What really causes falling productivity growth? The answer seems to be very much energy-related. Human labor by itself does not cause productivity growth. It is human labor, leveraged by various tools, that leads to productivity growth. These tools are made using energy, and they often use energy to operate. A decrease in energy consumption by the business sector can be expected to lead to falling productivity growth. In this post, I will explain why such a pattern can be expected, and show that, in fact, such a pattern is happening in the United States.
Preview of Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.
Background
The problem of falling productivity growth seems to be a concern to many economists. An August Wall Street Journal article is titled, Productivity Slump Threatens Economy’s Long-Term Growth. The article says, “Productivity is a key ingredient in determining future growth in wages, prices and overall economic output.”
The general trend in falling productivity growth does not seem to be particularly recent. OECD data shows a long-term pattern of slowing productivity growth, dating back to the 1970s for many developed economies.
Figure 1. Five-year average growth in productivity per hour worked based on OECD data.
Falling productivity can be expected to affect wages. Figure 2 shows that in the United States, wages for both low and high paid workers increased much faster than inflation between 1948 and 1968. Between 1968 and 1981, wages for both sets of workers stopped rising. After 1981, wages for high paid workers (“Top 10 percent”) have risen much faster than for the bottom 90%. This reflects the way this lower productivity has been distributed to the work force. Low-wage workers have been affected to a much greater extent than high-wage workers.
Figure 2. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.
A Major Culprit in Falling Productivity Seems to Be Diminishing Returns with Respect to Oil Extraction
Many people believe that the only oil problem we need to worry about is the possibility that supply will “run out” at some point in the future. In my opinion, the real problem is different. What we are experiencing is diminishing marginal returns with respect to oil supply. In other words, it is becoming increasingly expensive to extract and process oil. Total costs, including wages for human labor, the cost of capital, the cost of energy to extract the oil, and required tax payments, are rising ever higher. Businesses are finding it nearly impossible to earn a reasonable profit extracting oil. If oil producers want to cover all of their costs, they need to borrow an increasing amount of money simply to cover normal business expenses, including the development of new fields (to replace currently depleting fields) and the payment of dividends.
Figure 3. Bloomberg exhibit showing that returns for three large oil companies on a “cash” basis fell after 2008, and are now at 50-year lows. CROCI means “Cash Return On Capital Invested.” Bloomberg source.
The problem of diminishing marginal returns extends to other commodity types as well, such as coal, natural gas, fresh water, and metals. Oil is especially important, because it is energy-dense and easy to transport, making it the world’s most-used fossil fuel. At the same time, we are experiencing rising costs for pollution control of various kinds, including attempts to prevent climate change.
The combination of diminishing returns for commodity production together with rising pollution control costs tends to make the world economy increasingly inefficient. This increased inefficiency affects the cost of producing many things that consumers value, including food, fresh water, housing, and transportation. Indirectly, the ability of businesses to create jobs that pay well is affected, also. I believe that this growing inefficiency in producing goods and services is the basis for the falling growth in productivity that appears in Figure 1.
Why Diminishing Returns with Respect to Energy Supplies Are Likely to be the Culprit in Falling Productivity
There are several basic issues that make our economy vulnerable to the impacts of diminishing returns:
- Energy plays a critical role in creating goods and services, and thus in economic growth.
- Energy that is very inexpensive to produce is important in setting up a benevolent cycle of greater productivity and more economic growth.
- Diminishing returns for oil and other energy products lead to higher costs of production. If these higher costs of production are passed through to the consumer as higher prices, this leads to what we think of as a recession, and a slow-down in economic growth.
- The timing of falling productivity “matches up” with falling energy consumption on the part of employers, and also with high oil prices.
Energy plays a critical role in economic growth because energy is necessary for all kinds of economic activity. Energy allows transportation to take place; it allows heating to take place, so metals can be smelted and chemical reactions of many kinds can take place; it allows the use of computers and the internet. When workarounds for problems are needed–for example, increased pollution control, or deeper wells, or desalination plants–all of these workarounds also require the use of energy products. So, the problem is not simply that it takes more fossil fuel energy to create energy products. Many other parts of the economy, including pollution control and extraction of fresh water and minerals, become more demanding of energy supplies as well.
Cheap-to-produce oil and other types of energy are important in setting up a cycle of economic growth. We think of productivity growth as being something that an employee is able to do. In fact, productivity growth is enabled by the use of “tools” that the employer (or the government) gives workers, allowing these workers to create more goods and services per hour worked. These tools can be either physical tools, such as machinery, computers, vehicles, and roads, or they can be tools provided through more specialization and training. In the case of physical tools, it is clear that energy is used both to create and operate the tools. In the case of specialization, energy is needed in a more indirect way; extra energy allows the economy to have sufficient surpluses to permit training of specialized workers, and also to allow them to have higher wages later.
Thus, we can think of human labor as being increasingly leveraged by energy-related tools. In fact, if we divide energy consumption of businesses (commercial and industrial) by the total number of non-farm employees in the United States, we find that energy consumption per employee falls very much according to the pattern we might expect, based on the rise and then fall in productivity growth shown in Figures 1 and 2. A slowdown in energy leveraging seems to correlate with the decline in the rate of productivity growth.
Figure 4. Total quantity of per capita energy used by the US Commercial and Industrial Sectors (excluding transportation). Computed by dividing EIA Energy Consumption by Sector by Total Non-Farm Employment from the Bureau of Labor Statistics.
Figure 4 shows that energy consumption per employee reached a peak in 1973. Energy consumption per employee started falling in 1974. This date corresponds to the first major run-up in oil prices (Figure 5). Oil prices, on an inflation-adjusted basis, have never returned to the very low level experienced prior to 1973.
Figure 5. Historical annual average price of oil, for a grade of crude similar to “Brent,” based on data of 2016 BP Statistical Review of World Energy.
The period between the end of World War II and the early 1970s was generally a period in which inflation-adjusted oil prices were under $20 per barrel. At this very low price level, it made sense to add a new interstate highway system and to greatly upgrade the electric grid and the oil pipeline distribution systems. Once oil became high-priced, the US greatly backed away from leveraging worker productivity with such big projects. Other changes began as well, including gradually shifting manufacturing to other countries. These countries typically had lower labor costs and a cheaper energy mix (more coal and hydroelectric, and less oil).
The first run-up in prices occurred after US oil supply reached a peak in 1970 (Figure 5). According to a presentation by Steve Kopits, the second run-up in prices started occurring about 1999 (Figure 6). By then, we reached a point where a disproportionate share of the cheap-to-extract oil had already been removed. Oil producers needed to start work on new oil fields in areas where extraction costs were higher.
Figure 6. Figure by Steve Kopits of Westwood Douglas showing trends in world oil exploration and production costs per barrel. CAGR is “Compound Annual Growth Rate.”
Oil’s diminishing returns affect the economy. As we reach diminishing returns with respect to oil production, the cost of producing additional barrels of oil tends to increase. If this higher cost is passed on to goods made directly and indirectly with oil products, we find that the prices of many products rise. Food costs are particularly affected, because oil is used extensively in agriculture and in transporting goods to market. Higher oil prices affect the cost of other types of goods, because many goods–even coal–are transported using oil. The higher cost of oil tends to ripple throughout the entire economy.
The problem, however, is that higher oil costs lead to lower productivity, because employers and governments tend to purchase fewer energy products for the benefit of their workers when oil prices are high. We end up with a mismatch:
- The cost of oil products, and many other products, tends to rise.
- The productivity of workers tends to grow more slowly. Wages rise very slowly, if at all. They certainly do not keep up with soaring oil prices.
The result of this mismatch is recession, as occurred in the 2007-2009 period. Economist James Hamilton has shown that 10 out of 11 post-World War II recessions were associated with oil price spikes. A 2004 IEA report states, “. . . a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. Inflation would rise by half a percentage point and unemployment would also increase.”
A Second Way Diminishing Returns Can Work Out Badly: Prices that Are Too Low and Oversupply
In the preceding section, I explained how oil prices, if passed on to the consumer via higher prices of other goods, could lead to recession. Because our economy is a networked system, the situation doesn’t need to work this way to come out badly. There is an alternative scenario in which oil prices stay too low for businesses extracting oil to make an adequate profit. In this scenario, it is businesses, rather than consumers, who find that they have a huge financial problem. This is the problem we are encountering now. In fact, it is not just oil-producers who have a profitability problem; the profitability problem extends to businesses producing coal, natural gas, metals, and many kinds of agricultural commodities.
The reason why this kind of low-price scenario can take place (despite rising costs) is because workers are also consumers. We saw in Figure 2 that the wages of the lower 90% of workers tend to lag behind when energy consumption per worker is falling. There are a very many workers in the bottom 90%. If the wages of these workers lag behind, homes, cars, vacations, and many other kinds of discretionary goods become less affordable. The reduced demand for these finished products leads to lower demand for a wide range of commodities. This lower demand tends to push commodity prices of many kinds lower, even though the cost of production is rising. As a result, profits for a wide range of commodity producers tend to fall in a way similar to that shown in Figure 3.
It may be that we can expect a recessionary impact, a short time after profits fall. According to Deutsche Bank:
Profit margins always peak in advance of recession. Indeed, there has not been one business cycle in the post-WWII era where this has not been the case. The reason margins are a leading indicator is simple: When corporate profitability declines, a pullback in spending and hiring eventually ensues.
The article goes on to show that there is a lag of about two years between the time of profit compression and the time when recession hits. The amount of variability is quite high, with one recession coming as soon as 4 quarters after a fall in profitability, and two coming as late as 15 or 16 quarters after a fall in profits. The median lag was 8 quarters, and the average lag was 9 quarters.
This Deutsche Bank description of the cause of recessions gives an explanation why Hamilton encountered recessions after oil price spikes. These rising oil prices affected one of the costs of production for most companies. These rising costs compressed profits, and eventually led to recession.
This description of the cause of recession shows how recession can also ensue if commodity prices remain too low for an extended period. We know that oil prices began falling in the third quarter of 2014. It is now two years later. Profit margins of many commodity producers have been squeezed. We have already seen layoffs in the oil and coal industries. In this low-priced situation, companies are affected unevenly: some benefit from low prices, while others are hurt by low prices.
Commodities are often essential to economies, especially for countries that export commodities. These exporters are especially likely to be affected by low prices. Impacts are likely to include civil disorder and falling production, similar to what we are now seeing in Venezuela.
Oil importers are dependent on oil exporters, so eventually oil imports must drop. Low oil prices are likely to lead to a drop in locally produced oil products as well. As a result, we can expect that less oil and fewer other energy products will be available for leveraging the labor of human workers. If past patterns hold, we can expect a further decline in productivity growth. Rising oil prices are not really a solution either, because, as we have seen, they tend to lead to recession.
Diminishing Marginal Returns Don’t Just Go Away by Themselves
Economists claim that the law of diminishing marginal returns operates only in the short run, because in the long run, all factors of production are variable. This statement might be true, if we lived in a world without limits. In fact, the amount of arable land is very close to fixed. We have not found a way to stop population growth, either. As a result, the amount of arable land per person is falling. We need to keep finding ways to produce increasing amounts of food per arable acre of land. Doing so typically requires energy products, including oil.
We are having similar problems with fresh water supply. We can solve our falling fresh water per capita problem with deeper wells, long-distance transport, or desalination. Any of these workarounds requires energy products.
Of course, we have had diminishing returns with respect to oil supply since the 1970s. We have not yet found a reasonable workaround. Intermittent electricity is not a reasonable substitute; it does not power existing airplanes, trucks and most cars. When all costs are considered, intermittent electricity tends to be very expensive. Experience shows that if subsidies are given for intermittent electricity, they are needed for other types of electricity generation as well.
Figure 7. Figure by Euan Mearns showing relationship between installed wind + solar capacity and European electricity rates. Source Energy Matters.
The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise.
As a result, when businesses use falling amounts of energy per capita, we should not be surprised if productivity lags, and if wages for many workers barely rise with inflation. It is possible to get some productivity gains through education, but it is very unlikely that these gains are as large as when more capital goods are used, as well as more direct use of energy. There are also clearly diminishing returns with respect to education and training; for example, if we need 10,000 additional dentists per year, training 50,000 additional dentists per year would not be helpful.
Can We Solve Our Productivity Problem with Lower Interest Rates, or with Increased Deficit Spending?
I wouldn’t count on it. Our problem is an energy problem.
Increased deficit spending could perhaps raise commodity prices a bit, and thus help the profitability of companies producing commodities. The reason commodity prices might rise is because increased spending by governments would act to supplement the low spending by workers who are suffering from low growth in wages. The sale of goods might rise for a while, but productivity of workers would still lag. Economic growth would, at best, remain very slow. If the economy were headed for recession or the collapse of commodity exporters, that situation would continue to be the case.
Lower interest rates would likely be even less helpful than deficit spending. There is no guarantee that these low interest rates would lead to increased spending on capital goods that would benefit workers. Banks in Europe and Japan would likely have even more problem with adequate profitability than they do now. Bank failure would become even more of a concern than it is now.
Our problem is really a lack of very cheap-to-produce energy that can be used to inexpensively leverage the labor of human workers. This energy needs to be of the correct kind to match the requirements of existing equipment. Without this leveraging, it is likely to be impossible to fix our productivity problem.
The June solstice in the year 2014 in the Norther Hemisphere was on Saturday, 21st of June 2014
http://www.financialsense.com/sites/default/files/users/u3089/images/2014/M1.jpg
Then on the 23rd of June 2014 the oil price started to fall with the falling sun. Astrology really works. As above so below.
I have always thought all that bloodlines, solar cult, s-tanist, flat earth cr-ap was part of the disinformation campaigns the intelligence community is doing to keep people.. disinformed.
Silk Road was heavily infiltrated by co intel pros/ agents. Yoshua are really in to these sort of things, or just messing with us??
Disinformation indeed.
http://poster.keepcalmandposters.com/3733350.jpg
Yup, the money.. indeed follow the money. But for once it would be nice to hear the solar cultists, osiris tomb, elite bloodlines people mention Richard Carrier or Robert Price, how the Bible is completely made up..
I like a good fantasy story, but lets not forget what is pure fantasy, and what is based in reality.
Genesis 1:26 – “And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth.”
Look how well that turned out…
It could of course just have been a coincidence that the oil price started to fall after the summer solstice.
There could also have been a downward pressure on the oil price for some time, but held up artificially by the central banks to give the Wall Street banks enough time to adjust their derivative bets… and on a signal marked by the solstice they just let the oil price collapse.
Everybody uses oil. When companies need more profits, the best way to increase corp. profits, is to play the futures market on oil and dump the oil prices.
But despite the oil prices being artificially low, profits have plummeted, nontheless.
Solstice or not solstice, the price of oil had to be managed lower..
The end of QE3, Fed’s interest rate hike and the strong dollar obviously have had a downward pressure on the oil price. The Fed would then manage the oil price lower by returning to normality.
The QE’s and the ZIRP could perhaps then also be called managing the oil price higher.
The Fed and Wall Street obviously have a lot of power over the global economy.
The Fed, Wall Street and all those trillions that keep somehow mysteriously missing from the Pentagon. Again and again. http://www.thefiscaltimes.com/2016/07/31/Pentagon-s-Sloppy-Bookkeeping-Means-65-Trillion-Can-t-Pass-Audit
As oil prices trend lower; at what price does the system break. I say below 20 dollars a barrel. Oil companies are likely to be in trouble in about two years when oil hits the 20s.
The oil companies and central bankers are still in denial about this.
They’re in denial about everything. I believe they mostly understand what’s happening on a visceral level, but choose to ignore the problems, because they make them feel uncomfortable.
Out of sight, out of mind…
They’ve been bouncing around the mid 40’s for what seems like a couple of months now.
right now our oil driven infrastructure is supported by the high EROEI of the legacy oilwells, (saudi etc)
The world economy can currently afford the delusion of affording the extraction costs of the Bakken and Athabasca.
when they begin to falter the entire “tight oil” business will seize up
It’s already plummeting in terms of output but with the current supply glut it might be awhile before the slack is taken out of the system. That is provided we don’t start wading heavily into a recession here in Q3-4 of 2016.
yes the current supply glut is a short term anomaly
when that is removed from the system—we may arrive at the cliff we’ve been expecting
i only hope my roadrunner legs keep whirling for a while after that
I don’t know if it will make much of a difference in the short term. Other countries are making up the difference and talking about increasing output. Russia, Iraq, and Iran for example all want to produce as much as possible. Also the oil companies will get bailouts the moment they go under. I’m not sure I believe this will make much of an impact over the next few years if things can just keep limping along.
It’s like Granny spending her retirement nest egg….
Just where the El-ders want the price…. they pushed them over $100 to ensure that cash would be sunk into new exploration and wells ….
They dumped them down to $30 to give a last shot of adrenaline to the dying horse…. that of course didn’t have much of an impact…
So now they just keep oil trading in a narrow band…. just enough to keep producers barely alive…. not high enough to blow out the economy…
“Just where the El-ders want the price…. ”
It seems like you are not a Belieber after all?
Make up your mind. Is the economy operating by market fundamentals or tightly controlled by the elite? You can’t have both the cake and eat it.
Waiting for that ‘crash’ or simply just realize you are yet another delusional pleb in a plutocracy rambling on and on, on some random doomster forum on the internet.
https://cdn.meme.am/instances/400x/58142813.jpg
No subsidies in NZ agriculture? Give me a break!
They took the Carbon credits from forestry and gave them to Farming
They have an artificially low ACC rating so pay less employment injury insurance
They pollute waterways with near impunity
The Govt continues to subsidise irrigation schemes and agri research
All trade deals are based on a better deal for agriculture; everybody else takes the leftovers or gets run-over
Seasonal labour for agriculture have special immigration status
Regional councils etc are stacked with farmer reps.
The Island of Nauru was destroyed for its phosphates for NZ and Austr.
Palm kernel extract imports depend on the destruction of tropical forests
etc
etc
…some people are so deep in their subsidies they are like fish who can’t see the water
What you’ve listed there is a long set of preferential policies rather than subsidies. Sorry to play semantics but there is a difference.
subsidy
“a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low”
Some of the things you state are actually counter-factual. For instance most irrigation schemes are now privately funded and ag research is steadily shrinking pie.
Nice that you are aware of the evils of the agricultural-parliamentary complex but identifying the rort as a system of subsidies is misleading.
I thought I’d check the figures for you on those irrigation subsidies.
It seems that irrigation subsidies started in earnest in 2013 and never amounted to much of a bean before then. I can’t find a complete breakdown but according to the five year budget (and 2015 additions to it) which was set up in 2011 approximately 40 million dollars will be spent this decade by the govt on regional sized schemes. To put that in some context the dairy industry alone would ideally have revenue of approx 120 billion over the same period. Doesn’t that make the case for saying there is virtually no subsidy in real terms? In what world does a 0.00000000003 percent contribution equal perdifirous manipulation?
If one was to apply your definition of subsidy then I could claim that the possum-fur industry is being ‘subsidised’ by the use of 1080 poison because picking up dead possums is easier than shooting or trapping them. Or that the education industry is being ‘subsidised’ by the government’s refusal to criticise China’s practice of dumping cheap steel. Do you see how contorted it becomes?
mmm I think your understanding of subsidy is to narrow; if you socialise the costs and privatise the profits this is a subsidy, and if you follow the politics you see the subsidies. The NZ govt has cleverly gone away from its direct cash injections to farmers, and used legislative means to achieve the same
I will try not to bore the non-NZers: A recent example is the attempted swap of ‘a valuable pocket’ of conservation land for worthless regenerating bush in southern Hawkes’ Bay to facilitate an irrigation scheme and the shrinking/suppression of the report from the (Govt) Conservation Dept about the merits of the scheme under political pressure. A subsidy for irrigation via devaluing the conservation value of a recognised area of diversity. This is a subsidy.
Another recent example, the sacking of the Canterbury Regional Council due to ‘incompetence’ … i.e. not (over!) issuing enough irrigation consents and stacking with Govt appointees. This is a subsidy.
The removal of the classification of ‘contaminated land’ for farmland for the high levels of cadmium in the soils; farmers avoid the cost of cleaning/remediating these soils and/or changing from their (cheap) fertiliser supplies. This is a subsidy.
Yes and of course there are endless lists of subsidies in other industries. Doctor, lawyers, universities and the fossil fuel industry are rife with graft. My input related to the claim, earlier, that there are NO subsidies in NZ agriculture. This is clearly rubbish and merely a mantra of the industry, similar to the clean green mantra of the tourism industry.
So….
I stopped by an antique shop today …. and walked out with the following End of World Party gear:
– one brass and glass oil fired chandelier — not quite a disco ball — but there will be light (there are 20 or so 5 litre jugs of light oil in the 20 ft container)
– one of these along with 20+ records (louis armstrong big band etc…) — and plenty of spare needles —- there will be music – no disco music but there will be no disco ball so that is fine….
http://www.gramophones.uk.com/_Media/hmv_8jpg_large.jpeg
I will try to locate this album
FE can you find any charts regarding the rise and fall of disco?
They may correspond to changing trends in productivity, wages, lower 48 oil production and interest rates.
Disco became House music became Drum and Bass.
Conventional oil became Deep Water became Unconventional.
There has to be a connection.
Greatest hits, not only Disco:
https://www.overthinkingit.com/wp-content/uploads/2008/09/rs-500-us-oil-production1.jpg
https://www.overthinkingit.com/2008/09/23/the-hubbert-peak-theory-of-rock-or-why-were-all-out-of-good-songs/
Peak rock music. 60s and 70s.
Only old people listen to Rock, when now we have Progressive House: https://www.youtube.com/watch?v=t-0D-qfgnwk
amazing! old Slim got her programmed to walk and chew gum at the same time. positively high tech.
Massive Koombaya moment
http://img-s-msn-com.akamaized.net/tenant/amp/entityid/BBwteUQ.img?h=972&w=1456&m=6&q=60&o=f&l=f&x=1396&y=631
Paris climate deal passes milestone as 20 more nations sign on without ‘the faintest idea how they’re going to achieve the goals’
UNITED NATIONS — More than 20 world leaders tendered legal documents on Wednesday, formally binding their governments to the Paris climate accord at a General Assembly ceremony here and all but ensuring that the agreement will go into force by the end of the year.
The specifics of each country’s plans, though, are voluntary. There are no sanctions for failing to control pollution or to put economic polices into practice, or for submitting unambitious pledges.
The legally binding portion of the Paris accord does little more than require governments to continue to convene at high-profile global climate summit meetings, make public pledges to tackle global warming at home and submit those plans to be published on a United Nations website.
The ultimate importance of the climate accord will be determined by its members.
Pass the bong… 😀
These are just gestures to make it look like governments care, sort of like when greet one another with “how are you” even though they don’t give a crap. Speaking of bongs, I got some Old Faithful curing right now and my R4 plant is going to be harvested pretty soon!
Awesome 😉
I’m in Oregon and this is completely legal. This plant’s mother was 20% CBD and 3% THC but I plan on letting it convert to CBN so it’ll just put me to sleep. I use it for insomnia and migraines. Let’s see if the picture posts correctly. [URL=http://s1079.photobucket.com/user/TangoOscar36/media/14466395_10153932106542423_1170877586_o_zpsnkimg0gq.jpg.html][IMG]http://i1079.photobucket.com/albums/w510/TangoOscar36/14466395_10153932106542423_1170877586_o_zpsnkimg0gq.jpg[/IMG][/URL]
World trade in merchandise is a reflection of the global goods-producing economy. And it just can’t catch a break.
The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released the preliminary data of its Merchandise World Trade Monitor for July. The index fell 1.1% from June to 113.4, the lowest since May 2015 – a level it had first reached on the way up it in September 2014.
The chart shows that merchandise world trade isn’t falling off a cliff, as it had done during the financial crisis, when global supply chains suddenly froze up. But it’s on a slow volatile grind lower. And compared to the fanciful growth after the Financial Crisis, it looks outright dismal:
http://wolfstreet.com/wp-content/uploads/2016/09/World-Trade-Monitor-Volume-2012-2016_07.png
http://wolfstreet.com/2016/09/22/merchandise-world-trade-in-volatile-grind-lower/
Kingdom Comedown: Falling Oil Prices Shock Saudi Middle Class:
http://www.wsj.com/articles/kingdom-comedown-falling-oil-prices-shock-saudi-middle-class-1474623003?mod=e2fb
One comment from the article:
“we found it. we produced it. we developed it. they expropriated it.”
All hail late Max Steineke as the Saudi civilization enters twilight.
https://upload.wikimedia.org/wikipedia/commons/3/3b/Max_Steineke_in_Saudi_Arabia_1938.jpg
So long, and thanks for all the oil.
It is pretty easy to believe that middle class people are doing worse in Saudi Arabia. I am sure their purchases are down now.
I was driving to the southern tip of NZ today…. and passing quite a few dairy farms…. and my thoughts turned to cows… and milk…
When prices went through the roof for milk solids the dairy industry in NZ ramped up big time…. incurring big debts
Now that prices have crashed most are losing money — yet they keep producing because so long as they pay at least interest to the banks they are allowed to stagger on…. the money is already sunk into the herds, gear and land….
The banks are floating them hoping prices will increase….
Essentially this is the exactly what is happening in the oil industry.
The Chinese shorted that “industry” by stockpiling milk products. Now they have cheap milk products and the cronies at the politburo can scoop up some close to bankrupt el’ cheapo dairy farms for their friends and family. Wise move.
Here in New Zealand we are being encouraged to believe that all shall be well because the Chinese have an endless and insatiable (forever increasing) thirst for everything and anything we might offer them. Including selling milk and dairy products to a predominantly lactose-intolerant populace.
Now that the Chinese economy is not experiencing the strong growth that we need it to. .. all we need do is convince each other that China is still growing and shall pick up the pace of growth quick smart. Pay no attention to all those pesky issues behind the curtain.
What’s the situation with agri sector and especially diary subsidies in NZ ? As it is probably well known to others but I stress it again, most of the small scale EU agri is primarily supported by diary oriented subsidies. The bigger land-size boyz are in total more sucking from the cheaper fuel, biogas electricity, credit backing and other per ha based subsidies. But overall one is certain, it’s being all massively propped up, nowhere near able to stand on their own.. Interesting what’s going to happen in the future with respect to overall industrial triage..
dairy rather, lolz..
No agricultural subsidies in NZ. Hasn’t been for a LONG time.
However one could consider the extreme willingness of the Australian banks to lend to such an oversubscribed industry a kind of private sector derived subsidy?
