Our economy is a mystery to almost everyone, including economists. Let me explain the way I see the situation:
(1) The big thing that pulls the economy forward is the time-shifting nature of debt and debt-like instruments.
If we want any kind of specialization, we need some sort of long-term obligation that will make that specialization worthwhile. If one hunter-gatherer specializes in finding flints that will start fires, that hunter-gatherer needs some sort of guarantee that others, who are finding food, will share some of their food with him, so that the group, as a whole, can prosper. Others, who specialize in gathering firewood, or in childcare, also need some kind of guarantee that their efforts will be rewarded.
At first, these obligations were enforced by social norms such as, “If you don’t follow the rules of the group, we will throw you out.” Gradually, reciprocal obligations became more formalized, and included more time shifting, “If you will work for me, I will pay you at the end of the month.” Or, “If you will pay my transportation costs to a land of more opportunity, I will repay you with 10% of my wages for the first five years.” Or, “I will sell you this piece of land, if you will pay me x amount per month for y years.”
In some cases, the loan (or loan-like agreements) takes the form of stock ownership of an enterprise. In this case, the promise is for future dividends, and the possibility of growth in the value of the stock, in return for the use of funds. Even though we generally refer to one type of loan-like agreement as “equity ownership” and the other as “debt,” they have a great deal of similarity. Funds are being provided to the enterprise, with the expectation of greater return in the future.
As another example, governments make promises for future benefits, such as Social Security, healthcare, and payments to the unemployed. These payments are not guaranteed, so are not considered debt. Even without a guarantee, they act in many ways like debt. Citizens plan their lives around these payments, even though they may be reduced or eliminated.
Surprisingly, even “cash” is debt. It is similar to a bond that pays zero interest and has no redemption date; this type of bond can also be easily transferred from person to person. Since cash can be hidden under mattresses, it too can be used as a device for time-shifting.
(2) The big thing that goes wrong in this time-shifting approach to operating the economy is the loss of what I would call an “opportunity gradient.”
As long as the future looks better than the past, it makes sense to make these debt-like obligations. But as soon as the future looks worse than in the present, the whole model falls apart. Even if the future looks exactly the same as the present, there is a problem, because taking on these long-term obligations has some overhead costs, such as administrative costs and a margin to cover the possibility of defaults on loans. These overhead costs need to be paid in some way. Because of this, there needs to be enough of an upward gradient to cover the necessary costs of the loans or the loan-like agreements. (This is part of what makes a Steady State Economy, advocated by many, an absurd idea.)
Once the opportunity gradient becomes negative, it becomes very difficult to get anyone to borrow money and to use the resulting debt to lead the economy forward. When the opportunity gradient becomes negative, young people are less inclined to get married, and tend to have fewer children. International organizations of countries (such as the European Union) have a harder time staying connected. The whole model of cooperation working better than “every country for itself” starts falling apart.
Just as human bodies often go downhill before dying, an economy that finds itself on a downward slope may very well be near collapse.
(3) The loss of an opportunity gradient comes from diminishing returns in many areas, including:
- Rising energy extraction costs
- Rising costs of mitigating pollution, as increasing resources are extracted and used; these pollution mitigation costs are really part of total extraction costs
- Reduced quantity of arable land per person
- Reduced fresh water per person, without high-cost treatment such as desalination
- Fewer investment opportunities that allow for true growth, such as providing tractors to farmers who previously used draft animals, or adding a new road that permits fast transit across a country for the first time
- Many more required “investments” that are simply for the purpose of offsetting deterioration in previously built infrastructure
Figure 1 illustrates the extent to which current business and government investment in the United States offsets either depreciation on old investments, or previous investment that was no longer needed for one reason or other–perhaps because manufacturing moved to China.
Figure 1. US Business and Government Capital Investment, based on Table 5.1 (Savings and Investment by Sector) of the US Bureau of Economic Analysis.
Between 2008 and 2015, only 17% of “Gross Capital Investment” actually became “Net Capital Investment.” With this small amount of true addition to capital investment, it shouldn’t be surprising that what seems to be “productive investment” doesn’t really raise productivity by much. It mostly raises the debt level, without necessarily providing a corresponding benefit to the economy.
