How Economic Growth Fails

We all know generally how today’s economy works:

Figure 1

Figure 1

Our economy is a networked system. I have illustrated it as being similar to a child’s building toy. Ever-larger structures can be built by adding more businesses and consumers, and by using resources of various kinds to produce an increasing quantity of goods and services.

Figure 2. Dome constructed using Leonardo Sticks

Figure 2. Dome constructed using Leonardo Sticks

There is no overall direction to the system, so the system is said to be “self-organizing.”

The economy operates within a finite world, so at some point, a problem of diminishing returns develops. In other words, it takes more and more effort (human labor and use of resources) to produce a given quantity of oil or food, or fresh water, or other desirable products. The problem of slowing economic growth is very closely related to the question: How can the limits we are reaching be expected to play out in a finite world? Many people imagine that we will “run out” of some necessary resource, such as oil, but I see the situation differently. Let me explain a few issues that may not be obvious.

1. Our economy is like a pump that works increasingly slowly over time, as diminishing returns and other adverse influences affect its operation. Eventually, it is likely to stop.

As nearly as I can tell, the way economic growth occurs (and stops taking place) is as summarized in Figure 3.

Figure 3. Overview of our economic predicament

Figure 3. Overview of our economic predicament

As long as (a) energy and other resources are cheap, (b) debt is readily available, and (c) “overhead” in the form of payments for government services, business overhead, and interest payments on debt are low, the pump can continue working as normal. As various parts of the pump “gum up,” the economic growth pump slows down. It is likely to eventually stop, once it becomes too difficult to repay debt with interest with the meager level of economic growth achieved.

Commodity prices are also likely to drop too low. This happens because the wages of workers drop so low that they cannot afford to buy expensive products such as cars and new homes. Growing purchases of products such as these are a big part of what keep the economic pump operating.

Let me explain some of the pieces of the problem that give rise to the slowing economic growth pump, and the difficulties it encounters as it slows down.

2. “Promises,” such as government pension programs for the elderly, and promises to repair existing roads, tend to get bigger and bigger over time.

We can understand how promises tend to grow by looking at an example I constructed:

Figure 4

Figure 4

Suppose a pension program begins in 2010 and gradually adds more retirees. Or suppose a road repair program starts out in 2010 with more roads gradually being added.

The payments made each calendar year, whether for the pensions or the road repairs, are the totals at the bottom of the column. These totals keep growing, even if each retiree gets the same amount each year, and even if each road costs the same amount to repair each year. Admittedly, using 100 for all amounts is unrealistic–this is done to keep the math simple–but regardless of what numbers are used, the sum of the payments each calendar year tends to rise.

If we look at US government expenditures as a percentage of wages, the pattern is as we might expect: government spending rises significantly faster than wages.

Figure 5

Figure 5

3. At least partly because of growing “promises,” it is very difficult for an economy to shrink in size without collapsing.

We can think of many kinds of promises in addition to pensions and road repairs. One such promise is the promise by banks that they will allow depositors to withdraw funds held on deposit in the bank. Another kind of promise is the promise of debtors to repay debt with interest. All of these promises tend to grow in total quantity over time, at least in part because population grows.

If an economy shrinks, all of these promises become very difficult to fulfill. This is the problem that Greece and other countries in financial difficulty are encountering. There is a need to reduce some program or to sell something so that the calendar year payments are not too high, relative to revenue for the year. These payments really represent a flow of goods and services to the individuals to whom the promises were made. “Printing money” does not really substitute for goods and services: pensioners expect that they will be able to buy food, medicine and housing with their pensions; those withdrawing money from a bank expect that the money will actually buy goods and services needed to live on.

If there is a major problem with “making good” on promises, it is difficult to have an economy. It is hard to operate an economy without functioning bank accounts. Even cutting off pensions or road repairs becomes a problem.

4. The over-arching problem as we reach diminishing returns is that workers become less and less efficient at producing desired end products.

When an economy starts hitting diminishing returns, we find that the economy produces goods less and less efficiently. It takes more worker-hours and more resources of various kinds (for example, fracking sand and deep sea drilling equipment) to produce a barrel of oil, causing the cost of producing a barrel of oil to rise. Usually this trend is expressed as a rising cost of oil production:

Figure 6

Figure 6

Looked at a different way, the number of barrels of oil produced per worker starts decreasing (Figure 7). It is as if the worker is becoming less efficient. His wages should be reduced, based on his new lack of productivity.

Figure 7. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 6.

Figure 7. Wages per worker in units of oil produced, corresponding to amounts shown in Figure 6.

There are many types of diminishing returns. They tend to lead to a smaller quantity of  end product per worker. For example, if the population of a country increases, but arable land stays the same, adding more and more farmers to a plot of arable land eventually leads to less food produced on average per farmer. (Some might say that each additional farmer adds less marginal production.) Similarly, mining ores of lower and lower concentration leads to a need to separate more and more waste material from the desired mineral, leading to less mineral production per worker.

As another example, if a community finds itself short of fresh water, it may need to begin using desalination to produce water, instead of simply using relatively inexpensive wells. The result is a steep rise in the cost of water produced, not too different from the steep rise in the cost of oil in Figure 6. Viewed in terms of the amount of fresh water produced by each worker, the return per worker falls, as happens in Figure 7.

If workers get paid for their work, the logical result of diminishing returns is that after a point, workers should get paid less, because what they are producing as an end product is diminishing in quantity. Workers may be making more intermediate products (such as desalination plants or fracking sand), but these are not the end products people want (such as fresh water, electricity, or oil).

In some sense, fighting pollution leads to another form of diminishing returns with respect to human labor. In this case, increasing human effort and other resources are used to produce pollution control equipment and to produce workarounds, such as alternative higher-priced fuels. Again, wages per worker are expected to decline. This happens because, on average, each worker produces less of the desired end product, such as electricity.

Admittedly, less pollution, such as less smog, is desired as well. However, if it is necessary to pay extra for this service, the effect is recessionary because workers must cut back on purchasing discretionary goods and services in order to have sufficient funds available to purchase the higher-priced electricity. Thus, fighting pollution using approaches that raise the price of end products is part of what slows the world’s economic growth pump.

5. When civilizations collapsed in the past, a major cause was diminishing returns leading to declining wages for non-elite workers.

We know how diminishing returns played out in a number of past civilizations based on the analysis conducted by Peter Turchin and Surgey Nefedov for their book Secular Cycles. They found that typically a period of rapid population growth took place after some change occurred that increased the total amount of food an economy could provide. Perhaps trees were cut down on a large plot of land, or irrigation was introduced, or a war led to the availability of land previously farmed by others. When the original small population encountered the newly available arable land, rapid growth became possible for a while–very often, for well over 100 years.