There is a grant available from local governments if a farmer chooses to properly fence their waterways in order to protect against faecal contamination… but the nitrogen time-bombs have already been laid in the subsoil over many decades and fresh water here is d-d-d-d-doomed.
Curt, are you following werewolf.co.nz or scoop.co.nz?
The need to diversify away from pine forestry and dairy farming is drum that has been beaten in this country for decades. Now… it seems a little late.
I always say: “A small Pacific Island nation that depends on or two cash crops and tourism cannot borrow its way to prosperity”. And now we find ourselves in the midst of the world’s MOST egregious property bubble … Kiwi exceptionalism is about to meet the realities of ‘keeping up with the Joneses’.
I occasionally look at the scoop website, but it does strike me as being rather poorly designed – even though the quality of the news content is inclined to be better than the commercial mainstream.
I agree with your comments regarding the New Zealand economy. I have long thought that we are living well beyond our means. We are rushing headlong into chaos and despair, but doing so with a joyous spring in our steps.
The mayorlty contest here in Auckland is a case in point. People are happy to support promises of an additional harbour crossing, not interested in hearing that it would be a waste of resources due to the various systems and resources trends we already see in play around the world.
Though I see we have here in New Zealand the potential to be better as a place to live after collapse than almost anywhere in Europe or the USA, I see also that we are doing nothing to realise that potential and everything to make it more difficult to do so moving forward.
Oops I just used the word m-ary-wan-a and forgot that’s on the naughty list.
The world economy has been very dependent on China as the engine of growth. I am sure the situation is even worse over in New Zealand.
[Is idle gossip permissible here? I’ll indulge even if it earns me some opprobrium]
Previous regular poster Don Stewart has been spotted commenting on Ugo Bardi’s blog. Perhaps searching for someone to light his hopium pipe? However it appears that Don’s particular brand of optimism couldn’t quite make the leap needed to support Ugo’s 100% renewables fantasies when he stated with OFW realism:
“the US currently consumes 9538.8 W per capita …you propose 2000 W ….The fact that [a switch to %100 renewables] may be ‘fair and equitable’ is likely to get lost in the uproar.”
It’s good that Don has found a like-minded community to join.
I sometimes miss our discussions around biology, evolution et al. (even if they were often blossoming towards too many directions at same time).
The esteemed Don Stewart will undoubtedly manifest himself on the Question Everything blog, where George Mobus is celebrating the Autumnal Equinox with a promising new series of posts on our fatal appointment with The Bottleneck.
Xabier,
I’ve read the first post yesterday and am planning to read the linked review of a W.Catton’s book:
http://questioneverything.typepad.com/question_everything/2009/11/humanitys-impending-impasse-.html
I’ll also have a look at the comment section.
Really wonder what this future “higher level of consciousness” consists in (even if I won’t be part of it).
Catton’s excellent book “Overshoot” (1982) is still in print and available for purchase at Amazon.com for about 20 petrodollars.
Looks like I’ve found some preliminary info about the “higher level of consciousness” George Mobus is talking about.
The following comes from the comment section of the 2009 review of Catton’s book “Bottleneck” (George’s answer, a bit rearranged, for simpler understanding: http://questioneverything.typepad.com/question_everything/2009/11/humanitys-impending-impasse-.html?cid=6a00e54f9ea2e588340120a6eaabbd970b#comment-6a00e54f9ea2e588340120a6eaabbd970b)
If I got it correctly, George hopes that post-collapse, the survivors will take again the “normal path of Evolution”, and continue to increase their capacity for “sapience”, which was interrupted by the advent of agriculture.
Jason,
My own view of the role of spiritual and “religious” attempts in the realm of sapience — the moral compass side — is that these are the thoughts of women and men who have been trying to explain what is already programmed into our behavior, our natural ingrained sentiments toward altruism, empathy, cooperation, and second-order consciousness (thinking about our own capacity to think!) What religions and spiritual traditions have been doing is trying to grapple with these innate behaviors and explain why we seem to have them (except for 2nd-order consciousness, mistakenly believing that other animals don’t, by the way). They have tried to codify what comes naturally to our species as part of in-group solidification (another part of moral sentiments). The details vary from culture to culture, but the universality of moral sentiments is now well established in science.
Today, most people have it backwards, thinking that without some kind of religious code, based on punishment for infractions, people would not be moral creatures. This, as much as anything, is evidence that humans have not quite reached the level of sapience needed to comprehend the world and ourselves.
Susan,
It isn’t that men are unevolved per se. All humankind is in an intermediate state between the advent of second-order consciousness and nascent sapience and what might be the case if selection conditions were to favor increases in the capacity of the prefrontal cortex, specifically the dorso-lateral prefrontal lobes. Evidence suggests this is what was happening with human evolution, but somewhere along the line, most likely with the advent of agriculture, the selection criteria shifted toward the traits you ascribe to men. And the rest, as they say, is history.
There is some hope in thinking that humans could resume their evolutionary arc toward greater sapience if the selection conditions return to emphasis on group cooperation and expansion of selflessness (altruism). But there is no way to second guess nature when it comes to evolution!
Pamur,
I don’t exactly “worry” about future humanity’s sapience. Evolution is simply unpredictable. Rather I hope.
What I do think is feasible, however, is taking some actions now, based on a scientific understanding of the genetic basis of prefrontal lobe development and behavioral correlates with sapience, to assist the survival of a highly sapient subpopulation as breeding stock for that future world. An ark, if you will.
George
I agree with the first part, I understand from the second part that next step won’t be reached, likely, before thousands years, and I’m quite disturbed by the last part and his proposal of “an ark” that would contain a part of the “skinny tail of people who are wiser than the ordinary person.” (George’s words from a comment in his latest post). Hmm…
To give George some credit and provide some context for anyone unfamiliar with his ideas, he is not arguing that collapse will be staved off or ameliorated by a jump in human consciousness (as former archdruid “If only everyone was as enlightened as me” Greer argues). Rather he is arguing that collapse in inevitable and soon approaching. Here, Stefeun, I think readers may possibly misinterpret your brief explanation of the timelines involved. It is the emergence of a new species that will be long in the making, not the short-term collapse which precipitates the novel environmental conditions.
For my two cents on the issue, though I doff my hat to the solid and intelligent body of work George has produced, I favour Guy McPherson’s ideas about the likely inability of any complex species to adapt fast enough to the type of rapid change in habitat likely to come.
FSA,
I thought I was clear re. inevitability of collapse and the timelines (ok, short because it wasn’t my main point), but re-precising it doesn’t hurt.
As for the speculation about long-term evolution, I’m also more inclined to think that the more complex forms of life will have harder time to adapt to very different environmental conditions, but who knows, homo genus has proven to be very plastic.
Scatter, Adapt and Remember..
Survival of our species seems to depend upon the Oceans.. if everything goes south, then zero habitat and -50% oxygen will be a tad hard to adapt into.. http://www.skepticalscience.com/Ocean_Oxygen_another_climate_shoe_dropping.html
Right now the science looks grim..
Luckily we don’t need to worry about such things, our immune systems generally can not handle what SHTF will bring..
So, unlike Dylan Thomas and Fast E. most of us will go gently into that good night..
Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.
Though wise men at their end know dark is right,
Because their words had forked no lightning they
Do not go gentle into that good night.
Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.
Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.
Grave men, near death, who see with blinding sight
Blind eyes could blaze like meteors and be gay,
Rage, rage against the dying of the light.
And you, my father, there on the sad height,
Curse, bless, me now with your fierce tears, I pray.
Do not go gentle into that good night.
Rage, rage against the dying of the light.
Right Van Kent,
There’s no longer anything worth raging against.
Thanks for the article about oceans deoxygenation, which seems to be more linked to ecosystems unbalance than to FF burning.
Stefeun,
In the Anthropocene everything is connected https://www.google.fi/url?sa=t&source=web&rct=j&url=http://anr.sagepub.com/content/2/1/81.full.pdf&ved=0ahUKEwjvruWx_6nPAhUJ8ywKHTj2CBwQFggjMAE&usg=AFQjCNHQKZ5pyRXO306bzajFA1MQ_40UTg&sig2=EIJT4bPCKEaKfAU9w8zOnw
Eddy rages. Norman is developing black humour one liners to an artform. Gail tries to moderate, I guess. Guess we all have our way of going forward when we know what we know.
Thanks Van Kent for those famous graphs updated.
Stunning that even those guys dare ask in the end: “Will the next 50 years bring the Great Decoupling or the Great Collapse?”
Just a few more graphs (such as Debt, Intl trade, etc..) and a little effort in trying to connect the dots (instead of desperately looking for iffy reasons of hope) would have given them the answer without ambiguity. Or maybe they know, but don’t want to tell, expecting the readers to conclude by themselves.
As you say, each of us has his own way to cope with the situation. Mine is to gather info to put the story together and try to better understand, and make my best to keep peace of mind.
If you want to see some science about the state of the oceans from a global warming perspective read this: https://portals.iucn.org/library/sites/library/files/documents/2016-046_0.pdf
The basic premise is that the oceans have been absorbing the vast majority of the warming thus far, meaning at some point they may cease to do so and the air will begin rapidly warming. Funny how the blob is now returning off the west coast just in time to ramp up California’s drought situation: https://weather.com/news/climate/news/the-blob-pacific-ocean-temperatures
My father in law was in Kodiak, Alaska this summer for 4 months. He said it was one of the warmest he’s remembered in decades and the salmon catch there was about 1/10th of what it normally is. It’s collapsing basically. I just scratch my head when people deny global warming. We are seeing an extremely serious impact right now. Not in 10 or 20 years, NOW! Our habitats are failing and our food supply is not far behind.
TO,
Yup, the Great Barrier Reef bleeching is a foreword of the biosphere collapsing.
Even if the financial wizards can keep this burning Hindenburg of a global economy up in the air for a year or two, I’m not sure if this collapsing biosphere gives enough food for 7.5 billion.
No need for expensive hydrocarbon powered machinery and transportation when we can propel ourselves and our machinery at 140km/h without breaking a sweat.
ho ho! How much energy was needed to construct that vehicle? And to contract such a nice flat road!
It is a very lightweight vehicle, the energy needed to build it is probably less than what is required to cast the block in your gas-guzzler engine, you know the particular vehicle you use for fetching the mail some 20 yards down your front door.
The residue from refining oil are used for roads. Not only does oil power most of our transportation needs, it also makes some fine surfaces for lightweight self-powered vehicles.
the asphalt will go away when the refined diesel and gasoline go away. we’ll be left with gravel and dirt roads. cement is too expensive for most places.
No worries, I got that one covered as well.
“No need for expensive hydrocarbon powered machinery and transportation”
freight and agricultural machinery come to mind… you f*$%tard
how long before you change your username again?
Yes we know who you are. And your proposed “smoting” of everyone you deem inferior.
Do us a favour and take your undeserved sense of importance to some venue where it will find itself in similar company. ZeroHedge and Kunstler seem to dominated by airs of superiority these days. Toddle off there why don’t you?
Why all the hostility? It is only the end of the world.
It seems I’m back on permanent comment moderation after that outburst…
I suppose I deserve it.
I don’t think Gail moderates. I believe WordPress sometimes get offended by certain words or even characters. Maybe even to long posts.
The system may have mistaken “K*nstler” for a naughty word.
o_O
Chill out man. It was some sarcasm in that original post. Didn’t you read the rest of the thread before going on a keyboard warrior rage?
“The residue from refining oil are used for roads. Not only does oil power most of our transportation needs, it also makes some fine surfaces for lightweight self-powered vehicles.”
Feeling better now?
Welcome Back, KGB – Vladimir Putin Planning On Reinstating The Oppressive Security Service Once Again
http://americanmilitarynews.com/2016/09/welcome-back-kgb-vladimir-putin-planning-on-reinstating-the-oppressive-security-service-once-again/
The “KGB” took over the power in Russia after Yeltsin and controls today 70 percent of the high governmental posts in Russia. With the latest state Duma election victory, the ruling party United Russia (The KGB Party) now has the right to change the Russian constitution.
Russia seems to be a little bit ahead of the rest of the world. The KGB state is now emerging from the shadows into the open sun light.
Russia is preparing for war. And has been doing so for several years now.
Check out this youtube video from a yer or so-
https://www.youtube.com/watch?v=r29k_T_o9To
This is the type of media production you see when the Russians are preparing for a national sacrifice. For anyone up to speed on 20th century Russian history, this vid should scare the bejesus out of you.
They had to rethink themselves, so in their psyche they went for the program of Russian Empire before 1914/1917 plus spiced it up with some successes of the USSR era, chiefly in technology-infrastructure. You have to take into account that from roughly 1917 till Gorbi and Yeltsin with “cosmopolitan oligarchs” at the wheel, the country was constantly under rule of various strange regional characters and mafia clans. Only now, since ~2000 most of the levers are back again in the hands of ethnic Russians for a change. And the west is only preoccupied with the “corruption” ~80ha Volga river bank lavish mansion of the #2? Medvedev guy, which in comparison to the boyz from the Gulf is just a country shack, lolz.
@worldof
Can you make sense of wrote you just wrote?
“the country was constantly under rule of various strange regional characters and mafia clans. Only now, since ~2000 most of the levers are back again in the hands of ethnic Russians for a change”
Are you trying to assert that Brezhnev and Kruzhchev were not ethnic Russians? Both had Russian parentage didn’t they? Are you also trying to say that the Russian mafia lacked ethnic Russians? Sure there were Ukrainian and Georgian elements but not to the point of exclusion of ‘white’ Russians.
Your post clumsily points to the resurgence of nationalism in Russian politics which is of course correct. However your idea that this was enabled by a handing of power from ‘weirdoes from the borderlands’ to ‘heroes of the Motherland’ may be a little off.
Oversimplification, yet true, these are short posts here, I’d wouldn’t/couldn’t elaborate in any fine detail on the politburo power composition through much of the USSR time, so I refer you to study the subject there..
“Russia is preparing for war.”
It certainly would not be the first time. They prepared for way from the end of WW II till the USSR broke up in 1989. But no war happened. I argue that the fundamental reason, a stressed population with bleak future prospects was lacking. EP is a depressing subject most of the time, but in this case, it seems unlikely that Russia will start a war, at least not a major war. Of course, some small activity always has the chance of blowing up.
You should take a bit longer time history approach.
Most if not all of the wars Russia was involved in, were on the defnsive/attacked side (Napoleon, Hitler being the major “recent” ones).
And Russian Army is still today much more defense than attack oriented.
Plus during the cold war, the West was preparing as much as the USSR.
The West is much more prone to starting wars than Russia in these last decades, that’s quite clear.
Plus the USSR “empire” was the result of WWII/Yalta, and WWII was not started by Russia for sure.
Didn’t WWII start as a joint venture of both Hitler and Stalin? They divided eastern europe in two parts. Also before WWII russia has occasionally been aggressive. Just ask swedes, finns, the baltic peoples and so on… If you want to grow big and stay big I guess some attacking is part of the game.
Russia also occupied eastern Europe for 44 years after the war.
You may like to consider how Russian military strategies have evolved since WWII. Generals today have reconsidered the “Attrition in the Motherland” strategy and have designed quick counterattack tactics designed to punish the homeland infrastructure of those who invade them.
Brought a tear my eye*.
Anyway, yes, it’s all so very deterministic, the way things will play out. The US and her NATO/Nazi/Islamist lackeys and puppets are in for ass-pounding of epic proportions. I shall grab the popcorn.
Did anybody catch the short segment at 2:05 where the camera flashes to a crowd. The funny looking dude with the bald head is Wojciech Jaruzelski, strongman dictator of Poland under the Warsaw Pact……….the segment was possibly inserted by a dissident film maker working on the video.
“Jaruzelski was chiefly responsible for the imposition of martial law in Poland on 13 December 1981 in an attempt to crush the pro-democracy movements, which included Solidarity, the first non-Communist trade union in Warsaw Pact history. Subsequent years saw his government and its internal security forces censor, persecute, and jail thousands of journalists and opposition activists without charge; others lost their lives during these same events. The resulting socio-economic crisis led to the rationing of basic foods such as sugar, milk, and meat, as well as materials such as gasoline and consumer products, while the median income of the population fell by as much as 40 percent. During Jaruzelski’s rule from 1981 to 1989, around 700,000 people left the country.[1]”
https://en.wikipedia.org/wiki/Wojciech_Jaruzelski
and the meek shall inherit nothing
LOL!
Oh they will inherit somethings…. a yoke around the neck…. and a master with a whip 🙂
Russian friend? ++ good. Will kill for you. Although your liver might not survive the experience.
Russian enemy? No, don’t risk even the smallest chance of that.
Orlov has an article up from a couple of weeks ago that shares a pretty nuanced perspective on the prospects of war with Russia. It’s a worthwhile read:
http://cluborlov.blogspot.com/2016/08/a-thousand-balls-of-flame.html
“Russia is ready to respond to any provocation, but the last thing the Russians want is another war. And that, if you like good news, is the best news you are going to hear.”
Nah, You armchair analysts of Russian contemporary society have got it all wrong!
Look at that image advertising the video. it’s not militarism they are selling, it’s the virility of aging men! All the expressions of phallic explosiveness and industrial might surrounding the youthfully-draped pensioner. They’re trying to market the believability of having octogenarian strongmen in power. Gotta prepare the way for Putin’s unending grasp on power even when arthritis weakens his grip. Either that or Viagra sales are below expectations.
Asiatic and Middle Eastern cultures – to which Russia really belongs in great part, modified by primitive Christianity -are permeated with the idea of the Big Man: preferably old, but always reassuringly powerful (ie become part of his client network and you’ll get good things, and enemies will be crushed.)
Hitler is simply worshipped by many Iranians and Arabs due to this Big Man quality.
The Western version of this, much the same at root, was the Great Man, ie Napoleon.
Ditto the ‘caudillismo” of Latin America.
Always longing for a Leader, never realising that the important thing is take to take control of oneself:
‘Know Thyself’, the oracle of Delphi over 2,000 years ago, and most haven’t caught up with the idea…….
Spent fuel ponds a problem? Well you ain’t seen nothing yet.
Let there be nukes!
http://energyfromthorium.com/pdf/CivilianNuclearPower.pdf
BAU to the stars!
Oil bet gone wrong: rusting tankers and rigs clog up Asian waters
“As an industry, they were complacent. They thought because cost was high, prices will remain high … (but) then there was the advent of shale. Since that period, there is a realization that there is no scarcity of oil.”
http://www.reuters.com/article/us-asia-oil-glut-idUSKCN11R2YI
This is primarily a demand issue — I fail to see how low oil prices would result in oil tankers being idled…. they are built based on projected demand for oil….
What’s it gonna be… Japan? Europe? Where is the
http://blog.cheaperthandirt.com/wp-content/uploads/2012/05/triggerfinger.jpg
Europe and Japan are too loaded too pull the trigger.
State of emergency called to quell Charlotte unrest over police shooting of black man
http://www.reuters.com/article/us-usa-police-idUSKCN11R1GS
Plan B Martial Law Lite…. is very close now….
Can you smell the beast’s sour breath?
The central bankers most certainly can…. and they are going to put troops onto the streets… in a last stand to prop up BAU awhile longer…
Whatever it takes… is about to be no longer enough….
The Fall (Autumnal) equinox is today Sept. 22nd 2016. Our beloved elites are Sun worshipers and believe in astrology. The Fall equinox demands human sacrifices and sex rituals. Strange behaviour and disappearing children is just our elites taking in part of the human harvest.
Does the human harvest include creepy clowns??http://www.telegraph.co.uk/news/2016/09/20/creepy-clown-sightings-are-spreading-across-the-united-states/
They are obviously just helping to bring in the child harvest. Who knows, they might disappear as well to avoid gossip ?
This is a rather strange numerology reference video by Christine Lagarde made in 2014 that I ran across.
Obsessed with numbers ?
https://youtu.be/ajlPpGjXEZM
I sent a link to my husband. He has a Ph. D. in Math (Number theory).
So did anything of significance happen on 20 July 2014?
The oil price started to crash.
http://blogs-images.forbes.com/advisor/files/2014/12/Crude-Oil-Prices-3.png
https://www.google.com/#q=57-nation+alliance
I need good info — is the US dollar about to be dumped?
We discussed along this structural stuff lines here numerous times. Chinese are by the end of Sept 2016 finally included in the global reserve pool SDRs, hence the weighting of other participants (US, UK, JAP, EUR) inside the basket will slowly decrease. For example, Morgan Stanley estimates ~$2T of US treasuries in the pool will be replaced in ~10yrs by Chinese equivalent. It could go faster, slower, sideways and bumpy, who knows, but one thing is certain the world/global is rebalancing out of the current single pivot system. So, if you are an American or European expect rather visible deterioration of your living standard from now on, irrespective of future stimulus attempts be it next QE, helicopter drop, debt jubilee, 3-4day work week, migration influx and other planned/discussed schemes for the ~2035 horizon.
The US record breaking debt depends on the petrodollar. Without it, instant system wide collapse as US can not get more debt, continue consumption, or export inflation.
The dollar can be split in to a domestic dollar and a petrodollar. Also the Chicago Plan can be implemented https://www.google.fi/url?sa=t&source=web&rct=j&url=https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf&ved=0ahUKEwiXwb2AnKPPAhWmNJoKHeX3DZAQFghBMAo&usg=AFQjCNELCV4djVy57jR7h30lBFlqYSdODg&sig2=joW83TRXlH6Ru4TzsGzavQ
The dollar can not be dumped as it is http://www.usdebtclock.org/ other measures have to be taken first.
Yes. But my post was not about dumping but rebalancing as a process, which is a very slow one (per single human experience), it could take perhaps another 2decades or a bit less if the depletion/ELM kicks seriously in mid 2020s or other systemic destabilizing factor aka huge war.
For the global owners the US doesn’t provide much now, almost all the possible technological transfers already happened, for the future perhaps the agriculture (water) and some mining could be still useful.. but this last act incl. very impoverished population will play out only when the SDR basket is rebalanced few dozen percent more away from the USD/EUR debt..
According to the document, “under the Chicago Plan the quantity of money and the quantity of credit would become completely independent of each other.”
Money creation would not require interest payment, while other debt would. At this point, interest rates are so low that the advantage would be relatively small.
I still see “money” as debt, regardless of what kind of backing it supposedly has. It only has value if there are things to buy with it.
I think the big issue is that with the US dollar as the petrodollar, the US’s standard of living has been able to be higher than it should have been, because it can continually borrow, while other countries cannot. I was expecting that with lower oil prices, the US balance of trade would not be as negative as in the past, but I don’t see much impact in the actual dollar amounts. http://www.tradingeconomics.com/united-states/balance-of-trade
Maybe the issue is more with how the dollar floats with respect to other currencies. If the dollar is high (as it is now), the US is busy buying imports (other than oil) and has a hard time selling its exports, so it still runs a big balance of payment deficit. This has to do with lack of QE in the US, and its higher interest rate policy.
I don’t think I fully understand this subject.
I’ve been reading Jim Rickards, to get some grasp of the debt/dollar/currency-war situation. And I’m not sure if anybody really has an in-depth understanding of the subject..
We just know a few things; Chinas growth is slowing down http://www.tradingeconomics.com/china/gdp-growth-annual there are limits to growth and China is reaching its limits, China slowing down will drag the world economy in to a recession/depression/over the cliff. US has been in a recession/ depression for a few years now http://www.zerohedge.com/news/2016-09-23/what-if-were-depression-dont-know-it
If interest goes up, the debt will default.http://www.usdebtclock.org/
If interest stays the same or NIRP, the banks go belly up. With Deutsche leading the way.http://www.zerohedge.com/news/2016-09-22/german-politicians-are-getting-nervous-about-deutsche-bank
So, for an example. It doesn’t really matter the IL based Caterpillar if the dollar is strong or weak. When China slows down, Caterpillar sales go down nonetheless. http://www.caterpillar.com/en/news/corporate-press-releases/h/caterpillar-reports-2015-fourth-quarter-and-full-year-financial-results-provides-outlook-for-2016.html
Will the US dollar be dumped? Will SDR:s become the new petrocurrency. What is the yuans role in the global currency war? In this Twilight Zone that has been created, where nothing is real anymore, who knows what will be tried next..
I am having a hard time seeing that this could be more than another (smallish) source of debt for those who cannot get loans elsewhere–perhaps doing badly because of low commodity prices. Maybe I am missing something, though.
Mark Zuckerberg pledges $3bn ‘to end all illness’
Facebook founder and wife Priscilla hope to use tech and knowledge sharing to eradicate disease
The couple, who have previously committed 99 per cent of their Facebook shares to charity, said the money — distributed by the Chan Zuckerberg initiative created last year — would be designed to “cure, prevent or manage all diseases by the end of the century”.
https://www.ft.com/content/a70ccc2e-8093-11e6-8e50-8ec15fb462f4
I’ve told Mrs Fast to lock up all the guns and knives… I am feeling …. unstable… everything is spinning out of control…. it’s feels like Mike Tyson has hit me with a hard right…
https://www.youtube.com/watch?v=NzlG28B-R8Y
All we are saying … all we are saying … all we are saying… all we are saying .,… row row row the boat…. my dingaling every body sing… I’m sorry Dave, I’m afraid I can’t do that…. hops and buzzes… hops and buzzes… I … need…. help… where are my pills darling…. purple kool aid all in my brain ….Excuse me while I kiss the sky… When seagulls fly…. you are either with us or against us! …. imagine… if you’re happy and you know it…. I love the smell of napalm …. the man’s a genius man…. just last…. PBR street gang… over…. winning!…. communication breakdown…. I’ll buy that for a dollar…. Walter Cronkite and the lady boy…. spiral… hole in one! — Xanax vs Abilify … boots are best when made of leather…
Can someone give me some &^% context for this? What is the context? I am flying *&^%^$ blind here people….
https://luckybogey.files.wordpress.com/2010/03/ss-100119-dennis-hopper-1979-apocalypsenow-ss_full.jpg
Oh woe is me…. I feel sick… I think if I don’t get a free private jet… and fuel … and a pilot… that my sickness will spread… and kill millions…
Mark…. Priscilla… are you listening … do you hear my prayers… do you see my plight… do you understand what needs to happen here?
Act now….
maybe they’ll let you use their wall—-on the outside obviously
no riff raff inside
The knowledge to end most of the diseases is already know… healthy, natural and unprocessed food (whole, plant based, less fats). Unfortunately all the big food corporate don’t want that this knowledge is widely spread, as it would evaporate their business model – the same as many many doctors, surgeons and the like.
That “cure, prevent or manage” reads to me like new business model – my model removes a lot of business and enacts more a direct a producer-consumer model.