(4) Increasing complexity is what acts to offset the many diminishing returns we face. Thus, the situation we face is an increasing battle between growing complexity and diminishing returns.
Many people would consider increasing complexity to be similar to improved technology, but increasing complexity really is broader than improved technology. Besides involving the development of new devices, it involves greater use of specialization, and more use of education. Businesses become larger and more international in scope, and governments offer more services. Organizations become more hierarchical as the economy becomes increasingly complex. With these types of approaches, it is sometimes possible to overcome problems associated with diminishing returns.
If an economy is already reaching limits because of the long-term battle between diminishing returns and rising complexity, the use of an increasingly hierarchical structure tends to lead to a society of “haves” and “have nots.” The people at the top of the hierarchy have more than enough. Those at the bottom of the hierarchy find it increasingly difficult to meet their basic needs for food, housing, and transportation. They find it difficult to afford the output of the economy. This is a problem we are increasingly facing today, because of the way our self-organized economy operates.
(5) Debt plays a greater role, as the economy becomes increasingly complex and uses more technology.
Debt, because of its time-shifting ability, acts almost like magic in allowing an economy with adequate resources to grow. In part, this is because improved technology allows more capital goods used by businesses and governments to be produced. Capital goods made in the year 2016 are designed to provide a long-term benefit into the future, over a future period of, say, 2016 to 2066. Paying workers making these goods becomes a problem unless the future benefit of these capital goods can somehow be brought forward to 2016, so that the workers making the capital goods can be paid. In fact, there is a whole supply chain of workers that needs to be paid. There is also a need to pay many other kinds of costs, including taxes for government services and dividends to shareholders. All of these costs can be paid, using the magic of debt to bring forward the hoped-for future income from the new technology.
Debt is also frequently used for convenience for large purchases, such as buying a house or car. Here, debt effectively promises that the buyer will have enough future income to make the planned payments. It thus brings forward the future income of the debtor, and, through the magic of debt securities, adds this future income to the balance sheet of some organization–a bank, an insurance company, a pension fund, or the purchaser of a bond related to this debt, as if the debtor had already earned the funds needed to pay for the large purchase.
Of course, the problem with using debt and other debt-like approaches to bring forward future revenue flows is the fact that we don’t really know what the benefit of a new capital device will be, and we don’t really know whether a particular individual will be able to continue paying his mortgage or other loan. Perhaps he will become ill; perhaps he will lose his job in a recession, and not be able to find another job that pays as well. With a mortgage, there is a backup possibility that the house can be sold, and its value be used to provide the necessary repayment, but we saw in the Great Recession that property values can drop, so this doesn’t necessarily work either.
The way today’s economy is structured assumes that these future payment streams can be counted on. The value of stocks and bonds are the “assets” of insurance companies and pension plans. Banks can only exist if the loans they make can really be repaid. Our whole financial system is dependent on the current system continuing as usual, with at most a small number of loan defaults, such as are priced into the system.
(6) Growing debt tends to raise commodity prices and encourage commodity production, while falling debt levels tend to lower commodity prices.
If an individual obtains a loan, he or she can buy a home, a car, or other high-priced object, such as a boat. If a business takes out a new loan, it can build a new factory or buy new equipment. Making these objects requires the use of a wide range of commodities, typically including many kinds of metals and energy products. Once these items are placed in service, they are likely to need to continue to consume energy products.
Adding more debt allows the economy to make more goods using commodities. The way the economy encourages more production of a commodity is by bidding up its price. With this higher price, ores of lower grade can be converted to metals, and higher cost energy products can be used to make the desired end products. Alternatively, the higher cost can be used to open new mines or new oil fields, to try to pull the cost of production back down again.
Of course, if debt levels start to shrink or even rise less quickly, the opposite effect tends to happen. Commodity prices tend to fall, because not as many mines and oil wells seem to be needed.