At some point, the carrying capacity of the land was reached. Then the familiar problem of diminishing returns on human labor occurred: adding more farmers to the plot of land didn’t increase food production proportionately. Instead, the arable land needed to be subdivided into smaller plots to accommodate more farmers. Or the new farmers could only be “assistants,” without ownership of land, and received much lower wages, or went to work for the church, again at low wages. The net result was that at least part of the workers started receiving much lower wages.

One contributing factor to collapses was the fact that required tax levels tended to grow over time. Some reasons for this growth in tax levels are described in Items (2) and (3) above. Furthermore, the pressure of growing population meant that groups needed access to more arable land–a problem that might be overcome by a larger army. Paying for such an army would require higher taxes. Joseph Tainter in The Collapse of Complex Societies writes about the problem of “growing complexity,” with rising population. This, too, might give rise to the need for more government services.

Raising taxes became a problem when wages for much of the population were stagnating or falling because of diminishing returns. If taxes were raised too much, low-paid workers found themselves unable to buy enough food. In their weakened condition, they tended to succumb to epidemics. If taxes couldn’t be raised enough, governments had different problems, such as not being able to support a large enough army to fend off attacks by neighboring armies.

6. The United States now has a problem with declining wages of non-elite workers, not too different from the problem experienced by civilizations that collapsed in the past.

Figure 8 shows that on an inflation-adjusted basis, US Median Family Income has been falling in recent years. In fact, the latest value is between the 1996 and 1997 value. In a sense, this represents diminishing returns on human labor, just as has occurred with agricultural civilizations that collapsed.

Figure 8

Figure 8

Wages have been falling to a much greater extent among young people in the United States. Figure 9 from a report by Dettling and Hsu in the Federal Reserve Bank of St. Louis Review shows that median wages have dropped dramatically since 1989, both for young people living with parents and for young people living independently. To make matters worse, the report also indicates that the share of young people living with parents has risen during the same period.

Figure 9

Figure 9

In some sense, the loss of efficiency of the economy (or diminishing returns) outlined in Item 4 is making its way through to wages. The wages of young people are especially affected.

7. Demand for goods and services comes from what workers can afford. If their wages are low, demand for goods of many kinds, including commodities, is likely to fall.

There are many rich people in the world, but most of their wealth sits around in bank accounts, or in ownership of shares of stock, or in ownership of land, or in other kinds of investments. They use only a small share of their wealth to buy food, cars, and homes. Their wealth has relatively little impact on commodity prices. In contrast, the many non-elite workers in the world tend to spend a much larger share of their incomes on food, homes, and cars. When non-elite workers cut back on major purchases, it is likely to affect total purchases of goods like homes and cars. Other related goods, such as gasoline, home heating fuel, and the building of new roads, are likely to be affected as well.

When the demand for finished goods falls, the demand for the commodities to produce these finished goods falls. Because of these issues, when the wages of non-elite workers fall, we should expect downward pressure on commodity prices. Commodity prices may fall back to a more affordable range, after they have spent several years at higher levels, as has happened recently.

There is a common belief that as we approach limits, the price of oil and other commodities will spike. I doubt that this can happen for any extended period. Instead, the low wages of non-elite workers will tend to hold commodity prices down. Because of this issue, we should expect predominately low oil prices ahead, despite the continuing pressure of rising costs of production because of diminishing returns.

The mismatch between the rising cost of commodity production and continued low commodity prices is likely to lead to a sharp drop in the supply of many types of commodities. Thus, the slowing operation of our economic growth “pump” is likely to lead to a situation where the production of commodities, including oil, falls because of low prices, not high prices. 

8. What is needed to raise the productivity of workers is a rising quantity of energy to leverage human labor. Such energy supplies are affordable only if the price of energy products is very low.

The amount a person can produce reflects a combination of his own labor and the resource he has to work with. If energy products are available, they act like energy slaves. With their assistance, humans can do things that they could not do otherwise–move goods long distances, quickly; operate machines (including computers) that can help a worker do tasks better and more quickly; and communicate long distance by means of the telephone or Internet. While technology plays a major role in making energy products useful, the ultimate benefit comes from the energy products themselves.

We have been using a rising amount of energy products since our hunter-gatherer days (Figure 10). In fact, the use of energy products seems to distinguish humans from other animals.

Figure 10

Figure 10

Clearly, cheaper is better when it comes to the affordability of energy products since available money goes further. If gasoline costs $5 per gallon, a worker with $100 can buy 20 gallons. If gasoline costs $2 per gallon, a worker with $100 can buy 50 gallons.

In recent years, with the high prices of energy products, world growth in energy consumption has lagged. It should not be surprising that world economic growth seems to be lagging during the same period.

Figure 11. Three year average growth rate in world energy consumption and in GDP. World energy consumption based on BP Review of World Energy, 2015 data; real GDP from USDA in 2010$.

Figure 11. Three year average growth rate in world energy consumption and in GDP. World energy consumption based on BP Review of World Energy, 2015 data; real GDP from USDA in 2010$.

In fact, Figure 11 seems to indicate that changes in energy consumption precede changes in world economic growth, strongly suggesting that growth in energy consumption is instrumental in raising economic growth. The recent steep drop in energy consumption suggests that the world is approaching another major recession, but this has not yet been recognized in international data.

9. One way of describing our current problem is by saying that the economy cannot live with the high commodity prices we have been experiencing in recent years and is resetting to a lower level that is affordable. This reset is related to low net energy production. 

If oil and other commodities could be produced more cheaply, they would be more affordable. We would not have the economic problems we have today. Energy use in Figure 11 could be rising more quickly, and that would help GDP grow faster. If GDP were growing faster, we would have more funds available for many purposes, including funding government programs, repaying debt with interest, and paying the wages of non-elite workers. We perhaps would not have the problem of falling wages of non-elite workers.

The current “fad” for solving our energy problem is to mandate the use of intermittent renewables, such as wind and solar PV. A major problem with this approach is that such renewables make the cost of electricity production rise even faster, exacerbating our problems, instead of making them better.

Figure 12 by Euan Mearns

Figure 12 by Euan Means. Installed capacity is in Watts (W) per capita.