Ert, First tought what came to my mind after reading Zuckerbergs idea was wow, he wastes his wealth by trying to threat symptoms of fast food & environmental poison related diseases. How typical lack of holistic thinking to leads to waste of resources, what could have been used so much better. How about free concentraptives to 3rd world`s poor, or even just American poor, would have been so much better investment, but no. ->facepalm.
@Kanghi
Full agreement! But less people in the world == less potential Facebookers. He also wants growth… as his best customers, the advertisement industry and their customers: The big corporate world!
There is no facepalm… he knows, the Google guys know (look at Singularity University nonsense), Musk knows (but accelerates the doom with 750HP Teslas, space rockets and high-energy-intense batteries), Gates knows….
Reminds me of the wife of the exec who was telling me that everyone should be eating only organic food…. she could not understand why so many are willing to eat non-organic…
How is it that one can feel so alone — in a world of 7.4 billion people?
FYI the Inuit people didn’t eat anything close to a plant based diet ( about 80 years ago) and were a very robust people. Protein and fat were their calorie source as it is mine. Check out “Weston Price foundation “
The inuit are the global exception (also genetic), don’t reach 100 by far (Okinawa, Adventists,Hunza, etc.) or even an average age of 85, show in autopsies all the problems of a high fat diet. The WPF stuff needs lots of updates, since 100 years ago we learned much more about nutrition. Also that what I propose doesn’t go against what price had said. I’m all about going back to a natural, whole, plant based and low fat diet as it was the standard for many many millennia.
Tip: Check you cholesterol level. If they are above 150 – its not good. If they are above 190 you certainly will degrade your genetic living potential and have high risks of developing dementia and other illness before its your specific time.
You are not of the opinion that HDL is good any HDL/LDL may be more important than total cholesterol.
I could Google this, but what kind of scale is it? I’m more familiar with HDL and LDL around 1.5 if good and total above 5 if bad … (Very circa)
Also you seem to be of the opinion that cholesterol today affects health in ten years.
HDL/LDL ratio is not important, or only if total cholesterol is above 150 – which is not good anyway. LDL should below 70ml/dl – thats it. Watch: http://nutritionfacts.org/video/optimal-cholesterol-level/
And yes, total cholesterol affects lots of stuff in the future… read Essestyn (prevent and reverse heard disease) or search nutritionfacts.org for cholesterol. Dementia is one of the bigger issues, too.
I don’t want to be that far off-topic here… so I keep it to this post.
Oh, I was only implying most here believe no turkey next christmas, then cannibal hol o cause and everyone dead anyway.
If this drags out 20 years or so, maybe good health is the best prep.
@DJ
O.k. that reply on-topic now 🙂 I think no one should think he can or will predict the future with any degree of certainty. The whole game may drag out… so I try to act in a way that leaves me the most room to act. I think that Gail has figured out the fundamental… but no one knows how long the central bankers and the like can keep the system going… extend and pretend.
And I think that a good physical and mental health is fundamental to everything – in the future, now and in the meantime 😉
“The inuit are the global exception”
It is a myth and it’s about goddamn’ time to bust it.
I linked that video below… and still – the inuit are better adopted to the meat diet that the more southern cultures (“we”). Still… the diet is far from optimal for the human body… if you want to procreate and read 40… don’t care. But if you want to get 80, 90 or older in good health (as far as your (epi-)genetic potential is there)… stick to some principles.
“if you want to procreate and read 40”
I have plenty of friends and relatives with severe heart conditions and they are not older than 40. My uncle died from a myocardial infarction when he was 32. Pointing the finger of blame on heredity is just too convenient for my life philosophy.
I enjoy having a good health and decent athletic performance. I achieve this by some 2h training every day and I consume a 99% animal foodstuffs free diet. Though, occasionally some moose meat end up together with the fruit, rice, potatoes, other starches and veggies.
Inuit had no interest at all in living to a great age: by definition, the elderly in their society were utterly useless, being no longer either hunters or breeders, and weak and dependent.
They had already passed on all their skills and knowledge, procreated, and protected their young until adulthood – mission accomplished.
The few elderly Inuit suffered terrible depression arising from feelings of worthlessness in consequence, and were barely tolerated – and fed – by the young.
a result of their environment
at the equator, there was usually sufficient resources to supply the elderly—-not so the further north/south you go
Old folks are prone to death by hypothermia when the ambient temperature is low. That alone would be bound to limit Inuit lifespan unless they had good central heating during the long dark Arctic winters. I don’t think giving them more greens and roughage would help very much.
rice, potatoes, other starches…
Smite, I take it you’re not a fan of the Atkins diet.
It seems to me a miserable existence to give up French bread, baked, mashed and fried potatoes and all those marvelous rice dishes we have in the orient, but a diabetic friend who says starch is all poison to him, assures me that he has a great time on fish, dairy and green vegetables.
“Smite, I take it you’re not a fan of the Atkins diet.”
Not if I want to sustain 300W for an hour on my bicycle.
My body needs BAU carbs that burns with a clean blue flame. 🙂
Occasionally before training I even add some extra refined fructose and sucrose to my smoothies. Sugar for the body is like kerosene for a jet engine.
Your friend is most likely a diabetic because of poor insulin sensitivity caused by overweight and a meat/fat/oil rich diet.
https://www.youtube.com/watch?v=fRZduVxlP_U
Keep up stuffing in those carbs, and cut out fats/oils and too much animal products. Just like the Japanese have been doing since forever. No wonder they age well and live long lives.
I’m taking a cocktail of HGH, testoterone injections and doping my blood — in an effort to break my record on the rowing machine… I’ve never felt so healthy!
This is a good video. A large share of the world’s population lives on a lot of carbs–these are usually the cheapest foods. As long as they are not finely ground, or turned into sugar, the body seems to be able to handle them. A large amount of fiber in the diet seems to help as well.
Time to go back to medical school FE!
You are talking about old ways of sports doping and you forgot one of the most powerful recovery drugs: Insulin. And of course the use of painkillers and noninflammatory agents to push through pain.
It is not as much of a battle between the athletes anymore. The battle now is between the doctors and a tactical choice of pharma drugs.
https://www.youtube.com/watch?v=Gq9ytX0G5BM
“If you don’t dope, you wont cope!” in today’s ‘sports’.
I’m bringing in Lance Armstrong next week to bring me up to speed… whatever it takes….
Lance knows jack sh1t.
Talk to Dr. Michele Ferrari instead he’s the brain behind Lance’s performance.
http://www.53×12.com/
Amazing video on Insulin Resistance. I’ve learned a lot from it and now I find also have to unlearn a few things because of it. Thanks Smite.
“Amazing video on Insulin Resistance.”
Dr. Greger makes a fantastic job of communicating advances in medicine and nutrition research. Consider subscribing to his channel and/or donating some money for his cause. 🙂
As the enlightened man you seem to be, always read the studies in the video references and always stay skeptical. Who knows, he might be cherry picking studies that conform with his bias, just like the meat, poultry and dairy industry seem to be busy doing? 😉
Or you could do like Don and Gail, try out a mostly plant based diet and see if your health markers and general well being improve.
http://www.builtlean.com/2013/07/22/health-markers-track/
I’m only speaking for myself but I know my brain is comprised of 80% cholesterol so I certainly don’t want to reduce that but I am aware that LDLa has potential to be a problem. Store bought fats can be problematic but I’m able to source wild meats or raise my own grass fed which has the ideal omega 3 vs omega 6 ratios. Off topic I know but without dentist or doctors you do what you can to stay healthy.
Your body synthesizes the cholesterol it needs.
Thus no need for extrogenous cholesterol.
https://www.youtube.com/watch?v=HtpvsT5vGCg
“Your body, and especially your liver, makes all the cholesterol you need and circulates it through the blood.”
http://www.heart.org/HEARTORG/Conditions/Cholesterol/AboutCholesterol/About-Cholesterol_UCM_001220_Article.jsp#.V-THY7qLTdQ
Organic or not, animal protein and animal fats are not healthy for us. Time and again studies show this to be true. Check out nutritionfacts.org for the latest in nutrition research.
I don’t think that is true. It’s just a fad to not eat meat as it is to only eat meat, to not eat vegs as to only eat vegs. Humans are omnivorous and only our affluence allows us to choose the fad diet we prefer.
As we crash our civilization we’ll eat any and everything, grubs and rats and bark, bones and feathers. No niceties. It’s just dreaming to have a choice then.
humankind has forward facing eyes (stereo vision) and canine teeth and grasping hands—the three prime essentials for a meat eater. But of course we can eat lots of other good stuff besides, hence a broad healthy diet.
grazers have eyes at the sides of their heads, so they can have a better chance of spotting predators
Sorry veggie persons, that’s just the way nature is.
And young children…. babies? I hear they taste like veal….
i eat them regularly
but i’m trying to cut down
They usually swapped them with their neighbours’ children. Have to draw the line somewhere!
http://www.independent.co.uk/news/world/australasia/evil-under-the-sun-the-dark-side-of-the-pitcairn-island-880226.html
https://i.ytimg.com/vi/XfMwuT3Ltyw/hqdefault.jpg
“humankind has forward facing eyes (stereo vision) and canine teeth and grasping hands—the three prime essentials for a meat eater.”
https://i.ytimg.com/vi/b8YQAFHGZIU/maxresdefault.jpg
Oh really?
THIS is the canine teeth of a real meat eater. Makes ripping through flesh and bones as easy as a hot knife in butter. Yours can barely crack open a nut.
http://s.hswstatic.com/gif/saber-tooth-cat-1.jpg
This is how much of the skull an eye socket occupies for the proper stereo vision of a meat eating bird:
https://s-media-cache-ak0.pinimg.com/originals/09/88/df/0988df417befa5584ca08208dbad787e.jpg
“Sorry veggie persons, that’s just the way nature is.”
Sorry Normie, you are just plain wrong.
I am?
look again at the human mouth picture then refer to this
http://www.webmd.com/oral-health/picture-of-the-teeth#1
in the photo there are four upper teeth in a neat line—then at the one tooth either side of them—they are called canines—exactly the same teeth as in the cat pic—just evolved differently, they are clear and obvious. (sharp pointed)
they are repeated in the lower jaw
canines tear food while hands grasp it—-cats have developed retractable claws to to the same thing—raptors have claws to do it. The raptor’s eyes have followed another evolutionary path to carry out the same function in a different way—smaller prey over longer distances.
human teeth dont need to tear meat, but that’s a matter of immediate lifestyle–we cook it first
our jaw size/shape has evolved to take account of this.
https://upload.wikimedia.org/wikipedia/commons/f/f8/VampireE3.jpg
you mix with some weird people
i’ll stick with the doomsters rather than the munsters
No worries Normie, you can continue eating your steaks and hamburgers (BTW I eat meat too). I won’t judge you. But spare us your “logical” rationale behind it:
http://vegaprocity.com/wp-content/uploads/2014/10/dietarydifferences.jpg
Humans are a slightly evolved variant of this:
https://i.ytimg.com/vi/rZrO6x-sLpY/maxresdefault.jpg
we are all children of evolution
and gorillas have the same teeth pattern too—for tearing tough food
“Humans are a slightly evolved variant of this”
I am not so sure about that.
“and gorillas have the same teeth pattern too—for tearing tough food”:
Nope, it’s for chewing, mostly.
Besides, anyone doubting that the human is a great ape immediately should stop posting here and go back to school:
https://en.wikipedia.org/wiki/Hominidae
https://seaworld.org/animal-info/animal-infobooks/gorilla/diet-and-eating-habits/
Gorilla diet:
18 kg of which 3% is insects and snails.
A pound of animal products each day.
Probably a human can’t eat much more than 3-5 kg per day. Food, not snails.
have scrolled back in vain—trying to see where i inferred that man and ape did not have a common ancestor
Smite,
You can be a monkey if you like. I am Gods image.
No, it was the evolved-part I wasn’t sure about.
As far as I know humans has not d/evolved from gorillas but from a common ancestor where gorillas split off earlier than chimps.
“have scrolled back in vain—trying to see where i inferred that man and ape did not have a common ancestor”
Perhaps it wasn’t directed to you. 😉
What is an optimal diet for our human physiology is and has been a goal for science for about a century. If it so happen to consist of vegetables, fruit, ants, and cockroaches in some ratio – so be it.
Stuffing the mouth full of factory farmed animal products has a quite severe consequence of the human physiology. From first hand experience I know the consequences of a cholesterol laden diet extremely lacking in vegetables and fruit.
So spare me the idiocy of trying to motivate your eating habits by your fear and stigma of changing the source of your caloric intake.
Isn’t it time to let go of the childish behaviors at the twilight of the age of the human ape.
I believe I should change my eating habits. Perhaps not in the way you think. It is not fear that holds me back.
It is easier to plant the trees, bushes or plants that provide fruits on a depleted arable land or pasture than turn the pasture into arable land or revive the arable land using constant flows of fertilizers.
Certainly, growing trees, plants and bushes that provide fruits and nuts requires only small amounts of energy, if sun and water are present.
“The Inuit in Canada’s far north have lifespans 12 to 15 years shorter than the average Canadian’s, government data showed on Wednesday, putting the aboriginal people on a par with developing countries such as Guatemala and Mongolia.
At 64 to 67 years, Inuit life expectancy “appears to have stagnated” between 1991 and 2001, and falls well short of Canada’s average of 79.5 years, which has steadily risen, Statistics Canada said.
http://www.reuters.com/article/us-inuit-idUSN2362426520080123
It is not fair comparing inuits living a western life style to canadians. All around the globe lately domesticated populations suffers because they can’t handle the western diet (we weeded out people who couldn’t tolerate grains, milk and suger 1000 years ago).
Regarding the Inuit watch that: http://nutritionfacts.org/video/omega-3s-and-the-eskimo-fish-tale/. And milk products + sugar are bad anyway. Grains belong since a very long time to our diet. The problem today are highly processed grain products, high gluten containing breed grains (weat) and the like.
On top of that those “diabetes bomb” ‘diets’ high in fats, low in carbs and full of animal products. No wonder people are confused.
Go for the diets at the “blue zones” of earth to be sure you won’t be eating a bad diet.
Sorry, it’s a TED video but nonetheless..
That is another good video. I converted to a mostly plant-based diet in about 1994, and still follow that pattern. At that time, I was doing consulting work for the Seventh Day Adventists, and realized that with their mostly plant based diets, they had much longer life expectancies. I also had problems with being overweight and having arthritis. When I changed my diet, I lost weight and my arthritis completely disappeared.
Watch this video by the “Diet Doctor” from Sweden. full of good sense;
The proof of the pudding is in the eating! 🙂
The Inuit story is a myth. They are not a global exception by a long shot.
http://nutritionfacts.org/video/omega-3s-and-the-eskimo-fish-tale/
I see that I should have kept on reading all of the responses before commenting.
Switching to a no oils plant based diet 9 months ago is the best thing I could have done for my health. No more meds and my total cholesterol is 135. I’be never felt better. At age 64, I can tell you that high BP and cholesterol doesn’t have to be a part of getting older.
We will probably all have vegetarianism to look forward to in the near term. We’ll pass through healthy on our way out.
A good story can take some beatings.
Not only is a plant based diet healthy, it saves a copious amount of energy much better used for the exponential growth of BAU.
On top of that, the atrocities perpetrated on the animals.
https://www.youtube.com/watch?v=dSjE8xw_-Dg
Compared with some proper LNG and oil powered mechanized high-tech agriculture. A thing of BAUty. Mmm, potatoes, burns with a clean blue flame when I crank out the wattage…
https://www.youtube.com/watch?v=fAnmSgDCx6I
When we eventually throw in the towel, let’s do it in style.
http://www.jack-donovan.com/axis/wp-content/uploads/2015/11/Mishima-Tribute-2015.jpg
I am sure market forces will take care of the conversion to the worst kind of vegetarian diet.
How about putting the money into birth control instead?
It just ends up being the wrong people procreating with a opt-in based birth control.
A better solution would be mandatory IQ tests and other stringent psychological and physical tests and trials before allowing people procreating and rearing offspring.
Thats the Hilter solution.
A more gentle way is to give $Something to any childless couple that sterilizes themself. Of course welfare has to be adjusted so you can’t make a job out of making babies.
That way we don’t need to bother with abortions, maybe retroactive, or sterilization by force.
I remember the Bosnian war survivor writing something like; “in SHTF the gene pool will correct itself promptly”..
Just wait a few years. Then there wont be any more need to think about welfare/sterilizations/abortions-problems, they will be taken care of in a vary “natural” way..
Though, if we really would have wanted population control, then free education to every girl in the world would have been a nice way to accomplish that. But now, 40y too late. All we can do, is to wait for the gene pool to start correcting itself..
Bribing people to sterilize themselves, otherwise… Poverty and starvation.. It sounds like an idea from that clown running “socialist” North Korea. I’ll take the H1tler method any day compared with helicopter money and genital scissors from hell.
How about inserting a piece of code into Facebook that causes a smartphone to explode in the face of a user who is walking down the street with face buried in said device and bumps into other people more than 3x.
Someone was mentioning that America is going mad….
Well… this guy is most certainly cracking under the pressure…
http://www.zerohedge.com/news/2016-09-21/weiners-one-eyed-snake-strikes-again-latest-sexting-scandal-involves-15-year-old-min
http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2016/09/20/20160921%20-%20Weiner%205_0.JPG
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/09/20/160921-weiner-sex-scandal-part-3-feature_0.jpg
Maybe Weiner should run for president. Under the present circumstances, I might just consider voting for him.
What he needs to go is ring up Paris and Kim…. and get a 3-some video with them going viral…. facebook twitter…
HRC is going to die before the election – if she is not already dead….
Then he can step in as the replacement….
He will ride his fame with the millenials and the idiocracy crowd — right to the oval office.
I have come to think that neither Hillary nor Trump will be voted in. Hillary’s pneumonia was a lie [laughter] and she actually has parkinson’s [https://www.youtube.com/watch?v=q5mYx5oCxEg] If she resigns, [she cannot take that sort of disability into the Presidency] then Trump loses his best chance to be POTUS.
Watch the CNN regurgitator get clocked upside the head in Charlotte:
https://twitter.com/_MarcusD2_/status/778766082203062273/video/1
Give that man a free trip to Disney Land!
Maybe the creepy clowns are dressing as ordinary citizens and setting up sleeper cells among the population…………One day they will rise up on signal and cause clownish chaos across the nation.
Oh, sorry. The clown takeover has already happened in 2008.
I realized that a lot of you don’t want a solution to keep the lights on. None the less . . .
I recently ran an energy payback time for power satellites constructed using Falcon Heavy. It came in at around 8 weeks.
I am rather skeptical about the energy payback I got from using Falcon Heavy. Too much was left out like the energy needed to get the pieces back to the launch point. Plus I really doubt one of them can fly enough times to make the energy that goes into building a Falcon a small fraction of the fuel.
In any case, it may not matter because while I can imagine high flight rates (million a year) with Skylon, I can’t see that rate with rockets. (Though perhaps I just don’t have enough imagination.)
I have been using 50 kWh/kg as a ballpark number for hydrogen. It’s good enough for rough calculations and it what it takes to make hydrogen if you are making it with electric power.
Combustion of hydrogen is 286 kJ/mol. Mole is 2.016 gm, so 496 moles in a kg, 143
MJ/kg or 39.4 kWh/kg. That’s off quite a bit. I have also been using 20 kWh/kg to liquify the hydrogen. That’s off even more. If you Google for “A Future Energy Chain Based on Liquefied Hydrogen” Berstad and go down to page 20, they cite a number of ~6.5 kWh/kg. We might do a little better because we can use warming the LNG to cool the hydrogen. That makes the energy content of the LH2 about 46 kWh/kg. It’s hard to say exactly where you should measure the input energy, but the process to make hydrogen from natural gas is efficient, and it only uses about 1.7% of the energy in a kg of NG to liquify it. I.e., measuring at the well head will not make a great deal of difference. Still, I need to dig into the thermodynamics of steam reforming.
The current LEO to GEO hydrogen consumption (using electric propulsion) is 4000 tons to get 15,000 tons to high orbit. On average, that makes a 15 ton Skylon payload 11.84 tons cargo and 3.16 tons of hydrogen reaction mass. At launch the average Skylon has 59 plus 3 or 62 tons of LH2. That makes the hydrogen per ton of payload 62/11.84 or 5.25 kg/kg of payload.
The solar energy used to power the LEO to GEO transport is not included since it is outside the system. (The capital cost of the propulsion power satellite is included in the financial models.)
Using my supported but perhaps optimistic number of 6.5 kg/kW, an installed kW would use a little over 34 kg of LH2 to get it in place. Using 46 kWh/kg for the LH2, that’s around 1566 kWh per installed kW.
Without a detailed list of the parts materials and mass in a power satellite, it’s not easy to say how much energy goes into the parts. Aluminum has the most embedded energy at 15 kWh/kg. But not very much will be aluminum. If we estimate 10 kWh/kg, the energy in the parts would be ~650 kWh, for a total of 2216 kWh per kW of capacity.
When the power satellite is turned on, it takes 92 days (at 100% on time) to repay the energy used to build it and move it to GEO.
That’s a three month energy repayment time. I don’t know of any other proposal that is even close. And the energy from a power satellite not intermittent.
If the power satellites last 30 years, you get an ERoEI of 120 to one.
This is subject to adjustment as we settle on more accurate numbers in the design phase, but it should be reasonably close.
ERoEI is an interesting metric, but the more important figure is the cost. Target cost is 3 cents a kWh falling to 2 cents within a few years. This just barely meets Gail’s requirements.
Keith — are you looking for feedback on your sci-fi novel?
Do you have a useful comment?
Come on Keith…. I was just feeling a little used… you post these scripts… and I and others explain to you how they cannot be supported with any facts or logic….
And you use these comments to refine your story line….
So I was thinking …. if you aren’t going to offer us a cut of the box office… you can at least guarantee us with some seats at the Oscars… perhaps a mention in your acceptance speech… and most definitely take us with you to the after parties…
The thing is… you are over-estimating your audience…. people who watch Hollywood movies do not care about facts and logic…. that only bores them…. I would classify your script under the gene-ray of ‘Hopium’
Just make sure you include enough hopium in the mix (you have more than enough in the current version) — and this is yours!
http://www.ignitingminds.co.in/wp-content/uploads/academy-award146921345.jpg.pagespeed.ce_.6E9Vey4TIg.jpg
Eddy you are a very bad person
Since up is down and bad is good in the new normal… thank you for the vote of confidence – and the wonderful compliment!
Prometheus II is need of a new script I believe.
Prometheus I too. What a piece of garbage.
Alien I and II is where horror sci-fi is at its finest.
Just nuke it from orbit – it’s the only way to be sure. Brilliant:
Yeah, it was hacked to death during re-writes, you can tell. But still, I liked the concept of Prometheus, even if was poorly executed. Looking forward to the next instalment in 2017, unless we have the crash first! 😀
We are in the middle of the crash, it’s just a tad too slow for most insta-dommerists to be aware of.
Lights are on, fridge is full and taps are still running where I am.
No “crash” yet.
You are confusing an ongoing process with it’s state at completion.
Just like Titanic merrily continued on it’s course after it crashed with an ice berg.
Keith, keeping the lights on, also means that the sixth mass extinction is solved.. https://lokisrevengeblog.wordpress.com/2016/08/28/understanding-collapse-acceleration/
And also civilization not being a “heat engine” in any way, also solved.. https://robertscribbler.com/
These are all “limits to growth”. In a growth based economic system.. Energy, pollution, population, habitat etc. etc. Not exactly an easy predicament to engineer oneself out of all of these in an instant, with one solution.
But you don’t understand. There’s this thing called space and it’s limitless! Now, if only we can invent the hyperdrive…
You did not say if you were taking about H2 or H alone. 1 mole of hydrogen is equal fo 1 gram. People commenting on this web site including Gail are scientifically illiterate and have no real science background.Yet they go around writing like they know everything, Including Gail.
I forget the periodical table
https://en.wikipedia.org/wiki/Periodic_table
This is a link to the periodical table.
I can do simple math.
Break even on oil is over $100
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
+
$100 oil would destroy growth
According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf
= I don’t care about chemistry….
Stop paying dividends.
And what do shareholders do when dividends go away? They sell. And then what happens to the stock’s net worth? It plummets. Banks won’t give big loans to oil companies whose share prices have tanked 400%. So then they go bankrupt.
In the end the Fed buys the shares.. but in the meantime fortunes are being made.
First a plan is made in Brown Brothers Harriman BBH that has 4.7 trillion in assets under custody, and is a likely part owner of the FED.
The plan is simple; make money and keep oil pumping.
BBH makes private investment recommandations in private banking for a few billion to the oil companies.
That first round of capital is a base to get a second round of capital from institutional investors.
Thirdly JP Morgan, Goldman Sachs exports the risk out of elites hands and makes it a global systemic risk. Bundling debt so that the risk can not be properly calculated.
And fourthly a x10 over the counter derivatives enlargement is thrown in, and then all of that bad debt is exported (with a profit).
When the oil companies run in to trouble, a BBH senior analyst makes an evaluation (gets directions from the higher ups);
A. Is it profitable to let that particular oil company slide in to bankruptcy?
B. Is it profitable to expand the bubble by a new round of capitalization?
C. Or has the time come for FED to buy up the shares? (Officially to prevent systemic risks..)
Easy money for the elites..
Gotta love CDO’s and credit default swaps.
https://en.wikipedia.org/wiki/Mole_%28unit%29
Hydrogen is H2, so a gram-mole of hydrogen would mass close to 2 grams. The energy release data is in terms of gram-moles.
Don’t hesitate to ask. I very much appreciate it when people find my errors.
At the risk of feeding the troll, if you could manage to gather together a mole of liquid or gaseous atomic hydrogen in one place, it would spontaneously and almost instantaneously (within less than a second) react to form half a mole of molecular hydrogen (H2), releasing 436kJ of heat in the process.
Atomic hydrogen is an extremely powerful reducing agent, capable of reducing the oxides, chlorides and sulphides of metals such as Ag, Hg, Cu etc. to metals at ordinary temperature.
Interestingly, atomic metallic hydrogen has been envisaged as a theoretical rocket fuel. If it could be produced and kept stable at a temperature of 0K and a pressure of 25GPa, it would certainly be a game-changer in terms of thrust per pound. But it remains in the realm of science fiction at present, right up there with dilithium crystals.
‘Interestingly, atomic metallic hydrogen has been envisaged as a theoretical rocket fuel. If it could be produced and kept stable at a temperature of 0K and a pressure of 25GPa, it would certainly be a game-changer in terms of thrust per pound.’
