged cities in the last Balkan wars are our model for that: people then really will kill for food and medicines, and women will have to prostitute themselves to stay alive and feed their children, as the German women had to when the Russians conquered them in 1945.

            I suspect, however, that there would still be lots of co-operative behaviour in high-stress situations, but it will be principally shaped by group loyalties: one will be In or Out, and that will determine one’s fate in gaining access to the resources available. In short, tribalism: religious, ideological, racial, or class-based. And of course, one’s ties to the State apparatus, if it still functions.

            It’s probably not worth trying to second-guess these things, and probably better to pray that they don’t transpire!

        • Don and End of More

          I think there are two different issues people are talking about:


            How to save me and my immediate family, for the next, say, 20 years.

          This issue revolves around lands purchase, permaculture, silver, solar panels, recycling, etc.


            How can 7 billion people live indefinitely

          This is an extremely difficult issue to address.

          If a person is only concerned about (1), then perhaps there are partial answers. If one wants to save 7 billion people, we quickly get to the too any people/too few resources/too great a tendency to have too many offspring problem.

          There seems to be a difference of opinion on how useful techniques such as these are for doing much of anything about (2).

          • Don Stewart says:

            Interestingly, I was at a lunchtime lecture at the Botanical Garden by a professor of literature at the University of North Carolina. The lecture is part of a series celebrating the move to Walden by Thoreau and the writing of Walden.

            The lecturer made a number of points.
            (1) Thoreau said that ‘in wildness is the preservation of the world’, not ‘in wilderness is the preservation of the world’. Walden was a very civilized one mile from Concord and Thoreau made the round trip on foot quite often. When he visited wilderness in Maine, he was uncomfortable and felt that it was not a good environment for human habitation.
            (2) So what was the ‘wildness’ that Thoreau treasured? Thoreau felt that humans are too frequently victims of ‘shams and delusions’. He said that if humans could rid themselves of the shams and delusions, then Reality would be perceived as a more wonderful entertainment than anything in the Arabian Nights.
            (3) He had no illusions that Death was not part of the natural world. He saw it everywhere…but that did not minimize the miracle.
            (4) He rejected the Christian notion of Perfection in the By and By. He believed that the perfection of God is seen in the Here and Now.
            (5) He blamed the economic and social systems for the Desperation that he observes in the opening paragraphs of Walden. His time at Walden was spent in experimenting with just how far humans could go in bending the economic and social systems. Later, of course, he was arrested for failing to pay taxes to support the invasion of Mexico. Emerson asked him ‘Henry, what are you doing in jail’. He responded ‘What are you doing out there?’ And from that act and thought sprang Civil Disobedience as a strategy for change. He concluded that working one or two days a week could provide the money to buy necessities one could not provide for oneself.
            (6) Thoreau’s social and economic criticisms became popular in the Depression.

            The notion that Thoreau was basically a Nature writer was mostly a result of the way his Journals were edited and published in late Victorian times. When we look at them now, we see the much larger picture that he was addressing. His advice to ‘Simplify, Simplify, Simplify’ is more relevant than ever.

            Just as the pre-Civil War population of the United States refused to take Thoreau’s message seriously, we see the same confusion everywhere today. Yesterday in the Resilience blog was an article about how starvation faces us as a result of yields of grains not rising fast enough. But no one asks the question ‘fast enough for what?’ The article assumes that they have to rise fast enough to provide increasing amounts of biodiesel and very large increases in confined animal meat production. Thoreau would not be surprised by the blindness in the assumptions–perhaps just very disappointed that more than 150 years after the publication of his book we are still suffering from ‘shams and delusions’.

            Could we feed, indefinitely, 7 billion Thoreauvians? That is a question that is practically never asked. Could 7 billion Thoreauvians live rewarding lives free of Desperation? Again, the question is never asked. Jody Tishmack said that ‘first you have to drop the assumption that things must go on as they are’. I think we are pretty close to the time when we practice that ‘Creative Desperation’ that Gary Klein describes, or else we will live lives of chronic desperation.

            Don Stewart

          • xabier says:


            Well put. We have two aspects of this to face. In practical terms, some small % of the population in advanced economies can do something about ensuring greater short-term resilience, in terms of access to food, water, and personal security. It is possible for some people to take basic steps to protect themselves against the obvious shocks, financial and material, which we are experiencing and which are to come.

            But only a very small %, so small as to not affect to any great degree the course of events in their society as a whole, at least in the larger states. Small nations and those with ample natural resources might be somewhat better placed perhaps.

            And as for the daunting global problem of population over-shoot, resource depletion, end of cheap energy, antiquated grids, etc, it’s quite clear that there is nothing to be done to resolve these issues by individuals or small groups, and that the pursuit of BAU is the only agenda of all the national and international agents: too much investment has been made in the old models not to try to maintain them. Whenever I reflect of this aspect of things, I always seem to hear that Bush saying: ‘This baby’s going down.’ Out of the mouths of fools cometh wisdom…….

            • Don Stewart says:

              Dear Xabier, Gail, and Others

              Considering the question of ‘saving 7 or 10 billion’ vs. ‘saving some small group of people’, these are some of the considerations that I find helpful. Some of these I have said before, but I will try to organize them better than I have in the past.

              1. If anyone aspires to save 7 billion, then the first thing to do is listen to Chris Martenson’s interview with Dan Ariely:

              Note pretty early in the discussion that Ariely claims that only about 2 percent of the people are capable of behaving rationally when their short term goals conflict with the long term well-being of society. In discussing Climate Change, Ariely offers some rather vague notions about changing the reward system in society such that different behavior is rewarded. I would conclude from this that anyone who aspires to ‘save 7 or 10 billion people’ (and who buys in to the basic scenario for the future that Gail has laid out) has to be thinking in very deep terms about what it means to be human, how a few societies have been able to modulate behavior, the scope of the change which would be required to change the behavior of ALL the people, etc.

              2. If anyone aspires to save 2 percent of the 7 billion, then all the issues which surface in the operation of nuclear and extended families, in religious communities such as the Hutterites and the Amish, and in secular groups such as intentional communities need to be studied. Orlov’s current series of essays is a good place to start. In addition, one needs to study how a small group can be successful in surviving in today’s world, through the collapse, and into the next, much smaller, world. One also needs to join a group which is expert in terms of the fundamentals of food, water, shelter, super-immunity, harmonious living, and deflecting the hostility of outsiders.

              3. If anything thinks that broad social changes such as technological innovation or the achievement of a new consciousness can save at least billions and maybe everyone, then I suggest getting a copy of the current issue of the magazine The Intelligent Optimist. The issue is titled The Natural Revolution. Here you will find an eclectic collection of articles proposing many different (and mutually contradictory) ideas. I’ll describe just a few:
              a. Jay Harman contributes the article Nature, Inc. in praise of biomimicry. He notes successes such as chains for chain saws which copied the principles of beetles chewing trees. Here is a sample:

              The Industrial Revolution was about cheap and plentiful power. If you needed more speed, you didn’t look to nature to find a more efficient way, you just shoveled in more fuel and blasted your way forward. That approach worked well enough until the side effects began mounting: polluted air and water, stripped lands, diminishing access to cheap fossil fuel, new public health risks and global warming.

              Nature works on an entirely different principle. Its mandate for survival is to use the least amount of material and energy to get the job done–the job being to survive and re-create itself without damaging its foundational ecosystem. It doesn’t stamp out flat plates, it doesn’t create straight lines. The ultra-efficient human cardiovascular system has 60,000 miles of plumbing, yet there’s not a straight pipe inside. However, it is beyond compare when it comes to efficiency. How many machines can drive anything 60,000 miles on one and a half watts of power? That’s less than the power consumed by a bedroom nightlight.

              Harman proposes that the next great fortunes will be made by companies who successfully use biomimicry to vastly increase efficiency and cut pollution as compared to the currently dominant industrial paradigm. Permaculture is a more modest expression of these ideas.

              b. Jay Harman will be one of the participants in The Natural Revolution Summit in San Francisco in November. If you are a ‘savvy investor looking for the next opportunity to do well and serve society’, or ‘readers of The Intelligent Optimist looking for proof that the revolution is upon us’, you are invited to attend.

              c. The article A Fertile Future outlines a plan to grow food without soil or light and even in the middle of a desert.

              d. Peter Russell, a physicist living on a boat, gives advice about effortless meditation. Stop working so hard at it. ‘there is a lovely sense of emptiness. You’re still aware, but there are no thoughts going through your mind anymore’. At moments like these, you are like the cormorant: alert, and above all, relaxed, satisfied, not distracted.

              If you read my little summary of Thoreau, you will see a lot of similarities between Thoreau’s ideas and Russell’s ideas. Is the Industrial Economy merely a clumsy effort to achieve the same hormonal results as effortless meditation?

              Russell will being doing a free webinar beginning July 25.

              e. Aspire to be bored. Jeremy Mercer argues ‘From bursts of creativity to improved focus to greater self-awareness, the fruits of boredom are manifold’. Having just endured a necessary trip to the mall and its constant distractions, I find this article poignant, and perhaps convincing.

              f. A defense of utopian thinking is offered by Sophie Bloemen: ‘If you look closely, you can already see a wealth of little utopias. The world is bubbling with bottom-up initiatives, cooperatives, and do-it-yourself projects.’

              g. Stephen Shapiro offers tips on innovation. First, get rid of the experts. Another, is to make sure you are asking the right question. (My interjection. Are the people growing food without soil, water, and light asking the right question? Calories are less important than genetic messages. What we most need in the world today is helpful genetic messages. Industrial foods give us harmful genetic messages. Have they made this distinction? Did they ask the right question?)

              10. Frank Karsten argues ‘The problem with these complaints is that people keep believing that democracy is the answer’. Karsten argues that democracy can only work well in very small groups. You can read the article or buy his book to find out what he thinks will work better.

              11. Brendan O’Neill argues for ‘Power to the People’. ‘Ordinary men and women fought for centuries for the right to do morality, to do politics, to be the authors of their own and their nations’ destinies’. This argument also intercepts with Orlov’s observations about groups which have survived over the centuries.

              12. Dan O’Neill, author of Enough is Enough, and Daniel Ben-Ami, author of Ferraris for All, go head to head.

              13. If you haven’t been to church lately, you probably deserve a sermon. From Bruno Latour: ‘If God has not abandoned His Creation and has sent his Son to redeem it, why do you, a human, a creature, believe you can invent, innovate and proliferate–and then flee in horror from what you have committed?’

              If you are facing a dull week, you can either embrace boredom and perhaps solve all the world’s problems, or else run down all these references and perhaps end up more confused than ever. Or, as Jan Steinman would encourage you, get out and weed the garden! Good luck!

              Don Stewart

            • Jan Steinman says:

              2… One also needs to join a group which is expert in terms of the fundamentals of food, water, shelter, super-immunity, harmonious living, and deflecting the hostility of outsiders.

              This is very frustrating for many. I do not know of a single such group that is not starved for people and/or cash. Perhaps those groups which are not struggling are intentionally keeping a low profile.

              Nature works on an entirely different principle. Its mandate for survival is to use the least amount of material and energy to get the job done–the job being to survive and re-create itself without damaging its foundational ecosystem.

              I don’t think it is that simple. One shot of ejaculate has what, a million sperm? And yet, only one is needed for the job. The same holds for ecological basic productivity — the seeds and leaves upon which all animal life depends.

              The ultra-efficient human cardiovascular system has 60,000 miles of plumbing, yet there’s not a straight pipe inside. However, it is beyond compare when it comes to efficiency. How many machines can drive anything 60,000 miles on one and a half watts of power?

              Do you have a reference for this? The human brain alone consumes about ten watts, the resting human body, about 150 watts. Were you thinking of hummingbird or bat migration? I can’t think of many animals that get by on 1.5 watts.

              Also, I think you may have dimensions confused. Distance traveled would be work, or mass times distance, which requires energy (force times flow times time), not power, which is an instantaneous measure of force times flow. So perhaps I’m missing something, because there seems to be a time dimension missing on the right side of the equation and a mass missing from the left side.

              c. The article A Fertile Future outlines a plan to grow food without soil or light and even in the middle of a desert.

              Very curious indeed! What is the energy source? “Food” is simply a form of stored energy, and creating it without energy would violate the Second Law of Thermodynamics.

              e. Aspire to be bored. Jeremy Mercer argues ‘From bursts of creativity to improved focus to greater self-awareness, the fruits of boredom are manifold’. Having just endured a necessary trip to the mall and its constant distractions, I find this article poignant, and perhaps convincing.

              Who has time to be bored? Right now, I’m stealing time from a dozen things that need attention. I would love to have the luxury of boredom sometimes!

              But caring for plants, animals, and old machinery is going to take up increasing amounts of time for everyone, and I think boredom will once again be the curse of the idle rich as the middle class slowly goes away. Peasants don’t have time for boredom!

              (Gotta go fix the sickle bar that broke while mowing on biodiesel yesterday, so the goats will have forage for the yogurt I had this morning. It’s my last tank of biod, as the processor has problems. And the water timer isn’t working, so our lettuce crop will wilt and not get sold, and, and, and… who has time for boredom? I’ve just consumed my entire day’s allotment of Internet time…)

              I’m not meaning to be picky — it was a very interesting post, with much to think about!

            • Don Stewart says:

              I didn’t write the articles, so I will tell you what I think some the answers to your questions are.

              As for the heart, I think he means that the heart operates on one and a half watts and pumps blood through 60,000 miles of vessels. (Whatever the exact numbers, it is amazingly efficient and durable).

              As for the Fertile Future article, I have great scepticism. I specifically aimed this collection of ideas from a single magazine at those who think ‘technology or a mass awakening’ will save us. I don’t personally think either will happen. Critically examing these ideas is the task if one is inclined toward ‘technology or mass awakening solutions’ which will save 7 or 10 billion people.

              I DO think that biomimicry sometimes yields very good solutions. But I don’t personally see us being able to make a machine which operates like a human heart and blood vessels which also accomplishes its purpose in so elegant a manner. Making a human heart with sperm and egg is likely to be the solution of choice for a very long time.

              I ALSO agree with the physicist who meditates that it is an elegant way to manage hormones. Buying a Hummer also manages hormones–just not nearly as well and with vastly more expense, pollution, debt, etc. But humans have known about meditation for at least 3000 years and only a small percentage are able to make it work for them. Again, I don’t see it saving 7 billion.

              I guess that an Optimist thinks that with so many ideas floating around which are going to save everyone, surely something will work.

              As for your observation about all the energy Nature wastes in making excess sperm and seeds and pollen and teenage boys trying to impress girls…I agree. I think both Nature and humans are wasting a lot of energy. The main difference is that Nature doesn’t create physical pollution. Everything that comes around, goes around. Teenage boys can create poisonous pollution as they chase teenage girls–which makes humans uniquely dangerous. Again, the quote was from the article–not my thoughts.

              My not very optimistic prognosis is that survival is going to be hard. Even for the 2 percent that Dan Ariely might expect to understand and accept the problem, the list of challenges is daunting. Not the least of which is getting ready for an uncertain future while continuing to survive in this world.

              Don Stewart

          • Hi Don,
            I think Peter Russell is correct that many people who try to meditate work too hard at it. But, being a long time practitioner of meditation, I also know it isn’t easy or effortless to achieve the “empty mind” state. I suspect that Dr. Russell was inclined in this direction just from his choice of vocations. Physicists look at life from a very unique perspective!

            I think Jeremy Mercer used the wrong word. “Aspiring to be bored” is not what will create a creative, dynamic lifestyle. Boredom is a lack of interest in the world. What we want to achieve is a state of peaceful intention; a state in which we can be detached from the need for excitement. The way I have heard it expressed is to be “actively calm, and calmly active.

            People who enjoy simple things in life are happier, less stressed, and healthier. People who are thrill seekers have an addiction to outside stimulants and inside adrenalin, which results in excessive amounts of cortisol into our blood. The result is high blood pressure, heart disease, hypertension, and many other problems that shorten and diminish our lifespan.

            As Spock says ‘Live long and prosper!’ Or as James Dean said, ‘Live fast, die young, and leave a good-looking corpse.’ The choice is ours.


      • Don Stewart says:

        And as for the non-news in the dietary videos. I suppose you heard the man say that at least 70 percent of our medical expenditures would vanish if everyone did what you consider obvious. That is about 14 percent of our GDP, and whatever employment growth we have been getting in the last few years has mostly been in that sector.

        The news is that there are enormously powerful forces at work to obscure the truth, ensure that people eat food and take meds which are harmful to them, and then require the taxpayers to pick up the broken pieces. By a rough calculation I recently made, the drag on the real economy from the broken food and medical system may be as much as ten times the drag from high oil prices. More likely something like 6 or 7 times as high. And that’s not news?

        And the fact that getting old doesn’t have to mean getting decrepit. Which means old people can still be productive. Which means the demise of Social Security and Medicare CAN BE a small problem rather than a big problem. But, of course, that’s not news either.

        Don Stewart

        • xabier says:


          That’s a fine exposition of Thoreau, may I say!

          Thoreau was directly addressing in his way of life Malthus’s astute point that the expansion of a capitalist society built on trade and banking requires the inculcation of completely superfluous wants and obsessions – misunderstood as needs and priorities – in otherwise sensible people, who would be much happier living somewhat simpler lives.

          Unfortunately, the materialist world of obsession with acquisition and slavery to greed (to be noted in ‘socialist’ societies as much as ‘capitalist’ ones, in ‘feudal’ as much as in ‘liberal and progressive’ ones) makes a profound appeal to some deep inherent biases in human (animal) nature: to seize, consume, gorge, plunder (much as my dog never turns down a chance to eat!)

          Greed and a desire to acquire could be found in rural, traditional agrarian societies which did not embody the post-WW model of consumerism: I think back here to the landowners of northern Spain in the 19th century who used, – even though the real holders of wealth and power whom you crossed only at your peril – to dress in a way little different to their peasants and happily sat on a balcony eating the same simple meals of tomatoes and peppers and garlic, but who spared no effort to get a little more gold into their treasure chests and take more land into their holdings: no less greedy for not being gross consumers. I know not a few people who embody this mentality today!

          And we should not forget, – comfortable Westerners that we are, – that the immense power of the consumer capitalist model lies in its profound attraction for people living now in poorer societies of hard labour and discomfort, for whom the car, washing machine, fridge and little apartment, with an expanded diet, does seem to represent a huge step up in life, a glittering and promising future. And they are quite right, except we know it won’t last. In the same way, the life of the town and its freedoms and comfort tantalized the bonded peasants of Old Europe.

          What might we conclude? I don’t think our societies will rebalance in any significant way, still less will governments foster a new ruralism. And I suspect that a vanishingly small % of people are capable either of adopting, or even of appreciating, the way of life of Thoreau: indeed, I can think of several who would regard it as insane! People have said to me that they would rather die than get their hands dirty growing their own food. Well, maybe they will……..

          But I’d rather live a little better with dirt under my finger-nails than die with manicured hands, even if the failure of our civilization curtails the lives of us all at about the same time.

          • Thoreau is one of my favorite writers and thinkers. I agree with your most of our comments Xabier, except for….”I don’t think our societies will rebalance in any significant way, still less will governments foster a new ruralism.” I don’t think people will have a choice in the matter. Our society will be forcibly rebalanced towards a new ruralism (including urban farming) in the post fossil-carbon-fueled world. It will become necessary for families to grow more food or produce something they can barter for food.

            Interestingly, we all will live better with “dirt” under our fingernails. A growing body of research has found that contact with the natural environment resulted in reduced muscle tension, blood pressure, heart rate, and immune response, and improved emotional status, attentional capacity, and other indicators of psychological conditions. [Rodiek, S. 2002]

            Research has also found that soil microbes improve the release of serotonin in our brains, and “train” our immune system in dealing with foreign bodies.”

            “A microbe found in soil (compost) may act like a mood-enhancing drug once it enters the human body. Mycobacterium vaccae a strain of bacterium in soil, has been found to trigger the release of serotonin, a neurotransmitter that elevates mood and decreases anxiety. It can enter the human body simply by hovering over the soil and breathing in, for example during gardening.
            The discovery of the effects of M. vaccae was something of an accident. An oncologist at Royal Marsden Hospital in London used the bacteria to create a serum for lung-cancer patients, in hopes of treating their symptoms. She found that patients showed an improved mood, being happier and feeling less pain than patients who were not treated with the serum.
            Doctor Lowry at Bristol University explored this further by injecting M. vaccae into mice and putting them in stressful situations. The mice that were injected had no problem coping with the stress test. A follow-up study done at the Sage Colleges in Troy, New York confirmed that feeding the bacteria to mice instead of injecting also led to better performance. The mice navigated a difficult maze faster and showed fewer signs of stress.
            Dr. Lowry: “The bacteria had the exact same effect as antidepressant drugs.”

            “The Hygiene Hypothesis states that a lack of early childhood exposure to infectious agents, symbiotic microorganisms (e.g., gut flora or probiotics), and parasites increases susceptibility to allergic diseases by suppressing natural development of the immune system.” [Wikipedia]

            Some research suggests that our modern lifestyle, cut off from contact with the natural world, is causing the increase of depression in our society. I always knew it was good to play in the dirt, no matter what my mother said!

            • Scott says:

              Jody, I totally agree, we live in Oregon and garden too and we have four animals and it toughens us up. Nothing like working the land to keep one well. We do not use hand sanitizers as they are not good for you.