To make matters worse:

  1. The way our economy works, energy flows in a given year (not on a net present value basis) are what are important, because this is the way we use energy to make goods such as foods, metals, and homes. The energy flows of renewables are very much front ended. Thus, the disparity in energy use on an energy flow basis is likely to be greater than reflected in Figure 12.
  2. What we really need from energy products is the ability to stimulate the economy in a way that adds tax revenue. Either the energy products must produce high tax revenue directly, or they must indirectly produce high tax revenue by stimulating demand for new cheaper goods, produced with the new inexpensive form of energy. This is what I think of as “adding net energy”. Wind and solar PV clearly do the opposite. Thus, they behave like “energy sinks,” rather than as products that add net energy.
  3. Modern renewables that are connected to the grid can be expected to stop working when the grid stops working. This may not be too far in the future because we need oil to operate the trucks and helicopters that maintain the electric grid. If this problem were considered in the pricing of electricity from wind and solar PV, their required prices would be higher.

As I see it, one of the major roles of energy products is to support the growing overhead of our economy; this is what the discussion about the need for “net energy” is about. Thus, we need energy products that are cheap enough that they can be taxed heavily now, and still produce an adequate profit for those producing the energy products. If we find ourselves mostly with energy products that are producing cash flow losses for their producers, as seems to be the case today, this is an indication that we have a problem. We don’t have enough “net energy” to run our current economy.

10. Debt and other paper assets are likely to “have a problem” as the economic growth pump falters and stops.

Debt is absolutely essential to making an economy work because it allows businesses to “bring forward” future profits, so that they don’t have to accumulate a high level of savings prior to building a new factory or opening a new mine. Debt also allows potential buyers of expensive products such as homes, cars, and factories to pay for them on an affordable monthly payment plan. Because more buyers can afford finished goods with the use of debt, debt raises the demand for goods, and indirectly raises the prices of commodities. With these higher prices, a greater quantity of commodity extraction is encouraged.

At some point, it becomes very difficult to support the very large amount of debt outstanding. In part, this happens because of the large accumulated amount of debt. Falling inflation-adjusted wages of rank and file workers add to the problem. In such a situation, interest rates need to be kept very low, or it becomes impossible to repay debt with interest. Even with continued low rates, defaults can eventually be expected.

Once debt defaults begin, commodity prices are likely to drop even further. Such a drop is likely to lead to even more loan defaults, especially by commodity producers (such as oil companies) and commodity exporters. Prices of equities can be expected to drop as well, because the problems of the debt system will affect businesses of all kinds.

Once debtors start defaulting, it will become very difficult to keep financial institutions from collapsing. International trade is likely to become a problem because financial institutions are needed to provide debt-based financial guarantees for long-distance transactions.

Other Information on this Subject

I have written previously and talked about some of the issues raised in this post.

An academic article I wrote that is directly related is Oil Supply Limits and the Continuing Financial Crisis. It was published in the journal Energy in 2012. Scopus shows 30 articles citing this paper.

A series of talks and videos that I conducted in China are now available on this website. These are some links to my presentations:

1. Overview of Energy Modeling Problem

2 Importance of Energy

3 Overview of a Networked Economy

4 Economic Growth – Diminishing Returns

5 Government costs and debt

6. Competition and Resource Exhaustion

7. Twelve Principles of Energy and the Economy

8. Renewable Energy

Videos of these presentations are also available on my Presentations/Podcasts page.

1,045 thoughts on “How Economic Growth Fails

  1. Don, I am thinking about building a house in California. My first thoughts were how do I install french drains to keep the water off the property. It flows across from the high side on the north to the low side on the south and has caused two gullies. After watching the perma culture video above maybe a better idea is a food forest to use and retain the water. Do you know anybody doing perma culture design in the Sonora California general area?

    • Ed Pell
      Toby Hemenway lives in Sonoma County. He is doing some demonstration projects on the property (which he does not own). I am sure there are other people there doing worthwhile things. I think Toby is in Sebastopol.

      As I imagine you are aware, the rainfall in California is quite seasonal. Wet winters and dry summers and falls. Storing every drop you can in the ground is essential. My sister who lives in LA hired a permaculture redesign of her yard a few years ago. She has been very pleased. She isn’t interested in growing much food, beyond the occasional tomato, but she is an avid birder and the bird population has multiplied by several times.

      Toby is in the process of redesigning his web site. Here is the link to the new one:

      Don Stewart

  2. The nearest comparable example of a cost that enters into the production of all goods and services is interest rates. Virtually all individuals and companies must borrow so the interest rate enters into the cost of all production and into many everyday living expenses too. You can argue therefore that the real reason that interest rates have been driven down so low by central bankers is that energy costs have been so high. It is has not been possible for the economy to sustain BOTH high interest rates AND the higher energy prices. This is the reason for the stagnation.

    According to Kopits most of the oil companies require an oil price of at least $100 for new investment in conventional oil production to be profitable. High prices are needed in the unconventional sector too and most of the fracking companies in the USA have not been making money for several years. In the last year the price has fallen even lower.

    So how come that they are still around? How come they have not gone bust? There are several kinds of reply to this.

    • China, Australia, Brazil, Canada, Sweden – it is beyond us how anyone can declare the crisis isn’t spreading.

      Be prepared – there are going to be lots of opportunities to both make and lose money.

      But first, you have to recognize what is happening.

      This fella hasn’t the slightest clue what is happening if he thinks there is money to made when this blows….

        • A lot of Sweeds has come to Norway for work the last few years. Few/no available jobs in Sweeden and Norwegians not willing to do a lot of service work is the situation. Guess they will be heading home in the near future, because our service sector sure will have to shrink.

    • I think Brian Davey has been reading some of my things, judging by his graphs. He talks about failing mechanisms to recycle purchasing power and energy limits, besides showing some of the same graphs. I will have to agree that there are other mechanisms to recycle purchasing power besides high enough wages to buy things, and these may be failing too.

  3. Maybe time to join a Trappist Monastery, now that is a solution to the crisis we are facing

    • Trappism? Not allowed to speak, wash, eating porridge and beans, sleeping on bare planks with no blanket and for fun whipping oneself every now and then, perpetual penance for sins of everyone? !

      Now, suggest a Benedictine monastery and we are talking; good wine, books, proper beds…….

      • Now, now, Thomas Merton was a Trappist and a self described “Hippie Monk” at that who said his fellow monks lived like millionaires and really didn’t have too many cares.
        These chaps usually live to be a very ripe old age and not like the old days, with modern comforts. My post was a half joke…no need to worry about overpopulation in their enclosures. I went on a retreat to Merton’s abbey and gave my supply of razors and shaving cream to one aged monk with the remark, “Must be hard to get a good shave around here”, after seeing him cull threw the waste basket for an old used razor.
        Yes, I got to admit the hours are difficult, but ever “job” has its drawbacks.