Keith…. can you make it happen?
The world needs you ….
Oh, the horrors!
At certain point of time even many of the formerly jet set would have to downgrade to the level of the “unwashed upper middle class” and burn, actually sip only <9 liters of diesel per 100km distance traveled per each of ~5x passangers (incl. pilot, or ~6L per 7x people config), and no more on board necessities like full sized bed and shower either. That's almost as boorish as car travel in terms of lowly energy consumption, lolz. At least there are few more decades of some limited comforts guaranteed ahead for the nobility..
When we are dealing with a very complex world, it is not possible for anyone to know everything about every subject.
I try to take the approach of figuring out important parts about a lot of different subjects. I have been fortunate to have commenters to help me in this regard. There are also people who communicate by e-mail to fill me in on thing I might miss. So I am able to put together more of the story than I ever could, if I simply sat down with a stack of science books (or economics goods, or geology books, or anthropology books).
I personally am not a fan of energy payback times. Clearly, a system needs to pay back all costs (not just energy costs), plus pay taxes, plus provide a reasonable return for those invested in the project. If the energy payback time is, say 15 years on a system that lasts 30 years, there clearly is a problem. But I don’t think that a short payback period says much at all, given the small piece of the total that the payback calculation relates to. I would much prefer looking at the necessary selling price of the electricity, given all of the costs involved. This selling price must be kept very low–say 3 cents per kWh.
Debt is also an issue, because with diminishing returns for oil and other fossil fuels, debt to GDP ratios have been rising rapidly. Is there any evidence that Space Solar could turn this situation around, even on a temporary basis? Making this whole system work would require financing some combination of (1) mines needed for the materials, (2) factories building the necessary components, (3) all of the materials associated with putting the solar materials in orbit and the receiving equipment on earth. If Space Solar electricity were used to make liquid fuels, another type of factory would be needed as well, necessitating another kind of factory to be financed.
“This selling price must be kept very low–say 3 cents per kWh.”
I am with you on the cost issue.
Re the points,
1 Power satellites use about 1% of the materials needed for ground based PV. They don’t have to cope with gravity loads or wind. Existing mines are more than we need. The peak materials use is around 12 million tons per year (after a ten year build up). That’s about 25% of the current production of aluminum. I.e., power satellite construction won’t stress the supply chain.
(2) “factories . . .” 12 million tons per year is not much factory output.
(3) “putting the solar materials in orbit ”
This takes expanding the aircraft industry by about 30% over ten years. That builds 50 Skylons a month, and with a refurb at 500 and 1000 flights, that’s enough for a million flights per year.
(3a) “and the receiving equipment on earth. ”
The rectennas are big, but relatively simple. Still, my estimate is around $200/kW or a billion dollars for a 5 GW plant. Over time we need to build at least 3000 of them to replace fossil fuels worldwide.
” used to make liquid fuels, another type of factory would be needed as well, necessitating another kind of factory to be financed.”
US oil consumption is around 19 M bbl a day. Sasol’s plant in Qatar can be used as an example. it makes 34,000 bbl of fuel a day. The capital involved was a billion dollars, but that included the cracking refinery. We can feed the output of synthesis plants to existing refineries. It would take about 560 synthetic crude plants at half a billion each. That would cost about 280 B over at least ten years, figure 30 B a year in capital investment. That’s a lot of money, but given the would wide cash flow for the energy business, it’s not a substantial percentage.
Figured as a 5 years write off on the capital, the capital cost in a bbl of synthetic crude is around $10. At 3 cents a kWh, the energy that goes into a bbl of oil is around $60.
$70/bbl is a bit on the high side for what you want in energy prices. The accounting gets really complicated when you are using very large amounts of electrical power to make fuel. Synthetic fuel is a long way out, but looks feasible.
With a minimum downpayment of US$30Bn to join the club, the world in not yet desperate enough to roll that set of dice, and it’s probably too late anyway. They really struggled to get the first CSP site built, and coal carbon capture and storage is still pretty much on the drawing board.
Also, this thing will look too much like the “Death Star” to ever get approval. Hmmmm … hold that thought …
Holy bovine excrement.
Our only “alternative” to fossil fuels is a nonrenewable source of energy.
Thus we need more goddamn’ nukes and hydro power. The rest is pure technology delusions, hopium, dreams, unicorns and fantasy.
https://www.youtube.com/watch?v=TU7kLruNZVU
Most of our resource mining are in fact consuming net energy. With cheap enough electricity it would, in theory, be possible to extract hydrocarbons and coal without their inherent net energy contribution to the economy.
I read somewhere that the enrichment process in the manhattan project used more electricity than was delivered with the bombs as nuclear fission. o_O
“Our only “alternative” to fossil fuels is a nonrenewable source of energy.
Thus we need more goddamn’ nukes and hydro power.”
The last I looked, hydro power was considered renewable.
Yes, and your point being?
I’m not sure you’ve ever addressed the idea that finding a way to replace some of the world’s electricity generation is not a comprehensive “solution to keeping the lights on”.
“Keeping the lights on” means keeping industrial society running NOT just finding a nifty way to substitute one form of electricity generation for another. The industrial economy is much more complex and threatened than just the question of how we generate electricity.
For instance does your solution include anything to do re-engineering the transportation of freight, the production of food, the availability of fresh water, the synthesis of any industrial material you care to name or does it conveniently gloss over these things? These vital aspects of BAU are under threat and what does your clever scheme have to do with them? Electricity may be vital but it is not the keystone on which all else rests or would you like to prove otherwise? The weft and wove of the fabric of our existence is under threat and you’d like to suggest that substituting one thread is the solution?
“For instance does your solution include anything to do re-engineering the transportation of freight, the production of food, the availability of fresh water, the synthesis of any industrial material you care to name”
Yes. In a good deal of detail, and developed over many years.
Google “Keith Henson” reverse osmosis 2000 ton per day and take the first link. It’s considerably out of date, 2008 perhaps. But it does go into the gross level of input energy you need to cope with getting off fossil fuels.
“or does it conveniently gloss over these things? These vital aspects of BAU are under threat and what does your clever scheme have to do with them? Electricity may be vital but it is not the keystone on which all else rests or would you like to prove otherwise? ”
It’s straightforward physics and chemistry to make all the liquid transport fuel you need out of electric power. The cost is $10 for the capital and about $60 for the energy per bbl of synthetic fuel at $30/MWh. If we can get the cost of power from space down to one cent per kWh, synthetic crude oil will cost ~$30/bbl.
“The weft and wove of the fabric of our existence is under threat and you’d like to suggest that substituting one thread is the solution?”
It’s more like a huge thick rope. If you are serious about the problem, you have to scale it to the total power humans use today and beyond. There is enough room in GEO for at least 150 TW of generation, that’s ten time the current energy consumption of the whole human race.
Go through that old presentation, which was before we had good solutions to the transport problem, and see if you can find something I missed that’s critical to BAU.
In the long run, we have to do things like sort the phosphorous out of sewage and ship it back to the farms. It’s noted on slide 79.
I only partly agree with Gail. Although I admit, I’ve made the same argument myself in the past! I’ll argue that the major cause of falling productivity growth in the West has been deindustrialization and over-regulation. In the ‘West’, far fewer workers are engaged in industry today than in the past. So there are few deindustrial workers who can improve their productivity. Few service sectors have the same high productivity growth as industry. Many sectors such as health, social work, education, regulation, policing, law, are intrinsically labour intensive and difficult to mechanize. They are, in fact, easy to bureaucratize and overregulate and this too may hinder productivity growth.
PS: I’d like to see Gail’s productivity chart broken down sector by sector. Not just services vs industry but each service sector. I think that would be far more enlightening.
So…you are saying that the present crisis is not due to LTG factors such as peak oil, pollution, over-population, etc but instead is just the result of some bureaucratic over-reach?
I am not sure we disagree. I mentioned both issues in the post. Regarding the deindustrialization issue, I mentioned that once oil prices were higher, then countries that used a lot of oil in their energy mix (US, EU, Japan) became less competitive compared to countries that used more coal and hydroelectric in their energy mixes. Factories in the US started being replaced by factories elsewhere, where both labor and other energy costs were lower. Jobs where human labor is leveraged by other energy tend to pay well. It was these jobs that we lost.
Regarding jobs in the service sector, I mentioned, ” It is possible to get some productivity gains through education, but it is very unlikely that these gains are as large as when more capital goods are used, as well as more direct use of energy.” I think that there is a tendency to think, “More jobs are better,” in the service sector. In fact, education and health care are really both part of “overhead.” Adding these reduces our ability to compete with other countries. If we force people to pay for these services, even when their costs are much larger than their benefits, we make it hard for young people to start families. We should not be educating far more people for job slots than really exist.
In healthcare, we need to be looking at the situation from a point of view of helping people living longer healthier lives more cheaply, not from a point of view of what makes money for health care providers–the incentives are wrong. There is a tendency to mandate that health care providers do a lot of medical coding, even though this makes them less efficient.
There are of course many other service sector jobs, including waitress jobs and and sales clerk jobs. These jobs don’t add a whole lot of value. It is hard to mechanize them or to make them add more value. Instead, they compete with the likes of Amazon, where sales clerks aren’t used.
I don’t have data to look at data by services sector.
“It is possible to get some productivity gains through education, but it is very unlikely that these gains are as large as when more capital goods are used, as well as more direct use of energy.”
Indeed, it is better to use energy to make specialized machinery and then use some more of it to power the same machine, than to sink a copious amount of energy into the current and next generation of mostly meaningless human automatons.
Now that I think about it, when did I last buy a coffee at some fancy café. Hmm, I can not remember. Hey look, I got a little coffee robot at home and at work. Isn’t it pretty spiffy?
https://www.youtube.com/watch?v=waKaV_Y1W58
Regarding Amazon, this is how modern warehouses are run today.
https://www.youtube.com/watch?v=quWFjS3Ci7A
Burger’ Bots’ are taking our jerbs’:
https://www.youtube.com/watch?v=7-JR2KDRnEY
Even doctors will soon be on the chopping block:
Will the machine use less energy than a human to produce same work? (Will it even use less human work?)
In most cases yes.
Because a machine does not have to commute 100km/day with a SUV and sleep some 8h. Neither does it have to live in a Mc Mansion with a heated swimming pool and AC’s/heaters in every room. etc..
The amount of energy consumed by the regular middle class worker in the western world is staggering. And the gain/growth for the economy is in most cases quite small compared with the energy input.
hate to point out the robot-problem
robots don’t buy what they produce
worse still, robots don’t even buy the stuff that other robots produce
just thought i’d mention it
Exactly!
Oh, you mean to terminate the surplus people. I assumed you meant the robots should do their job.
If you’re going through the mess of terminating people, is it not better to just not replace them?
“hate to point out the robot-problem”
robots don’t buy what they produce”
Why should robots and generic human automatons be entitled for owning and buying goods and services at all? What makes you think this? Lunacy?
My coffee robot produces coffee for me, as the owner of this capital investment I enjoy a cup of coffee at regular intervals.
i see your coffee robot has you well trained to keep feeding it with more coffee
Yes we are best buddies, me and the machines I own and manufacture. Using my other machines I design new machines, program them and finally sell them to other capitalists. The machines produce all we need. But mostly they create wealth, that is, for the owners.
Mindless consumerists does not fit into the equation. Like a bad case of fleas BAU will shake them off and once again hit exponential growth.
I see that the DelusiSTANIS have captured you …. if you are not already in their territory send me your position and I will send a team out to rescue you…. if you are already in their territory …. there is nothing that can be done …. you are lost…. forever
no wonder you want to terminate everybody
but you dont create wealth,
wealth is only a token of energy, and energy cannot be created— therefore you use machines to convert one form of energy into another by transfer of heat, then call it ”wealth”—which is then used to buy other forms of embodied energy—or maybe sits in the bank until it is needed to do that.
you cannot manufacture anything of any consequence without heat
“no wonder you want to terminate everybody”
Everybody? Where did I state that?
“you cannot manufacture anything of any consequence without heat”
As I have stated you confuse heat with energy.
“which is then used to buy other forms of embodied energy—or maybe sits in the bank until it is needed to do that.”
Exactly, it sits there deep in the saudi desert waiting for me and my buddies to extracting it using the machinery and other capital we own. You and the other mindless consumerists does not fit into that equation.
Prepare to kiss good bye to your life as you know it.
So you didn’t take on board strikingly obvious last time..
What exactly separates YOU from the mindless consumerists?
Please share us the secret of escaping the need to eat, find shelter and respond to the various biological urges and acculturations which demand us to clothe ourselves, seek social status and impress potential sexual partners…. You know all those mindless things that the talented individual or John Galtish hero can do without presumably?
“What exactly separates YOU from the mindless consumerists?”
I own this show.
I expect that the big issue in medicine will be the high cost, and the need to cut back. I don’t see whole lots of new fancy approaches. Fixing diet would help a whole lot.
Fewer Americans identify as middle class:
http://www.gallup.com/poll/182918/fewer-americans-identify-middle-class-recent-years.aspx
http://content.gallup.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/q3bjxgqdd0-x89ch1w0lxg.png
The middle class is being ground to dust in search of that elusive GDP growth. $28 / hr jobs replaced with $14 / hr ones. But – hey! – the unemployment rate is down. Uncork the champagne.
More contract and part time jobs too, I expect.
Pingback: What Really Causes Falling Productivity Growth: An Energy-Based Explanation – Enjeux énergies et environnement
Thanks Gail. I’m really looking forward to reading the response to this. Could you maybe expand on something – I’m not sure how your thoughts work on this:
“The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise.”
I think she is saying that trucks don’t run on windmill electricity, they need oil. We need a lot of oil energy just to maintain where we are now, and that is without consideration of any growth from here.
Added points that don’t relate to Richard’s comments but I may as well post them here….
I have a friend at a regulatory agency who claims we have incredible amounts of shale oil, that extraction technology is getting more efficient in volumes and cheaper, and that such technology hasn’t even been used in other countries yet – i.e. there are incredible amounts of untapped, relatively cheap oil and natural gas. My guess is that may be true, but as shale becomes more expensive when the low hanging fruit is gone, and conventional, high EROI oil is depleted worldwide, the further collapse of overall EROI will spell doom. In the meantime, the financial system is likely to collapse since nothing was fixed in 2008/2009 and now we are seeing cracks appear along the fault lines.
Legacy oilfields give massive support to the entire human industrial effort – including borderline energy projects- renewables, fracking, tar sands, etc. Without the legacy fields, all of the above would have much worse economics.
Shale is already one of the most expensive sources of oil….
Perhaps pass this along to your friend
https://srsroccoreport.com/the-death-of-the-bakken-field-has-begun-big-trouble-for-the-u-s/
Yes. The salient fact is that other countries have looked at the costs, and have been unable to find “the right kind of shale” ie, not California which IIRC can only recover maybe two percent of the available resource. The economics don’t work, have never worked, and the US needs $100 oil and soon to pay off the $32Bn black hole in the shale oil accounts identified in your link. But they keep hoping.
I understand that a shortage of water in many countries is also an issue
“I think she is saying that trucks don’t run on windmill electricity, they need oil.”
I think you are saying that not all energy is created equal. Controllable compact concentrated transportable frangible energy is worth a lot more than waste heat.
To get an efficient Carnot cycle, you need a high temperature high pressure input, and a low temperature high volume exit. I’m OK with that.
As long as it was possible to put together models showing that oil companies could make a profit (If oil prices stayed high enough and production continued long enough) then shale projects looked profitable. Now, it is hard to make a case for profitability except for on a “Future costs only” basis. If we ignore overhead, and anything already spent on the existing field, than the project does look profitable.
At some point, this whole way of doing things stops working, though. It becomes less and less possible to say that prices will go up high enough, for long enough, to make the oil profitable. Having interest rates near zero helps these models a whole lot as well.
Economists seem to have a view that there are no limits in this world. We can expect economic growth to go on at the same rate indefinitely. It is not a problem if population keeps growing at close to the same rate, indefinitely, because technology will allow us to produce more food per acre of arable land. It is not a problem if population growth relative to fresh water supply; technology will allow us to create more fresh water. If for some reason oil production cannot continue to rise at the same rate indefinitely, there will be workarounds that allow the same effect to happen, in a different way. For example, technology will allow us to become more efficient, and new technologies will be developed which allow us to do much the same thing using devices that use renewable energy, of which there seems to be an almost infinite supply.
Physics tells us that it really does take energy to move an object, and that efficiency has limits. Diffuse energy is not at all the same as concentrated energy. In fact, it takes energy to transform diffuse energy to make it of the type needed to operate our appliances on a 24 hour-per-day, 7 day-a-week basis. Even this energy does not substitute for oil; oil is easily transported and stored, making it ideal as a transportation fuel. Electricity requires batteries or perhaps overhead wires to provide the same services. There may be some situations in which electricity + batteries provide a substitute for an automobile, but there are huge costs involved. If the substitution could have been done more cheaply, it probably would have already been done before. We are likely finding a higher cost substitute–really a different manifestation of diminishing returns. If the economy is to go on as before, the substitute has to be no more expensive than previously. Fresh water from desalination is not a substitute from fresh water from well, because of the much higher energy costs involved.
Perhaps the hardest thing to see is that the economy is a networked system. If can’t just “get along without” a big piece of the system. It also can’t substitute higher cost devices for lower-cost devices without the economy imploding. Any alternative needs to be at least equally affordable, and this just doesn’t happen. As the economy dissipates energy, there are fewer and fewer inexpensive alternatives available.
Thanks, Gail. I’d got the reference to, for example, a ton of oil providing more work than an equivalent ton of wood, but I hadn’t picked up on things like desalinated water requiring greater energy from the system for their existence.
Good analysis, but not everything is related to oil. Diminishing return is everywhere including scientific progress.
Yvan,
Really everything IS related to oil. It is the master resource and the foundation upon which our civilization is built. It is responsible for complexity, it is responsible for climate change, it is responsible for scientific progress, and is scarcity is responsible for diminishing returns.
If you look around you, at the computer your typing on, the desk the computer stands on, the building surrounding your desk, the vehicle that brought you to your building, the food you ate at breakfast, the electrons that allow us to communicate. Can you see one thing in your field of view upon which oil doesn’t have a critical effect, directly or indirectly?
i keep pointing out—and getting ridiculed for, though not in here—-remove hydrocarbon input and you’re sitting naked on bare earth starving to death
You are right. Most people think of oil as the refined substance thrown into the tank of his car. In fact, that is the only direct experience they have, for example, through the sense of smell when you’re at a gas station.
But in reality, our life experience with oil, is metaphorically like this poor bird: we are surrounded by that substance.
http://2.bp.blogspot.com/-ldLTMc5SvhQ/URllqit9CDI/AAAAAAAAIQw/iAvSFjLvAOk/s1600/ave-marina-chapapote.jpg
That’s why, when you speak of the end of oil react with concern for the future use of the car. They never think, for example, in terms of economy… or food.
I mentioned a bit about diminishing returns being other places than oil. Perhaps I should have said more.
The huge number of academic papers today, in every field from English Literature to Psychology to Economics certainly reaches diminishing returns. Too often, these papers simply pass on wrong understandings of how things work. Even when the scientific theory is sound, there are diminishing returns in making inventions, and in making improvements to inventions. For example, inventing a car with an internal combustion engine was a major advance. Small enhancements were added later (for example, air conditioning), but they did not have as big an impact as the initial invention. We keep trying for new inventions, but the new inventions do relatively less. The wheel was a very important invention, made long ago.
I have not read IT, but this bok seems to FIT neatly into your scheme:
https://www.amazon.com/gp/product/0691147728/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0691147728&linkCode=as2&tag=freakonomic08-20&linkId=PNZJ3C2PH3Y2KCTT
Would be interesting to know if Robert J Gordon also has an energy based explanation for the falling productivity growth?
Interesting. This book seems to be a best seller, and gets a lot of favorable reviews. The back cover apparently includes this quote,
A towering achievement that will utterly transform the debate on U.S. productivity and growth. Robert Gordon chronicles the stunning swiftness with which American lives have advanced since 1870, and raises profound questions about whether we have benefitted from one-offs that cannot be repeated. Combining eloquent description with forceful and clear economic analysis, Gordon’s voice is gripping and compelling. This is economic history at its best.”–Kenneth S. Rogoff, coauthor of This Time Is Different
The first review listed makes the observation, “Going forward Gordon is a “techno-pessimist.” He views the 1870-1970 period as a one off event.” The next review says, “What makes the period 1870-1970 so unique is that the inventions during that period cannot be repeated.” The reviewer goes on to list a lot of inventions that were made then, that cannot be repeated.
The author doesn’t seem to get the energy connection, based on the reviews. It is interesting that he chose 1970 as the break point in his timing. That was when the US hit a peak in its oil production.
Part of the problem is humans were never evolved enough to responsibly use oil when it was discovered in the first place. Look at what our crowning achievements with oil are: iPhones, nuclear weapons, and myriad devices to keep people over 85 alive when their quality of life is awful. Our entire system of ethics is based on falsehoods and misunderstandings. We have completely destroyed natural selection and not only permitted but encouraged the worst of our society to procreate. And now we have The Donald coming to save us…
you are right to be worried about El Trumpo
he is promising to “Make America great again”, and pointing the finger of blame to why it isn’t.
Hit-ler used exactly the same words in 1932, using the same blame game. He also removed 6 million “lesser people”) His Ponzi scheme lasted just 12 years
he too was given control of the most powerful army in the world at that time.
the parallels are truly scary—not because of Trump getting elected, but that if he did, he would crash the economy harder further and faster.
Then it would be time for a real dictator to take over and restore civil order with martial law.
After that you can kiss your constitution goodbye
The American military has removed millions of innocent people as well and leveled foreign infrastructure similar to hurricane Andrew under the guise of enduring freedom or Iraqi freedom. I would know, I cleared dozens and dozens of F15’s for takeoff right near Afghanistan for months and those were the two campaigns I received medals for. And I agree that Trump will crash the system harder and faster than Hillary.
On the other hand, though, diminishing returns ARE everywhere including in scientific progress. This is reasonably because we are apt to pick the low-hanging fruit everywhere, including in scientific progress and technological development.
When we look at research into cosmology, sub-nuclear/quantum physics, pharmaceuticals, genetics, automobiles, military hardware, etc., a lot of investment and effort is going into getting very modest results back these days.
Still, we’ve gotta have progress.
High hanging fruit:
Farmville
Twitter
Facebook
Low hanging fruit:
Fire
Wheel
Electricity
I suppose people think that digital farming is more sustainable than traditional farming, lmao!
Meanwhile in the USA, the citizenry descends into madness….
Reports of creepy clown sightings — often at the edge of the woods, and almost always trying to lure children into the forest with promises of cash or candy — have spread throughout the nation, driving citizens to arm themselves and leaving police departments baffled.
Over the summer, police stations in six states — South Carolina, North Carolina, Ohio, Florida, Wisconsin, and now Georgia — received dozens of calls reporting what the internet is calling “creepy clowns.”
On September 9, in Dublin, Georgia, someone blamed a car crash on the driver swerving to avoid a clown (police believe speed and alcohol played a role). On Thursday morning, multiple schools in Escambia County, Alabama, were put on lockdown after an elementary school received a suspicious call related to “Flomo Klowns.”
Georgia has been especially hard hit over the past week.
http://nymag.com/daily/intelligencer/2016/09/creepy-clown-sightings-unsolved-despite-arrests.html
Back in 1993, the BBC news reported that a male and female social worker, both dressed in black, had been visiting people’s homes and insisting they had authority to take their children away. Reports were coming in from all over the Midlands of England. Nobody yielded their children, of course, but it sounded quite disturbing. I heard nothing more of it until it was mentioned in a book in 1998. Apparently there were around 330 reports to the police. Two people were arrested. One was released for lack of evidence, and the other eventually had the case against him dropped. Very weird. And in Russia in 1989, there was a huge increase sightings of claimed “UFOs.” Unstable times produce strange urban myths, it seems.
Strange!
Besides effectively diminishing returns generally bring the system down, for me is a clear correlation between this fact …
http://foro-crashoil.2321837.n4.nabble.com/file/n31271/imagen-sin-titulo.jpg
… and the gradual decline in interest rates. If oil directly or indirectly involved in all goods and services in the economy, it is logical that increasing production costs finally somehow affect the policies of central banks …
http://foro-crashoil.2321837.n4.nabble.com/file/n31271/j3.png
… and you know better than anyone explain why. Congratulations.
Now central banks are with the dilemma of not being able to raise rates to avoid recession. But if kept as low or even negative rates are introduced, it seems as if the system loses its meaning. However, even though I head against the wall, I’m not able to quantify the consequences of this in the long term. Anyway, as you say, low interest rates do not solve the underlying problem of the inexorable rise in energy costs.
What is the limit of action of central banks? In my opinion, that’s the big question which only separates us from the serious consequences of the collapse of financial bubbles that threaten us like a sword of Damocles.
But a recession and economic crisis is close in time …
Thank you for your effort to help us understand and accept the situation in which we find ourselves. The day the tsunami drag me, at least I know what are the causes that caused it, and this gives me peace of mind.
By the way, I do not know if it will have been a coincidence, but you’ve made me happy to use in your article Figure No. 6.
…………………………………………………..
Gail, you know that I have to use the translator to communicate with you. I apologize, and to fellow OFW, if my messages seem gibberish.
Thanks for trying to communicate with us using the translator.
Low interest rates seem to be one of the major workarounds for diminishing returns. If workers can no longer afford houses and cars, perhaps they can afford these things if the interest rates are low enough. Hence the match between low interest rates and higher costs of energy products. I don’t know how long banks can manage to keep going with lower interest rates. I would have thought that the system would have collapsed by now. The people in the central banks are very clever. The search for ever lower interest rates to keep the system going does seem like the Sword of Damocles.
Thank you for your sincerity.
Negative interest reminds me “Ouroboros” which devouring itself, closes the cycle.
http://lounge.obviousmag.org/vanilla_sky/assets_c/2015/10/eternal-return-thumb-800×805-125356.jpg
New symbol for bankers!
For a given interest rate there is an equivalent amount of debt. When interest rates fall, more debt becomes possible, and with that increase, the economy grows. It is the change in interest rates that stimulates the economy.
Now, given the chance I’d argue that what I’ve just said is total nonsense and is closer to giving the economy a heroin fix than a rational action to improve the economy, but that’s the way we’ve been conditioned to think.
I’ve just come back from ramming my head against the wall (the neighbours are wondering what all the racket is about…) ….