              I have not taken antibiotics for many, many years. I am 52 years old but still do over three miles exercise a few days per week and hikes in addition. I am not running a large farm like you so I have a bit more time but we do have a big garden and we work on it daily this time of year. Antibiotics made me sick when I was younger and it actually caused me some trouble with my stomach etc. So best to use other means if possible. I do know that antibiotics can save lives, but I would not take them again unless I was really sick and had no choice.

              People that live closer to the land and animals will surely be a tougher lot.

      • End of more,
        No one can argue with you that stuff must be made from other stuff. But the U.S. has been a notoriously wasteful society for too long. I think the video is an excellent example of how a comfortable home can be built today (and I emphasize TODAY) more cheaply and sustainably. This will work for a considerable amount of time until we run out of debris. The author mentioned that it used to be much easier to acquire free stuff but now more and more people were salvaging.
        We are already living in a society where carefully planned deconstruction and recycling are generating building materials. This is partly due to the cost of disposing of construction debris and partly due to the value of the components. When I worked for Purdue University I helped to start a concrete recycling program that allowed the university to save money on disposal and create needed gravel.
        As the cost of raw materials rises or their availability declines this will become the norm rather than the exception. I’m sure that every city in antiquity that exists on the same land of a previous one was built from the debris of that society. Ours will be no different. Knowing how to build this way is an important skill.

        • Scott says:

          You know Jody, I want to commend you and Jan you both are doing so much, we are some stuff but on the level you are. My chicken coup is still in a box, made in china but I have it and plan to set it up if needed. People have trouble with chickens because they only lay for about two years and then they are faced with killing them or keeping them as pets, I know my wife is the same way but things will have to get tougher before she will agree to have them butchered as they will likely all have names by then. The tough part of country life is not known by many in the cities today.

          I think we can really get along for a time on what we have, there is a lot of stuff around and it will take some years to go through. There are really lots of supplies made in the last few years, but so much food as the cities may soon learn. But lots of tools and things to make tools with.

          Many may become peasants in the next say 20 years, but what I worry about is the next generation, are they going to starve, as it seem we see problems coming in the cities by then, perhaps a new generation of “Border Men” those were the guys the Indians feared. A new tough breed may arise again like I read about in the books of the Early West.

          • Dear Scott,
            I can empathize with your wife. My first flock of four chickens all had names. My husband named his “drumstick” showing you his sense of humor! My sons were 10 and 12 then. The first thing they would do when they came home from school was head to the back yard to “watch the chickens”. They were tame enough to sit on our lap and eat from our hands. When the neighbor’s dog attacked and injured one of them (he is a dachshund not a lab or the bird would have been dead not injured) I took it to a veterinary that specialized in exotic birds. It took me several calls to find one that would take a chicken. I couldn’t understand why the receptionists kept asking me to repeat myself when I said my injured bird was a chicken.
            $260 later I had a chicken with an amputated wing and a hundred stitches in its butt. My husband’s tolerance and love for his wife prevented him from asking me how I could spend $260 on one chicken when I routinely look for chicken at $1.29/lb. in the store!

            This happened in November and so I had a chicken in a box by the fireplace and I had to give it oral antibiotics twice a day. If you never have to give a chicken oral antibiotics you can consider yourself lucky! A week later, when the bird finally began to recover, it removed the bandage covering it’s butt and proceeded to pull out all the stitches and started eating its skin. This goes to show you how truly vile chickens really are….self-cannibalistic. So in the end I had to chop off its head.

            I no longer name my chickens. I still don’t like particularly enjoy killing animals…but the six ducks I started this spring are already in the freezer! We get over our squeamishness!

            • Edward Kerr says:

              Maybe if people had to kill their food they wouldn’t eat so much meat!

            • Scott says:

              Thank you Jody, I guess that is where the old saying comes from “Behind the old wood house”.
              I think the message here to all of the group is get ready guys, we may all have to get tougher here soon! But hopefully not too soon. Maybe we should all practice some of these methods now so we handle the tough times. I have killed a chicken before with an axe but like we talked about we love like pets and that is our human nature. But we are going to have to get tougher if needed and be ready to kill a chicken.

              Best Regards,


          • Jan Steinman says:

            “People have trouble with chickens because they only lay for about two years and then they are faced with killing them or keeping them as pets…”

            Hens will bear for many more years than that!

            Their egg production goes down, and they tend to have softer shells, but they make bigger eggs.

            If you’re buying feed and selling eggs, yea, two years is the limit for profitability. But if the hens are 100% range fed and the eggs are for your use, there is no input costs nor lack of output profit, and you might as well keep them until they die.

            My dad gets eggs from six-year-old hens. Some of ours are about that old, as well.

            • Scott says:

              Hello Jan, that was really helpful information on chickens, I got that from this article…. Good to know we can get some eggs for up to perhaps 6 years. I am still in the research stage on this although we had chickens when I was a kid living in the mountains. I want to understand this better and want be sure I can properly manage the flock. I think by next year.

              Our thing is we like to go camping and the more animals you have the harder it is to get out to spots we love. We are doing more each year and if we have tougher times we may have to abandon some summer camping plans and get more serious about raising animals in addition to our gardens which will mean more care. Here is the chicken article…


          • Scott, I don’t think you should worry about having to kill animals. We don’t have to eat meat to be healthy (unless you live in the far north as Gail said). I didn’t mention that my husband is a vegetarian, which is why naming his chicken “drumstick” was his way of being funny. Yet he had no problem chopping the heads off of the ducks. I guess he is already a “border man” of sort. My youngest son, who wants to learn to hunt and trap like his uncle, said after helping to butcher the ducks “I didn’t think it would be as difficult as it was.” He wasn’t sure he wanted to eat the duck meat but he changed his mind when he smelled the bar-be-que.
            I don’t know if agree with Edward Kerr that “if people had to kill what they eat more people would eat less meat!” I think they would adapt, but I also think Americans eat far too much meat. Unfortunately, there is a huge disconnect between the food we eat and where it comes from. There are many children today that think chickens are square and come breaded.

            • Scott says:

              Hello Jody and others, I think we could get by not eating meat, but I do eat mostly chicken and fish and just little bit of beef. It would be a long winter without a bit of meat for our soups.

              It may be easier for one to use a gun than an axe to take down meat. The border men were feared by the Indians, and they were white men that would sneak up on their lodges like snakes in the grass and take scalps. A tough group of men. And after collapse I think they will re emerge again.

              But for now lets love our laying hens and keep them as pets unless you get really hungry.

              I may use my gun to shoot some turkeys and game if needed here.

            • Scott says:

              You know Jody that made me think of something, What if we made it a school class for kids in the early grades 1-6 to have to kill some animals for food? Like a chicken.

              Could you imagine the uproar from the politicians, parents etc. Most of this the culling for our meat goes on in the old ” wood sheds” and there are still people that do this work mostly immigrants in the USA. The school would surely have to send permission letters home to the parents and grief counselors would be needed at the school afterward. Fish sticks are not good fish and the same for chicken nuggets.

          • Scott,
            Goodness! What an up roar that would cause. Isn’t it funny how afraid we are to teach our children the realities of life, such as killing our food. Yet children spend hours and hours in fantasy games killing and mutilating on the computer. I sometimes wonder if our society isn’t raising our children to be insane.

    • Dear Don,
      Ever since the heat wave that hit Indiana in July of 2011 I’ve been reading about polar amplification (also called arctic amplification) and how it is affecting weather patterns in the temperate regions of the world. The stagnant weather patterns you are referring to are indeed a result of warming in the Arctic. Simply speaking, the warming of the Arctic is reducing the temperature gradient between the Arctic and the equator. This slows the progression of the jet stream moving west to east resulting in stagnant weather patterns over temperate regions. Amplification also increases the amplitude of the wave patterns making ridges reach higher into the north and troughs lower into the south. This brings cold air farther south and warm air farther north. This is causing heat waves in Canada and Alaska and freezes in southern states that normally don’t freeze. It is causing excessive precipitation on the east coast this spring, and heat, drought, wind, and wildfires in the western U.S.

      Here is an excellent place to start reading about this phenomena for those who might be interested.

      Early winter storms dumping heavy snow on the northeast are also caused by this. Winter of 2011 and 2012 both found the NE pounded by winter storms as early as Halloween. The longer hurricane season we are observing is a result of a warmer ocean and results in late season early winter hurricanes reaching farther to the north. One of the reasons that Super storm Sandy was so powerful was because a late season hurricane that came up from the gulf merged with an early winter storm moving down from the north. Two events that are likely to become more and more frequent and making the chance of future super storms that hit our east coast very high.

      Lucky for me this spring, Indiana has had the best weather I’ve seen for many years. But actually, the weather we are having this spring used to be the norm. We have had mild temperatures and good rainfall. Here it is July 10th and we haven’t hit 90 degrees except for one day and only for an hour or so. Last year by this date we had already had 14 days above 90 (starting in June) and 6 days above 100 degrees (also starting in June)!
      I’m counting my blessings and enjoying the abundant fruit harvest. Tomatoes are already ripening on the vine. Tomorrow….who knows!

      • Christopher Johnson says:

        Hi Jody,
        Your contributions are notable and it’s clear you’ve made some friends here. I am very concerned about the weather patterns. In the hills west of Washington DC we’ve had the wettest spring / early summer I can remember for more than 30 years. June was truly a monsoon: rain fell every day, and many days saw new blue sky. A strong Low centered on Purdue (?), Indianapolis (?) sucked up the Saragossa Sea right into my neighbor’s yard. This is Southeast Asia type monsoon. Is there an arctic link somehow? Oh, and it’s still kinda moist and getting moldy. (Maybe DC will collapse of mildew).
        Cheers, Chris

        • Hi Christopher,
          It is difficult to say with certainty that this or that weather event is due to this or that cause. I prefer to think of climate in chaos rather than climate change. The earth’s weather patterns are losing long range patterns and flipping into new ones that are difficult to understand. I’m not a meteorologist so my understanding isn’t highly technical. I routinely read Jeff Masters blog on weather patterns. He and others on his website seem to be very well informed and knowledgeable about these things.

          I believe I read that the recent rain you are experiencing is probably due to moist, warm air coming up from the gulf due to early season hurricane activity. This is likely due to the ocean becoming warmer. The overly wet spring this year seems to have been influenced by the jet stream are getting “stuck”, which is a result of arctic warming.

          Washington DC was built on a swamp so it isn’t surprising that it would experience wet damp and mold.

  8. Hello Jan,
    I looked at your website and you appear to be doing some serious work in creating a sustainable lifestyle and educating others. Well done! From experience, I know it can be very frustrating at times because it seems as though so few people want to change what they are doing. And if your efforts require outside financial inputs it can limit your success.

    I think those of us who read Gail’s posts are probably all doing different things. I appreciate all Gail is doing to help us to connect the dots. I appreciate reading what others think about these issues.

    I began to take home food production seriously about 7 years ago. I grew up in a family with a large vegetable garden and small fruit production. I was accustomed to annual planting, weeding, harvesting, and daily cooking and preserving activities. It was a normal part of life. We also lived near a large lake that was well stocked with fish. The nearby woods offered deer, pheasant, and quail hunting. I loved fishing, which has it’s own reward aside from the delicious meals. Hearing a loon call from across the lake on a quiet evening and the next moment a bass striking my line, is sublime! This is also true of gardening and cooking. The smell of freshly baked bread and a hearty winter soup brings smiles to my husband and kids when they walk in the door. But regardless of how I grew up my lifestyle had changed and I still had a lot to learn and re-learn!

    Today it is quite easy to acquire good books on these subjects. Elliot Coleman’s “Four Season Harvest” was my introduction to season extension. Kale, carrots, and beets grow all winter here and are wonderful in winter soups. The internet offers a great deal of information and help. But reading only takes us so far, the rest is experience.

    Ten years ago I started a composting business to recycle yard waste and animal bedding. One of my objectives was to make our community more sustainable. Once I started reading about peak oil I realized that local food production was going to be essential. So, that is where I have focused. Through my business and local talks, I’ve focused on the home gardener, offering products specifically for the vegetable garden; garden soil that is a blend with horse manure compost, garden mulch that breaks down into next years compost.

    I also give a lot of talks on sustainable living, encouraging people to start slow and work their way up to bigger things. Take food production, most people fail at gardening because they are too ambitious or don’t understand how important soil fertility is. Once they fail they often stop gardening. My goal is to help people to be successful. It isn’t hard to grow big, healthy plants when you start with compost-rich soil.

    The local university has a few people who understand peak oil, Steve Hallett is one. He helped to start a sustainable agriculture program with a student farm, where students learn to be market growers. Other faculty and staff are reaching out to small farmers in our region helping them to reach more markets and produce a wide diversity of food for local markets. The local farmer’s markets now offer cooking demonstrations by local chefs. Local restaurants off meals on the menu made from season locally grown food.

    All these efforts take time, and who knows how much time we have until “discontinuities” hit. But once we stop thinking the world will be the same tomorrow and start applying our intelligence to changing our lifestyle towards something that is more resilient, we make progress.

    We have to accept the fact that we can’t plan for the future. The future is probably going to be too chaotic. But if we accept that our future won’t be like the past, if we decide that in whatever way we can we are going to meet the future on whatever terms it comes, we will find that life becomes very interesting and offers us creative solutions to daily problems. In many ways, life becomes so much more invigorating and rewarding.

    For example, I have been studying herbal medicine for several years. I believe that herbal remedies might be something I can grow and use as barter items. Eventually my readings led me to identify all the “weeds” around me that actually are wild food and medicine. Suddenly, my view of “weeds” began to change. I began to see how much nature provides freely to us and I stopped fighting with her and instead I’ve learned to gather her bountiful harvest.

    Last summer, we suffered a severe drought. My pigs were running out of fodder because the grass they normally eat was dormant. Rather than resort to winter feed rations, which I have to buy, I began to feed them “weeds” from the garden (which were thriving even with the drought). I found that my pig’s loved the lamb’s quarter, pig weed, purslane, and crab grass. Each morning I would load up a wheel barrow of these plants for their feed. In this way, I weeded the garden and feed the pigs at the same time. I also learned about how much nutrition there is in lamb’s quarter. I dried it and used it as a healthy ingredient in winter soups. Very high in calcium. Young lamb’s quarter is also delicious sauteed, kind of a cross between asparagus and spinach.

    Purslane is thriving right now and makes an excellent ingredient in green smoothies along with fruit.
    Another plant that I’ve been using is stinging nettles. I have found them to be an excellent stimulant for our immune system. They help fight off colds and flu, they reduce our sensitivity to pollen so reduce the effects of allergies, and they reduce inflammation in the body, which helps reduce the pain of arthritis. Nettles thrive and are very easy to cut, hang up and dry. Once dried they powder easily and can be used on salads, soups, etc.

    The more I look, the more I find. The more I find, the more abundance I see. The more abundance I see, the wealthier I feel. I’ve reached the point where looking at my past go-go, climbing, striving, lifestyle seems absolutely crazy and impoverished by comparison!

    When we stop thinking life must be the same and stop worrying about what we might lose, we will start seeing the possibilities.

    • Don Stewart says:

      Dear Jody
      You are an excellent example of one of the paths to insight delineated by Gary Klein…Creative Desperation works by discarding a weak anchor belief. You have been able to discard the belief that everything must stay the way it is. Once you discarded that belief, alternatives appeared as if by magic.

      Don Stewart

  9. Don Stewart says:

    Dear End of More
    Regarding the immune system:

    If green vegetables are the King of Super Immunity, then mushrooms are the Queen.

    Mushrooms play an important role in keeping the immune system strong. Mushroom phytochemicals may even be helpful for autoimmune diseases such as rheumatoid arthritis and lupus because of their anti-inflammatory and immune-modulating effects.1

    Want to learn more about the power of this super food? Register for this members-only event*.

    So, if you want to be super-immune, go to and sign up.
    Don Stewart

    • hi Don
      luckily for me I eat a lot of mushrooms
      (no seriously, I do)
      Maybe thats why my doc says hi stranger on the odd occasions when I see him.
      I’m not a great meat eater, but we cannot deny that we are a species evolved to catch and eat meat. We are not grazers. Our eyes are set in the wrong place for grazing, we have evolved to take our energy from the flesh of other animals as well as vegetable matter.
      but over and above that, this link says it all far better than I can

      • Scott says:

        I do take a lot of vitamins and herbs, Celery Seed Extract helps control my blood pressure and
        This is a Chinese Mushroom called Cordyceps, I have been taking for several years with much success also good for blood pressure and hear. But I also take it after lunch for an energy booster, kind of like a cup of coffee – but different not a shaky feeling, it seems to be good for the heart and blood pressure everything too. I am a big believer in these Chinese medicines and they have helped me.

        It takes time to learn about them, but is worth it to have them in your medicine cabinet. Also, it good to have colloidal silver, and the essential oils like oil of Oregano and Tea Tree oil, these will have many uses during a time of trouble like a collapse when doctors are hard to get into see, actually these are much healthier anyway, do not drink Tea Tree Oil though it is topical use. The others can be taken internally. People should study the uses of these herbs and natural remedies.

        Red Reishi is also another powerful mushroom that is taken for inflammation etc. which my wife takes and it helps her.

        If you got something bugging you… I believe people should try all of these types of natural medicines first before going onto a prescription med. as a last resort.

  10. Don Stewart says:

    Dear End of More
    And as for the excess population, Orlov says it pretty well today:
    Such communities can provide everything their members need—housing, nutrition, education, medicine, entertainment, companionship, social security and, perhaps most important of all, a sense of belonging. While their specific practices may be alien to us, their commonalities should not be.
    Someone’s refusal to consider them simply because they do not accord with maintaining a middle-class lifestyle simply signals someone’s refusal to consider doing whatever might be necessary to survive the extinction of that lifestyle—something we might call “voluntary extinction.” This, mind you, is not altogether unhelpful; those who are waiting drown should be thanked for all the lifeboat seats they free up while they wait. But for those wish to fight extinction tooth and nail, all options should be on the table, even the unpalatable ones.

    Back to me. The very limited data I have indicates that a tiny fraction of people are willing to re-examine their basic assumptions and demands. Therefore, I expect most people to choose ‘voluntary extinction’.

    Don Stewart

    • Apologies for being facetious, but voluntary extinctions does bring up an image of polite self extermination:
      My turn for the incinerator today I think?
      No, I assure you it’s my slot earmarked for today.
      No, I think not
      but, after you—I insist.
      Well. If you’re quite sure you don’t mind me taking your turn?
      oh no—not at all, it’s the least I can do.

      • At a minimum, people who are elderly will have less urge to keep extending their lives, and the health care system will start being less concerned about “saving” every one-pound baby. Maybe the situation will not be as polite as you suggest, but customs will change fairly quickly, I expect. Some people will be depressed, and take to drinking excessively.

  11. Don Stewart says:

    Dear Gail and Others

    Gail has referred to the deer problem and the issue that in collapse, fencing material may become unavailable. Here is a local attempt to do something about the deer problem:

    The Chatham County Center of North Carolina Cooperative Extension will offer an informational meeting as part of its Enhancing Sustainability Series on Monday, July 15, 2013 from 7:00-9:00 pm in the auditorium of the Agriculture Building in Pittsboro.

    Derek St. Romain, Central North Carolina Regional Coordinator for Backyard Bow Pro, will talk about Connecting Farmers and Landowners with Hunters to Reduce Deer Depredation and Provide Hunger Relief. You will also hear from local landowners, hunters, food bank representatives and others who have worked with Backyard Bow Pro.

    Backyard Bow Pro is a North Carolina non-profit organization that is working with farmers, property owners, communities, municipalities and conservancies across the state. Their mission: to build social bridges between the verified hunter and non-hunter to work together to support local food relief efforts. Did you know ONE deer from your property could feed 200 meals? Landowners that participate in the free program are finding that they can give back to their community in a way that they have not thought of, which is through meals.

    There is no charge for this program which will be from 7:00-9:00 pm in the auditorium of the Agriculture Building in Pittsboro. You do not need to register. For more information, email or call Chatham County Cooperative Extension at 919-542-8202.

    Visit the Backyard Bow Pro website at for more information about the organization.

    Back to me. The fundamental issue is not fencing. It is the attitude of people who think that food comes from grocery stores. Hanging around the feed store during the fall, I see an amazing number of people coming in to buy corn to feed deer. In questioning people, many of them just like to see deer in their backyards during the fall. Another large group wants to shoot their deer for the year and so they feed the deer to establish a habit that the deer will come looking for food to a certain location where the homeowner will then shoot the deer. Meanwhile, the State chimes in with its goal of keeping the deer population high enough to be a menace to farmers and gardeners and so will fine you heavily if you kill a deer out of season.

    If you tour the historical farm near Winston-Salem, NC, you will see some fences. All these fences were about keeping domesticated livestock INSIDE the fence so they wouldn’t eat the vegetables and fruits. There was simply no problem keeping deer OUT. Deer had been hunted to near extinction. Rabbit and woodchucks and similar pests were also hunted. Nobody had to fear the power of the State to punish them for ridding their property of herbivores.

    While it is true that deer do provide some ecological services, the number of deer today is completely unreasonable. IF the State had any common sense, it would declare a wide open season on bow-hunting deer. Then the State could fine tune the deer population with a gun season and permits, etc.