  4. #57. Storm Front – part 2


    In my previous article, I raised the possibility that China might be heading for a financial crisis, something which must – given the sheer scale both of the Chinese economy and of Chinese debt – pose a globally-systemic threat. Here, I take up the China story again, but also look into the global implications of what I think is happening.

    I also set out some thoughts about the “when?” of all this. For a “non-Keynesian”, I am rather fond of quoting Keynes’ observation that “the market can remain irrational longer than you can remain solvent”. This I take as a warning against trying to predict the day when seemingly-obvious imbalances (like China’s debt) result in their logical consequences.

    • Thanks! Your link is to the latest Tim Morgan post. He seems to think that a “window of risk” will open in September. I would think that would mean a time when we could start seeing a big step down, when loans from shale start defaulting and filling oil storage becomes more of a problem. Also a remote possibility of US interest rates going up.

  5. Dear Gail and Finite Worlders
    I wrote months ago about universities and rape cases. Universities all across the country starting setting up quasi-judicial processes for trying rape allegations involving two students. The universities also got involved with cases where students allegedly raped a non student. I have been following three local cases.

    The first is the alleged rape of a strip tease dancer by the Duke Lacrosse team. After lots of huffing and puffing, the case has been dismissed and the prosecutor in the case has just been disbarred for conduct unbecoming an attorney.

    The second case is an alleged rape by a male Chapel Hill native who was attending college in Tennessee. An administrative law judge reviewed the evidence and found that there were insufficient grounds for a finding that the man was guilty. There was a hue and cry and the University apparently gave some orders and the Administrative Law Judge changed her mind and decided that the man had to prove he was not guilty. It went to court, and the court ruled that the man is ‘innocent until proven guilty’, and that the university hasn’t got the right to change the burden of proof requirement. Meanwhile, the man’s father has been fired as wrestling coach at the University of North Carolina, apparently because of his blogging about the kangaroo court aspects of the ‘trial’ in Tennessee. While the family ‘won’ their case, it cost them $40,000 and the father lost his job.

    The third case was an alleged rape of a Duke freshman woman by a senior male after a fraternity party. This made headlines early in 2015. The fraternity was banned from the campus, and the student was denied his diploma.

    About a month ago the district attorney issued this statement:
    ‘No charges will be filed in the case of a Duke University fraternity where a woman claimed she was raped, Durham district attorney Roger Echols said Thursday.

    A Duke coed told police she was taken to a home next to the party before blacking out, according to a search warrant.

    The Alpha Delta Phi fraternity was suspended after the student said she was drugged and sexually assaulted on Jan. 8 at an off-campus house being rented to members of the fraternity.

    Echols, in a statement Thursday, said, “Based on our careful review of witness statements, investigating officers’ notes, results of tests and examinations, applicable statutes, case law and the standard of proof, I have decided not to seek an indictment charging any subject of the investigation with a criminal offense.”

    I had read in one newspaper account that the case might turn on the question of whether the female was significantly drunker than the male. In North Carolina, rape is considered to include sex with someone who is deemed incapable of giving consent because of alcohol or other drugs.

    The male student still has a lawsuit pending against Duke. Duke has been ordered to cease and desist from using the investigator they hired to gather evidence, because the person they hired has no license to practice. I also read that the Duke lawyers were refusing to share evidence with the plaintiff.

    Duke may want to claim that it is a private institution, and can do any damn thing it wants to. But if the judge finds that there is an implied contract between Duke and the male student, and if the Tennessee ruling on burden of proof stands, then Duke may end up with egg on its face and paying a lot of money to the Australian native they refused to give the diploma to, after taking a hundred thousand dollars or so of his money.

    These extra-judicial boondoggles by the Universities strike me as insane. Are these universities our ‘best and brightest’?

    Don Stewart

    • Rape is a crime. Society has a whole system devoted to dealing with crime. Why any victim of rape would choose not to use the full force of the law is beyond me.

      I do understand the idea that universities want to protect their rich clients from any criminal charges. This model is a better fit when the victim is a townie and the rapist is a rich boy customer.

      I would expect any victim that chooses not to use the police and courts is think “I have no case by the standards of the sane world but I want blood so I’ll go with the administrator that see me as a rich customer and are scared by political correctness and so called micro-aggressions.”

  6. Gail
    While it is true that BW Hill does not start out with a credit money model, he gets to the same place.
    Don Stewart

    Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis.

    A deflationary crisis is now baked into the cake. One look at the petroleum industry confirms it. Determining how the industry, or any oil producer is fairing is quit simple. You take their profit that was generated during the last high priced year (such as 2013) and divide by the number of barrels produced. That gives profit per barrel for that year. Then subtract the difference in per barrel price between now, and then. That gives present profit, or loss per barrel. The present spread in prices is now about $55. If you find a producer that was making $55/ barrel in 2013, they were making a 43% profit on their gross sales. The industry has historically turned a 5 to 10% profit on gross sales.

    The Etp Model, which is a best case scenario, projects a downward trend in petroleum prices from 2012 forward:

    Unlike economic models the Etp Model is constrained by physical limits imposed by the laws of physics. It eliminates the magical “IF” word so beloved by economists who want to present a “things aren’t that bad” story line. Common sense, and the Etp Model informs us that the petroleum industry is now in dire straits in the present price environment. The Etp Model also informs us that production must fall significantly in the near future as producers who are losing money on their production will soon be shutting in high cost production, or going out of business.

    When producers run out of credit lines to finance their now money losing operations they will be shut in. It is not likely that can be escaped for many years. When it happens turmoil will ensue in petroleum producing regions. It is not likely that anywhere will escape turmoil for many years. Petroleum is the irreplaceable commodity that powers modern civilization!

      • John Doyle
        Just responding to Gail who said that BW Hill would have something different if he had based his model on money (which is credit) rather than on the thermodynamics of oil.

        BW Hill thinks (as I understand him), that the physical is more basic than the financial. When the physical goes bad, then the financial will also tend to go bad. The physical sets some limit on what we can achieve with financial maneuvers…so it is a ‘best case’. We can make things a lot worse with poor financial and political and military and social responses to the physical reality, but we can’t make it better than the physical limitations permit.

        I pretty much agree with Hill. Money is not an independent factor. Ideally, we look at a model which contains a ‘theory of everything’. But theories of everything are very hard to construct and contain so many imponderables that they can easily become unwieldy. A good model of the physical is a good place to start.