Hopefully this loss of intelligence is only temporary …. I am taking various pills that I found in the third drawer …where the pills are kept…
wait… wait… I am having my first epiphany in my altered state…. it is coming to me like a vision from another world… waweewoowaaah… is this what DelusiSTAN feels like????
‘Now central banks are with the dilemma of not being able to raise rates to avoid recession.’
It’s almost here… here it comes…
Ah ha yes! If we just keep lowering interest rates it means there will never again be a recession…. we have defeated the business cycle…. no – we have destroyed the cycle… ended it…. terminated it… with extreme prejudice… terminated the colonel….
And because we can go negative to infinity… what we have here is known as a ‘perpetual prosperity masheen’ (TM Fast Eddy Enterprises — Richard … if you use this in an article you better pay up….)
http://focusfeaturesmedia.com/uploads/image/mediafile/1302537538-a1acd95b7b00c7f0f18e625bf29e4dc4/x950.jpg
thats my wall—keep off
Room for all…
http://saltandlighttv.org/blog/wp-content/uploads/2016/03/wester-wall-wailing-610×343.jpg
i’m very fussy about who i share headbanging space with
Considering the financial effects of negative interest rates gives me a headache!
On helpful cheatsheet way to think about them is that they are a crude ‘grenade-like’ weapon used by countries engaged in currency wars. The lower the rate the less demand there is for your money on the international markets. The lower the demand the lower you can keep your currency. This benefits your balance of trade, debt servicing and export markets. When every country’s economic, trade and monetary policies are geared towards these aims you get a currency war.
Why is that important and how does it fit into collapse theory?
Currency wars are symptoms of the conflicts between nation states that arise out of MERCANTILISM (economic policy geared at gaining export advantages which ultimately sacrifices domestic priorities) and GLOBALISATION (the hyper expansion of trade ties which causes a fundamental tension between the needs of the nation-state and trans-national business entities)
How did MERCANTILISM and GLOBALISATION work out the last times they were given free rein? Economic collapses and World War 1.
Decrease interest rate of a 10 year bond with .5% and its value increases by 5%.
As long as we can keep lowering the interest rate by .5% per year everything that depends on returns will be fine.
“As long as we can keep lowering the interest rate by .5% per year everything that depends on returns will be fine.”
That “will be fine” will have a short tour, I’m afraid.
Observe how has broken down the correlation between rise in interest rates and delinquencies.
http://ep01.epimg.net/economia/imagenes/2015/12/16/actualidad/1450278896_850527_1450290706_sumario_normal.png
http://i1.wp.com/www.gurusblog.com/jordi/wp/wp-content/uploads/2016/09/Captura-de-pantalla-2016-09-22-a-las-09.33.32.png?w=740
Delinquencies in the US is rising at an alarming rate.
What does this say Yellen?
Well … she denies that there is an economically-financial bubble … I guess it’s better this way.
Extend.
Lower interest rate (5 years and up).
Pretend.
Maybe Yellen hasn’t looked at commodity prices.
Asset prices will look great as well. I hope no one expects anything of their pension plan, however.
No,
But is there any lower possible limit for a 10Y government bond?
Thanks Gail !
So when Productivity Growth drops to zero, then we have reached Peak Growth ? From that summit point real economic growth is no longer possible ? The central banks QE, ZIRP and NIRP will from that point no longer have any effect ?
I think the question is whether the economy collapses even sooner than when Productivity Growth drops to zero. In other words, is there so much overhead, in terms of interest and dividend payments, that the economy will collapse when the productivity growth is not enough to cover these items? In the absence of this kind of overhead, I would agree that when Productivity Growth drops to zero, we have reached peak growth.
Excellent post Gail. I recently finished Robert Gordon’s new book”The Rise and fall of American Growth” and reviewed it on Amazon. In the book he says that American growth is done because all the “innovations” in the period from 1870 to the present were one time inventions which generated the growth. Unfortunately as with most economists he completely misses the fact that it was cheap fossil energy that was the driving force behind all those innovations and inventions and nowhere in the book does he relate the declining productivity to for example declining energy per employee. It is a remarkable book from the economic community but as with most economists he sees energy as a subset of the economy instead of the other way around.
Productivity seems to be the subject of discussion between the Red Queen and Alice. Left to itself, for example, a steel mill, tends to improve efficiency by one or two per cent per annum, just by the people there finding better ways to do things, and by optimising new components in place of old legacy parts. The workers employed at the plant then go out and buy SUV’s in place of bicycles, for example.
So you end up running harder just to stay in the same place.
A more exact description suggests that, for example, an aluminium or cement processing plant will be sited near a source of cheap energy, and that advantage gets passed on in the form of growth, and something that uses less energy loses out in the market place, and the cycle continues.
Talking about cement, aluminium and steel.. and the illusion of productivity growth.
Largely it seems that the last two decades of BAU intact have been a combination of China building infra like CR-ZY https://www.washingtonpost.com/news/wonk/wp/2015/03/24/how-china-used-more-cement-in-3-years-than-the-u-s-did-in-the-entire-20th-century/
and the US consuming the things China produced..
Now it seems China can not continue to invest, go in to debt, build roads, ghost towns, pollute the environment etc. etc. like it used to. (After the Versailles was finally finished, France decended in to a two decades recession..) And therefore Chinas lack of investment/raw materials/building equipment demand will drag the world economy over the Wile E. Coyote -moment.
And the US will finally have a limit to its debt..
When talking about productivity or productivity growth, there seem to be these elephants in the room; how it was done, with what, where, why, and what was the outcome..
cal48 – That’s a nice argument which you will find expanded in George Mobus’ latest post.
http://questioneverything.typepad.com/
While I am still in the zone….
This is not a problem …. we don’t need real growth….
We can just switch to fake growth…. fake growth does not recognizeLimits….
Dennis Meadows while brilliant… was not stupid enough to understand that there is a parallel universe…
Negative interest rates are the gateway to fake prosperity….
http://focusfeaturesmedia.com/uploads/image/mediafile/1302537538-a1acd95b7b00c7f0f18e625bf29e4dc4/x950.jpg
Now you are switching places with Dolph ? You enter his fake parallel universe and he enters your real universe ?
Don’t judge till you’ve walked in their shoes so the saying goes…
Well — I’ve walked in the shoes so I can judge….
My attacks on DelusiSTANIs must intensify. The zombies must die.
The Limits to Growth model does not include debt. In fact, it does not include a financial system. It includes the quantity of the physical goods that would be needed to make factories and such things. But something got lost with the omission of a financial system. From the point of view of an engineer, all that was needed was the “stuff.”
I believe we’re already at the moment where growth has stopped, it’s just that the big players in global GDP like the U.S. and China have become extremely sophisticated at hiding reality from their citizenry. How many times has the U.S. revised unemployment data, like 3 or 4 times now? And how long can China just keep building ghost cities that will never see any sort of payback? If we’re at peak growth right now, the contraction is about to happen anytime now, and it’s going to be a doozy!
Think what will happen in countries what have youth bulge, when young men don`t find a meaningful job and cannot affort to have a wife and family. Not all populations are like japanese who just live in selibacy and take the life it like it is. What a suicidal jackpot it is to be a youth or child in those countries as blight of Syria and the aftermaths of Arab spring shows.
“Consider India. More than 300 million Indians are under the age of 15, making India home to more children than any country, at any time, in all of human history. If these children formed a country, it would be the fourth-largest in the world.
Every month until 2030, one million Indians will turn 18 years old, observes Somini Sengupta, the author of a compelling new book, “The End of Karma: Hope and Fury Among India’s Young.” These young people will need education and jobs in a global economy that will feature more automation and fewer of the semi-skilled manufacturing jobs that absorbed earlier youth surges in Asia. India’s demographic bonanza nevertheless holds the potential to create unprecedented economic growth — or it could rock the world’s largest democracy and second-largest population with sustained instability.
Africa’s population of 200 million young people is set to double by 2045. In the Middle East, a region of some 400 million people, nearly 65 percent of the population is younger than 30 — the highest proportion of youth to adults in the region’s history.
In Pakistan, two-thirds of the population is under 30. Many of these young people will grow up in a Pakistan that appears to be growing more democratic but that also is rife with corruption, extremist violence and dire shortages of energy and water.”
http://www.post-gazette.com/opinion/Op-Ed/2016/09/04/Here-come-the-young-the-next-world-population-boom/stories/201608210045
I’m a younger guy; I can’t imagine how people afford to start families these days. I was doing the math a few weeks ago…
Housing prices … high (this is seen as a good economic sign!)
Student debt is through the roof.
Fewer high paying jobs.
Higher health insurance costs.
Weddings cost, what, $20 grand?
Even delivering a kid at the hospital is $4 g?
Save for the kid’s college fund. Save for retirement.
But wait – no – no, stop saving! Spend! Buy a car! Reboot the economy! Rack up the credit cards! Stimulate! Helicopter Money!
These problems exist in first world countries! How is this global economic system of ours going to absorb hundreds of millions of people in even worse financial shape?
There is something funny about the trap that we are in as a species.
The joke is most definitely on us
30K for the wedding, 7k for delivering the kid. And that was several years back. I won’t tell you what the house cost…..
I manage to stay stress free by reminding myself that none of it matters anymore. Once this sucker really gets going it will be “lord of the flies” or fukushima. Eat, drink, and be merry, you were never getting out of this world alive anyways.
You know you can make babies without being married?
can you?
wow
Mind. Blown.
https://media.giphy.com/media/EldfH1VJdbrwY/giphy.gif
I am happy to help.
I’ve heard that you have to involve someone else in this arrangement.
That might present difficulties
Not the least for a Swede.
It’s our national hobby to import poor woman from rice farming families in Thailand. And I don’t mean it in a derogatory kind of way.
It solves plenty of problems for both “participants” in this little game of “love”.
https://en.wikipedia.org/wiki/Prostitution_in_Thailand
well rice farming in Sweden is probably not a sound business venture
gotta find some way of passing the time in those dark northen nights I guess
This is a website http://www.worldlifeexpectancy.com/country-health-profile/pakistan that gives the population pyramids for various countries. It also gives an optimistic view of how the population pyramid will change in the future.
What’s so damn great about civilisation anyway? Only two convincing arguments ever seem to be made. Dentistry and the genius of (insert favourite creative artist).
Really? Was all that strife of maintaining omnicide just so that one form of pain could be removed while we make the pretense of assuming art is somehow transcendent?
you’re going to find life very unpleasant without an infrastructure of civilisation
‘What’s so damn great about civilisation anyway?’
Where does one begin….
By removing BAU/civilization it from one’s life and rather quickly having an epiphany.
Starvation might lead to an epiphany … or perhaps just a bit of light headedness
Yawn….
Quite obvious that civilisation provides us with a present day life-support system.
What are its achievements? I.E. What makes it so great when the species managed to live so long without?
You don’t enjoy being able to turn on a light? What about having cold or hot air on demand? Would you rather live in a cave? It’s kind of nice to always have enough food no? Medicine is kind of useful as well…
What makes civilisation GREAT is a different question than what UTILITY does it serve?
Well, first of all it is great because it provides an utility for most people. Which is probably why it got started in the first place.
Perhaps you are looking for some other word than ‘great’?
Regarding Dentistry: Ever heard of the work of Weston A. Price? Civilization often causes dental problems due to the diet necessary to maintain a population surplus.
https://en.wikipedia.org/wiki/Weston_Price
I agree on the artwork, though. And music. Landing on the moon – that was a neat trick. Running water. The Internet has been fun.
Destroying the ecosystem though… what a price.
There is evidence that Hunter Gatherers had much better dental outcomes than we have today.
I blame a lot of that on refined sugars, white flour, and processed foods. Saying that grains are to blame for all of our health ails is a bunch of horse apples. Look at countries like China where they had almost no cancer and heart disease and then all of a sudden the American diet of soda and potato chips shows up and what happens? Diabetes, cancer, heart disease, and other ailments take off. Western A. Price is almost as hilarious as the ramblings of T. Colin Campbell.
No civilization = no discotheques … and so much more
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What is also important is that our ability to repair things cheaply diminishes: as the things are more and more produced by more and more sophisticated machines and robots, which can keep the production costs (and thus prices) of the products down and are less influenced by the energy prices, we produce more and more (complicated) things the repair of which is less and less economical.
Furthemore, it is interesting (but in line with the abovementioned trends) that todays children have worsening manual abilities, so the share of the population with good manual abilities goes down. It would be interesting to see how the jobs in the area of repair and servicing are doing.
Unfortunately in Slovak:
http://www.noviny.sk/slovensko/111561-2000-eur-za-dva-dni-remeselnici-sa-na-slovensku-nemaju-zle
It states clearly: the jobs of reparing and servicing personal have several times higher wages than the jobs of todays university graduates.
Also high wages and enormous taxes in west makes is rational to buy new from far away.
That things are on purpose built to break and being impossible to repair by non-certified doesn’t help.
Yes, it looks like consumerism, but in fact it is growing inability to service and repair things cheaply.
I find it hard to believe that repairmen will have such a rosy future. If replacement parts are not available, I am afraid repairs won’t work too well. If the devices are electric, and replacement parts for the grid are not available, it won’t do any good to repair the electric devices, because most of us will not have a way to operate them.
We built our electric grid, oil pipelines, and a lot of gas pipelines over 50 years ago.(Also a lot of water and sewer pipes.) These things wear out with age. This is why we had the problem this last week with the pipeline carrying gasoline through Alabama. Many of these pipelines are now getting to the point of needing replacement, but I don’t think doing so is really an option today.
Of course, the repairmen have no rosy future. My nephew is a handy car mechanic. He was working for a certain company for several years providing the servicing and repairs of its fleet. But the conditions started to get worse and worse. So he left this job. And also in his current own company he knows how costly and difficult is to get the spare parts at the right time, even from the renown producers of machines. And he has to find creative solutions when e.g. an electronic control unit of a renown world brand breaks and needs to be repaired immediately here and now, but when he tries to order a new one, they tell him, that it will be delivered in a months time… (The electronics in current machines is a big problem, as when some parts of the machine overheat or dirt and dust accumulates e.g. in the cable channels, they can easily catch fire and the whole machine is inoperative.)
I was just pointing out to the fact the repairmen abilities are a big plus in comparison to university degree and are highly valued in the collapsing world, which the wages of such people show. Because it means, that the worker with the university degree must face the negative results of the collapse sooner in comparison to those who have lower degrees of education, but have creative self-repair abilities.
This is where the civilisation collapses: when there is no one to repair your faucet, pipes or electric installation to/in your home, you are finished. You lose your independence and it is better for you to move elswhere, where such services are still available and affordable. This is the reason why many houses are abandoned: there is no one to care for their daily operation or their operation becomes impossible or uneconomical.
a house, and all the gizmos within it are effectively blocks of embodied energy
if no futher energy is inputted into those blocks—ie repaired—then they must inevitably fail
Right. We also have a lot of electric grid and a lot of pipelines that are getting to an advanced age. They need frequent repairs, but it will be harder and harder to make these repairs.
many years ago we had a nice repairman who came a fixed CRT tv’s videos and stuff
we used to talk about retirement, pensions and stuff—he always used to say he’d fixed his pension for 70…”because people will always need TV’s repaired”
then they went and invented flat screen TVs and dumped videos.
oops
And that repairman probably are more busy than ever fixing legacy industrial monitors, computers and electronics by now. Why scrap a perfectly fine 90’s CNC machine just because the old PC under the hood and monitor has given up the ghost?
And soon TV’s will go the way of the doo doo:
http://www.marketingcharts.com/television/are-young-people-watching-less-tv-24817/
Speaking from my own anecdotal evidence, supported by actual evidence, most old f@rts seem addicted to TV:
http://www.marketingcharts.com/television/are-young-people-watching-less-tv-24817/
“(…) which can keep the production costs (and thus prices) of the products down”
Not necessarily, I would conclude that most products require advanced/precise/fast machinery to make the manufacturing process possible, at all.
Take for example a milk packaging and filling machine as a case study. Not only does it need to be fast filling up the packages, it has to be extremely precise to fold the paper or plastic bottle to an exact shape and furthermore make the package aseptic to remove any microbial contamination. It is an amazing show watching one of these running at full speed.
It is a compounding set of problems where only production cost is one factor in the predicament.
A lot of us who are drawn to Gail’s ideas may have found ourselves previously bouncing around the blogosphere searching for explanations about the reasons for our unfolding collapse.
Before I discovered Gail’s blog the most cogent work on this subject was in the writing of Nicole Foss BUT i always had a problem with her statement (paraphrased here) :
“When financial collapse hits, cash will be king”.
Some of you may also remember the blog “lifeaftertheoilcrash.net” and sites like it which surmised that learning skills like bicycle repair and acupuncture would allow one to ‘survive’ collapse. The more fringe among you may have even encountered the primitivist-anarchist theories on sites like anthropik.com which argued so eruditely against societal complexity. However one could help but feeling a little lost when the authors stopped posting apparently to go off into seemed to the Appalachian wilderness and relearn ‘noble savagery’ by picking ticks off each other.
It’s the ramifications of these ideas and their flaws that also make me allergic to the constant ‘buy gold’ exhortations on the various online agencies that purport to understand civilisation collapse.
Has anyone else here have trouble with those kind of ideas? it seems to me that there will little need for media of exchange when there is little to exchange! I found myself struggling with those ideas about the time I encountered David Korowicz’s ideas and it was only when i found this blog that I found a sensible community of understanding.
the home based economy theorists are effectively offering my universal work structure system —which is standing 100 men in a circle, with shovels and unlimited money.
Each man digs a hole, and sells dirt to the man on his left, while buying dirt from the man on his right.
the only rule is—no one is allowed to stop digging.
of course, everyone becomes a cash billionaire but eventually dies from overwork due to lack of energy input from outside sources
If it were not for the men dying … this would be classified under Perpetual Prosperity Masheen.
Talking about digging- here is how Stalin got things done-
“Built between 1931 and 1933, the White Sea-Baltic Sea Canal was the first massive construction project of the Gulag. Over 100,000 prisoners dug a 141-mile canal with few tools other than simple pickaxes, shovels, and makeshift wheelbarrows in just 20 months.”
and the survivors?
the Japanese used the same construction methods as I recall
“and the survivors?”
What survivors?
zakly
You can get a surprising amount done with pickaxes, spades and wheelbarrows. The road over the pass near my place runs for about a kilometer along the side of the mountain. I walk the dog along that road every morning.
It began as a footpath through the woods and over the mountain, but it was widened to take cars and vans once cars and vans began running. A few years before WW2, a team of guys attacked the hillside with pickaxes and the result is some rather picturesque “natural” looking cliffs covered in moss, ferns and the occasional orchid.
These days, a public works project of that size would be done with power shovels and dump trucks and the wall or cliff would be buried under a nasty concrete monstrosity. The modern method involves much less manpower, but much greater use of equipment, energy and raw materials.
I saw a museum in China that talked about the manual labor by Chinese workers before Daqing Oilfield was put into operation in 1963. This article http://dqyt.cnpc.com.cn/dqen/HoDO/dqen_common.shtml talks about “hundreds of thousands of workers” who were able to successfully explore and develop the field in less than three years.
“Has anyone else here have trouble with those kind of ideas? ”
In some ways the ideas are completely sane and logical. However, something is left unsaid – that there is no route to reduce the size of the population that doesn’t involve unacceptable levels of bloodshed.
Again, there is big difference if the collapse take decades, it’s regionally diversified (fast in Venezuela vs slower in Asia), somewhat hidden behind demographic slump and various ad hoc spikes of regional wars on resources. OR it proceeds as instadoomers portray it by universal “overnight” action..
Big difference, repeat after me timing and sequencing of the future is unknown.
The former Soviet Union collapsed in 1991, when oil prices were low. In fact, they had been low for several years. The Soviet Union was an oil exporter that could not afford to keep up its investment. Its collapse is part of the reason we are still here today–they had more oil remaining to export than they would have if they had been able to continue as in the past.
When people asked me about whether gold would work, one of the first things that came to mind was what might be available to buy. If there is not much to buy, gold doesn’t do much. Also, the denominations of coins are too high to us for, say, buy bread with gold. I would think people who have food to sell would be most interested in others with different kinds of food to trade. That would seem to be another problem for gold. So while gold might play a role in diversification of assets, I wouldn’t feel like it would solve most of my problems.
gold only works as a purchasing medium if there is stuff to buy that is (or can be) converted into embodied energy.
Thus a Roman gold coin could still be used long after the empire had collapsed, because there was still “stuff” to buy with it—a sack of grain, a horse or sheep or whatever.
You could still use a gold Roman coin as currency today—a fine one might buy you a Rolls Royce for instance.
The “energy exchange” system remains the same.
The system fails when whoever has a sack of grain to sell realises that a gold coin might not be exchanged for an energy equivalent elsewhere because there’s nothing to be had.—then you might be reduced to offering several gold coins for a single loaf of bread.
In that scenario, your Roller would be worth only the value of the metal in it.
In 2007 I was piling into physical gold at $700 …. The thinking was that a massive collapse was imminent.. that fiat would blow up … asset prices would be incinerated … that the price of gold would go through the roof … and that those who were joyfully knee deep in the bubbles would be begging me to take their nearly worthless assets for a handful of gold coins….
What ended up happening is I flogged some at 1800… and kept most believing 2008 was just the warm up…
Then I began to understand that there was to be no reset — that when the next iteration of collapse comes it will be final. A handful of gold coins won’t even be able to buy a toothbrush …. because there will not be any toothbrushes being made…. and if anyone has a few spares saved up…. they will prefer to keep them rather than trade them for useless shiny metal coins.
And of course there are the spent fuel ponds…. I was hoping that if I were to make a necklace of gold coins and wear it that it would protect me from the radiation …. but then I remembered reading this some years ago http://www.phnompenhpost.com/national/magic-art-bullet-proofing-troops
Gold will be as worthless as this post BAU:
https://cdn.dogomedia.com/system/ckeditor_assets/pictures/525afb4ce7798905100005db/content_original.jpg
why do i keep having this vision of Fast Eddy wearing a three cornered hat, a parrot on his shoulder and a crutch.
Actually …. I did send my brother a map – complete with an X — of where to find the treasure chest in the event that Mrs Fast and I were to unexpectedly meet our ends at the same time…
He was needless to say … incredulous…. and remains so….
How did my dream ….
http://ceoworld.biz/wp-content/uploads/2015/09/private-jet-crew-1.jpg
Go so horribly wrong????
I am sure this Chris Martenson is somehow to blame….
you mean that’s not Mrs Fast?
Ive tried selling treasure maps with Xs all over my garden
so far nobody has fallen for that one.
You should team up with Xabier…. he could plant those maps in ancient books… to lend an air of authenticity to them….
Then set up a website http://www.treasuremapsinsideancientareus.com …. with a disclaimer stating that these maps may or may not lead you to treasure….
Follow the Elon Musk model — get Don Draper involved… and you guys can have the jet that I will never have… I can live vicariously through your adventures on The Jet…. be sure not to forget us…. post regular updates with photos…
I remember reading about Bosnian war survivors.. the first places looted in SHTF were the big beutiful houses with high fences. I imagine they had gold.. I remember him telling explicitly something about absolutely NOT having gold. That was like an instant invitation to have night time guests.. Cigarrettes and vodka worked much better. And barter worked even better with a real skill attached, like first aid. Patching up the numerous knife and gunshot wounds was a valuable trade commodity.. I imagine there’s some truth in that, gold and large stockpiles of handguns and ammo, become an almost irresistible target for the numerous nightly looters.
That was not the sort of thing I had in mind…. I was thinking collapse — then reset…. and not being left with less than a pot to p.iss in….
Sort of like a Greater Great Depression …. then a Phoenix rising from the ashes (with me riding on it’s back)
https://s-media-cache-ak0.pinimg.com/736x/05/c2/65/05c265d93248a5e4c0747dcfc998aa90.jpg
I was absolutely not thinking of trading a coin for a box of food — rather I had in mind trading the coin to take over the bankrupt farm….
If not for FW I would still be looking forward to the clock striking midnight and all the good things that would follow…. my matrix would have remained intact…. it’s all Gail’s fault!
Sorry!
Yup, all Gail’s fault!
And maybe a little bit Normans too.
And let’s not forget Tim Morgan and his sickening Perfect Storm…
http://stk5f277gbe2lfag44edxpbf.wpengine.netdna-cdn.com/wp-content/uploads/2008/09/barker-plane-crash.jpg
Yup, Tim Morgan.. everything would be just A-OK without Tim Morgan.
Gold may still serve a purpose in the period before BAU ends…. difficult to say what might happen to fiat currencies…gold tends to be a hedge against that…
A friend in Canada was wondering why I was holding gold — this was just after the CDN dollar had tanked…. I pointed out that if he had bought gold as a hedge he would have preserved his spending power….
Also we have seen how some countries have limited withdrawals of cash….
Post BAU it will be as useful as fool’s gold.
Executive order 6102; Roosevelt confiscated the gold..
When the CB:s try to split up the dollar and/or implement the 1934 “Chicago plan” a system wide gold confiscation is more then likely. Just like Roosevelt did.
I think that happened in the US only….
And in any event… this time is different….. there will be no point in confiscating gold to preserve BAU…. because BAU will be done.
The CB:s have distorted everything. Nothing is real anymore.
I wouldn’t rule out a complete Twilight Zone experience before BAU finally goes bye-bye. Every rule has already been broken, so, what’s to stop them?
If they think they can keep BAU going for a day-month-year longer by doing some crazy s-it, I think they already have proved that they will do it. I think they will go to any lengths to keep BAU intact for just a little while longer.. NIRP, Helicopter, Cashless anything goes
“When financial collapse hits, cash will be king”.
Nicole is the Anthony Wiener of the doomsphere…. both of them are jokes… in their own way…
‘relearn ‘noble savagery’ by picking ticks off each other.’
Can I get your address — that comment gets you a ticket to the VIP lounge at the Fast Eddy End of the World Party….
‘Has anyone else here have trouble with those kind of ideas?’
My journey started with Albert Bartlett…. and involved encounters with Korowicz, Colin Cambell early Tim Morgan… and ended on FW….. I was actually searching for ‘feasibility of a steady state economy’ and up came an FW article…. life has never been the same…
One can pick up bits and pieces from other sites…. but there is nothing remotely as good as FW…both articles and comments.
For me it was also Al Bartlett who started my journey “how deep does this rabbit hole actually go??” Then Tim Morgan combined with Alice Friedemann (trucks and logistics) kinda made it clear to me that no miracle tech solutions were to be expected. Finally the biosphere collapsing (stats & numbers) made it clear to me where this particular rabbit hole actually ends.
FW:ers have the courage to face this FUBAR predicament.. strength of character not exactly common elsewhere..