    This is another case where we need to analyze carefully to pick out the real problem so that we can at least imagine what a solution might look like. Then we have to wait for Sanity to strike.
    Don Stewart

    • Don Stewart says:

      One more thing. Observe that one deer will be part of 200 meals–not that one deer will be industrially processed and feed one person for 200 days. Now compare to Orlov’s point about group size

      ‘within the limits of Dunbar’s number, which is somewhere between 100 and 230 individuals’

      And so we find that communally killing and eating a deer makes a lot of common sense and takes care of all sorts of problems such as refrigeration or freezing or drying as well as protecting the food supply of vegetables and fruits.

      Don Stewart

      • xabier says:


        Which makes the old system of the aristocratic (or ecclesiastic) manor house with a substantial deer-park and a large kitchen garden and orchards, housing the lord, his family, retainers and workmen, in the middle of productive fields and pastures, an excellent model, both nutritionally and socially.

        For those who don’t like the idea of hierarchies: well, they get things done (and some kind of hierarchy always seems to emerge anyway – look at the one we suffer under today) and it was always noted how well the old masters used to treat their tenants and servants – particularly those who managed their horses, dogs, and hawks – in the days when they actually lived on the land with their people.

        Absentee landlords were the scum of the earth, to be sure: who cares if your peasants are half-starved when you are living it up in the city (in Britain, the old ways of duty and obligation started to fall apart with the immense wealth derived from Empire in the early 18th century). But I would happily have been a valued retainer sleeping with the hunting dogs with my own share of the venison for dinner.

        Now, we are all forced to contribute to the megalomaniac State, that shows its love for us by giving us an identity number, and reserves to itself the right to take our personal liberty, labour, and property at any time it may wish to do so. Could any feudal lord have been crueller?

        • some feudal lords were caring people, most were not.
          The peasantry were in effect the pre-industrial source of energy, and were treated with the same disposable indifference as we treat our hydrocarbon fuel supplies today. The main difference being that peasant energy reproduced itself, oil doesn’t.
          For that reason large families were ‘righteous’, both for food production and cannon fodder when needed.
          It certainly wasn’t nutritious for everyone. Commerce ruled the land (energy source) just as it does today. Peasants were turned off their land in droves when it was found that sheep produced more revenue for the landowner.
          In those ‘good old days’ virtually every crime was a hanging offence, (everything above the value of one shilling , about 10c, I think). Your lord of the manor was invariably part of the judiciary. Being sent to prison was pretty much a death sentence anyway.
          Even your clothing was restricted, with strict laws about what each social class could or could not wear. As to getting your share of the venison…I think not, The origin of the term ‘trencherman’ came from the practice of letting servants eat the bread (the trencher) on which the meat had been served at the top table.
          I agree though, that in fundamental terms, the modern state functions in much the same way.

          • xabier says:

            End of More

            My advocacy of a feudal lifestyle was more tongue-in-cheek than anything else.

            Huntsmen and grooms were certainly well looked after though, as they ministered to the pleasures of the lord and his most valued companions -horses and dogs.

            And the food could be good. I was looking at the accounts of an old English ‘great house’ and the amount they expended on the servants in meat and beer was simply staggering. Domestic service with a great family was sought-after in England until WW1, as the conditions could be very comfortable indeed (particularly if you knew how to manage the accounts in your favour!)

            One problem is that we have a Hollywood idea of the Middle Ages: just considering it logically, if it had been as squalid as it’s portrayed, there would have been no great castles, palaces, cathedrals, no charming towns.. Of course, it varied by region: in 1800 in Europe it was possible to go from a region of prosperous peasantry in lovely villages to one of absolute squalor and degradation – filthy huts, bad food and everyone thieves. And it was from those poorer regions that ordinary people fled in the 19th century to make a better life in the USA.

            Modernity has given us in the West a relatively uniform, comparatively easy, and superficially prosperous and healthy life. This will all go.

            • Jan Steinman says:

              “we have a Hollywood idea of the Middle Ages”

              I recommend two movies that I think do a good job. Both (coincidentally) feature Gerard Depardieu.

              In Vatel, Depardieu plays the chief steward to a french lord in the time of the Sun King, Lois XIV. In it you can get a good understanding of the life-styles of the various classes of the time — yet, even someone as important as the person who managed an important lord’s household was virtually a slave, as Vatel was lost in a card game to another lord.

              In The Return of Martin Guerre, Depardieu plays a peasant in the true story of the first documented case of identity theft in a tiny French village. I’ve watched this over and over for the excellent rendition of the life of peasants of the time, and for the great costumes and sets. I particularly recall the cramped quarters — multiple people to a bed was the norm, and on his return after eight years, numerous people vacated a room so he and his long-separated wife could have privacy for a night.

              Perhaps Hollywood has a distorted view of the Middle Ages, but I think such films can paint a vivid image of what may be in store.

        • Scott says:

          Hello, It is true that the age of oil allowed us to rise up from being Peasants. Once the cheap oil is gone and most of it is we will begin to descend back once again into the Peasant world. As we look around the world it appears we have started on that path back down now. The disappearing middle class in the US was a clear sign post to me. Most countries are having severe financial problems partly brought by following the same models of over leveraging debt to borrow from tomorrow. Complex financial instruments have allowed this leverage to exist.

          The first think you see are rising bond yields, then these countries need bail outs since they cannot roll over their debts, then austerity, social unrest and perhaps collapse. Which is what we are seeing in Spain.

          Xabier – I know you have family in Spain and I was looking at this article this morning about the outlook there. I am sending on to you and others that are interested.

  12. Don Stewart says:

    Dear Gail and Others

    Two different views of collapse.

    From Kathy Harrison
    In each spare moment I try to get some writing done. I’m working on a novella about what I think the next decade will look like. There are no zombies and nobody is raped or murdered. It’s a much slower, much less dramatic collapse and I’m not sure just how interesting it will be unless you’re a fan of herbal medicine and permaculture. If it’s too boring I may have to throw in a love story.

    From Dave Pollard, reviewing Dmitri Orlov’s new book
    My hope was always that as the first three Stages of collapse played out, government would be mostly a passive and inept player, a victim rather than an actor. But if the ruling group installs worldwide the kinds of corporatist totalitarian regimes I describe above, I fear they may strenuously act to suppress or prevent many or all of the coping/resilience mechanisms we hope to employ (shown in the right-hand column of the table above) to reduce the suffering of collapse and start to transition to a much more modest post-civilization society. Specifically, they will work to obfuscate what is really happening in the world, thwart attempts to create self-sufficient local communities (free of the ruling group’s authority), and prevent us from creating a sustainable sharing economy, growing and gifting healthy, organic local food, living off-grid, living in “non-standard” housing, looking after our own health and education, and weaning ourselves off “employment”, money and socially- and ecologically-destructive goods. What we see as taking responsibility for our own well-being in the face of cascading crises, the ruling group will inevitably see as threatening all the levers of control of wealth and power they rely on keeping.

    Don Stewart
    PS I agree with both of them. (How can anyone fail to get excited about herbal medicine and permaculture?)

    • so I show up at my doctor with some kind of raging infection, (there’s lots to choose from, but let’s say tuberculosis) and I tell him I prefer to be treated with herbal medicine.
      He shows me the door, with the comforting words: “sorry, but you’re going to die.”
      Lots more to pick out in this wishful nonsense of ‘downsized living’ but let’s choose non standard housinjg.
      Now exactly what are we talking about here?
      The purpose of a house is to keep the rain out and its occupants secure (basically the old nursery rhyme holds true–nobody can huff and puff and blow it down).
      So a house must have sound structure of some kind. Wood? Stone? Turf? Mud? I can see caves being in demand again here.
      It must have a roof, but again, that implies ‘structure’. Rafters are merely logs sawn into fixed lengths. Sawn?–but sawing requires energy input!! And we want non-standard housing!
      If all the local caves are occupied we can only construct houses with grown materials. That is what a house is, no matter how you build it. We make our houses warm and comfortable with plastics, but ultimately plastics are fossilised plant and animal life.
      If on the other hand we build ‘non standard’ housing, one must assume that we chop down trees and build our shelters that way, with the addition of liberal daubs of baked mud, mixed with straw and animal excrement.
      So please decide what you want when indulging in wishes for our future. You cannot construct anything without ‘using’ something else. if lots of people also want that ‘something else’ then there will be competition for it. If we build log cabins, there will be a shortage of logs.
      Essentially the problem is one of numbers, no matter how you twist and turn around the subject. But that may not be uttered–only that we must enter into a future of blissful peasantry where everyone is going to be nice to one another.
      Please–stop daydreaming?

      • Don Stewart says:

        Dear End of More
        I suggest a strong dose of reality.

        First, listen to this interview between James Howard Kunstler and an organizer for small farmers:

        Fleming is describing exactly the sort of social organization which is necessary to survive a collapse of finance, commerce, and government. There are lots of people working on this, with plenty of good ideas. The biggest problem that Fleming identifies is government opposition. Sometimes the opposition is active: refusal of occupancy permits for people living in non-standard housing, laws forbidding graywater use, laws forbidding composting toilets, laws forbidding chickens in the back yard, laws making it impossible for groups of small farmers to cooperate with processing facilities, laws forbidding home based food processing and on and on in an endless stream. In ‘progressive California’ it took two years to get a simple biodiesel station permitted. And on and on in an endless parade. In his old age, the architect Sym Vander Rhyn refused to build houses in localities with building codes because they forced him to do so many stupid things.

        Sometimes the governments cause problems by trying to save the current system. The Central Banks print money and hand it to rich people who bid up the price of farmland so that no real small farmer can possibly make a living. That is the issue that Fleming closes with. Farmers producing food can’t compete with the speculators because the speculators have the Fed at their back.

        Anyone actually involved at the ground level is made aware daily of just how hostile the financial, commercial, and governmental system is to sane behavior.

        So the tantalyzing question that Orlov and Pollard pose is ‘Can we let the useless and harmful overhead fail while preserving that which is sane?’

        It’s clear to many people that trying to reform the system has utterly failed. As a Turk recently commented about Obama: ‘He talks like he’s a civil libertarian, but he acts like Dick Cheyney’. Obama thinks appointing people from Monsanto and Tyson and the drug companies to high positions is a really good idea and putting whistleblowers behind bars (or in coffins) is ‘God’s Work’. And he is less harmful than most anyone you can come up with on the other side.

        So the path that Pollard identifies, and that Kathy Harrison lives daily in her gentler way, holds out whatever hope we have. As an example, people living simple lives cannot, and should not be expected, to ever repay the debt that has been taken on to fight wars of Empire and to save Wall Street.

        Will a majority of people in the US embrace that path and get serious about behaving sanely? I have grave doubts on that subject. I expect the population of the US to be much smaller a century from now. The primary factor isn’t the raw ability of Nature to produce food–it is the unwillingness of most people to do what they need to do to survive. If we have a long downhill slide (perhaps Greer’s ideas), then more people will have a chance to adjust–just as quite a large number of people have adjusted to the collapse in the labor market in 2008. If we have a very quick descent, as Gail predicts, then most people simply won’t have time to assemble the skills and resources needed.

        If we manage to do it right, then chronic and infectious diseases and depression will mostly disappear. We will still have injuries to deal with. Historically, a great many deaths occurred in childbirth and the early childhood years. I don’t know enough about that to say anything intelligent. If there are any midwives reading this, they can, perhaps, enlighten me.

        Don Stewart

        • the numbers problem still hasn’t been addressed, other than an airy—“in a 100 years the population will be smaller than now”. No thoughts on how 330 million might drop to say–30 million, or even 100 million. No matter, we can ignore that little detail, but 200 m people are going to be mightily upset.
          Next point, diseases will disappear. Wonderful. No acknowledgement that our current health is sustained by two things, ample nourishment and a factory based energy burning healthcare system. Your downsized doctor will have little more at his disposal that his medieval counterpart. We have become used to a prescription being given for the slightest ailment, we see our doctors as medical magicians, whereas in reality they are at the top of an industrial pyramid. They might diagnose what’s wrong with you, but industry cures you.
          Sewage removal and clean water delivery has a lot to do with it too, both energy intensive processes
          Childbirth death had many causes, puerperal fever was a prime example though, brought about by dirt and ignorance, children had a 50/50 chance of reaching 5.
          It’s possible to dream up all kinds of fantasy futures, but the brutal reality is that our society is held together (both literally and figuratively) by a constantly expanding and accellerating stream of energy, mostly derived from hydrocarbon input. That stream doesn’t have to stop, merely slow down for nations to begin to disintegrate. It’s happening in Europe right now. The EU worked fine so long as everyone was making money (ie burning fuel) now the grand scheme is falling apart.
          When energy is no longer available, the USA will also disintegrate. The geographical ethnic and religious cracks are already there.There will be internal conflict to prevent it of course, but the result is inevitable, (Secession anyone?)
          As to small scale farming, fine. But those food producers face two problems.
          1 they exist within a stable and otherwise industrial society
          2. When industrial society ceases to exist, small farmers will not exist long enough to make a second harvest, other than perhaps under some kind of feudal protection system. Which is roughly the situation that existed prior to 1500, when we only had to feed 1 billion. (and even then famines were commonplace in Europe.)
          after 15/1600 excess populations began to spill over into new lands
          I try to describe the reality of human nature, not a fanciful notion of utopia

          • Don Stewart says:

            It’s hard to know where to start with this stream of errors. So i’ll pick one example. Your claim that industrial medication saves people. I will grant you that modern medicine works wonders for acute injuries. It seldom cures chronic disease or infectious disease. Chronic disease is caused by the industrial food system and infectious disease is cured by the immune system.

            Don Stewart

            • There is some truth to what each of you are talking about. Our health system is pretty bad, but if people are undernourished, and living in close quarters when we cannot recycle human waste in a way that does not pass germs around, death rates will skyrocket. We will likely need to do reorganizing on a dime–something that will be very difficult to do. There may very well be a need to move people to new locations–either that or the ones in cities and other bad locations will die. Homes for the many new farmers are likely to be a problem. Perhaps we can recycle parts of old buildings for a time. The magnitude of the problem is huge.

        • “Chronic disease is caused by the industrial food system and infectious disease is cured by the immune system.”
          Oh dear.
          Penicillin, ( a product of the industrialised healthcare system) has been an instant cure for a range of infectious disease. But as Alexander Fleming prophesied, bacteria evolve immunity to it. When it is no longer effective, our immune system will not prevent medieval diseases returning in more powerful forms
          Our immune system does not stop infection, pure chance does. With the black death, you had a 3:1 chance of survival. Which meant a third of Europe’s population died.
          When WW1 broke out in 1914, (this was well before our industrial food system was established) recruits from the ‘working classes’ were found on average to to be 6” shorter than those of wealthier origin. In other words they were inadequately fed.
          There is little doubt that our food production processes can cause problems with some people, but that will not be solved by a return to the food production systems of the middle ages.
          Reliance on wishful thinking to cure disease is advocating a return to frontier medicine. I can only suggest you read up on the reality of that.

          • Don Stewart says:

            End of More
            Life is too short to go over all these topics yet one more time. Jan is right. A waste of time is a waste of time.

            However, you will find at the end of the comments section how I think the overpopulation issue will work itself out.

            Don Stewart

          • End of more,
            Suggest you read “Are your prescriptions killing you?” by Armon B. Neel, Jr., a consulting pharmacist; and “Next Medicine” by Walter M. Bortz, a doctor. Both books are highly informative about our current industrial health management system. No doubt in my mine that we will be much better off without it. Much healthier and wealthier.

        • Scott says:

          Nice Post Don, I think many of us including Gail are a fan of JHK.

          Luckily there are still some nice areas left on the planet right now and I am enjoying our little Eden in Oregon. But I think many of us will soon be wishing there was an exit from this planet Earth and these governments that have gotten far to large and overbearing on all of us. But for now I see it as many of us do as a stair case down, slow unless some large event could set things in motion faster. Let us hope that holds off.

          In my old books I read about the Frontier days of the old west and the good times come but would not last – until the next attack! I think times have changed much from then, but then the attacker had to hide grass, but now they hide in many very complex ways and our attackers are still unknown to most but I am starting to see who they are.

  13. Jesse Parent says:

    Reblogged this on Timelines: Jesse Parent's Blog and commented:
    Gail is one of my favorite minds in looking at the challenges of the 21st century. Here is another great post concerning further economic implications of oil and related market & financial issues.

  14. Barry Cooper says:

    Reblogged this on Orcop: A Connected Community?.

  15. Jens Bryndum says:

    “In my view, the primary effect of QE is to create asset price bubbles.”
    Probably true, but how about QE as an accellerator of our trajectory towards the limits to growth through misallocation of physical resources?
    Famous examples are empty cities etc. in China.
    I suspect, less thoughtfulness is put into the application of credit, when it´s cheap and abundant, than when it´s scarce and expensive.
    I rarely see this perspective mentioned. What do you think?

  16. ravinathan says:

    Here is another piece to the puzzle which relates to the strategy of the 1 percent in a zero interest rate regime and that is to buy up infrastructure and turn into rentiers, a form of neo-feudalism if you will. And where are these assets going to come from? By converting whole parts of public commons into private assets. So we see pressure on Greece to sell public buildings and tourist attractions that can be turned into streams of private income. As Michael Hudson notes, the bankruptcy of Detroit is leading to pressures to sell artwork owned by the city in order to compensate creditors. The great asset grab is upon us.!/entry/michael-hudson-from-the-bubble-economy-to-debt-deflation-and,51d7997787443d6c8e58ce47

    • I am afraid you are right. The 1% will want to “capitalize” publicly owned assets, in an attempt to shake down the rest. Perhaps it can temporarily move the collapse a bit later in places like Detroit, that are on the “leading edge,” but ultimately it makes certain the whole system collapses.

  17. ravinathan says:

    Apropos my earlier post on IMFpotentially becoming the banker of last resort, here is a letter from President Obama asking Congress for approval to fund the IMF for 100 B of a 500B fund in exchange for gold backed interest bearing IMF debt. The proposed $500 In new IMF capital funds will be used to support developing economies who will need to be bailed out very shortly for example Egypt where a new government is going to make no difference to their predicament. Obama notes that this does not constitute new expenditure since the dollars are exchanged for IMF paper. Just another level of the Ponzi where printed dollars are exchanged for IMF paper and the world suddenly has $500 B more to ‘invest’!

    • This letter is from back in 2009. This is a good example of the government not understanding what is really wrong, and that more debt, or lower interest rate on debt, won’t fix it. For a while, we lived in a world where the growth in cheap fossil fuels temporarily enabled growth. Now that population has caught up, and fossil fuels aren’t so cheap, more debt won’t fix our problems.

      • donsailorman says:

        What more debt can do is to postpone a crisis–“kicking the can down the road.” Individuals and businesses often go into excessive debt, but governments are the worst offenders. When governments go deeper and ever deeper into debt the typical response is either direct repudiation of debt or indirect repudiation through increased rates of inflation.

        The next couple of years are going to be especially interesting, because global growth is down and increasing government indebtedness is the rule. If something cannot go on indefinitely, then it won’t. Exactly where the crisis begins is impossible to predict, but local crises, if they are serious enough, can bring about global financial discontinuities.

      • Scott says:

        Hello Gail, I hope you are enjoying your trip. I wonder if this is a case of the government not wanting to acknowledge the fossil fuel issue. Although almost every president has spoken about only the need to be independent from imports which is the same old story. Never a mention that we may be in trouble.

      • Scott says:

        Hello Gail, I hope you are enjoying your trip, I have family from Switzerland which is near where you are but I have never been.

        This may post twice as I tried to post a comment like this earlier. What I said was is this a case of the governments not understanding or not willing to disclose the upcoming emergency?

        I think the later. Every president has made basically the same speech about getting off the dependency of and I am sure now they are cheering fracking as the answer to that. Meanwhile they re buying up all the bullets without comment.

        I do not believe that they do not know, they seem to not care and I wonder if they have something up their sleeve to remedy the shortage like some new power source? No, not that we can see. I think we are on a need to know basis with our government. They are indeed very secretive which sometimes makes me wonder about it.

        They surely have embraced fossil fuels to the end. Their message is that we can keep building bigger aircraft, boats and empty cities as which China. There is no message what so ever about the danger ahead coming to the peoples of the world except for those that read between the lines as many do on this site. I would sure like to see some honesty, but I do not think we will learn of the crisis officially until it is upon us.

  18. Bogwood says:

    In the eyeball business we struggle with the nature of light,sometimes a wave,sometimes a particle. Speculation runs toward:both,neither, it isn’t binary, it is a deeper phenomenon for which we have no words. The flation argument might share some characteristics. Money is a wave,no it’s a particle.
    Not much light on the matter,except to say it is the context of the measurement that seems critical.

    • That is an interesting way of putting it. Money is valuable, except when there really isn’t anything to buy with it. Then it isn’t so great any more.

  19. Don Stewart says:

    Dear Gail and Others
    A continuing discussion centers around ‘how many people can the world feed?’. A few observations and then I will offer my concluding comment.
    1. Simon Fairlie, in an exhaustive analysis, concluded that Britain can feed itself–just not in the way it does agriculture today but with older methods. If Britain can feed itself, then countries like the US and France and Russia should have no problem. Fairlie does not factor in climate chaos which might greatly reduce yields.
    2. Seventy percent of all calories are provided by grains. However, many of the grains are diverted to feeding animals in Confined Animal Feeding Operations (including farmed fish) or ethanol. If the world ate like Africans, the grains would be used to feed people and there should be no problems with gross production of food.
    3. The Iowa State trials showed that ‘traditional agriculture’ produces the same amount of food as ‘modern agriculture’. The ‘traditional’ agriculture is, let’s say, 80 to 100 years old. It requires more humans, but vastly less fossil fuels and fossil fuel products such as pesticides and herbicides and fertilizers. Both ‘traditional’ and ‘modern’ took advantage of advances in seed breeding.
    4. Transportation and preservation of crops and home preparation would be major issues in a collapse. These uses account for most of the fossil fuels used today.