        Don Stewart

        • Don, I understand the limitations that just have to be adopted in theorising, and also that the final arbiter will be physical realities. However there are lots of choices in the run up to the physical limits. Will oil be the one of choice? Maybe not. What about the credit overhang, probably not either as it can be largely resolved with, for example, a debt jubilee. What we are certain of as Al Bartlett explained, is that there are finite limits to growth, so can we manage decline then? how about No. There are ,or seem not to be, any plans to manage our civilization’s decline and fall.

          Once the rot sets in there will be a growing spate of problems that without a plan of management will rapidly spiral into chaos. A plan of management has to be done by the government who can commandeer resources and services to keep chaos at bay. The government can continue to pay wages to everyone needing money to buy food, and rations to control hoarding etc. Does anyone know of a plan, secret or not? It’s surefire curtains without a plan, a Wile e Coyote moment all at once for everyone!

          • John Doyle
            Please remember that I am not claiming that the Hill model is accurate. However, if one considers that it might be pretty accurate, then it lays out a daunting scenario for any government or corporation thinking they can ‘manage’ things. Hill predicts falling prices for oil. The dominant reaction to that is ‘glut’, which must mean that the oil industry propaganda about ‘decades more oil’ and ‘a hundred years of gas’ MUST be right. Lots of blather about Econ 101 supply and demand curves. When Hill says that those Econ 101 supply and demand curves have never applied to oil, people can’t hear him and can’t understand him.

            When Hill claims that the thermodynamic efficiency with which we produce oil is declining, and that, over the past century, the GDP that we produce from a barrel of oil has fallen dramatically, people can’t figure out what he is talking about. They have been thoroughly indoctrinated by statistics about all those ‘energy slaves’. What they fail to realize is that most people are now slaves of their energy slaves. As the energy slaves begin to diminish, there is no easy way to go quickly back down a curve we have spent the last 150 years climbing up. Yet Hill’s analysis says we need to be rapidly adjusting to the new reality RIGHT NOW. Imagine trying to tell Congress that we have an oil problem RIGHT NOW….and also that nobody has any pat solutions.

            Hill uses cumulative oil production in some of his equations: the GDP we can produce with a barrel of oil today is partly dependent on how many barrels we have ever produced. For example, I may buy a car and drive it on a vacation, which generates some GDP. But the automobile factory and the knowledge of how to build the machines and the highway system and the resort I drive to and a host of other things are infrastructure that was built with the historical oil. If Hill’s equations are correct and our ability to produce oil is declining very rapidly, then much of that infrastructure will deteriorate or just be useless. So not only will wealth disappear, so will our ability to generate current GDP.

            It is interesting to observe how oil professionals hear his story. If he is correct, then a career in the oil business is deeply threatened. So resistance is natural. Most oil people are simply unwilling or incapable of thinking that oil scarcity and low oil prices can go together. However, I have noticed that some people are beginning to contemplate that awful scenario.

            If that is what is happening to our major primary energy source (excluding warmth from the sun and photosynthesis), then you can predict many repercussions in terms of money, politics, family life, social customs, mortality, business, etc..

            Don Stewart

            • Do you think, however difficult it is to know the future, that there should be a plan to take over when the SHTF moment becomes reality?

            • Dear John Doyle
              ‘should there be a plan?’

              Have you looked at Nicole Foss’ now three part series on the future?

              One of Nicole’s predictions is a collapse of the ‘trust horizon’. Nobody is going to trust people they cannot reach out and touch. BW Hill and Nicole are probably in about the same camp in terms of the future of oil over the next decade. Nicole, for example, saying that the EROEI of oil is now only marginally supporting our complex society, while BW thinks we witnessed a sea change in 2012. I just listened to an interview with Robert Rapier, and he is confidently predicting an increase in the price of oil, just as soon as the screwy psychology on Wall Street gets straightened out. If you put Rapier on one side and Nicole and BW on the other, it is clear that Nicole and BW have only minor differences…same thing is true relative to Gail, although she usually emphasizes her differences from BW and Nicole.

              Nicole says that ‘we need to get started now, building local connections’…or something to that effect. That is where I come out also. I just have no idea how one does that in Manhattan. I have an idea how to do it where I live, and I participate in localization efforts here. I view anything from the federal government with suspicion. They have been the prime movers in the militarization of the local police, and I suspect that anything they put together would, likewise, involve tanks and armored personnel carriers. I am afraid that I would look at federal efforts as involving both a lot of graft by the well-connected and repression of the population.

              I am sorry to be so negative….Don Stewart

            • I haven’t caught up with Nicole’s blogs lately, so thanks for the link.
              It’s likely true that trust will be in short supply. However if a government is seen to be working for the common good, then trust may survive. If on the other hand the trust we don’t have in government stays dominant, then it WILL all end up as chaos. So I’m not surprised at your negativity. Being aware, which we are, is seeing big issues in our future.

            • I really am doubtful that the BW Hill model is right. I have not gone through all of the details of the model, but what I have seen does not convince me it is correct.

              One of the issues is confusion between marginal cost of production and average cost of production (and marginal net energy vs average net energy). Price is set on the marginal cost of production. The US tends to be the world’s high-cost oil producer, and BW Hill tends to use US costs in his analyses. His E sub N is Net Energy of Conventional Oil for the high cost producer, namely the US. I can see how his analysis would point to the US having to drop out as the high cost conventional oil producer, but I am not sure what else this shows. Perhaps production from Iran and Iraq would take its place in conventional oil production.

              The world is filled with producers with different costs of production–Saudi Arabia, Iran, and Iraq would all tend to be lower cost producers, with higher EROEIs. The vast majority of net energy given to society always comes from the low-cost producers, not the high-cost producers. Net energy is where most of the tax revenue comes from that is used to support governments around the world. This varies greatly. I have posted the world “Government Take” graph by Barry Rodgers previously. Tax rates are as high as 90% of what is left after the direct costs of oil extraction. Countries with low tax rates tend to be countries with low oil EROEIs.

              Barry Rodger's Government Take map

              In my view, Net Energy also flows through to importing nations when the price of imported oil is low enough. Once the price of oil rises too high, this benefit is lost to importing nations. The current low prices seem to reflect an attempt by our self-organized economy to get this imported net energy back–whether it really is there for import or not.

              I am also skeptical that the price of crude oil has a sinusoidal character, with a period of 26.8 years. BW Hill claims this to be true, based on Graph 13 of the model.

              I didn’t notice much treatment of unconventional oil and all of the types of oil substitutes, such as natural gas liquids. BW Hill’s curve fitting was done to 1999 and prior data, to avoid the problem of including other than conventional oil. This has been the growing part of oil supply.