“FW:ers have the courage to face this”
Yeah, but the chatter is dominated by hopeless fast eddy. I don’t think many people here have a clue as to how weird the future could get.
nobody told me that eddy was weird—i hope it’s not catching
WARNING: there are experimental elements and deeply controversial personages on FW. You have been warned, if you choose to proceed, however, you do so at your own peril, and against the advice of MSM.
i shall bear that in mind
do weird persons have a capital W on their foreheads—or is there some other way of knowing what one looks like—(apart from the standard method of using a mirror?)
Anyone who believes MSM has a problem.
Hear Hear!
Fast Eddy isn’t weird, just boringly consistent. What is weird are some of the potential futures. For example, if people started tapping the atmosphere for carbon to build things, like linings for underground vacuum transport tubes. There is a lot of CO2, but the demand for structure could use it all up. There are other fates even stranger. For example, the human race could get into spending most of their time in an uploaded state, which would obsolete the vacuum tunnels because they would just send their “software” by optical fiber and rent a body from Hertz rent-a-bod. A combination of uploading and speeding up, perhaps a million fold would could cause a “collapse” of civilization to 300 meter spheres sunk in the deep ocean for cooling.
https://web.archive.org/web/20121130232045/http://hplusmagazine.com/2012/04/12/transhumanism-and-the-human-expansion-into-space-a-conflict-with-physics/
Of course this class of futures depends on research continuing. I.e., BAU to some degree has to continue for a while. But not forever. If one way or another we can continue to make knowledge progress for another 50 years, the current set of problems will seem quaint.
i think i need to take time out to redefine weird
The only thing certain about the future, seems to be that it will get weird..
Water/hydrogen cars R&D heavily underway in Germany. Water in the gas tank..
Solar cell that captures CO2 and produces fuel https://news.uic.edu/breakthrough-solar-cell-captures-co2-and-sunlight-produces-burnable-fuel
Algae that captures carbon http://www.powermag.com/breakthrough-carbon-capturing-algae-project/
And then we have the nanomaterials and quantum research going on. Weird stuff..
Ah, and here we go!
https://s-media-cache-ak0.pinimg.com/736x/b7/cb/11/b7cb11b1c07d55e2165046959098156a.jpg
I’ve found a better landing place…
http://orig09.deviantart.net/5a83/f/2012/277/3/0/shark_feeding_frenzy_by_eylk341-d5grr3k.jpg
And meanwhile out in the real world, with the non-FW:ers, the talk about space elevators, carbon nanotubes and offshore wind wont stop. The talk will continue, even as the grid comes down. We are a strange species. Hope at any and all costs.
When someone tells you it is impossible to build an global energy transformation, if all else works out, brilliant ideas, wondrous inventions, hero engineers, we simply don’t have the raw materials needed.. impossible.. https://www.fastcoexist.com/3044467/a-periodic-table-of-elements-that-the-world-is-running-out-of but the word impossible will be ignored every time.
Hope at any and all costs, will probably make our world in to a very, very, weird place. 7.5 billion pretending nothing is wrong. Nothing is wrong. Move along. Move along. Nothing to see here. Don’t know how many days of BAU there is left. But it’s getting weirder by the day..
Keith… are you there? Are you reading this?
Just remember that we need things cheap and very abundant. These things depend heavily on fossil fuels, and they have diminishing returns.
Keith is very busy ignoring the word “impossible”..
But it is.. impossible.. http://www.climatecentral.org/news/renewable-energy-needs-huge-mineral-supply-16682
http://content.presentermedia.com/files/animsp/00009000/9439/chatter_teeth_md_wm.gif
In the sphere of the imagination, every problem has a solution, and so, if we were brought up with a can-do spirit backed by tails of Thomas Edison and Benjamin Franklin, when we come across problems, we go sniffing around in search of solutions regardless of whether they exist in the real world or not. Alternatively, if the problem is dire enough, we may fall back on the conviction that supernatural beings, doctors, scientists, or the Fed will step in and rescue us regardless of whether they have the capability or the will to do so in the real world or not.
When the issue is an existential one involving the dichotomy between extinction and survival, or between damnation and salvation, if we are engaged in it, we will tend to approach it with some urgency. If we think we’ve found a promising answer, we may decide it’s worth sharing this with the rest of the community of seekers, and if our listeners detect the audacity of hope in the solution, a crowd will gather. That’s how the hopium peddlers of the doomersphere get their audiences. These folks are not unlike religious leaders or spiritual gurus. Followers gather around their feet to become enlightened or comforted or redeemed, and to receive advice on how to prepare for the coming tribulation.
Where Gail differs from virtually all of these luminaries is that she doesn’t light the way to any promising answers, she doesn’t indulge in the audacity of hopium, her candle illuminates the problem, not the solution. In short, she doesn’t offer the seeker any cookies at all. Also, she doesn’t offer any advice on how people should live their lives. She’s a teacher, and possibly a prophet, but she’s certainly not a guru. This refusal mount the pulpit or the soapbox is a major boost to her credibility.
Good comment, Tim.
In a comment that I made the other day, I said that the situation in which we are (technically) is not a problem. We are asitiendo the natural order of things in action. We are a complex system that dissipates energy and sooner or later meets the limits. This is a phenomenon. The phenomena observed with the senses but are not solvable.
We can agree to call it “problem” as convention or to understand conversational mode.
Formerly fregábamos the floor on our knees. This was a real problem and someone came to put a stick and fixed the problem. But what the reindeer on the island of San Mateo could solve their “problems”? The answer clearly is no.
However, this I say that is very difficult to accept because humans have evolved with narrative and magical thinking. Surely this has helped us to lead us through life but now it seems that is a drawback.
Y Dios salve a la reina!
http://www.findingbetteragencies.com/wp-content/uploads/keep-calm-and-god-save-the-queen-146.png
Formerly fregábamos the floor on our knees… ehhhh… not.
Formerly, we were washing the floor on our knees.
” in search of solutions regardless of whether they exist in the real world or not.”
You certainly won’t find solutions if you give up.
Solutions are what got us to the precipice of extinction.
Can you not see that?
So what if we go extinct?
I got this thing – if I’m going down, it should be in flames.
https://i.ytimg.com/vi/pLyobNsBDHI/hqdefault.jpg
The extinction of humans would be the best thing that every happened to everything else on this planet — except for the fact that being the vindictive pricks that we are — we will take everything else with us …. when our spent fuel booby traps explode
Maybe there is good an evil. And we are the devil. 🙂
George Carlin isn’t worried (anymore).
The earth is just fine. The microbial life will rebuild it all eventually and the process reboots.
On the positive side… radiation is bad for cancers…. so the odds of another species similar to humans emerging …. are very low….
No hurry, the radiation will eventually decay.
Give or take a few ice ages and magnetic reversals of the poles in between. Then we are back were we started with the first one-celled organism evolving to more complexity. Eventually to the point where large pockets of liquid hydrocarbons will be discovered.
http://i.imgur.com/mDeEz3R.jpg
https://upload.wikimedia.org/wikipedia/commons/thumb/9/90/Check_mark_23x20_02.svg/1081px-Check_mark_23x20_02.svg.png
Glad you like it. Nicole has very good knowledge of electricity and renewables. Her financial knowledge is more pieced together, IMO. (Of course, there are not many good people to learn things from on the financial side.)
acheologists studying ancient roman settlements in what is now Engand find that the nobleman’s stash of gold and silver coin is usually buried in clay pots beneath the charred remains of one of the manor’s posts. i recall corner posts are favorite places.
The comments section is a good barometer for what things are going to look like when the SHTF…..
I suggest that anyone who has notions of a ‘Little House on the Prairie’ type existence … have scan through the comments on this article:
http://www.zerohedge.com/news/2016-09-20/police-unleash-tear-gas-quell-riots-charlotte-after-police-shoot-kill-black-male-liv
Yup, ..was just making calculations how bad the harvests would be in Germany without the vast amount of fertilizers and pesticides used today. Year 1 post-BAU.. rephrasing Norman; not exactly comfortable..
Thanks Gail for another good post.
You conclude with “Our problem is an energy problem“.
I understand this sentence is intended for economists and other non-specialists (who hopefully grasp the fact that money is an elastic proxy for useable energy…), and “energy” is used here in a broad sense, like “physical and not monetary”.
More precisely, before having an energy supply problem, we’re having an entropy expulsion problem. Increasing the energy supply would work only for a short while, because more energy dissipation would generate even more entropy that we cannot expel out of our finite system (aka “the planet”).
In other words, ““(entropy) sinks become problematic before (energy) wells do“, as Jacopo Simonetta states in his excellent article “The Other Side of Global Crisis: Entropy and the Collapse of Civilizations” (http://cassandralegacy.blogspot.fr/2016/03/the-other-side-of-global-crisis-entropy.html?m=1).
Getting increasingly more energy wouldn’t be a problem, if we hadn’t to face increasing costs of extraction, diminishing returns of all kinds, pollutions of all sorts, the burden of growwing complexity, etc…, i.e. entropy in its different expressions. Actually, this is what you’re explaining and detailing all along your present article.
NB: this is valid for the period before TSHTF only.
Post-collapse, the situation will be different, with an energy input close to zero (reduced to what humans will be able to gather from photosynthesis (NPP) for their own profit), and still the remaining burden of “our” entropy, that will take -very long- time to evacuate.
Is it correct to say that a rise in entropy means a rise in the likelihood of ORDER becoming DISORDER? Does this reflect the reality that at the peak of civilisation we are at most risk of losing civilisation?
Yes FSA,
But instead of order Vs disorder (max disorder being “all equal”, aka thermal death), which is true but can easily be misunderstood, I think we should talk about amount of stored information (the more information, the lower the entropy).
Our structure (civilization, economy) is increasingly unable to acquire new information (capital investment, layers of complexity) and therefore is becoming more and more unable to adapt itself to changeing conditions (which are changeing even faster due to the accumulation of entropy inside the system, as we produce it faster than it can be evacuated).
In such case, the only possible answer for the -increasingly inadequate- structure is to tighten its internal links in order to hold together, but that also makes it more brittle as a whole (contrary to one with loose couplings, in which a shock is easily absorbed and not propagated everywhere). At some point, the old structure collapses, and new ones can take place and self-organize according to the actual energy flow and other conditions of the moment.
the fundamental problem with ”civilisation” is that we have not discovered any alternative base for our industrial infrastructure other than the combustion of explosive chemical processes.
so now we find ourselves in the position of chasing increasingly unlikely ”energy sources” to sustain what we have.
we call these ”alternatives” or whatever, but of course they all have their fundamental dependence on those processes of chemical combustion—in particular hydrocarbons.
It seems unlikely that we will find an alternative, in which case we are well and truly hoist on our own petard—as they say.
Agreed, Norman,
We fully rely on the most powerful (and wasteful) chemical reaction, combustion.
Running out of petrol, only an underground sea of nitroglycerin, or a huge seam of TNT, could help us keep destroying the planet for some more years.
Kaboom anyway.
They have no such fundamental dependence. There’s no technical requirement for the combustion of oil or NG or coal for anything we have except transcontinental flights and rockets (and perhaps speedy ships if you don’t allow them to have nuclear reactors). There IS however, a technical requirement for it to transition 7B off our current tremendous usage of the stuff. Waiting for BAU to be too inefficient to continue and then expecting a “successful” transition is foolhardy, much less expecting that transition to not be catastrophic.
should i answer that myself—or leave it to others better qualified in here to deliver the laughter that deserves?
my head needs a break from wall banging
three words Norman: sustainable nuclear fusion.
nuclear construction and ongoing sustainability/maintenance and eventual decommissioning cannot be done without hydrocarbon energy input
nuclear fusion itself has not yet been proven as a viable economic concept—-it may come about of course, but i maintain that we have less than a generation left in which to arrive at a solution to our energy problem, fusion or otherwise.
For the moment fusion comes under the heading of wish science, perhaps higher on the FW list than laser/satellite power sources
if fusion does work, it still doesn’t solve the rest of our problems, of overpopulation, resource shortage and climate change.
It will actually add to those problems, because high energy input to the global community will result in increased consumption as everyone strives to rise to the level of western industrialised economic level.
Consumption of resources creates more heat, and supports more people.
Nuclear fusion in an easy to understand illustration:
https://media.licdn.com/mpr/mpr/AAEAAQAAAAAAAATTAAAAJGE5N2U3NzFlLTkxOTktNGZmYi05M2QzLTgxYjJlMzY1NDhjNA.jpg
Otherwise known as:
Perpetual Motion Machine
Isn’t the question how big a break takes place, and what kind of a new structure can take place? Will the break be too big, for us to start with new banks and new governments to fix the old problems, for example.
Yes Gail,
(See also the NB ending my comment just above)
My gut feeling is that next break will be very big, and global, thus reducing the energy input by orders of magnitude. Fossil fuels, and everything depending on them, will quickly disappear. Almost all of our tools and infrastructure will become useless.
The size of any dissipative structure depending firstly on the intensity of the energy flowing through it, it means that the population will likely be reduced in similar proportions. (my bet is less than 100 millions, but that’s ony a wild guess)
I think the survivors -if any- won’t have any possibility to re-start any of the components of our current BAU, as they’ll be busy full-time struggling to survive in a depleted environment (e.g. feeding on insects?). Their problems will likely be very different, very basic (food, water, shelter, security). Banking, trading, govts, transports, communications, etc.. will be things of the past.
After several generations, new -slightly- larger structures may be establihed, but they probably won’t look like anything we know today.
My 2 cents.
It is a worrisome situation.
Thanks – entropy’s ramifications are surely the most interesting, under-recognised yet perceptually difficult concepts I’ve come across in collapse-phere so thanks for your contribution!
You’re welcome FSA.
It’s often getting counter-intuitive.
If you compare Evolution with a car (one should never do that!), energy input is the power engine, but the actual pilot is entropy.
Lots of confusion and manhandling of various definitions here. Here’s the definition of entropy:
“Energy unavailable to do work.” and “a measure of disorder”
And by ‘work’ it is the thermodynamic variant intended, not human labour. And disorder in a molecular/atom sense, not as in your chaotic life.
So, according to you Smite, entropy would be energy (unavailable), human labour wouldn’t be thermodynamical work, and confusion would be on my side.
Well, I take good note of it.
Thanks! Good video!
You’re taking it the wrong way. I think the discussion can be improved with more rigor when talking about thermodynamic and information theory systems.
“In information theory, systems are modeled by a transmitter, channel, and receiver. The transmitter produces messages that are sent through the channel. The channel modifies the message in some way. The receiver attempts to infer which message was sent. In this context, entropy (more specifically, Shannon entropy) is the expected value (average) of the information contained in each message. ‘Messages’ can be modeled by any flow of information.”
https://en.wikipedia.org/wiki/Information_theory
In an economy context I could perhaps speculate that the carrier of information is a currency. The money is “information messages” that is sent between producers (transmitters) and consumers (receiver).
The channel which modifies the message is perhaps the finance and banking sector. And with the ever increasing layers of complexity more money is needed to be able to recreate a coherent message of the market.
It would be interesting if you could share your thoughts on this Gail?
Smite,
I certainly won’t pretend having wrapped my mind around the connections between thermodynamics and information theory (I’ve got poor knowledge of the latter, slightly better of the former), nor clarified the various definitions of entropy, but from what I know of Shannon’s entropy, I wouldn’t qualify it as an amount of information per se, or its average, rather as the quantity of different informations encapsulated in a message, i.e. its degree of uncertainty from the receiver’s point of view.
The calculation of Shannon’s mathematical entropy then allows to determine the minimum size an emitted message must have in order to avoid uncertainty in its reception. In that sense, Shannon’s entropy is a measure of the quantity of information (contained in a message of a given size).
As I said, this isn’t straight nor obvious… As for your analogy with the economy, I prefer not to comment it. I know that François Roddier compares the entropy with the money (albeit with opposite sign, as they flow in opposite directions), but I haven’t been able to fully understand the theory.
“François Roddier compares the entropy with the money (albeit with opposite sign, as they flow in opposite directions)”
Thanks Stefeun, it’s interesting.. I’ll have a look at what he’s up to. (Use the automatic subtitle translation in Youtube)
Fortunately, F.Roddier’s post #92, in which he talks about the parallel between money and entropy, is one of the very few that have been translated into English:
http://www.francois-roddier.fr/blog_en/
Smite,
As far as I know, the auto-translation of F.Roddier’s video of this presentation is sometimes giving very strange results, making it ununderstandable for a large part.
There was a project aiming to correct these subtitles, but…
Roddier seem to connect thermodynamics and the law of gasses to the economy. I do not see that he made any connection with information theory, which I intuitively consider more closely related to the flow of information/transactions in the economy.
Smite,
Some more connections in this post (#85, in French): “Entropy and Information”
http://www.francois-roddier.fr/?p=360
See also the link in footnote #3: “Information: From Maxwell’s demon to Landauer’s eraser”
http://scitation.aip.org/content/aip/magazine/physicstoday/article/68/9/10.1063/PT.3.2912
(I haven’t read it very carefully myself)
You are right–my comment “Our problem is an energy problem,” was intended for non-specialists. It could be interpreted to mean “physical and not monetary.” I explained to someone else that the problem was really an entropy problem. https://ourfiniteworld.com/2016/03/17/our-economic-growth-system-is-reaching-limits-in-a-strange-way/
The oil is there. We can’t get it out because of the required high cost, the increasing debt that would go with this, and many other problems, including pollution-related problems. Alternatives are pretty much equally bad, but in slightly different ways.
Mothballing the World’s Fanciest Oil Rigs Is a Massive Gamble
http://www.bloomberg.com/news/articles/2016-09-19/at-500-million-a-pop-it-s-an-oil-gamble-that-has-no-precedent
See the 5 year share price trend….
https://www.google.co.nz/search?q=Transocean++share+price&ie=utf-8&oe=utf-8&client=firefox-b&gfe_rd=cr&ei=XAviV8G-MKzr8AeevZzYCQ
Deep Sea done?
Perhaps the shape of Seneca curve we should be using.
interesting twist of history—that the first oilfield drilled by Drake in 1859 was called Seneca
http://nyhistoric.com/wp-content/uploads/2013/10/marker-seneca-oil.jpg
http://aoghs.org/wp-content/uploads/2013/08/Image-2-Wells-e1377540297798.jpg
http://nyhistoric.com/wp-content/uploads/2013/10/seneca-oil-spring-before-1927.jpg
Very interesting. I sent a link to Ugo Bardi. I imagine he knows, but in case he doesn’t.
Since you are in touch…. let him know that if he needs help escaping from DelusiSTAN I will make an exception and try to infiltrate the country and bring him back…. I would need to wait for the Full Moon Party when the Delusis are cracked out and dancing around the fire …
I know it was the Seneca Oil Company that hired Drake. I didn’t realize that the field was also called Seneca. https://en.wikipedia.org/wiki/Edwin_Drake
i might have gor the field and the company mixed up
+
Suppose some of the rigs come out of mothballs in five years. I wonder how many of the companies that made these ships will still be around to sell spare parts. They likely have had a pretty poor sales period.
[This is a bit of a mea culpa directed at Fast Eddy but others may be interested]
FE, you may remember I put forward the idea that in the NZ context, once financial collapse occurs, due to the realities of a hydroelectric-powered electrical grid which might possibly be temporarily maintained without a global supply chain and functioning banking system, it MAY be possible to keep the greater population fed and watered for perhaps six to twelve months. One of the central planks to this argument was that there is at least 500 kilograms of meat per person currently held in the farming sector and that it’s unlikely that such a readily available resource would not be harnessed by whatever anarchic form of community persists once the ATMs, supermarkets and petrol stations empty.
Well, after bouncing this set of ideas around in my head for a couple of months I have to admit that I can’t see it happening.
While I wish it was possible that some kind of order out of chaos might prevail I can’t find any historical precedent for the kind of radical shift in human organisation that would have to occur whilst at the same time everything we have been accustomed was removed almost overnight. Even if I were to believe that co-operative behaviour could be utilised I can’t foresee it overcoming the utter desperation and panic that would engulf most individuals when engulfed with the reality that every cosseting and life-supporting feature of their existence was suddenly removed.
P.S.
I’ve been under permanent comment moderation long enough already! One comment containing the word J-ew about six months ago. Enough already!
I think I fixed the problem.
The main problem is that we have destroyed over 99% of the planet’s agricultural land by pouring petro chemicals onto it…
I can gaze out my window at many hundreds of acres of farmland — the whole lot is farmed with chemicals….
If one was not aware of the above — one might believe there would still be food produced post BAU….
Half a Million Jobs Lost as Textile Crisis Hits Pakistan’s Economy
Exporters from South Asia’s second-largest economy, including textile manufacturers who account for more than half of all overseas shipments, say buyers have shifted to countries including Bangladesh and Vietnam as continual power outages impede their ability to meet order deadlines.
“Internally you have constraints on energy and then manufacturing keeping exports down,” said Turab Hussain, head of the economics department at the Lahore University of Management Sciences. “If oil prices go up and exports don’t pick up there will be pressure on your balance of payments and currency.”
http://www.bloomberg.com/news/articles/2016-09-20/a-deserted-karachi-factory-signals-pakistan-s-textile-crisis
I tried to look to see what Pakistan does for power. Up until about 2006, they had natural gas production which was increasing rapidly. This increase in natural gas supplies allowed electricity generation to increase rapidly until 2006. Then growth in both natural gas production and electricity production flattened. Relative to population, electricity production quite likely fell. This is the reason for their rolling blackouts. In 2015, they started importing a little natural gas, so electricity production jumped in 2015–perhaps not enough to make up for the long period without growth.
Pakistan is also a big importer of oil. They need to be able to sell manufactured goods to pay for the oil.
The Helicopters are Circling
Negative interest rates have failed to stop the yen from strengthening—what’s next?
All that spending is getting a diminished return, said Tom Murphy, managing partner of Family Office Research and Management in Sydney. Kuroda’s quantitative easing “is losing its firepower,” he said.
As Kuroda runs out of alternatives, he might need to reach for one of the most extreme tools a central banker has: helicopter money, so-called for the image of bankers hovering above consumers and tossing down free cash in the desperate hope that people will spend it. Another way to implement helicopter money is for the central bank to give carte blanche to the government to borrow as much as it wants and not worry about paying the money back.
http://www.bloomberg.com/news/articles/2016-09-20/helicopters-gather-over-bank-of-japan-with-kuroda-running-out-of-options
Signs Are Building That the BOJ Is Reaching Its ‘Endgame’
What was thought to be healthy turns out to be detrimental
People have been arguing for a while that central banks are reaching the limit of their capabilities, even as they keep coming up with novel ways to stimulate their economies.
However the Bank of Japan may truly be reaching its ‘endgame,’ according to M&G Ltd fund manager Eric Lonergan.
Ever since the Bank of Japan waded into negative interest-rate territory in the first quarter this year, markets have witnessed an outcome more characteristic of monetary tightening — the yen has strengthened, and risk assets have performed poorly.
This counterintuitive market reaction, argues Lonergan, is behind what he calls Japan’s “endgame.”
“When I say the endgame, we have reached the point where what have now become conventional tools of monetary policy — quantitative easing and negative interest rates — are actually now having detrimental side-effects,” Lonergan said in an interview with Bloomberg TV on Monday.
“It’s not clear that lower interest rates are actually stimulating consumption and they may have actually be increasing the desire to save,” added Lonergan. “So you could actually be getting the opposite effects to those you are trying to achieve by pushing the interest rate ever lower.”
http://www.bloomberg.com/news/articles/2016-09-20/signs-are-building-that-the-boj-is-reaching-its-endgame
Herbert Stein’s Law: “If something cannot go on forever, it will stop,”
We are fast becoming a nation of old people here in Japan. And old people are less avid consumers than youngsters are. The oldsters already posses most of the clothes, machines and household goods they will ever need, and they don’t feel the urge to eat, drink or be merry on the same scale as youngsters do. So they tend to park their spare cash in the bank, or worse still, stuff it under the mattress.
However, perhaps the Finance Minister has a solution:
Finance Minister Taro Aso, 75, said he wanted to ask an elderly person who was worried about the future just how long they intended to live — a comment that is expected to spark controversy.
“I heard someone on TV saying something totally ridiculous, like ‘I’m worried about how I’m going to carry on after I turn 90 years old,’ and I wanted to ask that person, ‘Just how long do you plan on living?'” Aso said.
http://mainichi.jp/english/articles/20160618/p2a/00m/0na/011000c
Added to that, any youngsters there are in that demographic cul-de-sac are not forming new households. The oldies aren’t spending and the youngsters are only only spending in the commodity-lean sectors.
It is our moral obligation to stay alive and healthy as long as possible.
92 and still runnin’ smoothly:
http://www.runnersworld.com/general-interest/woman-92-becomes-oldest-marathon-finisher
For “ojisan” Taro Aso I have another proposal; let’s dust off the old Swedish tradition of “Ättestupan” and introduce it for the charlatans in Nippon.
https://en.wikipedia.org/wiki/%C3%84ttestupa
At some point, the burden of all of these very elderly people living in nursing homes gets to be quite a load. The problem is the “disabled lives” problem. I discovered very early in my insurance career that disability claims are generally a lot more expensive than death claims. When a person is disabled, you have all of the person’s living expenses to deal with, plus care by providers of various sorts. If the person dies, the problem is only supporting family members who might have been dependent on this person for support. With elderly people, these are pretty close to zero.
when the uk pension system kicked off in 1908, (1/4 of £1 per week at 70) there were 28 workers for every pensioner—and most of them conveniently died before 70 anyway.
Now there’s only 4 workers per pensioner.
The difference is made up by hydrocarbon fuel
Social Security in the US and most government sponsored programs elsewhere are pay as you go programs. I think the shortfall is made up by increased debt. All they can do is divide up the goods and services that are produced in a year. Adding more debt tends to raise prices, and thus increases the amount of goods and services to be divided up. I suppose you could say these goods are made with fossil fuels.
I got the final solution for the elderly problem.
https://i.ytimg.com/vi/gsOL1jxgbxc/maxresdefault.jpg
bad taste
with no humour intended
Do not reject a proven concept on the grounds of snobbery.
With resource scarcity as it is, if any sort of system establishes itself and our “leaders” begin to tell the truth the elderly will no longer exist. Do you have any idea the amount of resources that go into keeping people alive after the age of 60? Why not start having conversations about how to reduce the population? But yeah, train tracks should be an individual choice and not something forced. Now a little pill that just makes you go to sleep on the other hand.
At that point there is no need for conversations.. or plans..