    My final comment relates to Wagner Dodge and the forest fire. 15 experienced smoke jumpers were dropped to fight the fire. Dodge was the leader. The fire unexpectedly got downhill from the crew. When they realized what had happened, and understood that the wind would blow the fire rapidly up the hill toward them, they turned around and ran. They turned around at 5:45. At 5:56 the slowest runner was caught and killed. At 5:57 the fastest runner was caught and killed. Three men lived to tell the tale. Two exceptionally fast runners got to a pile of rocks, which did not burn. The third man was Wagner Dodge. At 5:55 Dodge saw that he could not outrun the fire, so he started a fire in grass in front of him and then threw himself into the ashes. The fire burned around him. He exhorted his men to do as he did, but they ignored him and continued to run.

    For the sake of argument, let’s say that the 2 men who reached the rocks were really lucky…if they had started a minute later, they would probably have died. Wagner Dodge was the one in fifteen who behaved with real intelligence. If collapse comes upon us suddenly, why do you think all the people in the world will react as intelligently as Wagner Dodge?

    It is very clear that people need to be preparing physically and mentally and socially. But are even one in fifteen doing so? I think the best guess would involve a Mann Gulch event overtaking the world’s billions. Spending a lot of time trying to figure out whether we can feed ten billion the way they want to be fed, where they want to be fed, and without doing any more work than moving the cursor on a computer is, I think, a waste of time.

    Don Stewart

    • I agree that spending a lot of time trying to extend our current methodology to 10 billion is a waste of time. Even if we could get to 10 billion, I expect that we would be stopped by 11 billion.

      Regardless of how many we can feed, the main trick is the transition. If we had built up in the past from a small number to a larger number, and had developed a network of systems to support what worked, then we could be sure that the whole system would work. Now, we have lost most of the old systems that worked before (for example, using draft animals for labor, but with much smaller population, and probably different eating habits).

      You talk about going to eating more vegetables/grains and less meat. That works in warmer parts of the world, but in cold areas of the world, it is hard to get enough calories without animal products in winter. And if we cannot use oil products to provide the energy to provide the labor to grow grains, we may need animals as draft animals again. So I am not convinced that it is necessarily as easy to get the animal portion of food consumption down as much as it looks like on paper. With fish in decline, we don’t necessarily have the option of fish as a substitute for meat either.

      • Don Stewart says:

        I agree that everything takes a lot of care if you put it in reverse. I don’t think most people will even try, and so most people will die. One commenter on this site said he would rather die than use a composting toilet…and he might get that chance.

        But cold, wet parts of the world grow rye, which is perhaps the most nutrient dense grain we commonly grow. Grain plus beans (which grow just about everywhere) are a very good protein so there is no necessity to grow animals strictly for food. Animals as workers, yes. But they have to earn their keep.

        Simon Fairlie concluded that Britain could afford some animals for food. He called them an ‘extravagance’. So even in crowded Britain it isn’t the raw productivity of Nature that is limiting.

        Chris Martenson quoted some numbers on Egypt in his talk today. They have a tiny amount of land per capita, but still manage to grow more than half their food. Better endowed countries just have to do it as well as Egypt. As for Egypt, they just have too many people.

        As a generalization, with exceptions such as Egypt, we won’t starve because Nature is so stingy.

        Don Stewart

        • growing half their food is fine—it’s the other half that’s the problem

        • I would observe, though, that beans are not necessarily as easy to grow as you say. Around here, there are real problems with pests bothering them. It depends.

          • Scott says:

            Hello, Yes, Gail we are trying to grow organic string beans and we are on our second planting, the first one was eaten by bugs. It really does take years to learn what grows well in your area and the weather (climate) is always changing too so that makes it harder. Just keep practicing your skills. If your first batch fails replant a bit later and try again, sometimes the second batch of seedlings does better as the bugs may be gone now.

            Storing food is a basic human and ancient function and also storing things that are rare (silver/gold) and of value for trading goes back to the times of our ancestors. Tools are also something of value that we need. In the last couple of years I learned how to make my own jerky, but using an electric dehydrator it will be harder if we have to use solar and fire to dry foods. Electricity is a wonderful thing, temps can be exactly regulated which more difficult with solar thermal which is dependent on weather and fire. This year I am going to try to learn how to pickle some stuff from the garden.

      • If animal production were to go back to small farm production they will be fed a large amount of grass and hay, two crops we humans can’t eat and therefore a very efficient way of raising protein. Free range chickens and a milk cow were standard in most farm families a century ago and moving back in that direction again. It doesn’t take long for families to change. In the last five years I have seen many, many people living in the county beginning to raise a flock of chickens. Same is true of families starting vegetable gardens. I think people are thinking about feeding themselves and already making changes. It may not be obvious to others unless they live outside of the city.

    • Jan Steinman says:

      “Spending a lot of time trying to figure out whether we can feed ten billion the way they want to be fed, where they want to be fed, and without doing any more work than moving the cursor on a computer is, I think, a waste of time.”

      Well put, and yet, what are people here doing? I’ve mentioned what I’ve been working on, without receiving much in the way of interest. (We could use some help!) I also limit my computer time, because it subtracts directly from time I spend preparing.

      Gail has mentioned spending quality time with family and friends as a priority. One or two others seem to have a useful project going — beyond changing their light bulbs and buying a Prius.

      Are we a bunch of “keyboard survivalists” here, or is anyone else doing something real?

      • Don Stewart says:

        I agree with most everything you are doing. It makes sense to me, based on what I know about you and your situation. I’m older, so my path is a little different.

        I think that our plans need to begin with the realization that we can’t save the old ways, that things are going to be different, that things will work out differently than we expect, that skills are better than money in the long run, that we have to survive the short run to even get to the long run, etc., etc. But everyone is going to choose differently based on their own assessments, predictions, talents, predilections, etc.

        Doing something is better than doing nothing.

        Don Stewart

      • Scott says:

        Well – yes Jan, my wife and I have been working on our small land in Oregon, but the good gardens and we are drying if some harvests from the summer, but we find the long winters mean we still need to buy lots of stuff which I imagine others have dealt with. We could surely survive on less but we spend money at the stores getting the things we like.

        We still buy far too much and only grow part of it but it helps. I think many of us could do with less if we had to (like if the store was closed). It really does take a lot of work to grow all of your own food and few can do it. If we were not lured into the stores for all the goodies – we really could live on less. Living off the land is not always fun when it comes to getting all the things you want but can be done if we were forced into it for some of us.

        I think part of the problem people face that garden is that it all comes in almost at once and how to store it for the winter. That is a whole other skill set and it is about not being to picky and you may have to eat the same food day after day and week after week which is not popular.

        • I think the difficulty of growing enough plant foods in some climates is part of the issue I raised about people in cold climates wanting/needing meat to eat, or cheese from milk. It becomes so difficult to grow enough food with a short season, and poor methods of keeping food, that they give up. If chicken, rabbit, fish or some other non-plant food can be added to the diet, it can help quite a bit in making the diet more interesting, perhaps without proportionate work. (Feeding huge amounts of grains to animals is not a solution, though. The animals need to be ones that can eat greens plants that grow pretty much wild.)

          Perhaps the right kinds of grains and beans would work too, but there are a lots of details that need to be worked out, in particular locations–what to plant when, how to process the grain (“sprout it” or grind it?), recipes for palatable finished products.

      • Don Stewart says:

        One other thing, which it will take me two points to make.

        First is winter. I live in North Carolina. With just a little season extension technology, crops here grow well through the winter. Actually, they don’t grow from the middle of November through early February, but if you have some carrots in the ground and kale in the form of plants, they are stable and can be harvested. That’s probably not true in Manitoba. So I would expect someone from Manitoba to be a lot more interested in putting up a lot of stuff than I am. People in the North Carolina mountains put up far more than I do. So…our situations are actually different and call for different responses.

        Second, I have made the point about season extension so many times I am sick of it. People either don’t hear or don’t understand because they have never done it.

        I think the same is true of most Permaculture methods. Until you have built a system which stores water in the soil, you don’t have a real conception of how it works and so you fall back on inanities like ‘the necessity for irrigation’. It’s always about the specific situation…as well as the experiences and skillset of the farmer or gardener.

        If I had my druthers, I would have people go out and build with shovels and mattocks a water management system involving sinking a lot of rainwater into the ground. Then, their muscles would have a memory of what it is all about. And I would have them go back 6 months and a year later and count the life in the soil. But I think that just continuing to talk about it is not a good expenditure of time.

        Don Stewart

  20. Don Stewart says:

    Dear Gail and Others
    With great trepidation, I will try to make an observation or two along the lines of the Triple Path laid out by Gary Klein.

    Let’s suppose you are feeling some pain because you perceive that we can’t go on the way we have been. Klein would call this the Desperation Path. But perhaps cutting off our arm isn’t the best response. So let’s give up a few treasured assumptions and see what happens. The treasured assumption I will (mentally) throw overboard is Homo Economicus. GDP is everything. In it’s place, I will substitute a physical creature (which is actually a community of creatures) with an elaborate signaling system working through hormones which guide actions. I’ll give you two references:

    First is Dave Pollard’s chart showing our hormonal pathways (to the extent that we understand them) and his little story about what is really going on:

    Second, is a series of YouTube’s by Sara Gottfried, MD (from Harvard, no less),d.dmg

    The link gets you to the first video, and you can easily follow the others. Sara focuses on the importance of orgasm and the hormones it stimulates, but as you listen to her talk, you will see lots of references to other hormonal reactions to the events of life. You can search other authors and get a pretty good idea that there is a whole world of hormones and feelings out there that isn’t intrinsically dependent on Debt and Oil.

    With a little searching, you will find all sorts of interesting things, such as that eating kale also activates many of the same hormones as orgasm.

    So, let’s try to think like Napoleon at Toulon. We have been ordered to attack a superior army of British and Spanish, which army threatens the continued existence of the French Republic. But attacks have not been successful, so it seems to be a suicide mission. Are we feeling some pain? Have we perceived that we can’t go on the way we have been? Do we have to keep trying to conquer unresponsive governments and TBTF financial institutions, and the madness of the mainstream media? Is there some alternative?

    Napoleon finally showed the new General a different path–cutting the supply line. Perhaps abandoning the goal of positioning ourselves so that, just as soon as QE99 gets the economy humming again, we will be rich, and instead adopting the goal of having the best managed hormones of anyone we know is a more worthwhile and achievable goal.

    But isn’t it important to ‘save all 10 billion people’? Klein observes that, in his long career, actually helping other people change deeply held beliefs has seldom been a successful venture. Klein wishes he were better at it, and promises to work on his skill level. Perhaps ‘saving 10 billion people’ is one of those goals which, considering my own lack of success in promoting change, has to be given up. I know quite a number of people who are absolutely convinced that ‘technology will save us’. I vote for more orgasms and fewer sermons to the unbelievers. Perhaps bonding with a small group of like-minded people is a better idea.

    IF we make this sort of watershed decision, THEN we move into the other paths in Klein’s Triple Path Model. For example, we start looking around for people who have been pretty successful with their hormones in the absence of Homo Economicus success. Do they have any ideas we can steal?

    Happy exploring, and beware of charlatans…Don Stewart

    • I agree that it will be impossible to save 10 billion people. Governments can’t even talk about this problem, much less act on it, so it pretty much must be small local groups, trying to do what they can.

      Each of us tries to our little bit toward understanding/fixing the problem. So far, I seem to making better inroads on understanding the problem than fixing it.

      • A problem has solutions. A dilemma has consequences. Forty or fifty years ago we could have worked to solve the peak oil, resource depletion problem. Today…there is no solution. Our current situation is a dilemma. All we can do is adapt and try to live through it…or not.

        • I am afraid you are right.

          • Scott says:

            As Jody said… I agree and I really wish the world had taken notice of this peak resource problem and done something 40 years ago too. People should be held accountable and made to answer to these lies they fed us!


            • Brian says:

              I believe it was Carter who tried to bring some of these issues to our attention. Predates me as I was born in ’85, but from what I’ve heard he wasn’t real popular as a result. No addict wants to hear that the diminishing returns from their drug of choice will cause them to either overshoot the available supply or overdose. As I see it it’s a race to the bottom on a global scale and overshoot is out in the lead by a hair. Perhaps some of the same coping mechanisms Al-Anon teaches to addicts family-members could be of physiological support to those of us who have stepped back to see the mess we’re in. “You can not control their behavior, only your reaction to it.”

            • Scott says:

              You know Brian, I think you are right about Carter, a few years ago he was still building houses for poor people. He quickly found he was up against forces too big for him to challenge and also Kennedy tried to challenge the Federal Reserve and move the powers back to the US Treasury Dept. Look where that got him. Carter backed off and lived.

  21. DaShui says:

    I wanna know the secret of how to travel around the world as a peak oil writer!

    • Actuaries are well paid. If they also always live in inexpensive housing and drive inexpensive cars, they save money. My husband is also still teaching most of the year. Leaving that money in the bank now does not seem like a good choice. So we visit people we would like to visit, and see parts of the world that are interesting, when my husband has vacation.

      Also, some of my trips have been paid for by groups I am speaking to.

      • Jan Steinman says:

        You’re always welcome here, Gail. Given enough lead time, I can probably arrange a public appearance as well, if you want to put together a BC tour.

        • I have not really ever thought of “putting on a tour” somewhere. It seems like I can reach more people writing than speaking, and I have a family who needs me (husband and adult son who lives with us). I do give talks, but I haven’t gone out of my way to find them.

        • Stilgar Wilcox says:

          In Canada?! The last time my wife went to Canada as part of a book tour back in 96, which just happened to also be in BC, she received a lot of prejudice because she’s American. Unless that has drastically changed in the intervening years I highly advise not going to Canada, Gail.

          • Jan Steinman says:

            The problem with anecdotes is that they almost always involve something other than what is reported.

            I’ve found Canadians to be an open and receptive bunch, as a whole. We’ve hosted Nicole Foss here, and people loved it. We hosted Starhawk, and nearly maxed out the biggest venue on the island.

            Of course, one way to get a bad reception is to come into some other country — any other country — and tell the locals how they should be doing things, not that your wife did that. But Americans do tend to do that!

            As Steven Covey says, “Seek first to understand, then to be understood.”

      • I might also that my background is very different from most “peak oil writers”. Most of my trips are paid for either by academic or actuarial groups. I write in all three settings–actuarial, academic, and web site. One of the things I can do, is help academic authors make their articles more accessible to a wider audience. So I have learned to know a lot of academic writers, through this role.

        What I write about is not traditional peak oil (with oil production determined by geological decline only, with no financial consideration), which makes my writing somewhat less than acceptable to many from the peak oil community. But academic audiences who are looking for an outside speaker, and actuarial audiences who are looking for an outside speaker find my different way of looking at things useful. While these groups may not pay “regular” academic/actuarial speaker expenses, they sometimes have money set aside for a few outside speakers of special interest.

        • Adam says:

          “audiences who are looking for an outside speaker find my different way of looking at things useful”

          After the oil price spike of 2008 subsided, I thought that “peak oil” (however defined) had been a dream and normal service had been resumed. Your inclusion of the financial (affordability) side explains the missing part of the puzzle, and therefore seems just not “different” but correct.

          I first stumbled upon “peak oil” in 2004. A BBC documentary on poverty claimed that Bangladesh would be as rich as the UK by 2090, assuming its growth rate continued. My mind suddenly boggled. I thought of all the other poor countries that would have to catch up and buy so much “stuff” that people would have to hire “self-storage units”. I googled “future world resources” and found the “Life after the oil crash” site (now defunct). It all made perfect sense, and numerous lights switched on in my head. (And let’s face it, here in 2013, even the UK isn’t as rich as the UK was in 2004!) But when I tried to talk about it to people, I just got looks of embarrassed incredulity – until 2008. These days, nobody I know talks of it, so when the “discontinuities” arrive, I think you’re right – people just won’t understand the resource scarcity issues behind it.

  22. Pingback: Inflation, Defl… | Southern Energy and Resilience

  23. Prudentis says:

    I think you make some very valid and interesting points. You paint a very realistic picture of future possibilieties.
    I have however one problem with your reasoning concerning gold. As most economists nowadays, you seem to think of gold only as an asset. I don’t recall a period in history, where gold acted as such, other than the recent, fiat money, infinite debt, we-can-grow-the-money-supply-indefinitely, ressources are inexaustable era. Other than that, gold has always been only one thing: a store of value (also known as money). Silver also has had the historical role of a value storage, but it is much diminished in recent history by silver’s industrial use. So I guess silver runs a much bigger risk of ending on the “asset” side of diminishing value.
    As for gold, I don’t see it rising anywhere near the hights some goldbugs dream of. On the other hand gold “value” falling in accordance with “real” assets would be quite a historical novelty.
    After all, to even have a “value” of something, you have to have some kind of reference point. If currencies fail (and they will), there is literally nothing else left _but_ gold as a measure of “value”.
    That is, if you do not envision an EOTWAWKI scenario but a more realistic “elevator ride” down as you call it but still in a modern world that is diminishing, but not entierly going to hell.
    There may be other “things” that could be a better store of wealth for the coming disturbances, be it farmland, forestry land, tools of production, etc. but they are all harder to store, more difficult to asses i terms of post-oil value and most have counter-party risk.
    So if you go out and pretty much say, that even gold investing isn’t a viable preparation for the coming crisies, than be so good and give us your ideas, what might be.

    • The question is how what really is produced will be divided up between those who are currently producing it, and those who think they have stored up a prior claim to it.

      If there is barely enough for those who are currently producing it, I would suggest that prior “stores of value,” no matter how wonderful they may claim to be, will not be of a great deal of worth. There will be certain essential services that some will provide (dentistry; midwifery; making cloth, clothing and shoes; and grinding grain come to mind) that some will provide, that will be essential as well. “Store of value” works well in an expanding economy, but much less well in a shrinking economy, as far as I can see.

      I would suggest spending it now, if you expect your assets to have value. If you spend it on things that are meaningful to you, no one can take your experience away. If you spend it on land, tools, and practical experience as to how to use these things (the education part is more important than the land and tools), it may be helpful–especially if things go right, and no one takes it away from you.

      Unfortunately, “You can’t take it with you,” is as true now is it has ever been.

      • Land most certainly can be taken from you, and if Da Goobermint falls, what is the meaning of the “Title” to the land? The paper that is written on is as worthless as the paper the Fiat money is written on, in fact they are practically one in the same thing.

        Once there are real shortages, one has to suspect there will be Land Reform of some sort, either a Communist or Fascist solution of collectivization or a neo-Feudal sort of Warlordism. Hard to see how the individual land holder does very well under either scenario.

        The best way to combat these outcomes is through neo-Tribal collectivism, which is what we are exploring with the SUN (Sustaining Universal Needs) Project. You can find out more about SUN on the Diner.


  24. Edwin Pell says:

    Hi Gail, somethings have a global market and something have only a domestic market. I think these can behave differently. Oil has a global market and will remain high priced. Housing stock in Detroit has only a local market and will continue to fall.

    • Those are good points. Also, the size of the market can change, if oil based transportation goes away. Coal that cannot be transported with oil becomes usable only within a very short distance.

      • yes energy is generally only usable in any volume if you can transmit/transport it in some way
        The Romans had their glorious fountains, (the energy in falling water) but only as a result of thousands of slaves building miles and miles of aqueducts. eventually the aqueducts fell down because the Romans lacked the means to maintain them. (the energy input of the slaves)
        when the means to move and use oil is no longer viable, our oil based energy system will also grind to a halt

        • Exactly! Oil and natural gas are incredibly difficult to extract, if we don’t have our current systems in place. Some coal is not so difficult to extract, but it still is very difficult to transport, without oil based systems. If we cannot maintain what we have, we lose it.

  25. Adam says:

    “If currency is viewed as another asset, its value may go to close to zero as well. In fact, if there has been a government change, its (the?) value of the currency may be exactly zero.”

    Meaning that, if there is not much to buy, then your currency is worth very little. This was the case in communist East Germany in the 1980s, so most people had savings that couldn’t buy anything worthwhile. From Wikipedia: “Upon adoption of the deutsche Mark in East Germany on 1 July 1990, the East German mark was converted at par for wages, prices and basic savings (up to a limit of 4000 Mark per person, except a smaller number for children and a larger number for pensioners).” In 1991 I asked a West German friend how he was enjoying reunification. He complained that there was such a pent-up demand from the former East Germany, that he often couldn’t find his favourite brands of products in the shops and had to settle for a lower quality alternative. Not the answer I was expecting!

    In Suriname in the 1990s, inflation was so high that the coins became worthless, and only banknotes were used. In 2004 Suriname introduced a currency reform, whereby one new Surinamese dollar was equal to 1000 old Surinamese guilders. The central bank announced that the old coins would become legal tender in terms of the newly created Suriname dollar. It probably had enough old coins in stock to do this without minting new coins. The previous 1 and 2½ Guilder coins had (curiously) been inscribed 100 and 250 Cent, so it was possible and legitimate to reuse them, and people did. Those who’d held onto the old coins got a windfall profit (though in reality probably a small one). I know of no other country that has recycled its coinage in this way. (I’m a coin collector – can you tell?)