(7) Nurturing economic growth; the key to growth seems to be growing “Disposable Personal Income”
With the magic of borrowing and promising to pay back the borrowed amount with interest (or through share appreciation and dividends), it is possible to start with very little, and gradually create a large economy. The situation is almost like planting an “economic seed,” and nurturing it with (a) additional debt as needed, (b) a growing supply of cheap energy, and (c) a growing population of workers. As long as the debt grows rapidly, the supply of cheap energy grows rapidly, the population of available workers grows rapidly (without becoming too hierarchical), and the other types of diminishing returns listed in Section (3) don’t become too great a problem, the economy can grow and prosper.
One of the keys to producing economic growth seems to be getting sufficient funds back to workers as “disposable personal income.” Disposable personal income (DPI) is after-tax income that gets back to individuals one way or another: as wages, dividends, interest, or rents, or as transfer payments, such as pensions for the elderly and payments to the unemployed, or as government employment of some kind, such as payment for being in an army.
There is a popular belief that GDP is the Goods and Services that an economy can make. As far as I can see, GDP is the Goods and Services that the people living in the economy can afford to buy. There is clearly a commonsense reason why this might be the case: an economy cannot grow, if the people living in the economy cannot afford to buy the goods and services that the economy produces. In the US economy, there is a .98 correlation between the growth in DPI (for all people in the economy combined) and the growth in the US GDP, as shown in Figure 2.
Figure 2. Comparison of 3-year average change in disposable personal income with 3-year average change in GDP, based on US BEA Tables 1.1.5 and 2.1.
The GDP used to compute growth rates is not inflation adjusted, nor is the DPI inflation adjusted. These amounts are thus different from the more commonly shown inflation-adjusted amounts.
The way I see things, the amount of inflation in commodity prices is to a significant extent determined by the match between how much disposable personal income is rising, and the quantity of goods and services being produced. As I have discussed previously, energy is essential for producing goods and services. A suitable quantity of energy products must be purchased, no matter how inexpensive or expensive the price of energy may be. If the energy purchased is very cheap, it is likely that the goods and services can be produced very inexpensively. The benefit of this cheap production of goods and services can encourage growth in many parts of the economy at the same time:
- Wages
- Profits to the owner(s); stock dividends
- Interest on debt
- Taxes
- The financial sector can flourish, with all kinds of new products
- Commodity price inflation
- Economic growth
The reason why this pattern happens is because the DPI of citizens (plus whatever amounts that governments and businesses can add to DPI) doesn’t necessarily match up with the cost of making those goods and services.
When energy prices are low, and when there are many opportunities for productive investments, the excess buying power can partly go into new productive capacity, leading to economic growth. Some of it can also go to provide higher wage growth. In fact, all of the items on the above list can be higher.
Figure 3. Average annual Brent equivalent oil price, in 2015 US$, from BP 2016 Statistical Review of World Energy.
When energy costs are at a high level (see Figure 3), all other parts get squeezed. Instead of seeing inflation in commodity prices, we start seeing deflation in commodity prices. In fact, deflation can bring energy prices below the cost of production. This effect, together with the end of US Quantitative Easing, likely explains the sharp drop in oil prices starting in mid-2014.
Figure 2 shows that, in recent years, the overall annual growth in US DPI and in GDP has been only about 4%. Growth of 4% doesn’t go very far when it needs to cover growing population (about 0.7% per year in the US), plus inflation, plus “real” growth in wages. No wonder commodity prices get squeezed! Because of diminishing returns, the cost of their production rises far more than the modest growth in DPI can afford to cover. Something gets squeezed: energy prices remain far below the cost of extraction.
(8) The 1980 Economic Turning Point
If we look back at Figure 2, we see that the recent peak in the growth of GDP and DPI occurred about 1980, at approximately 11% per year. At 11% there is room for many economic “goodies,” including funds for new investment, raising wages, and inflation.
When growth in GDP and DPI started falling shortly after 1980, many changes occurred in the economy. For one thing, wage disparity in the US started increasing (Figure 4).
Figure 4. Chart comparing income gains of the top 10% to income gains of the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.
This was also about the time when US interest rates started to fall. Ten-year treasury rates hit a peak in 1981.
Figure 5. Ten-year treasury interest rates, based on St. Louis Fed data.