              In my recent post How Economic Growth Fails, I tried to lay out how the energy system really works, as connected to the economy. One of my major points is that there is an overhead portion that keeps growing. Part of that overhead needs to go to paying back debt with interest. Another issue is the need to pay for growing government services. It is the fact that the growth in oil supply is not high enough that tends to bring the system down. Admittedly, the growth in oil supply on a net energy basis is lower than on a gross basis, but either way, we are hitting limits right now. The BW Hill model doesn’t look at the issue of growing overhead (apart from energy to make energy of the marginal oil producer, namely the US).

              There no doubt are some parts of the BW Hill model that are right. The difficulty is in figuring out which parts those are.

            • Gail
              I hope Mr. Hill will answer your questions, rather than me. But here is my best shot.

              Whatever may be the average or marginal cost of producing a barrel of oil in various places in the world, they no longer control the price (according to Hill’s model). The control of price passed to the ability of the global economic system to generate GDP with the use of a barrel of oil, in the year 2012. Hill quantifies the ‘ability to pay’ but he does not really analyze it. For example, could we, if we wanted to, revert to a simpler economy which used less oil but generated the same or more GDP? Hill assumes that the economy is what it is, and probably won’t change in the near future…unless there is a collapse, in which case the price of oil will probably plummet in a Nicole Foss deflationary scenario. Hill has very recently hinted that we are now in a deflationary scenario.

              As for the difference between marginal and average cost of production. Hill’s model assigns most of the cost of producing oil to the operation of the economic system which supports the production and distribution of oil. His model is very definitely NOT an EROEI study. EROEI estimates can be derived from the model, but he does NOT build up a marginal cost from looking at engineering studies of oil fields. Therefore, the cost has lots of ‘current cost’ in it, such as the cost of the economy and cost of lifting water.

              The way he develops the cost also takes into account whatever governments take. If a government has been able to skim 50 percent historically, that skimming resulted in a higher world price and that higher price will appear in his curves. He does not study the scenario where oil price and the government collapse together, and a new government skimming far less takes its place.

              As for the issue of using US data. As I remember, he uses the average well depth from the US (where, he notes, more than half of the global wells have been drilled) In another place he uses data from the US, Norway, and Great Britain. In both cases he is using the only reliable data available. I doubt that the world average is going to diverge enough from the data he does have to make much difference. But you might want to ask him about it.

              The sinusoidal curve is another case where he needs some data to complete his model (which is dictated by thermodynamics) and he uses the best data available. Again, I doubt that some other data would make much difference in the grand scheme of things.

              By stopping the model in 1999, Hill avoids dealing with the cost of unconventional oil in the core model. Separately, he has said many times that tar sands oil and shale oil are not reasonably priced sources of transportation fuel. IF tar sands oil and shale oil WERE lower priced sources of transportation fuel, THEN he would have to do serious work on his model. But he has separately marshaled some evidence that it is the cost of conventional oil (prior to 2012) that is controlling price, and that since 2012 it is the ability to pay that is controlling price. For example, he has labeled shale oil as ‘only suitable for feedstock’. It does not make good transportation fuels. The use of the term ‘total liquids’ tries to obscure the fact that much of the additional liquids being produced are not good sources of transportation fuel. In short, a liquid is not equal to every other liquid. Transportation fuels are best derived from some specific API crude oils.

              The ‘overhead’ you refer to is in his computation of how much it costs to run the society which produces and distributes the oil. His top down method is a way around the intractable problem of figuring out how much of the University of Texas Petroleum Engineering school should be charged to a barrel of oil. He just lets the data speak for themselves as he estimates the parameters in his equations.

              Again, I hope he will answer you directly.

              Don Stewart

            • Gail
              The metric he gets for his equations is the average depth….5000 feet, as I remember. He has to plug in some number, the US has the only reliable data, so he uses 5000 feet. The other characteristics of the wells are irrelevant. At least that is what I gather from reading his description.

              Don Stewart

    • The problem is that an oil company needs a much bigger “gross profit” on oil sales as the cost of extraction rises, to cover its now much higher exploration and production costs. Companies started getting into trouble a while ago, as I wrote about in February 2014

      The economy really works on an energy flow/cash flow basis, so the problems described in the above post started in the 2012-2013 era (or much earlier, back to the 1999 “bend” in the cost of extraction). All of the lending at low interest rates based on models of what might be produced in the future covered up the problems. Companies started substituting model future returns, for actual current returns. The cash flow of companies started turning negative, instead of positive, but this was deemed “OK” thanks to the models and the ultra low interest rates.

      I have no idea how or if this is reflected in the Etp model.

      • Gail
        If you look at Graph #21 you get the picture from the oil companies perspective. Their costs escalate and by the year 2031 they need $555 per barrel.

        But if you calculate how much GDP the barrels are capable of generating, which gives you the ability of the economy to pay, you get Graph #31, with the ability to pay replacing cost of production as the determining factor in 2012. Ability to pay declines to zero about 2020.

        The actual decline process would likely be messier, involving, on the one hand, the potential for WWIII, and at the other extreme the careful husbanding of stripper wells.

        But you can see the central conclusion which spells doom for the financial future of oil companies: production is likely to remain relatively high while the price sinks and so full cycle costs are not recovered over the next decade or so. If and when Wall Street figures this out, everything will change.

        The other possibility is that we magically transform the economy back into one which produced a lot of GDP with less oil, which would make expensive oil more supportable. But such an event is pure speculation, and as my very recent discussion with John Doyle makes clear, there are reasons to think that decision makers would consider you insane if you talked to them in this language. Also, converting to 10 or 20 percent less oil to generate a given amount of GDP wouldn’t help for very long, as the cost curve continues to rise relentlessly.

        Don Stewart

        • The GDP will actually improve. We are investing in technology. For instance if we switch to electric cars, the 200-400B/yr we spend on foreign oil, gets spent locally on electric which is produced here which creates jobs here. Every dollar that was going straight out of the country for oil, is being spent here now at least once before possibly leaving the country for other goods.

          It is like a built-in stimulus package, instead of coming out in one huge chunk like the Bush 1+T rebate program. It is coming back at a much slower pace, but it is a sustainable, more permanent effect.

          The GDP boost actually comes from the fact we still have the money in our economy to spend again instead of leaving for other countries, where it can’t contribute to the GDP.

          The side effect of this is we lowered the price of energy, by increasing the competition, so even if we don’t switch away from oil today, we drove the price down. Instead of spending 100/barrel, we are spending 40-50/barrel, which has a similar effect.