    But Gail, if you take a $10 bill to the shops and find it is only $0 when you get there, make sure that you haven’t just rubbed some of the ink off. 🙂

    Thank you for another superbly lucid, informative and insightful post.

  26. Don Stewart says:

    Dear Gail and Others
    Here are some more thoughts about the intersection between Gail’s thesis on how the future will play out, Gary Klein’s book on Insights, and the discussion today between Charles Hugh Smith and Gordon T. Long. I will also extend the subject to a discussion of what each of us should be doing to prepare for whatever the future holds.

    You can find Smith’s blog post at:

    Take a look particularly at the first three charts. If you have time, also click through to the conversation between Long and Smith. Note how they keep questioning ‘Why do we keep doing things that have failed?’

    Gary Klein identifies one path to insight as Creative Desperation. Among his examples are:

    1. A firefighter trapped by a rapidly advancing forest fire who started a fire in front of himself and then threw himself into the ashes while the fire burned around him. He saved his life.
    2. A hiker who wedged his arm between some rocks. He admitted after a couple of days that the hand was dead, so he conceived the idea of cutting off his arm. But his knife was not capable of cutting through the bone. In frustration, he heaved his body and felt his arm bend. It occurred to him that he could use leverage to break the bones and then cut through the skin and muscle with his knife. He saved his life.
    3. An executive of a company which used time sheets to comply with government regulations who could not get employees to promptly fill them out, even with threats. Giving up on threats, she changed it to giving Hershey’s Kisses to employees when they turned in their time sheets. Compliance suddenly disappeared as a problem, replaced by the much easier task of keeping a supply of Kisses on hand..
    4. With the French Republic in grave danger, Napoleon conceived the idea of attacking the invaders supply lines using light artillery. The invaders withdrew.

    In all these cases, some fundamental assumption had to be given up in order for the alternative path to present itself.

    Now consider the situation that many of us perceive ourselves to be in. Additional debt no longer leads to an increase in wealth. Yet our leaders can think of no alternative except creating lots more debt. The trajectory of US government debt is clearly unsustainable. Therefore, there is no apparent way for the US Government or insurance companies or private companies with pension plans to pay off their unfunded liabilities. (And the unfunded liabilities should, perhaps, include a zero rate of return on the securities backing up those liabilities…as per the first chart in Smith.) Listening to Gail, we may perceive that the lack of capital is a severe impediment to pie-in-the-sky projections of new projects to save us. Please note the discussion that Smith and Long have on the decline of free cash flow to corporations. Also note the chart showing the disconnect between bank deposits and loans. So we may perceive ourselves as being in a situation much like Gary Klein’s four examples.

    The question, then, is: Is there some treasured assumption that we can give up which will permit the path forward to be recognized? We may be in a position analogous to the firefighter and the hiker in terms of making the sacrifice of something near and dear to us.

    Don Stewart

    • Thanks for the links and the analysis. Our unfortunate problem is that capitalism has been set up based on a model of growth lasting forever. In fact, all of the many promises that have been made, implicitly or explicitly depend on growth.

      We need to have our electric system, education system, and road system to continue, if we are to continue with anything close to BAU. But it is hard to see that these can continue for very many more years, in the way that they have been put together, even if we could come up with a fix to our financial system. So we seem to have a real fix.

      I will keep these links in mind.

    • Scott says:

      Yes Don, bankruptcy could be near when rates rise. The debt is too big to roll over at the higher rates, I think they will manage to keep rates suppressed for a time longer than we expected because of this.


  27. Christopher Johnson says:

    Dismal it is, your science and our weather. Has anyone noticed that on the US East Coast it has rained every day since the 2nd of June. In some parts of the world they call it ‘rainy season’ or monsoon. I’ve not seen such weather here for almost 40 years, and it breaks all known records. Is this a gaiea response to cleanse the CO2 while cooling the air?
    Our practice of the dismal science may be equally inappropriate, or out of whack. Whoever said that inflation and deflation are anything other than temporary conditions fo the money supply? And that they can and do change continually, and minutely. Was that some Chicago fellah?
    However, more to the point, it appears that the reported demise of ‘less expensive’ oil may have been somewhat premature. Shale oil and shale gas is turning up all over the place, even though you won’t find many news reports on TV. The latest Economist has an interesting piece ‘Spooked by Shale’ about shale’s destruction of that bulwark of free enterprise, Gazprom, whose market capitalization has dropped from $367B in 2008 to $78B today. Putin was always better at interrogations than industrial strategy…

  28. timl2k11 says:

    I think inflation and deflation are two sides of the same coin (in the classical use of the terms). They are both possible outcomes of a recession. The monetary base can inflate because of unchecked government debt and money printing (hyperinflation). The monetary base can deflate because of debt defaults due to a decline in growth or severe recession.

    • I am not sure how parallel they are.

      Debt defaults can definitely reduce the monetary based, since we were assuming that that debt would provide value in the future. If an employer defaults on loans, its workers can lose their jobs.

      The way that the monetary base inflates is not quite as clear. We have seen one recent example of attempted money printing that mostly puffs up asset prices, rather than getting money back in workers pockets, where it is needed. So the effect is very narrow. Perhaps another approach would work better, but the money needs to get back in workers pockets. It is hard to do that by pumping up asset prices. If there is real value being added to society at low cost, then pumping up can happen. But this is not happening as much with high priced oil.

  29. Don Stewart says:

    Dear Gail and Others
    Some of you may be interested in looking at the newly published book Seeing What Others Don’t: The Remarkable Ways We Gain Insights. The author is Gary Klein, who has done a lot of work for the US Military, US intelligence services, and private corporations. He has a lot of experience and is definitely not in the ‘one simple trick can solve all your problems’ camp. He even criticizes Saint Steve Jobs for one of his less successful attempts at creating more insight.

    In brief, we have a conflict between the necessity to minimize errors (things like Six Sigma programs) which encourages the planning and checking of minutiae, and the need for insight and new solutions which are usually inconsistent with previous plans. As an example, he studies Daniel Boone’s successful rescue of three girls from Boonesborough who had been kidnapped by Native Americans. If you read the story, you will quickly see that Boone demonstrated a high degree of insight and determination which could not have been facilitated by some formal planning process. If Boone had listened to good advice, the three girls would probably have been dead.

    Klein criticizes professional scientists who have studied the issue of insight as focusing on problems that can be presented to college undergraduates which are not really relevant to the real world. Klein’s method involves collecting and studying stories. Klein is also humble enough to admit that, sometimes, it takes him 15 years to see the solution that he should have thought of long ago.

    Briefly, Klein thinks there are three basic paths to insight (although more may be discovered). The first is Contradiction, in which a weak anchor is used to rebuild a story. For example, Einstein relaxed the weak anchor of fixed time and space to allow the speed of light to be fundamental and space and time to warp and bend. In our case, we might begin to examine the assumption that plenty of cheap oil is a prerequisite for a reasonable life.

    The second path is Connection. In this path, we know quite a bit, learn something new, and fit that new knowledge into a coherent world view. Things like the current crop of cell phones are examples of Connection insights. If you are a good gardener, then learning a better way to manage water will probably come via the Connection Path.

    The third path is Creative Desperation. The situation I have previously described with Napoleon and the light artillery and the retreat of the invading British and Spanish forces is an example of Creative Desperation. In our case, it might be the stark realization that Business As Usual is no longer possible.

    The author gives some very cautious advice about fostering Insight in one’s own life. I think his most useful advice is contained in the chapter on teaching others. Each of us needs some helpers in order to survive on the Down Escalator. Klein will give you some good advice about how to converse with other people on the subject. Couple of quotes:
    ‘Devise an exercise enabling the student to discover the flaw for himself.’
    and ‘Teaching depends on what other people think…not what you think.’
    and ‘Emotion helped to translate the insight into lasting organization change.’

    Klein points out that two mighty organizations–Eastman Kodak and Encyclopedia Britannica–had plenty of insight into their predicament. What they lacked was the will power to follow through.

    In my opinion, the best way to use the book is to understand the nature of the Creative Desperation situation and work through it as it applies to a Down Escalator. Once the basic direction has been identified, then one can fine tune one’s path by using the Contradiction Path and the Connection Path.

    Don Stewart

    • timl2k11 says:

      One of the things I believe I have been blessed with is great insight. That’s not merely a grandiose observation. People keep telling me this. Maybe if there is a downturn I can finally put it to use. (It’s too late to prevent a downturn, I don’t care how much insight I have). Either that or perhaps I will be killed for the 150,000 kcal on my person.

  30. Pingback: Inflation, Deflation, or Discontinuity? – A question that seems to come up quite often is, "Are we going to have inflation or deflation?" They want to know whether to expect a rise in prices, or a fall in prices, either in general, or in c

  31. Stephen says:

    I think we will have to re-think priorities of life, and even re-think the role of the banking system in our lives. If hyper deflation (or the down escalator is the permanent path we are on), we will need to accept that every debt (consumer, business, or government) is not going to get paid, and eventually we may have to repeal the rule of the creditors taking everything we own to pay the debt or we will be dead. We can change to a sustainable society faster if the rule was repealed, rather than if we keep the rule. In fact, it would be better to use what money we do have to re-work the landscape into a sustainable design and teach people how to live without counting on mass scale marketing by teaching organic farming, survival skills, how to live with reduced power and fuel, etc. We will have to put human race survival as a much higher priority than mass scale marketing, big box retail, economic growth, or the bankers making more money as a national priority. In fact, I predict we will have to give people other than business executives, wall street bankers, and the like at city, county, and state planning tables and at policy decisions.

    Full reserve banking will also have to be implemented as the partial reserve system will not survive a down slope for long. Such banking may have to be under government control or heavy regulation.

    As a taste of things to come, look at Detroit, Greece, Cyprus, and others. They recently defaulted on many debts as they don’t have the money to pay them. Many of the creditors will not get 100 cents on the dollar. In some cases, private money had to be taken out of accounts to bail out the government. As David Walker put it, in the USA we have a 53 trillion dollar financial hole in unfunded obligations. It is inevitable that many other countries will default.

    • es330td says:

      “…in the USA we have a 53 trillion dollar financial hole in unfunded obligations.”

      This is not actually true. Congress can and is certain to reduce these obligations by a simple vote at will. SS/Medicare/Medicaid are not part of the Constitution and the US Government owes exactly zero dollars to anyone who has already paid Social Security/FICA taxes. Should Congress choose to halve SS payments tomorrow the only recourse is the ballot box.

      • We have let people think that the economy can grow in such a way that the economy will allow most people to retire, and to have health care paid for and a basic safety net of benefits. Congress could in theory take these benefits away, but they would be very unpopular if they did. In fact, they would be voted out or thrown out, if people knew how bad it was. In some ways it is not all that different if the government actually issues bonds for the purpose, or convinces people that the benefits will be there so they can plan around them. They are just as gone, if they cannot be funded, regardless.

        • Agent22276 says:

          I would add that the imputed compounding interest to the $54 trillion in total US credit market debt owed to term is now an equivalent of 100% of US GDP.

          Moreover, bank assets, including the Fed’s balance sheet (the largest Fed member banks own the Fed and technically the Fed’s assets), are also an equivalent of 100% of GDP and 100% of US equity market capitalization.

          Effectively, the largest Fed member banks, i.e., TBTE banks, have a 100% equivalent claim on all US value-added (un)economic output in perpetuity.

          Also, the cumulative revenues of the Fortune 25-100 firms are 40-75% equivalent of US GDP, with the Fortune 300 having revenues of 100% of GDP and revenues flat to falling. Since the 1990s, a growing share of economic exchange is occurring between the firms of the Fortune 25-300 and the US gov’t, even as the Fortune 300 employ fewer than 13% of all US workers. I expect this trend to continue indefinitely, with the acceleration of automation of labor in the services sector eliminating employment, income, and purchasing power at increasing rate and scale worldwide.

          The US economy no longer creates net new full-time private sector living-wage employment, and employment conditions are set to deteriorate further hereafter. Anyone who is optimistic about US economic conditions hereafter is either protected from evovling market forces or is not paying attention.

          • I haven’t looked at those particular numbers before, but agree that things are badly out of balance. If it were possible for all economies of the world to compound indefinitely at high growth rates, then the assumptions made by economists/actuaries would be reasonable.

            With respect to Social Security, the actuaries understand that what they are doing is simply splitting up what will be produced in future years between workers and beneficiaries–in other words, all that they are doing is making a primarily “pay-as-you-go” plan work. So the thought is to give out less benefits, and make retirees work longer, if things don’t work out as planned. But I am fairly sure they have never thought through how badly things could go astray. Even the amount of prefunding that was collected in the past to try to smooth out the baby-boomers’ bulge in benefits got spent (outside the S. S. trust fund) because government funding is on a pay-as-you-go basis. Thus, the extra funds are just more government debt in the S. S. Trust Fund, and are often not even counted in government debt, because the debt in the S. S. Trust Fund is not marketable.

            • Scott says:

              Hello Gail, I think for those us in our fifties, it is perhaps less than 50/50 that we will see social security as there really is no “trust fund”. They may pay us in dollars but I believe that will buy less however. But by the time we reach the age it may be changed to an older age like 70.

              The unfunded liabilities in the USA of SS and Medicare are really not funded and just based upon hopeful outlooks. We should not look towards these programs to sustain us in the future.

              I know we see deflation but inflation is the best way for the government to honer these payments with printed money that buys less to keep things going for a time.

              My savings would go into gold and silver then and not the dollar aside from buying food, tools and needed things to store for the future.

            • Jan Steinman says:

              for those us in our fifties, it is perhaps less than 50/50 that we will see social security…

              I’ve “known” this since high school, and have thus done everything legally possible to reduce or eliminate both what I paid in, and what I was expecting out.

              My guess is that there will be a sort of “event horizon,” an age, beyond which, there will be no Social Security. Similar to the “Disney Copyright,” they’ll just keep boosting the pay-out age in order to exclude enough people so that it will remain somewhat solvent.

              How they justify doing so will be interesting. But it will be absolutely necessary in order to keep young people paying in — any other way of dealing with the SS problem will result in a massive revolt among those paying in.

              My savings would go into gold and silver…

              Yea, lots of calories in precious metals! 🙂

              (I know that’s unfair. You did mention “food and tools” as well. But a lot of people are banking on gold and silver without accounting for food. I’m no so sure gold an silver will continue to buy in food what it will today. Whiskey might be a better investment!)

            • Scott says:

              I hear you Jan, most of us on this site most likely are making other plans aside from social security if they are able. It is a tough one, when we have a paper currency, and I think any commodity is better than paper, unless they are my treasured books that I love to read.

              I think many understand there are not many good choices to avoid a currency collapse aside from lots of food and needed things stored and of course we may have to learn to grow almost all of our food instead of just part of it like we do know. So we have been getting started. Even to grow and produce our own food we are dependent on getting loads of good dirt brought in to fill the raised beds. We may have to depend on composting, but it is hard to get bed filled with out that delivery truck of great compost. So getting those things established now may help a bit.

              As far as money goes, in a currency collapse, I still believe the old silver/gold dollars will trade as they have for many hundreds of years and if those no longer trade we surely have real trouble. Then our food and tools are our main thing. We also store some seeds, they are in cans in the fridge or freezer to make them last longer. There are lots of places that sell them now online they come in a #10 coffee size can sealed.

              I think my biggest challenge will be getting water, I even have saved some 5 liter wine bags to use and refill at the creek or river near here if needed. But that is not really enough to use in the garden so if we cannot get gas for our generator it will get even tougher to garden. I know it is true that in many parts of the world the crops are entirely dependent on the rains of mother nature and tough investment for a farmer. Replanting is not free.

            • Governments have a tendency to fall apart, when the economic programs they have promised cannot be paid for and when they cannot pay their debts. Governments may be overthrown with a coup, or any number of any other outcomes may take place. While the government may like to inflate away their debt, whether they really can do so is an open question. For example, Japan has not been doing well in this regard at all. Even its latest attempt at QE is not working.

  32. donsailorman says:

    As usual, I agree with your analysis. However, rather than one huge discontinuity I think there will be several over the next fifty years. You seem to suggest that there may first be financial panic along with debt deflation as businesses and individuals and governments default on their obligations. Then it seems that you expect rapid inflation, perhaps hyperinflation. That sequence of events is a plausible scenario, but it is not the only plausible one.

    If unemployment in the U.S. increases in the headline number above 10% I expect the Treasury will run humongous deficits–two to five trillion dollars per year. The Federal Reserve System will monetize these deficits, and the probable result is double digit inflation–possibly escalating to true hyperinflation if the unemployment rate keeps increasing. Thus I think that it is plausible that we will have serious and escalating inflation even if there is no debt deflation.

    Note that 2008 could have resulted in debt deflation and a rerun of the Great Depression, but because both the Fed and the Treasury were aware of this possibility they took aggressive action to avoid falling prices and falling wages and bank failures. Thus, what will happen depends in large part on what the Fed and the Treasury (with Congressional approval) will do.

    Another issue is timing. When will the first major discontinuity occur? Not I think in 2013. Probably not in 2014 either. BAU may have several years left. Note that oil prices have been–very roughly–stable over the past year or more. Global GDP is still growing, though at a reduced rate. Prior to the first discontinuity I expect to see a sharp decline in real global GDP.

    • Scott says:

      Don I agree, I think the next one is going to be bigger and will require a monetary response larger than in 2008, I think we will see inflation eventually if they print all those trillions to fight the deflation.

      • Dogtrainer says:


        Maybe this is the answer you have been looking for regarding whether it is going to be inflation or deflation? The answer comes from Martin Armstrong in his article: “Beware The Taxman Cometh” (

        Armstrong states there is not going to be hyperinflation because “…HYPERINFLATION only takes place in economies where there are no bond markets – NEVER in the core economy!” Armstrong backs up this outcome by describing the behavior government uses to prevent hyperinflation:

        When there is a VIABLE bond market, the bondholders yell and scream and then threaten government they will collapse if nobody buys their bonds. This creates a massive DEFLATIONARY trend as government hunts down everyone and LIBERTY vanishes into thin air.

        Armstrong is saying government will use its various powers to tax, regulate, confiscate, administrate, and others to redistribute (transfer) wealth to the bond holder Therefore, there is no need to put the fiat printing presses into overdrijve. As you know the bond holders are the owners of the Federal Reserve.

        Therefore, at most it will be a slow (gradual) inflation as we currently have with times of acute deflation as the government strips people of wealth.

        The key to surviving in such an environment is to develop a strategy that would allow you to hold on to most of your wealth while maintaining an adequate standard of living.

        • I think the proposed fix is a temporary fix at best. I am not convinced the governments are going to hang together as well as everyone believes. Perhaps federal government simply becomes to poor to provide most of the programs it has promised, so it turns those programs back to the state (who in turn turn them back to lower levels.) Or people rebel, and put in a much more extreme government. Or the whole system falls apart.

          Paying back bonds is much easier when there is economic growth that comes with cheap energy. When this dries up, the whole system tends to fall apart.


    The more thing change, the more they stay the same

  34. Philip Backus says:

    Gail, An informative post as always and like Hitchcock’s works the lack of hysteria is far more chilling and apt to cause change in people’s behavior than oil sucking alien space reptilian conspiracies will. What you are telling the public is what our politicoeconomic leaders should be saying…and are not. I find your assessment of our dilemma accurate and highly usable when analyzing my own personal risks. Thank you for your work and your sense of duty to humanity.

    • Adam says:

      Alien space reptilian conspiracies? Funny you should mention that. Here in the UK, my greatest nightmare is that the populace will elect David Icke as their leader once the Emergency sets in. Not sure you will have heard of Icke, across the pond.

  35. ravinathan says:

    I am delighted that you chose to wade in this topic Gail and a wonderful essay it is. I would like to point out that your assumption of rising interest rates is not consistent with the down escalator. Yes, the Mishkin et al paper that you referred to does discuss the threat scenario of ‘fiscal dominance’ with the fed forced to monetize government debt (with resulting spikes in interest rates). This scenario from my reading is predicated on two assumptions – positive real economic growth (5 percent nominal, or 3 percent real given 2 percent inflation) and the availability of substitute investments for global investors outside of the US. Yes, the authiors are still in the dream of continued real economic growth in a finite planet!
    If we assume a down escalator, as you argue, then we are forecasting a global depression. In this scenario where are global creditors going to go and why would US interest rates rise? With a global economic collapse, the Fed can continue to monetize government debt and the US can still remain the cleanest dirty shirt. In fact they may have no choice if global investors rush into the US as a safe haven, for the dollar would rise and interest rates can go negative as we saw in Switzerland recently. In my opinion, the reason that treasury bond yields rose recently were due to rumors of fed exit and sales of treasuries by emerging economies in a Hail Mary effort to keep their currencies from imploding – for example India whose falling rupee increases oil import costs more than it helps exports. Yes, the fed is concerned about getting locked in to a scenario of fiscal dominance, however their strategy of using a deferred asset account would mean that they can continue funding their financial obligations out of thin air without requiring the treasury to recapitalize them! As the Mishkin paper points out, if the fed does not sell its assets, they would not have to account for portfolio losses since thay value their assets at par in their balance sheet and could let securities mature over time. Consequently being long US treasuries may be the best option for portfolio investors at least in the medium term.
    Yet another scenario is suggested by Jim Rickards of Currency Wars, where the IMF expands its balance sheet by issuing SDR’s to purchase outstanding debt of major western economies. In effect this would be a debt jubilee for national treasuries with the possibility of a global reset and a new international reserve currency. Unfortunately, I believe that Mr. Rickards sees the debt problem clearly but not the energy predicament and I may be wrong about that.