Remember Al Bartlets talk? https://www.google.fi/url?sa=t&source=web&rct=j&url=https://www.youtube.com/watch%3Fv%3DO133ppiVnWY&ved=0ahUKEwjIkKmamKbPAhWLXCwKHSKtB5EQo7QBCBowAQ&usg=AFQjCNF7TA94pxCMjw2Pk7iwqf-theqMkw&sig2=eDOWE1LFxGwAsHUToCTfYw
When the bottles are full.. Then the bacteria population crashes. What is left in the bottles is an toxic environment filled with bacteria excrements. IF any bacteria survive, they will be living their lives in an extremely toxic environment.
Our bottle is full, and the toxins are building up as we speak. After SHTF, most of us will be taken out by various diseases.. And that will be the new normal IF anybody survives to see the next century.
The endgame is confiscation (bail-in/bail-out) of savings accounts by the government on behalf of the banks and other entrenched interests. The resut will be the total immiseration of the middle class, and destruction of the states tax base.
Ugo Bardi once remarked of the Italian state, which is well on the way to its event horizon too, is, and to papraphrase: “they will steal everything including the china from the cupboards in a last ditched attempt at survival, before finally dissapearing…”
There will never be a need for a federal government to take depositors bank savings and it’s illegal for the banks to do it. It’s not hard to imagine the backlash. The Fed can mark up the banks’ reserve accounts if it gets to that point, like they did in 2009.
You’re not thinking grandly enough. At the end of all modern things, black is white, up is down, right, wrong.
I wasn’t thinking of the end of end of end games. All bets are off there, only chaos is a safe bet
I am inclined to your position … seizing cash would lead to a collapse in consumption .. and a deflationary death spiral
We are on the same page, FE. We need to understand economics to see clearly what we can do as money lubricates so many of our choices, even though we all should understand it will end badly.
Since the system is showing surprising resilience, as Gail said, we don’t have a date when it will trip up. So we should at least pave the way forward based on sound economics. Sound, as opposed to mainstream rubbish, will mean – if plans get made – a decline instead of a chaotic crash.
Who has any liquid savings?
Anyone with savings in a bank.
I have a large barrel filled with bottles of whisky and wine in the container….
🙂
Ask the Cypriots.
They were the exception. Were.
Lol…
You mean the Russians? They were foreign depositors which may account for what happened.
Russians were spared a haircut.
When it comes to seizing things, if you read history, governments can take a lot more than the contents of your bank account. You may be left with only a bed, a table, a chair and one set of crockery.
But what would happen to real estate prices if you terminated all old people?
im not ready to be terminated
Norman, are you sure? Looking at your videos you sure seem kinda ready?
i didn’t know THOSE videos had somehow got out onto the open market
Anything that slows down population growth is a problem for housing prices.
There is no need to “terminate” the elderly. Just be content to let nature take its course and then let their offspring or the state inherit their estate.
Arthur Hugh Clough (1819–61; an English poet, an educationalist, and the devoted assistant to ground-breaking nurse Florence Nightingale) had the good life all worked out.
Thou shalt have one God only; who
Would be at the expense of two?
No graven images may be
Worshipped, except the currency:
Swear not at all; for for thy curse
Thine enemy is none the worse:
At church on Sunday to attend
Will serve to keep the world thy friend:
Honour thy parents; that is, all
From whom advancement may befall:
Thou shalt not kill; but needst not strive
Officiously to keep alive:
Do not adultery commit;
Advantage rarely comes of it:
Thou shalt not steal; an empty feat,
When it’s so lucrative to cheat:
Bear not false witness: let the lie
Have time on its own wings to fly:
Thou shalt not covet; but tradition
Approves all forms of competition.
The sum of all is, thou shalt love,
If any body, God above:
At any rate shall never labour
More than thyself to love thy neighbour.
According to this site, Japan has the longest life expectancy of the major countries, at 85 years. http://www.geoba.se/population.php?pc=world&type=15 Only Monaco has a longer life expectancy.
This site indicates life expectancy at birth for females is 86.8 years. http://www.worldlifeexpectancy.com/japan-life-expectancy There is a significant chance to living longer than age 90.
Re helicopter money, the government has that right already. The fed is just the medium. It cannot give the government a right to borrow as much as it wants. Federal governments have no need to save or borrow. In spite of that they actually do so but it’s a confidence trick by economists to muddy the waters, no doubt for someone’s agenda [banks pull the strings].
Of course as you well know, all we can do now is just manage the end of civilization agenda. So whether we use private or government money, it’s all irrelevant in the end. Just the same in the meantime we can use government created “free” money. It’s in the Constitution. We might tell the banks they are going to hell, except who dares?
There is a need for borrowing to (indirectly) raise the price of commodities. This borrowing can come from the private sector or the public sector. So it is not true to say, “The government has no need for borrowing.” It has a need to keep prices high on quite a few things (land, commodities, stocks, etc.), so that debt seems to be repayable. Government borrowing helps keep demand up, and thus commodity prices up.
More debt also allows more hiring–for example, hiring more soldiers for war. While in theory printing of money might also work, there is a good chance that money printing would lower the value of currency. The loss of buying power might be substantial.
Sorry, not quite. The US Constitution says the Federal government has complete sovereignty over their currency. What does that mean? It means it can pass laws in any way it wants to control the currency. It means it can issue currency in any amount at any time to buy anything it wants. This also means it has NO NEED to borrow or save its own currency. So it can borrow because it will have passed a law allowing it to do so as a voluntary choice. But it never needs to do so. Congress mandated that the Fed match government deficits by selling bonds. So it does, but it never spends the borrowed money. It’s just a sop to the ignorant in Congress. The $20trillion in “government debt” is actually investor deposits. Just as you have deposits in your bank, investors have deposits as bonds in the Fed. It is thus a debt instrument but so is your bank deposit a debt instrument for your bank. In reality your deposit is an asset, not a liability. Government debt is also assets for the economy. The money is never spent so repayment is a simple book keeping action.
The government can do what it wants, but our currency still must operate in an international environment. International currency relativities are of utmost importance in keeping the system operating. This is why the strange theories you keep promoting are nonsense.
As long as a country can provide valuable and wanted things to other countries (be it products, raw materials, energy resources or services), its currency has value for others. Also army forces provide important services like securing peace in the regions that are not stable and provide key resources like oil to other countries.
When a country does not provide neither of these things, its currency has no value for other countries. Such a country is usually an isolated black hole that consumes resources but does not provide nothing in exchange.
Helicopter money means giving it to the consumers directly as opposed to the banks or bailing out large corporations. And I’m not talking about social security or food stamps, I’m talking about a living allowance of say $1,000 a month per person over the age of 18, for example.
I see Japan has a new flavor of QE out today. “BOJ hopes to control the yield curve.” Maybe; maybe not! Big question is whether their banks can make enough money to stay in business. Also whether their businesses can sell enough of their goods abroad. If the yen is high, it is hard to sell automobiles (or to make money selling automobiles) abroad, I would guess.
At some point one of these experiments… will have the same effect as whipping a dead horse…
And then….
The effect of all these goofy policies is a strengthening of the yen, instead of them lowering it. Because perversely the yen is considered a safe haven currency. Lol…
If one were to run quickly and smash one’s head into a brick wall over and over and over…. to the point of dropping one’s IQ down to say …. sub-50…
One could make a LOT of money in the financial markets right now!
Let’s make lots of money AND die! Now you’re talking…
The thing is …
Even if you have a billion dollars NOW …. but an IQ of 43… would you be able to enjoy the time that remains?
Let’s ask this doosh-bag what life is like with lots of cash and minimal brain function
http://popcrush.com/files/2014/01/Biebs.jpg
No need to ask. Queue forex money makers with their beach houses in the Hamptons and girlfriends in the Bahamas. Not the sharpest sticks, but loaded… 😀
As usual: thanks for your excellent and exceptionally objective analyses.
I am pleased to see a drop-off in “alternative energy” comments/proposals, but I’d like to briefly re-iterate some points I and/or you have made over the years.
1) The present (or improved) electricity grids MUST stay in place + base load generating plants … all of which become less economic the more solar and wind generators are added. Therefore with less regular, “free”(?) consumers the price per Kwh must increase for all others, especially industries which could never install sufficient solar panels.
Electricity prices in South Australia are high and I’m sure that this is the result of the above + privatization.
2) A point which seems to escape a lot of people is that you can’t MAKE anything from electricity, e.g. raw materials and numerous by-products of oil, gas and coal, such as plastics, chemicals and fertilizers. SO “alternatives” solve nothing, especially considering the quantities of conventional fuels used in the manufacture and transportation of solar panels, wind turbines, or whatever.
Anyway, thanks again Gail.
Good point about electricity’s limited capabilities. The exception I’ll mention proves the rule. Aluminium, sometimes referred to as ‘frozen’electricity is perhaps one of the only industrial materials we can produce with an ore and electricity alone.
what about mining the ore itself?
I believe the biggest mining equipment started going electric 50 years ago and it’s almost all electric motor driven now. It would not be technically difficult to source their energy from local renewables, given the land is often incredibly cheap and it requires sufficient access for big equipment and cheap access for ore. They can also use previous digs nearby for pumped hydro to have a sufficient battery to cover supply gaps. Or they can go with a much smaller industrial battery and have workers only do intensive operations when their grid is properly pumping out amps.
As it stands, mining is a very risky venture that’s already capital intensive. Even if such an operation was projected to be 4x as profitable I doubt investors would feel comfortable risking double the initial investment (with good odds the mine gets shut down for political or economic reasons before it pays any ROI).
I like photos the best:
Imagine the size of the battery required for an electric version of this!
https://upload.wikimedia.org/wikipedia/commons/5/5c/CamionFermont.png
Hmmm… I wonder how many hundred thousands of solar panels would be required to melt rock and remove the metal?
http://www.mining.com/wp-content/uploads/2011/01/smelting1.jpg
Remember the Gong Show?
http://media.salon.com/2001/03/chuck_barris.jpg
This is the FW version of the Gong …. just for you 🙂
Oh and btw —- all the gear in the mine shaft that is powered by electricity….
Do you think the electricity comes from solar panels?
It’s a,amazing what happens when you actually start to think about this stuff …..
” to melt rock and remove the metal?”
You need to study up on industrial chemistry. Look up how they make iron.
Yes thanks for that incredibly useful tip… it reminds me … I should get around to taking the metallurgy course….
Meanwhile…. back at the ranch….
http://il8.picdn.net/shutterstock/videos/3196780/thumb/1.jpg
A (large) battery onboard certainly doesn’t make sense; the machines are connected with trolleys (assist) which provide the electricity from a plant traditionally many miles away burning coal. They’re less flexible than diesel engines (whose fuel you can bring in by train) but are chosen almost everytime the economics works out better (which is most of the time for the big mines).
Now that in certain remote areas electricity (in kwh) can be generated via wind or solar cheaper than any other source (without subsidy), they should be chosen to power nearby mining operations. But what company will invest now in the hopes of their mine operating the 10 years needed to make that additional venture profitable? And even if the risk is acceptable and they can find the capital (good luck getting a bank loan for it), is the payoff enough to engineer a more complex system they don’t have experience with? What if there are problems with the PV/wind system (eg producer or installer goes bankrupt)? Will someone provide insurance to cover payments on equipment/infrastructure designed and already installed but sitting idle for years until a new provider can redo/finish the job? The economics are already there for likely many mines but a) demand for new mines is shrinking b) they, on their own, are not yet enough to force the system based on oil to rework itself.
B) could be achieved through subsidies (I guarantee mines are already starting to take advantage of cheap energy caused by RE in australia) or taxation (on pollution or resource depletion) or by simply waiting a couple decades for the universal shift to happen on its own (assuming BAU is maintained that long, with steadily rising oil/NG prices).
https://en.wikipedia.org/wiki/Big_Brutus
https://en.wikipedia.org/wiki/Bagger_288
https://en.wikipedia.org/wiki/Overburden_Conveyor_Bridge_F60
http://www.industry.siemens.com/verticals/global/en/mining-industry/transport/mining-truck/pages/default.aspx
http://www.mining-technology.com/features/feature-the-worlds-biggest-mining-dump-trucks/
https://www.australianmining.com.au/features/the-largest-machines-in-mining/
‘Now that in certain remote areas electricity (in kwh) can be generated via wind or solar cheaper than any other source (without subsidy)’
I fully agree – I understand that this is already happening …. in DelusiSTAN.
Unfortunately DelusiSTAN is not real — even though to billions of people it feels real — it is like imagining one can fly …. one can believe it possible …. then one jumps out the window… only to realize it was all a big mistake.
It is fascinating to see how the forces of DelusiSTAN are constantly probing the defenses of FW…. trying to drag this site into the gutter of idiocy….
There seems to be no end to the legions of fools who land on the shores and try to poison us with their nonsense… one would like to think they are trolls.. but that would be to overestimate them … since they truly do believe their nonsense….
Electric loaders (in an iron mine):
https://www.youtube.com/watch?v=tPV94lIe5JY
Iron pellets transported using rail (hydro powered locomotive)
https://www.youtube.com/watch?v=WB-12z7BupM
Aluminium smelting (using hydro power):
Where did the electricity come from to power those machines?
Where did the electricity come from to operate the factories that made those machines?
I am not clear what your point is — do you think these machines grew on trees?
Do you think the electricity that makes them go was generated out of a magical outlet?
Do you think any of this would exist with a fossil fuel foundation? Without BAU?
“Where did the electricity come from to power those machines?”
A hydro power dam with 99.99% likelihood since we are talking about heavy industry and transportation in Sweden if you’d bother to watch those video clips?
“Do you think any of this would exist with a fossil fuel foundation? Without BAU?”
Nothing would be here without the chemistry of hydrocarbons. BAU is an extension of those properties. We are indeed flaring off the excesses as the fossil fuel cornerstone of BAU.
Mining is not long term sustainable even if there was a magical way to power ginormous vehicles with batteries. The load required to power mining equipment would be so large that the batteries that theoretically could do this do not exist. And if there’s no sun or wind how would you mine, because an awful lot of metals and rare earth minerals we could use are under water or deep underground. Lastly, what about all the toxic chemicals that are leeched into ground water like Chromium-6 and arsenic? None of this is sustainable, even if there was some way to power it.
“Mining is not long term sustainable even if there was a magical way to power ginormous vehicles with batteries.”
How about using electrical wires instead of batteries?
Look at those locos with pantographs handling some 16kV and 5400kW power output. A thing of beauty.
http://bonbytes.eu/swe/swe_mtab_iroenr118_iorenr116_1_184_vassijaure_2015_1000.jpg
AC/DC High Voltage for the plebs!
We only need a lot of wire.
http://www.resilience.org/stories/2016-09-20/just-16-000-catenary-trucks-would-use-all-of-california-s-electricity-with-only-2400-to-8300-miles-of-overhead-wires
mining is by definition a moveable feast
i fail to see how any mining operation—the actual digging—can be carried out using overhead wires and railtracks
Electric loaders has been running in the underground mines since the 80’s. It’s proven technology. You need to get out of your “Everything is powered by FF’s” bubble and catch up with progresses in contemporary industry.
http://minestories.com/wp-content/uploads/imagecache/0b/0bf84b254280aa43d1a918b912ef7304.jpg
http://minestories.com/wp-content/uploads/imagecache/e9/e9b3fe897855c4fed217a5f161db6893.jpg
I see the vehicle has tires… let’s look at how we make those
https://www.youtube.com/watch?v=abtaO0i7J4U
I see the vehicle has moving parts… those require lubrication … let’s see where these come from http://www.machinerylubrication.com/Read/24100/lubrication-basics
You are preaching to the choir man.
Petrochemicals are indeed crucial for a properly functioning industrial society.
Just as important as electricity from hydro power and nuclear power plants.
Where does the electricity come from?
Arouse thee, Muse and chant in accents rich
The interesting processes by which
The Electricity is passed along :
These are my theme : to these I bend my song.
It runs encased in wood or porous brick
Through copper wires two millimetres thick,
And insulated on their dangerous mission
By indiarubber, silk, or composition.
Here you may put with critical felicity
The following question : ” What is Electricity ? ”
” Molecular Activity,” say some,
Others when asked say nothing, and are dumb.
Whatever be its nature, this is clear :
The rapid current checked in its career,
Baulked in its race and halted in its course
Transforms to heat and light its latent force
— Hillaire Belloc
Let me explain with an illustration:
https://etrical.files.wordpress.com/2009/12/hydrohow.jpg
And how to you manufacture all the gear involved in that system — how to you build and maintain the grid that carries all that electricity to where it is needed…
Without petroleum — without a sophisticated financial system — without BAU?
Eddy—write out 100 times
I must not go round puncturing people’s balloons
If only it were that easy….
i recall watching electric mine loaders in the 50s
i did say “digging” though
Please explain to me where I state that petroleum isn’t needed for properly maintaining BAU?
However, building and keeping a hydro power station online is dependent on more than just petroleum. It is a key ingredient, just as the copper wiring in the generator and the steel rebar in the concrete fundament is.
As for the financial system, its floating on top of the contemporary computation prowess and its information flows utilizes the Internet. It can take any shape or form, just as currency can be the fiat dollar or cryptographically generated such as bitcoin.
Digging? Plug and play man, plug and play!
Time to wake up and smell that machine-made coffee?
@ I see the vehicle has tires
Just four your information.
One can produce both rubber and lube oil from ethanol or biomass via the gasification process.
food or tyres
hard choices
No food on wheels.
Or drive in restaurants.
With cheap enough energy and we can have both food and tires via the gasification process.
The problem is where do we find cheap energy now that the FF bonanza is about to conclude.
Hydro power with a scaling problem. It’s tractable to a certain degree.
Nukes with safety issues and a glow of radioactive stigma attached to it.
I would say that our only option is to try scaling up nuke plant production and see where it will take us energy wise.
Do you have a reference for that – or is this one of those things where ‘if I can imagine it then it is real’
Also – where does the electricity come from to make that happen?
a generator attached by belt drive to the engine in the car of course
Sheesh Eddy—you gotta think these things through!!
I need to go back to the wall… with my head…
Meanwhile…
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/09/20/hillary%20selfies.jpg
caption……..visitors must not feed the clinton
Click the original for a larger version http://www.zerohedge.com/news/2016-09-25/hillary-2016-caption-conest
The Borg has won…. but we will have the last laugh on the Borg…. 🙂
“where does the electricity come from to make that happen?”
If you have enough biomass, it will self power, but the output isn’t a very high fraction of the biomass. If you have lots and lots of cheap electric power, then it will take a study to decide if it is more trouble or less to just pull the CO2 out of air vs gathering up biomass for the carbon.
@ Do you have a reference for that – or is this one of those things where ‘if I can imagine it then it is real’
Also – where does the electricity come from to make that happen?
May I remind you that first industrial unit to produce artificial rubber from ethanol was build in Soviet Union before WWII.
The aim of the gasification process is to produce CO and H2.
Next typical semi-products are methanol or waxy hydrocarbons (Shell Qatar plant).
Then every product is not difficult to produce (only asphalt is exception – because it
is a by-product!) `
Typically the gasification process can produce the energy and the synthesis gas simultaneously.
That is not a reference…
I am a predator…. I need meat…. to sink my fangs into … so I can rip and tear….
Did you know that we can turn lead into gold … one slight problem https://www.scientificamerican.com/article/fact-or-fiction-lead-can-be-turned-into-gold/
You failed to answer where the electricity would come from….
@That is not a reference…
I hope these links will help your
http://www.biofuelsdigest.com/bdigest/2016/04/11/ethanol-for-the-rubber-or-the-road-new-russian-tech-advances-for-one-step-alcohol-to-butadiene/
http://www.gasification-syngas.org/
But if you need some technical info concerning conventional or synthetic lube oil technologies do not hesitate to ask
‘In Russia, ETB Catalytic Technologies has received $0.6 million from ZAVKOM and Skolkovo Fund as a series A investment to build a pilot plant for the production of 1,3-butadiene from ethanol, The investors received 22% of ETB CaT LLC’
0.6 million????? I know people who used up more cash lighting their cigars than that (actually I don’t but I am sure there are such people….)
600k — that is impressive – that should buy a few pipes and gaskets….
Remind me of why I am having this discussion — were you suggesting that we’d have rubber tires post BAU — made from ethanol?
Take your time… I’ll be out back ramming my head into the brick wall so that I can prepare for the answer.
I think you know Lebedev’s reaction where the butadiene is produced from ethanol.
First plant in accordance with this process was built in my city 80 years ago.
Nowdays many companies keep trying to improve the catalyst.
Please read the link one more time:
“Who else is chasing renewable butadiene?
Genomatica, Axens and Global Bioenergies are in the hunt.”
If you need technical information about tire cord production from reneables do not hesitate to ask.
And I am in the hunt for cash to fund my ram a pipe into the centre of the sun project…. anyone got a spare billion or ten?
You are aware that Tesla exists… with billions of dollars of funding and subsidies…. Telsa is a joke. It should not exist
You are aware that solar panels do exist — in spite of the fact that they produce no nett energy …. in spite of the fact that due to intermittency issues they result in enormous increases in the price of electricity to consumers and industry… The solar industry vies with Tesla for the Academy Award for biggest disaster.
So you see – there is a great deal of stupid sh^t that does exist…. this idea you are banging on about is just one more to add to the pile of sh*t.
It will not exist post BAU – it will do nothing to extend BAU. It is just plain and simply more stupid sh*t.
you still owe me for that shovel you used on the last project
credit can only extend so far
I’ll swap some shares in the sun pipe project for the shovel…. you can start shopping around for a private jet about now….
thats an idea—El trumpo will have a spare secondhand one soon
Plasma gasification seem interesting.
More technology for BAU can kicking.
Let’s do this!
One should remark that various steps of the gasification process are under development despite low oil prices.
Recently there was a message that MAN Turbo delivered world largest air compressor to a Sasol Plant.
I hope it doesn’t need replacement parts.
I’m sure MAN Turbo are quite happy selling lucrative replacement parts and service contracts accompanying that investment. O_o.
“It will not exist post BAU – it will do nothing to extend BAU. It is just plain and simply more stupid sh*t.”
Cheap Hydro (demand + base load) + Nukes (base load) + gasification process (liquid fuels) – useless compulsive consumerists = A winning formula.
http://img.picturequotes.com/2/215/214824/a-simple-equation-exists-between-freedom-and-numbers-the-more-people-the-less-freedom-quote-1.jpg
http://planetsave.com/2016/03/09/hydropower-costs-renewable-energy-hydroelectricity-costs-vs-renewable-fossil-costs/
clueless
ˈkluːləs/
adjective
adjective: clueless
having no knowledge, understanding, or ability.
Here you go FE:
http://demotivators.despair.com/demotivational/foresightdemotivator.jpg
Feeling better now? 😉
Two very good points, Gerry. I am making myself even more insufferable to my few remaining friends by telling them these inconvenient home truths.
I don’t mind it when somebody puts solar panels on their roof, and I don’t even begrudge them their subsidies and feed-in tariffs. But I am tired of biting my tongue every time one of them waxes sanctimoniously about how their “clean energy” system is helping to save the planet and how everyone else should “go solar”.
Biting one’s tongue… the self-negating but often necessary instrument of human interaction and survival.
In part, I gave up my comfortable well-paid corporate position because constant biting of my tongue became too much.
Urban designers who believed their “New urbanism” schtick were the hardest to bear. As if novel forms of suburbia could re-engineer humanity. As if creating a class of ‘work from home professionals’ would reconfigure industrial society. As if ‘post-industrial society’ and the ‘knowledge economy’ were more than wishful thinking…
Imagine BEING one of those urban designers! (my job). My tongue is nothing but a bloody stub at this point. I don’t yet have the luxury of leaving though. It’s all I’m trained to do, and I make good money doing it.
I suppose a day is coming soon where I’ll fondly remember my old “first world problems” of paying bills and having a conscience…
Or working with organizations in the “renewable”/”green” sector (I sometimes do).
Hey Tim, the simple fact is that most people do not have a clue, e.g. person X flips a light switch and nothing happens. Panic. Phone the utility company and some clueless individual says that a transformer is down, but neither the complainant nor advisor really knows what a transformer is, i.e. an apparatus reducing high voltage to domestic or industrial levels – presently 250 volts and 450 (three phase) – in Australia.
Not one person in a million would have a clue how they get electricity at the flip of a switch.
Just tell them the truth and who cares about the consequences? I just straighten people out at this point as there’s no real benefit in pretending any longer. It’s like people who look at the future as a bright and rosy thing. Uhhhh, Donald Trump is about to become President, there is no future.
always my point—that you can’t actually make anything from electricity of itself. It was 50+ years between Faraday showing electrical power existed in a physical sense, and Edison making a lightbulb.
yet this insistence goes on , with a range of people ( I don’t mean on here) who are convinced that “alternative” (electrical) energy is going to guarantee our BAU forever.
Heinberg is maybe the most well known culprit, though there are many others, insisting that as long as we have electrically driven vehicles, we will be OK.
You mean like this?
https://burnersxxx.files.wordpress.com/2012/12/gilliansislandmobile.jpg
We can definitely make things out of electricity, like paper mache and t-shirts. 🙂
useful to know
learn stuff every day on fw
I agree with you that electricity grids must stay in place. In fact, it becomes very difficult to divert much money at all from the existing system of electricity production–we need pretty much all of the fossil fuel production, plus a little less fuel, and perhaps more technical expertise to keep the grid managed, and more grid to try to work around the problems that intermittency provides. The South Australia experience recently provides evidence that wind and solar can’t solve problems; they drive down wholesale rates and cause problems for the fossil fuel providers who are desperately needed.
Electricity is only one of the types of energy products we need. While there are claims that, for example, mining equipment can be made to run on electricity, this still doesn’t solve the long chain of other needs. Agriculture tends to run on oil. Without food, we have a major problem, even if we could figure out a way to, for example, make metals using electricity.
‘While there are claims that, for example, mining equipment can be made to run on electricity’
Electricity produced from coal fired plants….
Made from electricity generated from coal fired plants…
“Electricity produced from coal fired plants….” 😉
Or produced from hydro power perhaps? 🙂
The only relevant renewable power supply and energy storage, although, with a scaling problem.
Mass production of hydro power stations are severely constrained by politics, rainfall, geography and general climate.
http://www.c2es.org/docUploads/electricity-sector-15.png
Yep, hydro dam production is naturally limited as I stated. Although, 16.5% is nothing to scoff at and the Chinese are building dams left, right and center.
https://en.wikipedia.org/wiki/List_of_dams_and_reservoirs_in_China
Keep in mind that hydro dams are very much like solar panels — in that they can only be built and operated if fossil fuels are available…. when BAU goes… this goes…
http://www.mstworkbooks.co.za/natural-sciences/gr9/images/gr9ec06-gd-0009.jpg
Turbines require spare parts… they require lubrication fluids… they require computers…. they require the grid to be functional….