It also seems to be the time when increases in debt no longer automatically triggered a corresponding increase in the wages of non-government workers (Figure 6).
Figure 6. Three-year average increase in debt compared to three-year average increase in Wage Base, defined as non-governmental wages plus proprietors’ income.
In Figure 6, “Wage Base” is wages of non-governmental workers, including wages of proprietors, such as farmers. I consider my wage base to be “regular” wages, before all the government manipulations that produce the much higher DPI, which includes transfer payments, and wages paid under government programs. Figure 7 shows a comparison of the relative amounts. On Figure 7, note that the upward “blip” in the Wage Base occurred in the 1998-2000 period, when the price of oil was unusually low (Figure 3), leaving more for wages.
Figure 7. Personal Income, Disposable Personal Income, and Wage Base, as Percentage of GDP, Based on BEA tables 1.1.5 and 2.1.
(9) The Problem of Ever Rising Government Expenditures, and Government Receipts that Don’t Increase Enough
If we look at the historical pattern of governmental costs, we see that there has been a long-term upward trend in governmental costs. Figure 8 combines receipts and disbursements for all types of governments (federal, state, and local). The Wage Base, mentioned previously, is used as the denominator, because even taxes paid by businesses will indirectly affect prices paid by customers.
Figure 8. US government expenditures and receipts compared to wage base, based on BEA Table 3.1. Amounts include federal, state, and local taxes, and include funding for Social Security.
In Figure 8, Government expenditures peaked at over 90% of the wage base. Clearly these expenditures are only possible because they include a big increase in debt at the time of the bank bailouts and all of the stimulus activities.
The fact that government receipts have stalled at about 66% of the wage base since 1981 suggests that there is a problem in raising taxes above the current level. We may not even be able to maintain our current tax level, if required payments for health care coverage under the Affordable Care Act behave like another tax.
(10) The Recent Decline in US Debt Growth
If we compare the growth in total US debt (not just governmental debt) to the Wage Base (includes all non-government wages, including proprietors’ income), we see a rather surprising pattern (Figure 9):
Figure 9. US debt as compared to Wage Base, based on FRED and BIS data.
The ratio of debt to wages remained pretty constant until about 1980, when it began to rise sharply. This was about the time when wages started to diverge, and interest rates began to decline. Once oil prices fell to lower levels in the late 1980s, the non-financial debt level settled back, compared to wages. When oil prices began to rise in the early 2000s, the total debt level skyrocketed. These patterns suggest that debt growth is strongly related to the price of oil. Less debt is needed to keep the economy going when oil prices are very low; much more debt is needed when the cost of oil production is high.
Since 2008, we see a different pattern. The debt level is falling, despite record low interest rates. We discussed in Section 2 the need for an “Opportunity Gradient” to encourage borrowing. At this point, there does not seem to be a sufficient Opportunity Gradient to keep borrowing at the very high 2008 level, and even grow from this point. The failure of US debt to grow relative to wages is thus part of the reason why oil prices cannot be raised to a high enough level to make oil production profitable.
The low growth in US debt is likely a problem for the rest of the world, too. Since oil is priced in dollars, I expect that the US really needs to be a leader in debt growth, if the world economy is to grow. The US no longer seems to be trying to be a leader in debt growth; it ended Quantitative Easing in 2014, has raised interest rates once, and is now planning to raise interest rates again. This creates a problem for other countries, because their currencies tend to fall relative to the dollar, when US interest rates rise. If these other countries do attempt to raise their debt levels, their currency levels tend to fall relative to the US dollar, mostly negating the benefit of the debt increase when it comes to buying oil and other energy products. This makes it very difficult to use debt to provide new programs, such as guaranteed income plans for citizens.
(11) Conclusion
This analysis is based on US data, but it gives some insight into what is happening on a world basis. I would expect that Europe and Japan are in many ways not too different from the US. The world economy has done better, because it includes countries with more opportunities for investments that might truly be associated with economic growth.