  36. Pingback: Tuesday Morning Links |

  37. Ikonoclast says:

    Gail says:- “(the) primary effect of QE is to create asset price bubbles.”

    This is correct in itself. However, there are strategies other than Q.E. (quantitative easing) which governments can attempt to use. Q.E. because of the way it is structured, funnels funds to the banks. Currently, for various reasons including a tightness in energy supplies, Q.E. funds tend to go into the stock market and other asset markets rather than into investment to expand production.

    Governments could also attempt more traditional Keynesian pump-priming via deficit spending (money printing if you like). If there is spare capacity in the economy in the form of unutilised labour and plant and also in the form of readily available energy and raw materials, then this spare capacity can be put to work creating both more production and more demand for that production. Under that scenario, inflation would not take off.

    The US has spare labour as proven by the high unemployment rate and the usually un-mentioned under-employment rate which is even higher. The US also has idle industrial plant as proven by the industrial production capacity utilisation figures (77.6% in May 2013 according to Federal Reserve figures).

    In this case, an attempt to pump-prime by counter-cyclical Keynesian spening would be effective unless there are some other countervailing factors. The main candidate for a countervailing factor would be energy and raw material shortages. If these manifest themselves, crude pump-priming of the economy probably cannot work. In that case, ineffective pump-priming (money printing) with money going almost direct to wages via national works (for example) could have an inflationary effect.

    At this stage, whilst we may predict depression due to resource shortages and their knock-on financial effects, we cannot predict which of deflationary depression or inflationary depression will occur because we cannot predict which policy a government will choose (austerity, Q.E. or money printing).

    However (again!), if government is wise to the above factors then it will make a conscious choice to adopt the policy that leads to either deflationary depression or inflationary depression. In the case of the US, government pretty much operates at the behest of the plutocrats, the richest 1%. So ask youself, what do the super rich want, deflationary depression or inflationary depression? I strongly suspect they want deflationary depression. This better protects and indeed enhances their wealth whilst further impoverishing the rest. So austerity policies followed by deflationary depression look like the best bet. But it’s still only a bet. Nobody knows for sure.

    The chaos unleashed by deflationary depression would be severe but then again inflationary depression could lead to much the same chaos. Let’s just mention that US Homeland Security has recently purchased 1.2 billion bullets and IED-proof Armoured Personnel Carriers. Gee, I wonder what they think they need that materiel for?

    • Edward Kerr says:

      I could be mistaken but it seems to me that the government has chosen both QE and austerity. Of course, in it’s usual way, it doles them out asymmetrically. QE for the rich to prop up stock prices and austerity for the poor to bludgeon them a bit more.

      What I doubt they (the rich) get is that all the printed money in the world is not going to solve the resource problems that are rearing their ugly heads. Their future will not be made ‘rosy’ by dollar bills.

      HS is well aware of what is coming and with the purchases you mention they are telling us that: yes you are going to die but you will do so in an orderly (and most probably rapid) fashion. A global population decrease has been decreed and they will not be dissuaded

  38. The real wild-card here is political change. As the economy contracts, ethnic and religious strife is likely to increase, and political actors will likely take advantage of these issues by scapegoating certain groups. No coincidence that anti-semitism increased during the great depression, and world war II started at the end of the depression. Thus, the fall-out from financial crisis could be far worse than the crisis themselves.

    • xabier says:


      Just look at the anti-‘Baby Boomer’ propaganda that is being actively disseminated now: the 21st century scapegoats ‘who took too much for themselves and crushed the lives of the young’, or so it goes.

      And looking at comments under news articles, a lot of young people, frustrated at low wages, poor prospects in general and inability to buy property, etc, are buying into this poisonous and inaccurate narrative.

      As soon as you see a narrative that identifies a whole (bogus) class of citizens as ‘enemies of the people’, you know your society is potentially in deep trouble indeed.

      • Christopher Johnson says:


        Please allow me to expand on your theme, sir. Our parents were ‘the greatest generation’, honed in their youth by the Great Depression and the great Second World War. They listened to the ‘first generation of child psychologists’ to prepare us Boomers, and ended up spoiling us thoroughly. Or at least they used to say to before passing from the scene. Never sure whether or how much one’s humor reflects reality or an attempt to relieve the pain of that reality, we must exercise some judgement. But of course in our advanced youth our generation became the one that really upset the world: protesting in the late 60s against all the things that our parents wanted to do.
        Protesters at the Pentagon in 1967 queued up in the hallways to use the rest rooms; the building was wide open, as were all public buildings. So on top of everything else, we can be blamed for the ‘increased security’ everywhere, which must mean we’re somehow responsible for all those things which threaten our security.
        Our parents tried to help us and we made a mud pie of the whole thing. And will continue to.
        Cheers, Chris

    • dolph says:

      America has become a multicultural society filled with people from all corners of the globe.

      You can view this as a good or bad thing. It’s good in a sense that it will be difficult to scapegoat any one group…who exactly do you scapegoat when there are so many different types of people?

      However, this also means that things will remain dysfunctional. The majority/minority dichotomy is one that provides cultural cohesion and meaning for a society. The norms are provided by the majority, and minorities assume those norms as their own out of necessity.

      America lacks any norms now. Nobody can agree on anything, which tells you that the whole experiment might be coming to an end.

  39. I am very impressed by the simplicity and common sense of your posts Gail. You make more sense than just about anyone else in the blogosphere. I agree with your predictions, even though they are somewhat counter-intuitive. The real issue is when will these things happen? I think that perceptions, even if false, can carry civilization along for a while. Like the road-runner cartoon when Wiley Coyote chases the road runner off a cliff and remains suspended over the chasm until he looks down and realizes his mistake, society can continue on until it becomes near impossible not to look down. At this point mass panic sets in, and things change so quickly and catastophically that it is impossible to predict what will happen next.
    Some people I know swear by gold, some people believe we should move back to the land, others that we are better off in cities. It seems to me that our best bet is in developing resilient social networks, social capital, and social support. If you think of the Amish, they are self-reliant largely without using fossil fuels by coming together and helping each other when it is needed, and otherwise having a solid work ethic and strong family ties.
    Religious movements will become stronger and more influential because people will be more afraid, people will be more uncertain, and people will tend to think more in terms of black and white.

  40. Leo Smith says:

    Interesting view Gail.
    What you seem to be saying is that s more money time energy and people are spent on extracting energy, there is less left over to extract anything else and process it, that is the cash flow of the global economy shifts from other things into raw energy production, leading to inflation in oil, and deflation in all the less necessary things to have. They may now be cheap, because demand has fallen, but we still cant afford them.

    Its a pity you aren’t a systems engineer, because the global economy maps well into such analysis, even down to debt being essentially the feedback component. That is debt represents the difference between where we are (output) and where we are trying to get to.
    Under this analysis if we run into a resource limit, debt will stagger up massively as we try to drive the economy to levels of growth it is incapable of sustaining.
    The answer is to not shoot for unattainable growth: under these circumstances there will be a period where output is highly hypothecated for debt reduction, – a period of negative growth or contraction, followed by the (if the damping is correct in the system) asymptotic approach of a more or less steady state. The world economy stays at a given level, representing what it is physically capable of producing, and, with labour being surplus to requirements, individual wealth becomes the inverse of population.

    That is, if the population was one tenth, the production levels would barely alter, provided that tenth were skilled enough to keep the machine running, as it were, and everyone would be ten times better off materially.

    That is probably where we will end up eventually, but in between there is a far far greater and more unpleasant scenario. The prospect of rising populations leading to per capita wealth reduction to the point where actual human survival is compromised. That acting as an overall brake on population, by simply allowing mass death due to essentially poverty..

    This solves the debt problem. Pension funds having few people to service, can afford to lose money they have lent to people who can no longer pay it back, being dead. Debt can in the end be cancelled out. If both lenders and borrowers have ceased to exist.

    • I think the part of the dynamics you are missing is that all species reproduce in far greater numbers than needed to replace themselves. Humans are unique, in that we have managed to overcome natural selection with our intelligence. We first starting doing this when we learned how to control fire (applied to biomass), over 1 million years ago. With this extra energy to help us along, plus other energy we gained from training animals to do what we wanted them to do, and plants to live in unnatural environments, we could overcome natural selection, and population could grow. This growth, in and of itself is a huge problem, and would likely to be a huge problem, even if our numbers dropped back to 1/10 or 1/100 of what they are now.

      So a smaller population is better, but we can’t let it stay that way. (Researchers claim education of women helps, but education of women is only possible with a fair amount of fossil fuels.) There is also a depletion/pollution aspect of the resources (soil less fertile, too much salt from irrigation), but that historically doesn’t seem to play as big a role as population growth–or maybe it is 50 – 50.

      You are right. It would be better if I could put together a full systems engineering model of it. If we can’t get rid of the population rise/depletion issue though, it seems like the system fails quite quickly.

      • xabier says:


        The population and resources argument will simply never get through to some people.

        Only yesterday I read an article in the British press by an economist, claiming that, since the populations of other European states were declining and ageing dramatically (creating an immense problem with paying state pensions), Britain should encourage a baby boom in order to ‘increase the relative importance and prosperity of Britain in Europe’ and get those pensions paid by all those eager young earners in 20 years time.

        His basic axiom was: ‘the larger the population, the greater the wealth.’ Not a hint of a mention of finite resources, and the fact that the UK is now lacking in the resources that were the foundation of the building of her industrial production and power in the 19th century.

        This sort of thinking, if one can dignify it thus, is very common now. Training as an economist does indeed seem to have left resources issues out of the equation, and Malthus is only ever mentioned to jeer ‘Well, he got it wrong didn’t he?!’ To mention population as a problem is to be a ‘neo-Malthusian’ it seems, which is of course intended as an insult.

        You might think, reading these people, that we were in the 1890’s, when European states needed a lot of manpower for their armies, fields and factories…..

        • I think that there is still probably a lot of thinking in this direction in actuarial circles too. I am not a pension actuary (or even a life insurance actuary–I have worked on the property casualty sides, with medical malpractice, workers compensation, private passenger auto, and homeowners). There is a belief that if there are more young people, they will have jobs and support the older people. No one realizes that these young people need resources to make things. The economists have encouraged this incomplete thinking, and the actuaries hove not really thought things through, either. They haven’t really thought through the interest rate issue either–how much economic growth is required for a given real rate of interest.

          I expect to be doing more public speaking with actuarial groups in the near future. I should probably be bringing up this issue more.

        • Yes. If there is nothing to buy, how can gold or silver possibly act to accumulate huge amounts of anything?

          • Scott says:

            But Gail, gold and silver has out lived many fiat currencies but I see your point if there are no supplies. I still would take my chances with silver and gold over fiat money.

            Just another tool to keep, but mostly we store food and tools so we can work.

      • Jan Steinman says:

        “(Researchers claim education of women helps [to reduce birth rate], but education of women is only possible with a fair amount of fossil fuels.)”

        I go one step further: I claim that “educating women” merely correlates with higher energy availability — it is not a causal situation.

        Take an uneducated, third-world woman and allow her to burn all the energy that an educated women in an industrialized nation has, and I’ll bet her birth rate will go down, as well.

        The fact is that children are both a slave labour force and a pension plan when people do not have the surrogates for slavery and pension that fossil sunlight provides.

        I wish I had time to properly research and document this. I feel certain of it in my bones, and yet the “demographic transition” types have things all figured out how population will stabilize at nine billion, once we educate all them stupid third-world women. Good luck with that one!

        • xabier says:


          I agree: the argument that higher levels of education necessarily lead to greater prosperity always leave out the energy factor. In fact, most social and political arguments ignore it completely. The disconnection from reality is almost total in some circles….

          • Some of my friends at University of Mexico have looked at this subject explicitly in an academic paper, and come to a similar conclusion. I do no have the link with me when I am traveling, however.

        • I agree. Education of women can’t happen, unless society has enough energy to spare to make education worthwhile both for the vast majority of men, and women as well. I don’t think any society managed this before fossil fuels came into play.

          Some things we do with fossil fuels can make a huge difference. For example, in dry parts of the world, young girls often have to spend their days walking to distant wells or creeks to get water, so can’t get an education. If there is enough energy to add water pipelines, this can help free up time for girls not to have to spend so much time doing this, and can go to school.

          Reducing the time spent in gathering sticks or dung for fuel is important too, as is finding a way to grow crops with less manual effort. All of this takes energy.

          We are still a long way from solving our population problem. The “education of women” answer just makes it sound like it is an easy one to solve.

        • Tarjei V says:

          Professor Robert Wyman (Yale) has a course called “Global problems of population growth”, a very thorough approach:

          • Tarjei V says:

            By the way, thanks for an immensely interesting blog. I have a question it would be nice to hear your take on.
            Reading Paul Krugman (to use him as an example, he has many likeminded colleagues of course), I can´t help but be struck by the obvious intelligence and deep thinking he displays. Still, I feel you have refuted his optimism – especially when it comes through servicing future debt – through your writings. So my question is this:

            Does Paul Krugman “know better”, that is, does he acknowledge the imminent threat of finite (expensive) resources and collapse, but doesn´t let on? In which case, why?
            Has he got a blind spot? (He very rarely touches energy questions in his NYTimes articles, for instance). In which case, how is that possible? What societal factors enable extremely intelligent intellectuals to acknowledge resource depletion and environmental destruction in words, without really incorporating it into their intellectual framework?
            Stating that the “dismal science” is just too wrapped up in itself, is, I suspect, only part of the answer. Something else is going on, but what?

            I suspect an answer to these questions can be enlightening. That´s why I ask you, Gail! 🙂

            • Thanks for the suggestion about an article. I think part of the problem is that our “story” about how the world works is so inaccurate, that people don’t really understand how important a role cheap energy has played in recent years.

          • Thanks! It looks like the material is free.

          • Tarjei,
            I’ve wondered the same thing about Paul Krugman. I found these comments in one of his opinion pieces for the NY Times located here
            the title of his piece is “The Finite World” and it ran Dec. 2010.

            “…Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental.

            Also, over the past year, extreme weather — especially severe heat and drought in some important agricultural regions — played an important role in driving up food prices. And, yes, there’s every reason to believe that climate change is making such weather episodes more common.

            So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.”

            So it appears that he has some understanding of the issues we are discussing but does not appear to believe that we are running out of time to fix them. I’m not sure why he seems to believe that resource constraints will not bring an end to economic growth. Maybe it’s easy to ignore the possibility of an economic collapse when you receive so much money and fame to think otherwise. What is that old saying about it being hard to get a man to tell the truth when his paycheck depends upon him telling a lie….

          • Tarjei V says:

            Jody: Interesting quote from Krugman! But seeing as Krugman is a “hard numbers” man, where are the numbers? Where are his calculations to convince us that alternative energy optimism is reasonable? Is he, like so many others, just humming the tune of fusion-or-whatever-something-will-come-along-so-nevermind…Gail is right, of course, in pointing out that the historical importance of cheap abundant energy is poorly understood. So we´re kind of back to square one. Mr.Krugman often answers his critics in matters fiscal and monetary in the following vein: Have you thought long and hard enough about this? Or are you just adopting a just-so story that suits your fancy…? – Well, Paul, are you? 😉

          • p01 says:

            Does he have the guts to link population to food production, or is he babbling about how humans are different? I have yet to hear a High Pr(ofessor)iest saying articulating the Heresy.

    • “Its a pity you aren’t a systems engineer, because the global economy maps well into such analysis, even down to debt being essentially the feedback component. That is debt represents the difference between where we are (output) and where we are trying to get to.”-Leo

      Our next podcast is with a Systems Engineer, George Mobus of Question Everything. It’s a Doozy, ran 3 hours in raw recording time. Following George is David Korowicz, the Physicist who wrote the Financial Contagion and Tipping Point papers.

      You should find plenty in both podcasts to chew on from a Systems standpoint.


    • Podcast with George Mobus now UP on the NEW Diner Blog!

  41. davekimble2 says:

    I don’t think you have focused enough on the discontinuities, in particular the insolvency of major banks – one minute they are sound, and the next they are bust. Credit Default Swaps aim to protect against that, but can the counter-party to those swaps meet their obligations? After Lehmann failed, AIG rushed to the FDIC/Fed and said if they weren’t immediately bailed out, they were bust too, and the contagion was obvious. Money-printing went into overdrive, and it hasn’t stopped, or fixed anything.

    Commentators like Ron Paul and ZeroHedge say the Fed should be audited, but can you imagine what would happen if that was really to be given the go ahead? They say ‘let the free market sort it out’, but who is going to meet all those government obligations you listed, when the money isn’t being printed to pay for it?

    “At some point, marginalized people will riot and overthrow governments.” Yes indeed, but can US debts be that easily written off? How would China and Japan react to the news that their $5 trillion of USTs are worthless?

    I see overthrown governments in US, Canada, UK, Eurozone, Switzerland, China, Japan and Australia at the very least, if WW3 doesn’t intervene. You know – the discontinuities.

    • Christopher Johnson says:

      Mr. Kimbles:
      Basil 3 may have some impact, depending on implementation timing. Wall Street banksters beat back the Dodd-Franck Act (which remains a travesty in many ways), but the Sharrod-Vitter bill is picking up some support. It would require a flat 15% deposit set aside for everything, including derivatives. Of course the Wall Street banksters are fighting it, but the smaller banks are strongly supporting.
      Are the 1% entitled to threaten everyone else’s existence?

    • Scott says:

      I see your point about overthrown governments, I guess the question is who will overthrow us.

      There are a lot of strong people here that have guns too and they would not stand still for that.

      Not without a huge war first…

    • Scott says:

      Dave, I guess one could argue that the USA has already been overthrown by corporations and business interests, special interest groups and also bankers like the Federal Reserve.

      That was the sneaky way to overthrow us.

    • Perhaps the discontinuities can be the subject for another post. The more specific a post gets, the scarier it gets. At some point, readers have a hard time even thinking about it. For what it is worth, way back in 2007, I wrote a post on The Oil Drum where I talk about the squeeze of high prices (maybe didn’t get that part right–maybe should be squeeze of few jobs) and some possible impacts. The Economic Impact of Peak Oil: What’s Ahead?

      • Adam says:

        “The more specific a post gets, the scarier it gets.”

        I personally know 17 people who have committed suicide after reading doom blogs (not that this is one, of course), so probably the government will ban them soon. In the meantime my ambition is to get into the Guinness Book of Records (do you have this book in the US?) for causing the world’s highest doom-blog-reader suicide rate. So please give generously to help me set up a doom-blog-reader-suicidee pyramid scheme. If we can reach peak doom-blog-reader suicide rate before the Emergency, it will help to mitigate world population overshoot.

        The most chilling, poignant and artistic representation of our predicament that I have seen to date appears at the following point in the film “Oil, Smoke and Mirrors”:

        Nobody in the BAU world has convincingly explained to me how we escape that terrible parabola.

        • One of the people with more experience with me, before I wrote the 2007 post, explained to me that I should frame what I wrote as a scenario that might happen. Otherwise, it would simply be too much for people to even read or discuss.

          I think all of this gets out of people’s comfort zone. It becomes necessary to explain things in a way that allows people to keep some distance from it, or we start causing suicides and other unplanned outcomes.

          • We discuss this stuff every day on the Diner. Collapse as Entertainment. 🙂

            Just remember, we won’t run out of food as long as there are still other people around.


        • p01 says:

          I personally know people who have committed suicide because of living like shit, then given some hope of a better life, and then live like shit again, but also in crushing debt slavery this time around (there’s no personal bankruptcy law, if you can believe that). I come from a country were peak oil and crushing depression/repression have already happened (starting circa 1976 and culminating in 1989 with the Romanian Revolution) and after a short euphoric bubble caused by giving people credit to play with, things are irrevocably going down the drain relentlessly again.
          I can assure you it’s a legitimate reason.
          Suicide for reading “doomer” blogs while living better than any kings of old is kinda stupid.

      • Adam says:

        “The more specific a post gets, the scarier it gets.”

        The most chilling, poignant and artistic representation of our predicament that I have seen to date appears at the following point in the film “Oil, Smoke and Mirrors”:

        3 minutes and 5 seconds into the YouTube film – I jumped to the spot in my previous post, but it didn’t work (though it always does in posts on forums, etc.).

        • Adam says:

          reverseengineerre said:

          > We discuss this stuff every day on the Diner. Collapse as Entertainment. 🙂
          Thanks for the link. Best find out what I’m in for. 🙁

          > Just remember, we won’t run out of food as long as there are still other people around.
          Yes, I’ve read about what the peasants of China and Ukraine had to resort to. Here’s hoping I’ll never be on the menu…and that there’ll still be room for a sense of humour in the years to come.

    • If a currency is worth next to nothing, that usually works out to hyperinflation. So gold could cost $10,000 oz. The question then becomes, “How much does a loaf of bread cost.” If the loaf of bread costs $20,000, then it takes 2 ounces of gold to buy a loaf of bread, and gold is still worth a lot less than it is today. When everything is in a race toward the bottom, you could get some funny relationships.