No BAU – no hydro. Only darkness
Fossil fuels? I would say dependent on hydrocarbons. Every living organism and all machinery is a manifestation of the power and complexity made possible by the chemical properties of hydrocarbons.
Although, rip out the combined 28,4% of hydro and nuke power from that pie chart and you can kiss goodbye to BAU as well.
Moar’ nukes to the people:
http://energyfromthorium.com/pdf/CivilianNuclearPower.pdf
If they are mining coal, it makes sense to use electricity made from coal to operate the plants.
Wouldn’t the diminishing returns and compounding energy problems become even worse if we tried switching to coal to power mining operations? As coal becomes harder to extract the portion of coal extracted required to sustain operations would become ever larger until it is not feasible economically. We’re seeing this right now with oil. Plus we would lose energy in the conversion process, but most especially if we tried to make liquid fuels from coal. The whole thing just seems impossible and it certainly wouldn’t be capable of supporting the system through taxation.
Maybe I am not understanding your questions. I think we are already using electricity from coal to power coal mining operations. So there is not a question of switching. The coal produced is in fact, net energy, in some sense. I am not sure whether the coal burned to make electricity actually gets counted. (When oil and gas are extracted offshore, I believe that natural gas is generally burned to produce the electricity needed for extraction. It was on at least one operation I saw.) The cost of these fuels is minimal.
The question would be whether electricity from coal could be used to mine metals and other minerals. There, I expect that it depends on the nature of the operations. Big wires or tracks might work for some kinds of mining, but not others.
I was referring to if we were to somehow power dump trucks and other equipment that is traditionally run on oil out of electrically charged batteries, for example. I meant to reply to a comment a few up and accidentally put it here.
I get that coal makes most electricity and electricity is used in mining operations but the mining industry really doesn’t have long term plans to deal with liquid fuels problems. Certainly solar or wind energy are not going to be very useful in operating machinery that is needed to mine coal, deep underground for example. So if coal miners were to try and switch to alternative fuels somehow it would just collapse even faster and/or use more of the coal mined to mine more coal. In the end it would appear as if they were just swimming faster and faster to stay in the same place.
“doesn’t have long term plans to deal with liquid fuels problems.”
It’s possible to make transport fuels out of coal. When South Africa was cut off from oil, Sasol did exactly that for at least a couple of decades. https://en.wikipedia.org/wiki/Fischer%E2%80%93Tropsch_process Of course the process is not particularly efficient, so it releases a lot more CO2 than you get from using oil as a transport fuel.
CO2 release is not a problem if you are sucking the same amount out of the air to make synthetic fuel.
I don’t discount the difficulty and cost that would be involved to replace oil with synthetic fuels. On the other hand, we know how to do it, there are F/T plants in the billion to ten billion range already. They would run fine on CO2 out of the air and hydrogen from electrolysis. It’s also a long way out. The coal burning electric plants would be displaced first. The synthetic oil plants would come on line as the space based solar power plants were generating more power than the electrical grid can use.
That can make sense in some cases, especially if you can burn low value seams (brown coal) without having to pay for the pollution you’re creating. But if the site just happens to be ideal for wind or solar it may be cheaper (on a kwh basis) to go that way, particularly if the mine may not operate for the three decades needed to pay for the coal plant (but is very likely to operate for the 20 needed to pay for the solar/wind). Also, if you want reliability you’d operate a coal plant at nameplate (the way coal plants are normally operated, especially smaller ones like a mine would need) which means you’d have to manage your loads (to be under nameplate) and you’d have to store (significant) excesses as well (or just dissipate/waste them). And if your coal plant goes down, your mine is inoperable until it is fixed.
Dear meliorismnow, per my last comments in previous article, can you tell me what your background? your academic background ? Engineering? Physics or just someone who regurgitates what others write and without even bother to check if it is right or wrong? It is likely that you come over, put in one comments and have a flurry of comments from other people. I figured that there are many people who just like to mess things up with some information that is totally not checked factually.
PHD in trolling from DelusiSTAN U?
Our problem is really a lack of very cheap-to-produce energy that can be used to inexpensively leverage the labor of human workers.
Like always Gail does not understand what the law or thermodynamics and conservation of energy are.
What we are missing is new fossil energy sources that have a high net energy return toward society and complexity.
Most net energy available fossil source are almost depleted and cannot be replaced by low net energy sources such as tar sand,.
Very-cheap-to-produce is a “stronger statement” in some sense than “high net energy return” toward society. There are a lot of calculations that purport to say something, but don’t really do so that go under the name “net energy.” I don’t like latching on the name, because too often, users of the term subtract apples from oranges and leave out important pieces. It also isn’t in a mainstream economic term. “Very cheap to produce” gives the idea I am trying to get across. Too many people use flawed calculations to “prove” that wind turbines or solar PV give a high net energy return toward society. Any energy product that requires a subsidy by definition cannot have a “high net energy return” toward society. Having a high net energy return means that the energy product can be taxed heavily, and those producing the product can still make a reasonable profit.
What kind of reply is that, You are talking about money and taxation. I am talking about the law of physics in the pure sense of the word. I am talking about the laws that governs the whole universe. Why are you talking about money and taxation.
Your comments seem to reject a central premise of Gail’s argument. She is proposing that that money, taxation, profits, leveraging human labour, methods of maintaining a functioning polity and the myriad of instruments we use to harness energy resources must be maintained to operate BAU. She is not, as you seem to suggest, rejecting physical laws. She is arguing that we have various tools that we use to engage with the physical universe in order to maintain human society. These tools are rapidly losing their effectiveness so that long before physical limits are reached our political economy will collapse. Would you like to contest that premise rather than misguidedly protesting that Gail is wilfully ignoring physics?
Exquisite explanation FSA, thank you!
Gail is talking about money and taxation (amongst other things) because these are highly relevant.
You seem to have a bee in your bonnet – which I’ve noticed before, unless I’m much mistaken – “about the law of physics in the pure sense of the word.” Which means what? I’m sure it’s open to debate and has little to do with the human artefacts of money and finance, which can be and are manipulated in a thoroughly unscientific manner.
Surely you don’t imagine that Economics is a science. In some ways – especially currently – it’s more like a conjuring trick, e.g. electronic “money” out of thin air and derivatives which are inventions of imagination, belief and faith. How on Earth can one apply the laws of physics to a Ponzi scheme.
There is plenty of oil left in the ground … so if this were just a matter of physics…. FW would not exist.
If history ever records Gail Tverberg and us blog commenters will her theories and our community be described as “Tverbergism” and “Tverbergists”?
Perhaps too hard to pronounce.
By the way, there is someone named Helge Tverberg who is reasonably well known in mathematics. The callout in an article called, Tverberg’s Theorem at 50: Extensions and Counterexamples says:
He taught in Bergen, Norway, until he retired.
I suggest a t-shirt…. Tverbergist
World’s Most Elite Club
Getting T-Shirts made would be a lot easier than writing a book. Could include the link OurFiniteWorld.com!
It is not the energy problem, per se; it is the related entropy problem. See my post https://ourfiniteworld.com/2016/03/17/our-economic-growth-system-is-reaching-limits-in-a-strange-way/
Agreed. Although we may not be quite so close to the precipice….
oh I think it’s physics underlying all this. Here’s an example: Conductivity = 1/L * D where L is the length of the pipe and D is its diameter. Back when oil was cheap to extract, it was self-pressurized and responded well to water injection to maintain that pressure. Now, we have hoizontal drilling, in-field drilling, fracking, and secondary and tertiary recovery techniques to get that same amount of “flow”. All that extra effort adds to the friction of recovery, and makes the conductivity smaller.
At some point we no doubt run into a situation where we cannot get the oil out … regardless of cost…. we are quite a ways away from that though…. if cost were no issue BAU could go on for quite some time yet
As long as the price is astronomically high, you can afford all of these extra techniques. If the price falls, then doing all of these extra steps makes a lot less sense. This is why the expensive to extract oil is being shut in.
When you write things such as “Like always Gail does not understand” and “What kind of reply is that”, you are being confrontational, aggressive, and rude. That’s a form of trolling.
Moreover, many of your sentences are inarticulate, ungrammatical and poorly punctuated. This makes it difficult for other people to understand what you are trying to say.
On their own, limited communication skills can be overlooked. Others can at least try to read sentences 3 or 4 times in order to grasp what they might mean. But this combination of poor communication skills and trolling is going to ensure that nobody is going to make the effort to try to understand and reply to your comments.
Agreed … though with WordPress it is hard to link comments, so I have no idea if you get my message, valid or not … but reducing to the probability that the US Hegemon initiates Nuclear war with Russia, with or without Chinese involvement.
mynamett
From the article: “The belief that diminishing marginal returns are temporary is probably related to the belief that there are substitutes for everything, including energy supplies. Unfortunately, this is not the case; the laws of thermodynamics dictate otherwise”
So read it again mynamett
mynamett not seem to understand is that debt is the system information. Debt includes all other aspects of the matter: productivity, wages, capital goods, money, etc.
It is debt, understood in a broad sense, which produces energy and consuming it. And somehow, is the debt that tells us we have to do tomorrow. Whoever ignores this aspect, it is not able to understand reality. If now the system information is beginning to fail by increased costs in obtaining energy, and increased costs measured in dollars it is actually a manifestation thermodynamics … where is the problem?
Surprising…
I agree with you. I was surprised to figure out that an increase in the amount of debt tends to increase commodity prices. Also, that increasing debt tends to increase nearly all commodity prices at the same time, since many types of commodities are used to make a given type of finished products, such as a house or a car.
Of course, if something happens to reverse the situation (that is, fallings debt, perhaps caused by default or a change in government policy),then commodity prices can fall far below the cost of extraction. This becomes a big problem. Debt is definitely part of the information system.
Taxation is all about transferring surplus energy to the government.
We have academics who have attempted to figure out a way of calculating “net energy,” but who don’t understand the basic principles sufficiently to understand that they are categorizing some things as having net energy, when they could not possibly have net energy, if they constantly rely on what I would call “net subsidies.” People point to subsidies for fossil fuels, but they are in fact very small offsets to big tax bills paid by fossil fuel providers. We depend directly and indirectly on fossil fuels for the taxes that operate governments. Somehow, any substitutes have to provide this function as well. Otherwise, governments fail–definition of collapse.
perfect summary Gail
If I confess, is it OK to steal that?
It would be OK to copy it. There are an awfully lot of people who think that they can calculate net energy by adding up comparing energy output with obvious inputs. The problem is that that approach misses an awfully lot of the energy that is actually used in the process. That is why we hear about minimum EROEIs of, say, 5 or 10 or 11.
Some of the energy used is actually used by governments, in setting up roads and schools. Other government functions may indirectly be involved as well, such as maintaining an army, to make certain that oil will be available in the future. Somehow, there needs to be a way to get the funds to pay for these energy uses back to governments. This is what taxes do.
Not exactly, Gail. Economically speaking, taxes extinguish excessive currency created by government spending. It’s a lever against inflation. Energy wise it also reduces energy consumption. It does not transfer energy to the government, which has no uses for it. The Federal government actually has no money. All money, therefore economic fuel, is in the private sector. Government payments are all into the private sector, [which includes its employees wages, which are paid into private sector accounts]. Only then do the numbers in accounts provided by the Fed become money, the liquid stuff. When the Fed bailed out the GFC banks, it simply marked up the numbers in reserve accounts held by those banks at the Fed. [ https://www.youtube.com/watch?v=11J_914RZ-o ] The common misconception that the Fed acts like a household is completely mistaken. That misconception is what mainstream economists are paid to tout by politicians and their masters.
What a hilarious bunch of fabrications. The government most definitely has access to money in many, many forms. They also have nearly infinite uses for it including the military, infrastructure, and supplies. Who ever said the Fed acts like a household?
I am afraid I don’t agree with you. The government is in effect transferring a lot of energy around. It is burning oil directly, in all of its military operations. The government is building roads, office buildings, and (local) government is building schools. The money that is paid to employees and is given to the many with transfer payments (Social Security, Medicare, unemployment compensation, Medicaid, etc.) directly or indirectly goes to pay for goods made with energy products, including food. There may be intermediaries involved, but that does not change the nature of the arrangement.
Sorry, No, Gail. First don’t confuse Federal governments with state governments and local governments. They are all part of the “non government sector” as far as the Fed is concerned. I.e., they have to budget like a household.
Second, the Fed does all its work through the non government sector. So it commissions works, like infrastructure and pays the military etc, but they spend into the non government economy, buying equipment from private companies and getting private companies to build roads and buildings. The Fed has enough to do with its mandate already, both fiscal and monetary policy. Government contractors get money from the Fed to spend into the non government sector, including wages etc. I agree it all can seem a bit weird, but it’s what they do. Someone else can explain it better probably but it is what actually happens with the Fed. The Fed buys the debt. That’s all it does.
It is all connected together. You are getting too tied up into little pieces of the picture.
I beg your pardon??
I will add that paragraph to my arsenal of weapons for use when combating DelusiSTANIS who insist that oil and alternative energy are both massively subsidized.
http://blog.chaseinternational.com/wp-content/uploads/2014/09/shutterstock_96392837.jpg
I think I will enter next year http://www.fastdraw.org/wfda/wfd_records.html
As a matter of curiosity, what do you think will be the actual trigger or tipping point that everyone will see as the collapse itself?
I am sure it will not be money, nor climate change. Both are problematic but climate change won’t really bite in time and money can be just conjured into existence to pay whatever it takes to keep things going. I wonder what event will be the Liebig’s law minimum, what resource or service?
My guess right now is that the problem will be debt based (China’s debt or European banks or Japan) or will involve changing currency relativities, and inability to buy things overseas. For example, if we couldn’t buy things from China, it would be a huge problem, because China makes so many things we depend on. Computers, for example.
I continue to be amazed at how well things can stay together. I would never have thought up QE.
Pingback: What really causes falling productivity growth — an energy-based explanation – Enjeux énergies et environnement
[“The problem of falling productivity growth seems to be a concern to many economists.”]
I don’t remember any interview of Alan Greenspan in the last few years where he hasn’t mumbled that phrase “…the problem is the decline in the rate productivity growth… “.
I suspect it’s the only [coherent] thing you’ll hear him say if he ever succumbs to senility.
Perhaps you should contact the “Oracle” and suggest this post as the answer to that fiendish question that has been plaguing him for so long…
Be kind Gail ….end his misery !
Be kind Gail, there are so many of us that will take [exquisite] pleasure in wearing a big smug grin as the fraudulent priesthood of ‘Economics’ takes another debilitating blow to the head !
I think I’m gonna try contacting Chris Hayes to get you on his show. I think he’s one of the [very] few (in MSM) that knows just enough to not shy away from an awkward moment of great significance…
https://www.youtube.com/watch?v=mQxKqvFZ6wQ
Come on Gail … it will be fun !!
😉
I will do almost any crazy thing that comes along. So if you can work out getting on Chris Hayes’s show, that would be fine with me.
If not for Greenspan and Bernanke…. and their bosses… we would not be here right now.
I so look forward to reading to fruits of your hard work.
Thanks! Hope they make some sense.
What are your thoughts on the idea that society can stave off collapse a few centuries by squeezing the masses into a world out of some kind of dystopian sci-fi novel?
Some ideas imagined:
– A “Soylent Green” style future where excess humanity is turned into foodstuffs. (This would presumably improve the ratio of arable land to person!)
– This was mentioned in a post about economics on the blog ‘Do the Math’: a society where people are simply hooked up to Virtual Reality. Everything else would be a 1984-style drab communist wasteland. People would live packed to the rafters in gigantic block apartments like ‘Judge Dredd’, or in tiny capsules like the famous Tokyo Capsule Hotels. The only escape would be anti-depressants and VR.
– Etc. etc.; pick your favorite Hollywood film – The Hunger Games, etc.
My doubts about the “Grim Darkness of the Far Future” is that is still imagines a world that is inherently quite complex. They always require an elaborate police state and administrative structure. With so many limits – oil, water, food, topsoil, metals – it seems like it would be difficult to keep any advanced society running long at all. Plus, we have plenty of evidence that societies and systems tend to go through cycles and die out (Tainter’s work, Sir John Glubb’s ‘Fate of Empires’, John Gall’s work on systems theory… plenty of others).
Still, it seems like it is at least POSSIBLE to maintain a society like this for a period of time. What’s the description for this one Fast Eddy? Not BAU-lite, perhaps BAU-Dystopia?
I afraid my imagination is not quite this good.
While hesitant to dismiss the idea completely, I’d add that any thought experiment about possible dystopian totalitarian society is bound to be beset by the myths about those sorts if political economies. For instance, command economies which remove the private sector, market-set pricing, material rewards for labour while installing layers of repressive social control by politically favoured hierarchies and beauracracies do not remove themselves from the vital economic imperatives such as leveraging energy and labour to create surpluses
And before someone mentions Cuba in this regard… remember that once Cuba announced itself socialist (1961) the Soviet Union fed it cheap oil and virtually guaranteed a healthy market for Cuba’s sugar exports. As Cuba deteriorated, Castro recanted his various petulant disagreements with the Moscow-communists (1968) which cleared the way for daily cash and trade credits totalling about 1.5 million dollars a day for a decade.
I agree. Cuba had a lot of help from Russia. That is part of what made the collapse of Russia so traumatic.
apologies for the very poorly worded comment above. It was written on my phone while waiting in line. You are excused for ignoring it much like I do with the word salad nonsense which ‘worldofhumanorganexcretion’ subjects us to
oppressed peasants always turn on their oppressors
Good points. We have had several experiences with planned economies. The Chinese version seemed to be doing well for a time, but now seems to be failing as well. The Chinese version has elements of capitalism in it, and this fact may have made it more long-lived than most. (I understand that leaders would set economic growth targets. Local leaders were given a fair amount of discretion in meeting those goals. They could borrow almost an unlimited amount of money for investment, making it easier to meet the economic growth goals.) It seems like individual leaders, no matter how hard they try, can’t make as good decisions as the market with many small decision makers.
As I think about it, our current ultra-low interest rates also take on aspects of a planned economy. It is hard to believe that any economy acting on market incentives would work as our financial system does now.
I am leaning in the direction that we have never had even remotely free markets…
As you point out …all roads lead back to the Fed… the private company that determines interest rates…
That is the lever.
It is Fed policy that determines US rates — which directly influence rates across the world….
Which brings us around to the answer to the question of who runs the world….
The same people for centuries – the bankers!
The bankers have some pretty savvy consultants..
I didn’t get why they allowed the Brexit vote to happen. And I don’t get why the US demands billions from the one bank that is the most likely bank to start the global financial collapse http://money.cnn.com/2016/09/16/investing/deutsche-bank-us-14-billion-mortgages/
I like chess, but I don’t understand those moves.. what is the gain?? Isn’t Europe playing ball in some bigger game right now, behind the scenes. And now the big brother slapps the littke brother around a bit to get him to comply to the bigger plan??
What’s likely happening is we’re seeing the elite power structure begin to tear itself apart. I seriously doubt only one group or person would be capable of orchestrating world events in dozens of different countries. George Soros for example likely has different desires and allegiances versus someone like Mario Draghi or Jamie Dimon.
Bankers live in a bubble. They had no idea there were people out there seeing affluence pass them by. Brexit has been a big wake up call. Trump too is doing well for the same reason.
It has always seemed to me that our brand of market economy and what passes for democracy work fine when we are exploiting surpluses, and you can promise those left out of the prosperity that everyone can benefit from future growth. When it becomes apparent that future growth will not only not take place, but will be replaced by persistent contraction, then you can no longer buy off the peasants with promises of a bright future. Everyone will realize that what we have is all we are going to get and it is a zero sum game. If I am going to increase my prosperity in a zero sum game, someone else has to lower theirs. Our markets and our political system will be unable to deal with any such redistribution. It will descend into a command economy, which will further descend into the oligarchs granting resources unto themselves, and for everyone else, “you’re on your own” (the ownership economy!).
Right, assuming the government stays together at all.
I know that in China, continued growth has been a big concern because it allows leaders to say, “You haven’t gotten the benefits of growth yet, but in not too long, you will also benefit.”
What’s the description for this one Fast Eddy? Not BAU-lite, perhaps BAU-Dystopia?
May I suggest BAU-dark?
If you really want to scare yourself, try some “scientific proof” that we are living in a holographic universe that is actually a simulation (like “The Matrix”), in which we are doomed to “eternal return” – that is, to relive our lives “Groundhog day” style. I can imagine nothing worse. The author believes that this is behind the sensation of “déjà vu”, or more precisely “déjà vécu”.
https://www.amazon.co.uk/Opening-Doors-Perception-Cosmic-Awareness-ebook/dp/B01KKC8R7U/ref=sr_1_1?s=books&ie=UTF8&qid=1474459678&sr=1-1&keywords=anthony+peake
I was once under the influence of something unnatural… well actually more than once….
And I ended up in a ‘hole’…. I was able to see behind the curtain … the best I can describe it is a bug on the surface of water…. that was able to escape the grip of the water…. to see what was beyond his immediate world….
What I saw was a digital world… in which each of us was just a pulse within that world…
Each time I visited the hole I saw the situation with increasing clarity…. it became so real that I became a little frightened…. because it exposed the world that I would normally perceive… as false…. as you mention ‘a hologram’
It’s been many years since I visited the hole….
Scary stuff. One person I did read about described meeting the “solid-state beings that run the universe”. I’ve entered the twilight zone myself on a couple of occasions, without ever doing substances. Talk about “ontological shock” ! Now I often wonder “what lies beyond”.
Groundhog day would be scary and yes this world is much more similar to The Matrix than people care to examine. A lot of this can be realized if you just look at how we interpret our world. Turn off the eyes and ears and what are we but fumbling around in the darkness with no understanding of what we’re doing or where we are.
While there is science that is a tad alarming such as advanced quantum physics and the infinite universe or string theory, what is actually scary is astral projection. There’s nothing more humbling than being introduced to a higher vibrational being that makes your current understanding of the world feel like a baby’s. Language is a very, very poor way to attempt to decipher some of the things I’ve seen.
Astral projection – it’s never happened to me. But it does fascinate. The wonders of the mind. My dreams are often weird enough, though. How does my own mind create such fantastic theatre? It has to be the “collective unconscious” that mediates these dreams.
Our minds do more perceiving than creating. While there is a “collective” so to speak, it is only unconscious to us while we are awake in a physical form. When humans are so incredibly divorced from nature and reality on Earth it’s no wonder that most people are blind to the infinite possibilities that lie just beyond the eyes.
The Matrix https://www.google.fi/url?sa=t&source=web&rct=j&url=https://www.youtube.com/watch%3Fv%3Dbp4NkItgf0E&ved=0ahUKEwizgojuv6PPAhVFEiwKHSTNDT0QwqsBCIYBMBQ&usg=AFQjCNEYQzBBi4Bw2hB3WR6SF3Bcrzphcg&sig2=CBBlCjNVnoEI8nee7z-FAQ
Astral Projection?? https://en.m.wikipedia.org/wiki/Quantum_entanglement
Interesting, but way too many formulas to try to explain something that is inexplicable to most humans. Einstein practiced astral projection. Religion, science (currently), and politics cannot explain the phenomena accurately. If you really want to open your eyes and get a view from an engineer’s perspective try anything by Robert Monroe. He subscribes to no dogma and lays the whole thing out in a somewhat easy to understand format.
I dig it, Tim.
Still, I doubt a BAU-dark world could keep things going for long.
The closest to BAU-dark today is North Korea – a country heavily reliant on support from China, the United States, South Korea, and others.
“eople would live packed to the rafters in gigantic block apartments like ‘Judge Dredd’, or in tiny capsules like the famous Tokyo Capsule Hotels. The only escape would be anti-depressants and VR.”
You mean like Japan?
Very much depends on what is included in the definition of “productivity.” For example, GDP is not a perfect metric. For other metrics see http://economix.blogs.nytimes.com/2008/10/30/alternatives-to-the-gdp.
Very interesting and informative.
Thanks Gail
Thanks for all the hard work on the new article!
Is there a formula that can be applied over time, for any one country, that includes interest rates and inflation and can be used to predict a country’s economic growth?
I don’t think so. Diminishing returns (with respect to energy, metals, fresh water, food produced per acre of arable land) mean that the rate of economic growth will always be slowing, until the system slips into collapse. Competition with countries that are less far along with respect to diminishing returns is another problem.
Reducing interest rates can partly offset both causes of slowdown. We have been reducing interest rates since 1981, in an attempt to keep economic growth up. But eventually we reach a limit.
Inflation seems to reflect the extent to which overall demand is increasing. Rapidly growing wages or debt can lead to inflation. At this point, keeping the inflation level high enough is a problem.
So really such a formula would be too complex, because of these additional factors. Then there is the complicating factor of productivity improvement through technological innovation, which would tend to bring inflation down. But how much technological improvement can we expect, in such an energy-constrained environment? Little or none. 🙁
You saw my earlier post, in which I looked at long-term GDP growth compared to energy consumption. https://ourfiniteworld.com/2015/09/14/how-our-energy-problem-leads-to-a-debt-collapse-problem/
It is hard to build and repair capital goods in an energy constrained world, so I would expect that we would lose even the little bit shown here.
@Gail
The description / title of your new article may have a type -> “What” instead of “Why” – like it is spelled in the first line of the article (“What really causes falling productivity growth?”).
I fixed it, but it is hard to get all “versions” of the article to pick of the corrected version. The link with the wrong word is, unfortunately, permanent. I need to learn to re-read the title before I put the post up.
I know it from my blogs with WordPress, since I also use the same format for the links than you do.
P.S: I would be glad if I would do as little typos as you do – and appreciate the work that you put into the articles very very much!
You do well Gail, even if I read something I’ve written several times, I still often miss a typo or some other mistake, seemingly because of a tendency to really only skim … no wonder editors are necessary … fresh eyes and all that!
I am fortunate to have some people helping me with editing. They come from different perspectives, so see different things wrong.
I still make mistakes like the title–something I kept changing, up until the end.
Hi Gail, Not a big deal in the scheme of things, but it is really nice to read an article by someone who understands the difference between the use of ‘less’ and ‘fewer’. Another year or two and I expect the word ‘fewer’ to have disappeared.
It is really my editorial assistants who know the difference between the use of “less” and “fewer.” I am one of the people who tends to use less for everything.