          Instead of a 300 dollar check from the government as a rebate, the investment in alternatives saves you 20 dollars at the pump every time you fill up. It is a much harder concept for a lot of people to grasp since it doesn’t come directly from the government in a large lump sum.

          • “For instance if we switch to electric cars”

            Ok, let’s look at electric vehicles. The United States currently consumes about 19 million barrels of oil per day:

            Of which about 70% is transportation:

            Of which about 65% is light vehicles, AKA cars, pickup trucks, minivans, SUVs. I cannot locate a source at the moment for that; if you want to argue this number, that’s fine.

            So, 65% of 70% of 19 million is about 8.6 million barrels per day. Let’s be generous and say that electric vehicles, full life cycle, including battery replacement, will use half as much energy as internal combustion engine cars, so you only need 4.3 million barrels of oil equivalent. Feel free to provide (preferably sourced) alternative numbers.

            We’ll say one Barrel of Oil is 5.8 million BTU:

            Which is about 1700 kWh:

            So, to power personal vehicles in the United States of America, you will need 1700 * 4,300,000 = 7,310,000,000 kWH per day.

            How much renewable energy would that take? For a real-world example, let’s look at Ivanpah. 1600 hectares (10,000 square meters per hectare = 16 million square meters, or 16 square kilometers). Cost $2.2 Billion. Expected to produce 1.04 TwH per year, it is actually producing closer to 400 Gigawatt-hours.

            So, you need 7310 Gigawatt hours per day, times 365 days = 2,668,150 GwH per year to power your fleet of electric vehicles. Ivanpah produces about 400 GwH per year. You need 6670 Ivanpahs to meet this need. Only $15 trillion dollars, so not too bad. 106,720 square kilometers = about one-sixth of the surface area of Texas. I’m surprised the numbers come out to something at least in the realm of possibility. Even at double, $30 trillion and say 250,000 square kilometers, it is at least plausible.

            • I will address one issue — where to get the space for the solar panels. Within a 100 feet of my house in Maryland are two rooftop solar installations. We can get a significant amount of energy from rooftop solar installations. I will pick out a wild-assed number of 100 million buildings with 10 square meters of solar panels each. 1 billion (US) square meters, or 1000 square kilometers. Not enough to make too much of a dent on the required 100,000 square kilometers.

            • “I will address one issue — where to get the space for the solar panels.”

              I’m referring to thermal solar plants, preferably along the sun belt. I don’t think continuing American Car Culture is a worthy goal, nor continuing pursuit of exponential GDP growth. I was originally doing it to show how ridiculous it was, but the numbers fell inside an actual plausible range.

            • A really good way to envisage the vast numbers involved in our energy use is the concept of Cubic Miles of Oil, CMO. We use now a bit over 1 CMO annually [1CMO =316 days] and including coal, gas and renewables it totals nearly 3CMO equivalent. To produce the equivalent electrical energy is estimated to require 200 Three gorges dams, 2,600 Nuclear Power plants, 5,200 coal fired plants, 1,640,000 wind turbines and 4.6 Billion solar panels. And that’s just the oil equivalent. The Wikipedia entry discusses this concept.
              It make obvious the whole system we have cannot have a substitute. We can nibble around the edges, but thats just a nibble, nothing paradigm shifting.

            • “How much renewable energy would that take? For a real-world example, let’s look at Ivanpah.
              …You need 6670 Ivanpahs to meet this need. Only $15 trillion dollars, so not too bad. 106,720 square kilometers = about one-sixth of the surface area of Texas. I’m surprised the numbers come out to something at least in the realm of possibility. Even at double, $30 trillion and say 250,000 square kilometers, it is at least plausible. ”

              Ivanpah is a bad example. It doesn’t include storage, and there were significant cost overruns.
              Plus it also uses natural gas. In fact, Im not sure the firm that was in charge of it wasn’t just trying to bilk US investors, but that is another topic.

              The 15T is within the realm of possibilities, but realistically we don’t want to pay that much. We would like to drive the costs down further. In fact Solar PV does drive the costs down further.

              There is a problem with solar and we do need storage. I don’t think you are fully understanding the storage situation.

              If you read:

              You see they identified the “duck curve” chart
              I wish they had data from like 2000 on the graph so you can see the full extent of what solar is can replace right in the middle of peak hours, which is the most costly time of day.

              Really what we need is short term storage for a few hours to peak shave the big hump on the right. The one on the left you can peak shave with the extra FF/nuclear/hydro capacity overnight which is significantly cheaper then using peaker plants for generation, and in fact, you have overcapacity available so when you do need to run the peaker plants, it isn’t “just in case” it is because you actually need the extra capacity (which is a -huge- cost savings by itself, it is where Germany ran into problems)

              You really want something like what Imergy or ViZn has which in theory is infinite cycling. The efficiency even at 75% gets rid of a huge problem. The regular cell batteries can also be used, Tesla is selling out and making news, but LiFePO4 has 6x longer lifetime. ABB is using them and a few other companies.

              The storage market is being driven by California mandates right now for storage. And the prices will dramatically fall.

              For most of the rest of the US, there isn’t a duck curve and you can see how much energy we can save -without- storage.

          • I am not at all convinced that we are dealing with a built-in stimulus package, and a rebate every time we fill up.

            For one thing, we are dealing with a lot of large front-ended costs: costs of renewables, costs of storage for renewable electricity, and the cost of electric cars. These can only be paid for by lots and lots of debt. This creates huge problems, because the whole debt level of the economy must rise to accommodate the structure. This tends to push economies over the edge–the interest payments become unacceptably high, and total amount of debt becomes unmanageable. Many poor workers can never afford the price of an electric car (or the garage needed for recharging such a car).

            A related issue is that building such a system creates years and years of where the whole system is cash flow negative–outgo exceeds income. This doesn’t leave funds for repaying debt with interest. We end up with a system that looks like the cash flow of the shale companies. Something else must make up the difference. Where does this come from?

            I would also point out that there is likely going to be a lot of foreign input with any of these solutions–solar panels are often made in China; parts of wind turbines are often from China; computer controls for any of these things are likely from China; electric vehicles (and the batteries from electric vehicles) will likely be foreign.

            Also, when we try to make anything in large quantity, we start running into diminishing returns. For example, the cost of lithium extraction is likely to rise, as it becomes necessary to use lithium from mines with lower quality ores.

            We also lose sight of the fact that the “package” that is put together has to be affordable for workers making the median wage, and below the median wage. It doesn’t matter that other solutions would be “even worse.”