      • xabier says:


        There are many ironies in ‘the search for safety’ using gold and silver, etc.

        I always think of those hoards of gold and silver we find now and then here in Europe which were buried by their rich owners (one presumes, maybe by robbers?) during the fall of Rome, in the hope of reclaiming them one day….

        In the Warsaw Ghetto, during WW2, dealers accumulated treasures from their fellow Jews in return for desperately needed food, etc: they thought they would be rich when things got back to normal.

        Both groups were rather mistaken in their assumptions, to say the least.

        Rather luckier were the rich Jews who fled Nazi-occupied France to Spain, where at least Franco wouldn’t murder them. Their gold and jewels got them guides over the mountains, but the guides made sure to take every last thing they had on them, even if they rarely murdered them (it would have been bad for business if word got out).

        • Scott says:

          Hi Xabier and others,

          There is really not a lot of choices if you do not trust the fiat money system. Gold and silver are cheap to me these days and I would choose to have some coins to put away for later. Silver and gold have a history of rising from the fiat money disasters, sort of rising out of the ashes of financial collapse. My best bet is on gold and silver with small denomination coins and food storage and of course our back yard gardens. What else can we do? I am not a big hunter or fisherman, but I have supplies for that too. There are not a lot of good answers to this problem.

          • I am in favor of at least some diversification. Some coins maybe are helpful. There certainly will be a downhill slope, and they may be helpful then. If nothing works terribly well, there is nothing to be lost by trying some coins.

  42. Will the US $ remain a successful fiat currency?

    • timl2k11 says:

      I can tell you with 100% certainty, no.

    • The short answer is “No”.

      If things really go to pieces, it is hard for a government to continue in power. There are various ways this could happen–a new group could come in and promise great things, with a new constitution. Or the Unites States could break up, more in the way the Former Soviet Union broke up. Or the richer states could decide to secede. If there is a new government, there could very well be a totally different currency.

      I think inter-changeablity of currencies may go downhill over time. Countries may trade with trusted partners, if they trade with anyone.

      So there are multiple ways the downfall could come.

      • I’m currently reading Dmitry Orlov’s book “The Five Stages of Collapse.” His book explains many of the issues and cites a precedent after each chapter.

        It’s very good because of his personal insight and investigation into the collapse of the USSR. It’s too big of a question to proclaim “This is how it will be” but I’m pretty sure he comes close to the mark. His book won’t be the last word though and as it unravels we will witness a history like none other. Thanks.

        • Jan Steinman says:

          I have not read the book yet, but I reviewed a presentation that contained the core concepts, and sent him some feedback.

          Based on that, I think this is an extremely useful book. Too often, we get caught up in either-or thinking, either “business as usual” (perhaps with some solar panels and electric cars thrown in) or “Mad Max”. Orlov paints a picture that is larger, more inclusive, and in many ways, more hopeful than the typical bipolar thinking. You can plan for the five stages. We all should be functioning as though Level 1 (financial collapse) has already occurred. Level 2 is (Credit Collapse) is something we should be making earnest preparation for, by forging tight bonds with suppliers and markets, so we don’t end up trading boxes of brassieres for boxes of produce.

          Level 3 (Governmental Collapse) is one in which I think Orlov glosses over a lot of details, and perhaps it should be split into several sub-levels. I think Orlov was overly influenced by the Soviet Union collapse here. In a North America dominated by Federalist governments, I think it will be much different here. We may see it devolve instead of collapse, into a Swiss-style confederation, with the Federal government becoming weaker and states becoming stronger. It seems that Federal programs and institutions are already devolving, with states forced into taking up the slack.

          The Soviet Union only went through three levels of collapse, and what Orlov writes beyond is speculation. Again, there may be more to consider than Social and Cultural collapse. For example, John Michael Greer seems quite fond of social societies as a general support mechanism that may well survive general collapse — but perhaps Greer’s vision is more hopeful and less deep than Orlovs. Will we progress past the point at which the Masons, Salvation Army, and other independent social societies can operate? I hope not. Because that leaves only Cultural collapse, which is the “Mad Max” scenarios that so many represent as the only alternative to Business As Usual.

          There is much hope in this approach, similar to the Kübler-Ross five stages of grief model, or Abraham’s 22 Steps from Fear to Love model. It is much easier to prepare for the next level of collapse than it is to prepare for Mad Max. This is why I persist in trying to set up a socially-based sustainable agricultural centre, arguing against those who claim that someone powerful will just take it away — Orlov Level 5 collapse. There is much to be done between here and Level 5!

          It is certain that these stages of collapse will not be ubiquitous nor contemporaneous. The Soviet Union has been through Level 3, and Greece, Spain, and perhaps the other PIIGS will soon be through Level 2. I chose to move to a place where I thought we’d have more time, even while some places around the world go all the way to Level 4 or 5.

          Again, I haven’t read the book, but at least read Orlov’s 2008 introduction of the concept. You will find it discomfiting, reassuring, and energizing. There is more to the future than just “Mad Max.”

        • I agree Dmitry has a lot of good insights. But this time will be different. It is not just the Former Soviet Union, and the problem is more than too low an oil price for an oil exporter.

      • Gail,
        Money is whatever we accept as payment for goods and services. Do you think the US currency and coins may still serve the purpose of being a medium of exchange even if our financial system were to collapse? I believe this may be possible because of how little physical money there is currently in circulation compared to the size of our economy. Most people no longer even carry cash or checkbooks, preferring to use debt or credit cards. Those instruments of exchange will be the first to disappear in the event of a collapse when banks no longer function. All the electronic wealth will disappear, but hard cash will still remain. This might also be a good reason to buy silver and gold coins.

        • I understand what you are saying(I think) about real cash and will it have value. I’m fairly certain(my opinion) the cash(paper money) will be worthless. Not just because it’s only paper(though that is reason enough) but also because as oil raises its price everything else will rise in price also. Example: bread is $50.00, fruit is $25.00, boots are $300.00 and a gallon of gas is $25.00. Having paper money may be a moot point.

          In regards to coinage I do think that will carry some value. Silver and Gold has always had value because the things that could be made from it. Even copper and nickel will be good again.The real materials can have and hold a real value.

          I have lately been buying small amounts of silver and gold for the future. Real Kennedy Silver dollars and real gold pieces. I buy it in as small a denomination as I can because if you own a brick of gold you can’t really make change on your transaction. If in the future someone finds out you have a brick of gold then that may put you in danger from the criminal of society. My object is to have a money resource backup that is useful and sensible(???) if the collapse occurs. I don’t really know if any of this is actually sensible or useful but that is part of what I am doing nonetheless. Thanks.

          • Scott says:

            I agree, small coins or bars of silver and gold along with some food and seeds and other needed goods are a good thing to have.

            Gold and silver have traded for many thousands of years and it will have value longer than most assets there is a deep cultural value through out the world to trade these metals.

        • My understanding is that in ancient times, and even in recent Argentina, the main issue was having a common denominator to convert goods to. Everything could be denominated in bushels of wheat, for example. Or everything could be denominated in US dollars, or in ounces of silver. A currency which had previously been used–US dollars–might be the easiest for this purpose. Then, when trading was done, each person could “run a tab,” and change be made in goods, even though the intermediate calculations were done in some form of units like bushels of wheat. From this point of view, silver coins might work, or US dollars might work. Gold coins would be too high denomination to be as helpful. But neither one of them address the need to be able to do long-distance transactions, especially if international trade drops off.

          As I have mentioned before, diversification is not a bad idea, because none of us knows the answer for sure. Also, things can be expected to change over time. But don’t expect that a big pile of silver or gold will necessarily save you.

          • Scott says:

            Hello Gail, you know my feelings about Gold and silver, the old silver dollars are best or the smaller silver and gold bullion. I do believe it will help us for a time in early and mid stages of collapse. These old silver dollars and gold have been money for many thousands of years.

            The old US money 1964 coins are 90% silver and are recognizable and easy to trade. Also the recently minted coins from the US Mint silver eagles will be money for a time I believe and trade-able for goods for a time. After that we are into our guns and food supplies and time could get really hard. Bullets and food. But I do believe gold and silver will play a part for a time if say the US dollar goes down in flames. Get some while it is still cheap.

  43. Jan Steinman says:

    Thank you for the interesting perspective. I have always been a bit troubled by the deflationists, because I could not understand their argument. If oil is getting scarce, and everything is based on oil, there should be inflation, no? Thanks for explaining how it might not work out that way.

    One thing is certain: our trophic needs will continue. I suppose people may start eating lower on the industrial food scale: buying bread instead of frozen pizza, then making bread instead of buying it. And certainly, a stroll through Mall*Wart convinces one that our average caloric level could decrease considerably — fat still has nine kilocalories per gram, whether you ingest it, or burn it from your own reserves.

    But unless population declines, food will still be in demand, no? So it seems to me that an “investment” in growing food is still a good thing to do. Worst case, you’re able to feed yourself while others starve. Best case, the demand is high, and you can earn enough (perhaps only through barter) to afford other essentials and perhaps even some modest luxuries.

    Doesn’t this mean that agricultural land will hold its value? Or am I missing something important here? I know people who lost their shirts in the ’70s when their speculation on farmland failed because farmland deflated like all other real estate, but I have never understood why good productive farmland would deflate unless population was falling.

    • Don Stewart says:

      Pardon me for butting in–I don’t mean to derail anything Gail might say to you in response.

      Lets imagine a very simple economy. The economy makes 100 tons of grain and 900 tons of widgets. The 100 tons of grain are divided between small, organic farmers who grow 25 of the tons of grain and gigantic industrial farmers who grow 75 of the tons of grain.

      The economy has a money supply of 10,000 dollar bills plus 90,000 dollars of credit. Oversimplifying, lets assume that the total money supply determines the price level, so everything is 100 dollars a ton. But the people who have lent money to the creditors ASSUME that they can reconvert that debt into dollar bills and hence into real good. IF they wake up and realize that the economy is on a down escalator, then the 90,000 dollars of credit simply vanishes into thin air. The remaining money supply is only 10,000 dollars, and so the price level for the commodities will fall to 10 dollars a ton.

      The small organic farmers were, pre-crash, getting 25 times 100 or 2500 dollars from the economy. Naively, after the crash, they will get only 25 times 10 or 250 dollars from the economy. If the government enforces debts, and the small farmers had taken on debt, they are in trouble like all other debtors.

      Now let’s add some dynamics to the assumptions. We might reasonably guess that the industrial farmers will simply fail as their dependence on failing supply chains takes its toll. So food production will fall (at least initially) to 25 tons. But people need to eat and will sacrifice most anything for food (or commit crimes, sell their firstborns…you name it). So we might suppose that the small farmers will get half of the remaining money supply (which is not too unrealistic if you look at history)…5000 dollars. So, in terms of money income, the small farmers might double their income.

      Of course, you also have to think that vacations in the South Pacific are going to be as scarce as hen’s teeth in that brave new world, and so what the small farmers are able to buy isn’t what it would buy today. They may become medieval like lords who have power but not the types of luxuries that people on food stamps have today.

      Don Stewart

    • xabier says:


      Worst case is that your agricultural land does indeed retain value, and therefore it attracts predators and is taken from you: land reform being one possibility (see the history of Europe in crisis) or simple indirect theft by a neighbour using litigation to drive you under and buy your land in the fire sale. Or bankruptcy due to high land taxes or fines.

      To hold a valuable asset in times of crisis is always fraught with peril.

      If the world becomes very localised, that leads to networks of local corruption, which can be very dangerous: alliances of property developers, big land owners, local officials and crooks. Well, that’s what I’ve seen in Spain. Best option: get in with the powerful people.

      Anglo-Saxon rule of law is a historical anomaly: this is hard to appreciate for those boprn in countries which have never experienced profound political upheaval like the US and UK.

      Still, any property can be stolen or lost, and that shouldn’t stop us putting our effort into things we believe in!

    • Doug W. says:

      For individuals and families it doesn’t have to be prime agricultural land. A more marginal piece of land that is well drained could be very useful

      • xabier says:


        Exactly: own what is useful to you, but less attractive to the greedy and dominating.

    • I think the major issue with farmland is whether it will be taken over, perhaps by a new government, and run in a way that is viewed to be better–give everyone a small piece, or use very large plots, overseen by someone who is supposedly knowledgable and has access to tools, and can optimize water use and rotation of livestock over various parts of the land.

      Another issue is that land prices have been run up the way everything else has been run up–by artificially low interest rates, and by the view that commodities are the only things that can go up. You would think that land that is good for crops and is in a good location would hold up better in value than other things, though.

      Without fossil fuels, it will take quite a bit more land to feed a person than it does today. (At least, that is the way it worked in the past, without metal fences and pesticides and herbicides). From that point of view, the productivity of land will be a lot lower. Logically, its price should relate to it productivity.

      • xabier says:


        Prime agricultural land in Britain has risen to unheard of prices since 2008. A lot of this is due to people who’ve made their money in finance looking for a safe haven. There are tax advantages, also for forestry land, too.

        It is not really related to the actual productivity of the land, which has not increased proportionately. It is, therefore, another bubble, although not quite built so much on sand as the prime property market in London, which is now utterly insane.

        Recently yields on forestry land have declined somewhat, but prices per acre have risen, so many of these financier types are cashing in and selling.

      • Gail,
        I don’t think the conclusion that “it will take more land to feed a person than it does today is true.” There is plenty of research showing that organic farming is as or more productive than industrial agriculture. The 18th C. French market gardeners and the Asian farmers in past centuries are both examples of highly productive organic farmers.

        Also, our modern agriculture isn’t actually feeding us very well. The U.S. agricultural industry currently uses 175 million acres for planting corn and soybeans. Although corn for ethanol is growing rapidly (and is expected to use about 40% of the crop in 2013), the main products made out of corn and soybeans are animal feed, high-fructose corn syrup, and soybean oil. Confined animal feeding requires imported animal feed whereas pasture raised beef, dairy, and swine utilize grass and hay. High-fructose corn sugar and soybean oil are mainly used in the food processing and fast food industries. We can live without both.

        We assume that modern agricultural is providing the food we need but actually most of agriculture is feeding meat and dairy animals, and the food processing industry. So if you are vegetarian and avoid highly processed food you don’t need this system.

        What happens if this system collapses? The number of farmers has declined to about 1% of our population, and most of the farmland is farmed by the largest farmers or corporate farmers who use an average of 10,000 acres. Interestingly, much of this farm land is cash rented not owned by the farmer farming it. Because GMO seeds, fertilizer, and chemicals are so expensive for so many acres, it also requires very large loans to put in the crops. I know of several farmers in my area that own less than 1,000 acres, rent more than 5,000 acres, and need a loan of $2 to $4 million to plant a crop each year. Without crop insurance (mainly provided by the government) they would not likely get the money to plant.

        In the event our economy goes into an even deeper recession, banks fail, credit fails, government fails (and crop insurance), there will be several hundred million acres of land (mostly in the Midwestern U.S.) sitting idle growing weeds, scrub brush, and fast growing tree species. It is doubtful that any governing group will have the ability to police all this land to remove squatters. Anyone with the tools and knowledge to grow food and live off this land can probably survive and produce food they can market in town. I imagine this is how people will get food and be the beginning of a local economy.

        • Jan Steinman says:

          “The number of farmers has declined to about 1% of our population…”

          Actually, you’re nearly an order of magnitude off: I believe there are nearly 700 people in the cities for each person providing food from the land.

          The historical, pre-fossil-sunlight level was fifteen people on the land to support ONE in the city.

          A reversion to the mean is inevitable.

          • Jan,
            I agreed that the number of farmers is less than 1%. The statistics I found on various websites were:
            US population (2013) 316,000,000; (2010) 308,745,538
            Farmers (2010) 1,202,500
            Legal immigrant farm workers (2010) 757,900
            Illegal immigrant farm workers ? (difficult to estimate but I will assume equal to legal for my calculations.)
            If I add these numbers up and divide by 2010 population I get 0.88% so yes, <1% but not an order of magnitude.

            Still, it is obvious that without fossil fuels, fertilizer, and agricultural chemicals it will require a much larger population of farm workers to supply us with the food we need.

          • xabier says:


            I was prompted to take a look at an old Gazeteer and see what it had to say about our province in Spain in about 1820, Navarre.

            It was very rural, with some basic artisan industry and forestry (and smuggling!) in the Pyrenees.

            Of a population of just over 200,000, about 35,000 lived in the towns, and 10,000 were of ‘noble’ status: this was a legal category and many didn’t have that much money, but were the land-owning class, more or less (nobles enjoyed freedom from military service and certain taxes until the 1840’s.) Lots of monks and nuns, too (good way to get rid of excess children.)

            Now the villages are almost dead, the farmers all about 60 yrs old, small farms are being abandoned, and everyone is in town (the main town is I think over 100,00 )or wants to be there, with at best a small plot of land and inherited rural house to spend the weekends in.

            There’s no interest in going back to the land, although something like the English allotment system is being promoted. The rural life is basically seen as cruel and hard, as indeed for the majority it was compared to city easy living.

        • I think the issue at hand, as to why crops didn’t feed as many had as much to do with keeping predators away as anything else. We assume that we can continue to do this. Organic farming still keeps predators way, and uses organic sprays (which will be hard to keep up) instead of other sprays on fruits and other crops. It also often uses watering techniques, and may plow the land with oil based equipment. All of these things are very important in keeping crop yields up. As a practical matter, we know that it took a lot more land, years ago. It is easy now, when there are “easy” solutions to keep dear out, and rabbits away, and to provide needed moisture to keep yields up.

          A big problem, too is using the food before it spoils, when there is not refrigeration and good transportation. This is still a problem in the poor part of the world. There are surpluses in parts of the year, but then not enough other times.

          • Jan Steinman says:

            I agree that “organic” does not mean “sustainable.” But there are things beyond organic — notably, Permaculture — that have better practices. We are transitioning away from sprays to drips, then to gravity-fed systems, and we use trap crops, natural oils and soaps, and other techniques to control pests.

            As for “using food before it spoils,” there are time-honoured traditional techniques for food preservation that don’t involve continuous energy sources, and actually, the third-world is way ahead on many of these.

            I just did a cheese making workshop. Cheese making is perhaps the oldest food preservation technique, predating agriculture to an ignored period of pastoralism that came between hunter-gatherer and agriculture.

            One of my students runs a restaurant in India. She said there is no refrigeration, and even hot water is not commonly available! We made feta cheese, which she plans to store for months at room temperature in large earthen crocks. It would appear India may have a better environment for post fossil sunlight survival than we do, where any new dwelling is required to have hot water service, and any food establishment is required to have refrigerated storage.

            Each of us must constantly work on the question: “What have I done to prepare for a low-energy future?” And figuring out sustainable food production and storage should be at the top of anyone’s list — or being wealthy enough to have serfs figure it out for you.

          • I agree with Jan, “organic” does not mean “sustainable” when one is looking at the current large-scale commercial organic growers. Even market gardeners aren’t always sustainable but most in our area are “organic” even if they are certified organic.
            I was mainly thinking of my own gardening practices. I use compost, mulches, and crop rotation to control pests and provide fertility. I have rain barrels for my green house, but still water from a hose in the main garden. With solar panels providing electricity and a pump that draws water from a well, my main concern is groundwater levels (and parts to repair system if needed). We have planted rain gardens around our property to intercept most of the rain that falls on our property ensuring infiltration and recharge. There are no farmers irrigating crops within 15 to 20 miles of our land so draw down on the groundwater is only due to families with wells.
            I also practice season extension and use low tunnels, cold frames, and a greenhouse. This system also protects crops from pests. Ever since we got farm dogs, varmints such as deer and rabbits are no longer a problem.
            If the U.S. economy continues to recede or perhaps collapse, the job market will decrease. Most families will have adults without jobs and working to grow and preserve food will provide much work and food for families.

  44. Very Good. I have been sharing with others that less oil almost automatically means more debt. Our capitalization foundation since 1859 has been the discovery of oil. Certainly other things pushed us along but if observed carefully the timeline of discovery and production shows that oil saved us. If we can’t pay with that major resource then we substitute debt(our future). Thanks.

    • Debt certainly has been ramping up. One of the reasons for the increase in debt is the higher price of oil in recent years.

      • Bill S. says:

        A lot of very clever people got quite rich by creating often useless debt. Matt Taibbi did an article on how Romney did it at Bain Capital in one of his Rolling Stone articles, ‘Greed and debt: the true story of Mitt Romney and Bain Capital’. I can remember, as I was reading it, how ironic it would be if these capitalists set the stage for the collapse of capitalism by creating too much unproductive debt in order to get rich. What was good for them, might not turn out to be so good for society as a whole.
        The brilliant TV documentary by David Faber of CNBC, ‘House of Cards’ demonstrated how a whole series of people got very rich creating mortgages, and selling them to unsuspecting investors before they could become bad debts. You can watch ‘House of Cards’ on hulu by searching the ‘CNBC Originals’ list. It is a real eye opener!
        Check out the Bill Gross graph of total debt in his Investment Outlook article, ‘Credit Supernova!’ at the PIMCO website. He knows what is coming too.
        Finally, some executive order allows the Federal Government to take over any industry during a national emergency. I think it was first written in WW II. Obama just renewed it a year or two ago.

        • Sometimes there is debt to buy debt, which is in turn used to buy more debt. At some point, there is too little interest to pay for everything, and the whole system collapses. Thanks for the links!

  45. Marianne says:

    Hi, This spring I read about the internation camps that has been build by the US government and the enormous amount of bullets that has been bought. All for internal use if things go out of hand. Or should I say, when things go out of hand. So I think that the US government already antisipates on the down escalator effect.

    • timl2k11 says:

      I have heard about the enormous amount of bullets, but not the internation [sic] camps. But I think you are probably right. There are people in high place who see bad things coming.

    • I think you are right. I think that there has even been an article mentioning the connection of the bullets and interment camps to anticipated problems.

      • timl2k11 says:

        What evidence is there of domestic internment camps, or are these foreign?

      • Lets not get too carried away-
        although there are planning documents to address all sorts of potential problems-
        and recently it has been exposed that British undercover police were infiltrating green activist groups even in the benign world of AGW campaigning.

        Disaster agencies need to be prepared given the extremes that somewhere like the US suffers- Katrina response was a disaster to match the natural one. However governments have a habit of being untrustworthy but we do have a choice-
        We can go into a paranoid survival mode armed with guns and be a real danger to ourselves and others [just imagine being in the dark, cold after a flood as well as being terrified with gun touting terrified people around rather than helpful emergency crews]

        Alternatively we seek good information, we organise into political active and socially aware groups and we stand united.

        • The Snopes article seems to indicate that the rumors that of large purchases of munitions by the US government is probably not too much to worry about.

          The UK Ministry of Defense looks at the balance between oil / cost and assumes that somehow people will be able to continue to pay for it, even at astronomical cost. I would contend that this will not happen. I see the balance being settled at much lower production, rather than higher cost. The UK MOD view is basically a peak oil view.

      • Gail,
        Can you provide a reference to that article mentioning bullets and interment camps? A friend of ours is a postal carrier and last fall he told us about all the deliveries of bullets to various Federal offices such as the Soc. Sec. administration. His fellow postal carriers were all speculating on why the Federal Government was buying up so much ammunition. But I haven’t found any articles discussing this. Very concerning to say the least!

          • Scott says:

            Gail, I am so glad you are getting this message out about the planned US internment camps being built. The ammo shortage was apparent everywhere and still is underway. Folks take notice that our government sees something they are not telling you and they are far too secretive these days to trust and beware.

            I feel sad I did not register to vote the last few years as I kind of gave up on both parties. My gosh they are building these secret camps and planning against us.

            I keep saying this but I hope I am right that we have a bit more time as long as things stay sort of stable as they are now in our country the USA. But we are seeing things fall apart elsewhere like in Egypt and Syria and elsewhere like we looked at Spain the other day. The foundations are cracking around the edges and meanwhile the broke US government pledged Billions to support Egypt just last week trying to cull the violence and stabilize the country.

            Why has our country become the world police and made us broke in the process? And now we have the UN and sorts of funded operation going on many did not vote for. It is slipping away slowly depending on where you live things may be better for a time.

            I do still hold out hope that our generation may be spared the worst of this (depending on how old you are).

            • I am not really trying to get any message out about planned US interment camps. This is not really my subject.

              I read the same things everyone else reads, and am just pointing out some articles. The articles seem to suggest the issue is not as major as some people suggests. Building anything is expensive. I am not sure the government is up to taking on a bunch of projects that require a lot of building. Looking at who is sending e-mail /or calling someone on the phone is a lower-cost type of activity, one that the government can more likely do.

            • Scott says:

              Yes Gail, those camp plans would entail much expensive operations which the financial situation we are looking at may accommodate. But it is good that people are looking at their governments and what they are up to. I am glad we are open enough on this site to look at all aspects of what is happening.

              I think they (governments especially USA) are stock piling goods now ahead of a dollar collapse or world financial crisis or war? You know this is a sign post that says they are worried about something, but they are not saying anything publicly.

              But perhaps – they know that the dollar may not buy what it did before and are now stock piling goods so they can do what they can later? They sure seem to have big plans and thinking of them selves as very big. I would venture to say “too big for their shoes”!

          • Gail,
            Thanks for the information. I wasn’t sure if your first line was missing a word. Did you mean that you “don’t” think there is a whole lot to worry about or the opposite?

            Normally I wouldn’t have been overly concerned, but did you watch any of the videos during the Occupy Wall Street marches? I was shocked by the over-reaction on the part of the NY police officers in several instances. If this is any indication of future police or military responses to peaceful assembly and freedom of speech, I’m worried about the loss of our civil liberties and worse.

            I’ve copied the following from the second website link you provided:

            “The manual states, “These operations may be performed as domestic civil support operations,” and adds that “The authority to approve resettlement such operations within U.S. territories,” would require a “special exception” to The Posse Comitatus Act, which can be obtained via “the President invoking his executive authority.” The document also makes reference to identifying detainees using their “social security number.”

            I can recall what shocked me the most watching the Occupy Wall Street protests….How can police officers act like that towards peaceful political protest? Well obviously they can and if need be they can call on the military to help them control unrest and to “rehabilitate” the dissidents. This is something I would have expected from the Soviet Union government, but not the U.S. government. It is quite possible that our government will react violently rather than admit defeat and allow a collapse. We are naive and unprepared for the violence our own government may exert against it’s own citizens in the event that a “discontinuity” is occurring. Perhaps if the Soviet Union had the largest military in the world and an oligarchy in charge…things would have been different there too.

            • Protest movements and what response US police make to them are not particularly on my radar. I am looking at other issues. So I am not a good one to ask about these issues. I don’t watch television, so I tend to miss all of the drama that comes through that avenue.

          • Gail,
            I don’t watch T.V either, haven’t had cable or any ways of watching it for more than 17 years. Best thing I ever did for improving my mental health.
            But when an event is happening, I look on the internet for information. That is how I happened to be watching YouTube videos of what what going on in NY and around the world as the Occupy Movement was spreading. It caught my attention particularly because the NY Times had so little coverage. I thought that was curious, since the NY Times is reputed to be so liberal.

  46. Brian Bundy says:

    Hi Gail,

    Great entry as always! As I read your site and others I always wonder if there is a course of action that one could suggest if they were advising institutional players (assuming that they had the best interests of the world in mind). It must be a hard day when you win an election or get a promotion only to learn that the ship you took over is in a narrow channel with rocks on both shores and no room to turn around. I’m not defending the crooks, but there must be an honest one somewhere in the den of thieves. Knowing that there are no right answers and all roads lead to collapse is it more responsible to “extend and pretend” or to tell the people what no one wants to hear, knowing they will likely lynch the messenger and it will only hasten collapse? Even if you wanted to speak up in a position like that, would the rest of the cast and crew let you? Seems to me like media is pretty well towing the company line these days. If en mass we all started doing what is wise – eliminating obligations to creditors and governments and learning to provide for your own well fare independent of the global industrial complex – wouldn’t that result in an earlier collapse? Through that lens even the crooks could pitch a defense for their role in extending this thing to it’s last breath.

    I’m afraid I may have stumbled off topic, but I look forward to your input. I enjoy that you participate in the comments section more than some mediators.



    • You are right. The lack of good solutions, and the possibility that good individual solutions will make the situation for the group as a whole worse, makes a person wonder whether even discussing this subject is even worthwhile. This is one (of several) reasons why The Oil Drum has not wanted to touch the issue.

      One thing that comes out of this analysis is that each of us should make the best use of the time we have now, before collapse, that we can. Appreciate each day. Don’t worry about spending money if you have savings. A penny saved in a bank is a penny ultimately lost (unfortunately). This solution actually works in the direction of delaying collapse, as well.

      There is at least some chance that knowing what we have gotten ourselves into will give us some insights as to what might mitigate the problem. For example, as collapse gets underway, (to a greater extent than it already is), we will need to learn ways of coping. An increasing proportion of people will not have jobs, even those with good educations. What does one do to cope with this situation? Most people will not be well enough off to own land. This is ultimately the problem we need to mitigate–how do we keep this problem from overwhelming the system? Perhaps insightful people can help fashion a new system, at least for some small areas. But this would probably require land redistribution, and a plan of lower population. This will be resisted by those who currently own land, and by families who want several children.

      • John says:

        “There is at least some chance that knowing what we have gotten ourselves into will give us some insights as to what might mitigate the problem….”

        I wouldn’t hold your breath. Unfortunately, it seems each generation must learn it each time anew. Everyone will indeed learn new ways of coping, but thru sweat and hitting their own heads, Not learning from our grandparent’s stories of them hitting their heads….

        And this;
        “This is ultimately the problem we need to mitigate–how do we keep this problem from overwhelming the system?”

        We WON’T learn, It will only get solved when the system IS finally overwhelmed.

        Why? Because “We will keep doing what we are doing, until we can’t, then we won’t”

        If you think it can be fixed “If enough people get the message”…. Well, you will be disappointed.

        Tell you what, If you can walk around Your Own Neighborhood, Your Own Cul-De-Sac and convince the majority of your neighbors, we stand a chance. If you can’t, then in doing that experment you will learn what I meant.

        • Brian Bundy says:

          John, I have to agree. I don’t think we will find (much less seek) solutions until long after the conclusion of the story is undeniable. That said, I also worry about our attempts to keep the ship afloat are going to make things much worse (war, famine, disease and other unpleasant events). In my reading on past collapses, it seems there are very few times when societies have gone quietly into the night. People tend to hold firmly to what they’ve been told is solid ground even after they learn that it’s really a sinking raft. Otherwise they might have to learn to swim and change is scary.

          My greatest hope is that I am able to maintain freedom of choice and that I am not funneled into some misguided government attempt(s) at a rescue. Such actions could take many forms, a war draft, work camps, refugee camps, land redistribution, resettlement campaigns etc. I prefer to make my own dumb choices rather than have someone else make dumb choices for me. But that doesn’t mean I will fight those initiatives if they come. I suspect a better survival technique is to remain fluid and cooperative and to stay always aware of your circumstances and how they fit into the larger world.

          • John says:

            Yes. I am a firm believer of getting myself square,then my family, then close friends, etc

            But above all the skill to have is adaptability. As Elastic Girl said to Mr. Incredible, “You gotta learn to be more Flexible”.

            Or as Bruce Lee said. “Be Water My Friend”

            Because, “This sucker is going down”

          • xabier says:


            Best thing perhaps is to study the fates of individuals in the great revolutions in China and Russia in the 20thc. It’s not terribly encouraging.

    • timl2k11 says:

      Hi Brian, I know you asked this question of Gail, but I think there a lot of honest politicians in Washington who simply do not know what to do with the information they have. A recent story on “This American Life” highlighted that many republicans accept the theory of AGW, but don’t dare to “come out of the closet” on it, because they would be ostracized not only by their political party but probably also by their constituents (well a majority of them) and even their own community and possibly even their family friends and whatever political connections they have in Washington. I think there are plenty of people in Washington who now the truth, possibly even better then Gail does (simply because they have access to data Gail does not) whose hands are tied because they see no benefit in telling people the truth.
      As an aside, take the term “climate change”. I hate it, because the problem is not “climate change” which is always happening, but “Man-made (anthropogenic) Global Warming”. The problem with the phrase AGW is it implicates “man”. It implicates society, and society does not want to be implicated. If you say the problem is “AGW” you are implicitly accusing your audience and they will be offended. That is why now all we here of is “climate change”, as if man was not implicated.

      • Brian says:

        Let’s just call a spade a spade: We’re screwed, we did it to ourselves, we don’t want to accept responsibility (or even admit that it’s happening in most cases), there is little to nothing we can do about it and none of us know exactly when the show is going to start…..Ah, it’s refreshing to get it all out so succinctly. That said, it’s a beautiful 79 degree day here in Seattle and I have a long weekend planned with my beautiful wife to celebrate our 1st anniversary. I find that the shorter my time horizon, the more manageable and happy life seems…..for now.

        Happy 4th of July week everyone.

        • Jan Steinman says:

          “I find that the shorter my time horizon, the more manageable and happy life seems…..for now.”

          It takes a combination, no?

          I feel manageable and happy when I do immediate things that take my attention, but these are generally things that I’ve planned for the long term: milk the goats, water the greenhouse, weed the garden, etc.

          But if you meant, “Damn it all, I’m flying to Vegas for the weekend to enjoy a short time horizon,” I think all you’ll end up with is a psychological (if not physiological) hang-over.

          So do you agree, Brian, and if so, what long-term things are you doing?

          • Brian says:

            Never liked Vegas. 🙂

            Financially my long-term planning is limited by student loan debt (can’t wait for that to be wiped out somehow). We don’t own a home and we’re tied to the city for income so most of my preparation has been knowledge based. I have built a library of information that will help me to educate people on our situation as soon as they care enough to ask about it. I have also learned to cook, grow food (small patio garden, but it’s a start), store food, make basic necessities (clothes, soap, basic medicine, fire, shelter, tools etc). I have family with some unused land so we have focused on being fit enough to develop it without tractors should the time come (if we moved there now we couldn’t service my student debt). We have a few acres worth of seeds and a deep pantry to keep us fed in case of supply outages along the way. Above all as discussed earlier in the string I’m counting on adaptability to get me through, but who knows. Any of us could get hit by a bus tonight and all our preparation would be for naught. Fortunately my wife and I enjoy all the hobbies listed above and far prefer spending a weekend hiking and identifying wild edibles to a weekend in Vegas.

            Interested to hear from more people here how they are preparing for the long term while staying sane in the short term. Thanks for asking the question Jan.

            • Jan Steinman says:

              “student loan debt (can’t wait for that to be wiped out somehow).”

              Hmmm… deflation is not good to debt holders, most of whom are hoping for inflation.

              Gail, what hope are there for debt holders in your scenario? Do they just end up losing whatever secures their debt? Or might some “jubilee” or other relief be deemed necessary?

            • I am afraid banks, insurance companies, and pension plans will be hit very hard by debt defaults. All three of these have huge obligations to others that they can’t pay, when there are debt defaults. So what look like debt defaults by one part of they system quickly circle around to hit the rest of the system.

              There is supposedly government insurance for some of this, but it becomes harder and hard to hold the whole system together if the economics behind it doesn’t work. The basic issue is that without a growing supply of cheap energy, true economic growth needed to keep raising salaries doesn’t really take place. The government can try to paper this over, but at some point, it is going to become clear that there is not enough to go around.

            • Part of preparing for the future is connecting with people you want to connect with–others with like interests, family members. We try to plan our vacations and trips so we can reconnect with people. I also try to learn new perspectives on trips. And I try to learn things, from the many commenters on Our Finite World.

              We need to be doing things that are meaningful to us now. Hopefully they will be useful for the long term, but even if they are not, they have helped enrich life today.

        • Happy Fourth of July Week. I am in Uppsala, Sweden today. I had a nice time with several people at Uppsala University today. I will be traveling, so it will be a little difficult to keep up with comments. Be back in the states in a little over two weeks.

          • xabier says:


            Bon voyage. A Swedish perspective would be very interesting, as they are usually portrayed as a model high tax, advanced economy.

            To an outside obeserver, there seems to be problem with rising youth unemployment, and certain racial problems, but most articles in the press on Sweden are so superficial as to be worthless (The Economist published a terrible one a while back.)

            • I can’t imagine any country can pay very generous benefits to retired and unemployed people if the economy turns down, Sweden included. I can’t imagine anyone has thought this through very carefully, though. Scandinavian countries tend to try to work toward consensus, so perhaps they will be able to settle their problems more amicably than others.

              We have only been in Uppsala so far, and have seen a fair number of female beggars with pictures of their families next to a cup. Some were clearly immigrants. We have heard that the unemployment rate of young people is quite high (25%?). (The people we have been with from China have commented on the high unemployment rate of recent college graduates in China as well.)

              The number of bicycles here is amazing, in relationship to cars, several times as many bicycles as cars. Many of the bicycle riders are gray haired. Cars stop for pedestrians, so there are few lights.

              We will be going to Stockholm tomorrow, to do a little sightseeing.

            • A few more observations on Sweden. The tourist industry in Sweden doesn’t seem to be doing all that well. The sightseeing boat we were on today (a beautiful Saturday, in the beginning of July–which should be high season)–was perhaps 60% full. A nice open-air restaurant in a fancy area of town was only about 30% full, at 7:15pm (19:15) on Saturday evening.

              There continue to be quite a few beggars. I would guess 70% or 80% are women. One this afternoon was blonde and looked to be about 22. I gave a little money to a darker haired woman, who said she was from Romania.

              From what I saw of the boat tour, Stockholm is quite different from what it was when it was smaller, making it much harder to sustain if there is an economic decline, meaning fewer have jobs. When it was smaller, there were mills for flour, and various kinds of industry such as clothing and textiles within parts of the city that have now been converted to apartment homes (or condominiums). While it all looks nice, there is nothing made nearby, so much more must be brought from a distance.

              New homes in some areas are heated with biogas from a sewage dump. But the sewage dump will not have nearly as much sewage, if the economy goes down hill. We noticed that the big lock we went through with the boat had its “door” lifted clear up out of the water, apparently with electricity, rather than having gates that open up by the flow of the water. If electrical power is lost, it will be hard to make the lock work (from the Baltic sea to the fresh water lake at the edge of Stockholm). Of course Sweden has lots of trees. We heard that Germany would like Sweden to make more (cheap) electricity with its trees and hydroelectric capability, so that Germany can get use of Sweden’s lower cost electricity capability.

          • Karl says:

            Hi Gail,

            I live in Stockholm.

            When it comes to true beggars (the ones that just sit there and look miserable), you can view them as seasonal workers coming in for the tourist season from poorer countries.

            When it comes to electricity, it is mainly produced by nuclear and hydroelectric power plants, a few percent by wind and bio power. Normally it runs a surplus (10-20%) that is exported (traded on the margin at the Nord Pol spot market) to Finland, Denmark and Germany. So, the risk for the “big lock” not operating is minimal unless the Germans buy us out.

            An interesting real time view is provided by:
            which usually shows that Sweden, Norway and Estonia are net producers of electricity.

            Houses are extensively heated by “fjärrvärme”, heat transmitted by a network of insulated pipes with hot water buried in the ground, often heated by burning garbage and residue from the wood industry at some central heating plant.

            Producing electricity from wood to export to Germany seems very unlikely. More likely is that the production of the totally not needed “green” wind power expansion will be exported on the margin to e.g. Germany, thus raising local electricity prices even more via Nord Pol.

            Some oil fueled power plants exists, but are mainly for backup.

            When it comes to the town of Stockholm it was originally just the area of the old town, with factories and rural areas surrounding it. But as with most cities the town area has expanded and the factories has been pushed out to the perimeter. Alfred Nobel once had his lab in town, but had to move after some unfortunate accident (explosion).

            • Thanks for your comments. Germany has also been a net producer of electricity. I think that there may well be a temptation by Germany to want to rely on more imports itself (from Sweden, Norway, and Estonia perhaps) rather than fixing its own electricity problems. I understand Sweden’s electricity rates are far below those of Germany’s. This creates a temptation for Germany, if it can arrange such a scheme. This is one concern.

              Another is simply the big concentrations of people that fossil fuels have allowed us to have. Before fossil fuels, the vast majority of the population of lived near where food was grown, and worked in its production. Now we have hoards of people in the cities. All will need to be fed. Most will need jobs, even as job availability continues to decline. This is a concern. If things go down-hill, a lot of things could go wrong. We could see riots and government overthrows, in countries where this has not been a problem, especially if the Euro zone comes apart, or if governments cut back greatly in programs for citizens.

              The EU system for allowing people to go from one country to another to beg in nice weather is strange. With so many unemployed everywhere, and the situation getting worse, it seems like the begging problem can only get worse.

  47. Arthur Robey says:

    Over here in Australia the interest rates have been lowered, encouraging more borrowing which creates more liquidity in the economy, which makes it’s way into equities to the delight of moronic commentators. Woopie doo. Were all gonna be rich!

    • Lower interest rates encourages borrowing to buy equities and homes, but it really doesn’t do much about increasing the feasibility of expanding a business, or starting a new business (other than help keep tax rates lower than they need to be, to support services that the government can no longer afford). Of course, businesses (except for oil companies, and some others that can’t move) don’t pay nearly as much taxes as individuals do. They put as much of their earnings as possible in offshore tax havens.

  48. Scott says:

    Another very educational article Gail, It covered the points that we have been discussing. Looks like we have to fear the rising rates more than peak oil right now. I agree our finance system is shaky indeed. We chose to use the national credit card and now we are in debt.

    I guess the best we can hope is that strong willing people will go to work when needed, but it will be hard for them if and when they are facing a broken down supply line where needed parts are not being delivered.

    And even worse letters and bills of credit are frozen, because nothing moves then.

    • You are right – I think rising interest rates and a need to raise taxes are the big problems will we be running into in the near future. The government may also realize it can’t keep raising the debt level either, because of the high cost of servicing the debt. (Not to mention the problems in Europe, China, and Japan.)

      • Scott says:

        Thanks, I guess Gail, we really have to watch China and Asia (and of course the US and Europe) and the other developing countries right now…. and, see if the this slow down takes hold.

        China seems to be on center stage right now from my reading. That may give us a clue where things are headed watching these countries where there economies are heading as we head through 2013.

        They used to say if the USA caught a cold the whole world would get sick, Now I wonder if it is China and Asia in general catching a cold that could make the whole world economy sick?

        Best Regards,


      • Scott says:

        Hello, I saw this report on Egypt today. The middle east is getting so unstable.

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