  7. wild card is deflation. Wholesale prices have fallen for 40 consecutive months, with the decline accelerating in July. Falling global commodity prices are largely to blame for Chinese deflation, but that is cold comfort for indebted companies whose nominal cash flows are in decline, even as the debt they owe remains fixed.
    In an illustration deflation is undermining deleveraging efforts, China’s debt-to-GDP ratio has continued to rise this year, even as new borrowing fell 21 per cent in the first seven months from the year-earlier period. That is because disinflation has caused nominal GDP to slow even more sharply than outstanding debt.
    Tao Wang, chief China economist at UBS, said: “Clearly, the overwhelming problem for China remains one of rising deflationary pressures.”
    ticking to that pledge means enduring the pain of an investment slowdown, as smokestack industries that thrived under the old model gradually give way to emerging industries such as healthcare, education, tourism, and information technology.
    So far the government has employed targeted stimulus in the form of fiscal spending on infrastructure, while resisting pressure to unleash a wave of lending from commercial banks to the manufacturing sector, as in 2008. That stimulus plan led to a quadrupling of China’s economy-wide debt from $7tn in 2007 to $28tn by mid-2014, equivalent to 282 per cent of GDP. But if the job market continues to worsen, pressure for drastic measures will increase.

    • Education and health care are not true industries. They don’t actually create wealth they just help people get ready to work. Tourism is a money sink that only creates memories for the travelers.

      Renewables and muscle power can’t supply enough energy to produce much wealth. People may be smart and informed but they wont have much money or be very healthy. Almost one sixth of our economy is health care. If we return to an agrarian economy there wont be much money for health-care.

    • Thanks1 Deflation is indeed a huge problem. In fact, it seems likely to grow as a problem, as oil prices continue to drop and as oversupply of steel and other goods becomes more of a problem. Some debt is likely to start defaulting, and this will cause banks problems. I don’t think governments are in a good place to fix the problem this time around, except by “haircutting” deposits–something else that adds to deflation. Thus, once it starts, it is likely to get worse and worse.

    • Who puts together an index showing that wholesale prices have fallen for 40 consecutive months? I realize the Financial Times article probably has that information, but I am sure I am over my allotment of free articles from them now.

  8. “With real median household income at 1989 levels, real unemployment north of 15%, a massive level of under-employment, young people unable to buy a home – saddled with $1 trillion of student loan debt, middle aged parents struggling to take care of their aging parents and struggling children, and Boomers who never saved for their retirement, the mood of the country is decidedly dark and getting darker by the day. The rise of Trump and Sanders in the polls is an indication of this dissatisfaction with the existing social order.”

    That was pasted from an article on Zero hedge. The reason it caught my eye is because of the last sentence, which is exactly what I’ve been thinking about lately, i.e. the dramatic polarization of voters to radical positions. It’s a strong indication of their desperate state of mind to seek out unusual political positions with the idea it will somehow yank the country back into profitable coherence. But as we all know here they can vote for whomever they want and it won’t make a hell of beans difference to the net energy decline that is occurring, down shifting the world economy into more desperate fiscal states. This is how Hitler and Mussolini got elected. Now people are liking a fascist like Trump or a more pure socialist like Sanders. How different is Trump from Mussolini in his mannerisms or Sanders from McGovern (who ran against Nixon). McGovern got one state but Sanders could win the whole shebang in this day and age of diminishing returns.

    We are on the cusp of monumental changes politically and environmentally. Like the quoted section at top of this post says, enjoy eating out while you can.

    • I do not think Sanders and Trump are different. They are both New York City born and raised. They both have strong connections to the Jewish community of NYC. They are both pragmatists. They both have more courage and backbone than most in politics. They both know the workers are being robbed. They both only want incremental changes.

      • And they are both given their marching orders by the men who own the Fed.

        Anyone in America who continues to follow this charade (other than for the entertainment value) is a stooge and an absolute fool.

        You’d have thought after seeing what Mr Hope and Change has done that the Idiocracy would have woken up and realized that it does not matter who is in the Oval office….

        That person has ZERO power. That person is an actor/employee…

        He does what he is told. If he balks he is sat down and made to watch this:

        I would love to see Trump win — it would be even better if he resurrected Palin as VP.

        That would be the greatest comedy act since The Larry David Show….

        • Yes, I agree about Trump. With him we see an unvarnished spokesman for the Right’s real levels of hypocrisy, which they have in spades.

        • You completely missed the point Fast Eddy. Whether or not it is entertainment to you is irrelevant. You must have missed history classes or maybe you don’t see the direction things are headed.

          If you really understood we are headed for collapse and things are getting worse for the middle class you’d also understand they are going to be more likely to vote for the person that is more radical than the mainstream, middle of the road candidates.

          And no, Trump and Sanders are not the same. Try listening to their positions next time.

          • I understand what you are saying …. but their positions do not matter.

            They are stooges.. actors… the Fed runs the show … if one of them wins the Fed will decide their positions… just as the Fed decides Obama’s positions…

            And when the Fed collapses … it will not matter what their positions are…. because there will be utter chaos… there will be no centralized government

    • Stilgar

      Polarization is an interesting and dangerous phenomenon.

      But there is also switching between nominally opposed radical ideologies: it’s often over-looked that many of the most enthusiastic Nazis among the workers started as Communists in Depression Germany.

      It is the political trends that cause me most unease at the moment: I can face poverty, and even starvation and death from natural causes, it is after all our fate, but totalitarian regimes and neo-fascism?

      A waking nightmare.

      • You got it xabier. No one else did but you got the gist of what I was driving at regarding as you put it, “opposed radical ideologies.” And yes, I agree it will get much more dangerous as voters move towards more radical candidates. It’s a sign of the times and certainly very worrisome but also a reflection of the direction we are headed; collapse.

        • Stilgar

          Sometimes, I rather wish I didn’t get it…

          But when your grandfather had to hide from blue-shirted (the colour of the modern ‘centrist’ conservative party in Spain, get the connection?!) fascists and fanatical Catholic assassins in a cellar in 1936 Pamplona, it’s hard not to be aware.

  9. Is that an invitation to join survival moms????

    Can I ask them how they will rape-proof their daughters when the bad men show up at the gate demanding the organic veggies and more?

    • Easy Eddy, they will beat them over the head with their drumming sticks.
      Survival Mom is one hell of a website and super tips to make it past the bottleneck. Also, gives us a gage on what others are doing and thinking. Great feedback, hope to be there soon myself.
      Maybe you can tame down a bit and join in on what you are doing in NZ?

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