The situation everywhere may very well be that growth is a temporary phenomenon. Rapid growth occurs for a while, but then it fades away. When it fades away, inflation tends to shift to deflation. This presents a huge problem, because our financial institutions are built using debt and debt-like instruments. When deflation hits, the “Opportunity Gradient” changes from favorable to unfavorable for future investment. This creates a much greater likelihood of future debt defaults, and discourages citizens from wanting to take out loans to finance new investments. All of these things are concerns for the future functioning of the economy.
The situation we seem to be encountering is that economies, both of the world and of individual countries, are dissipative systems. As such, they require energy. Similar to other dissipative systems (hurricanes, ecosystems, stars, plants and animals), they grow for a while, and eventually collapse.
Economies, as dissipative systems, seem to need several kinds of systems. Energy provides sustenance for an economy, in a way similar to the way food provides sustenance for humans. The debt system acts somewhat similarly to the way a human’s circulation system works; the time-transfer mechanism provides a pumping action similar to that of the heart. The pricing system acts very much like a human’s sensory system; it allows the system to discern whether the current opportunity gradient is sufficient to justify adding more debt. Thus, this analysis suggests that one way the system may fail is through commodity prices that fall too low. Most people have never considered the possibility that this could happen.
Intermittent renewables, such as wind and solar, might be considered as similar to a type of food that causes the sensory system of the economy to malfunction (similar to deafness or blindness). This happens because, as I discussed in a previous post, intermittent renewables disrupt the pricing system for electricity by dumping electricity on the grid without regard to whether the price signals indicate that the additional electricity is actually needed. As a result, prices for other types of electricity (such as nuclear and natural gas) become depressed, necessitating subsidies. This shows why overly simple models cannot be relied upon when evaluating possible solutions to our energy problems.
It would be nice if we could figure out a way to make our economy last forever, but it is doubtful that we can. Ultimately, the battle between diminishing returns and increased complexity seems likely to be settled in a way that causes the economy to collapse.
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all our politicians are puppets that know nothing they simply act out their roles because they are being contolled by vested interests namely the elites if any of them start working for the people we know what happens then
It is not just the politicians. Every group that takes donations has to keep making statements that will cause the people to make more donation. Charitable organizations are pretty much as bad as those that are trying to sell a “product.” It is just that their product is their views, and their writing.
I am not sure it is really the elites that are controlling everything. I think to a significant extent it is the forces that make us humans and the economies dissipative structures. The politicians sense what the voters want. And what the voters want is BAU to continue indefinitely. They want more income/ goods for themselves (or clean air, lack of global warming for the system). Of course, the view that the latter things are really available is pushed by the makers of wind, solar PV, and by those researchers who want funding so that they can keep their research positions. If someone wants research to show something totally ridiculous can be done (carbon sequestration for clean coal comes to mind), there are any number of researchers who will volunteer to write papers on small pieces of a very large boondoggle.
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Really good article. I feel like you’re breaking down debt some more here and really looking under the hood at the sequence of events that happens regarding our economy involving debt. In sum, it’s looking at the reality of the situation rather than what we’ve been told, taught, or falsely believed to be accurate.
I really liked where you mention: “as if the debtor had already earned the funds needed to pay for the large purchase.” I find it simply absurd that our economy has devolved into the perverted financial fantasy that is being played out. Every step after the debt being loaned from a bank appears to be a notch down the “ethics” scale, if you will, and appears more like gambling than investment. For example, credit default swaps and collateralized debt obligations. These are a huge part of what brought the economy down in 2008, or they were at the very least big contributors. Variable loan financing was simply moronic as well. And they’re doing it again with auto loans!
“The financial sector can flourish, with all kinds of new products.” I think this is a big part of the problem. Financial products seem to be divorced from any notion of reality including hard limits, diminishing returns, peak resources, and other finite world issues. Derivatives are really the economic version of radiation ponds; those of us paying attention know that it’s going to end really, really badly. We just don’t know when.
“When deflation hits, the “Opportunity Gradient” changes from favorable to unfavorable for future investment. This creates a much greater likelihood of future debt defaults, and discourages citizens from wanting to take out loans to finance new investments.” Bingo! Deflation is hitting now, pretty sharply too. Not only does deflation discourage new investments it discourages population growth, which in turn becomes a self-reinforcing feedback loop. Less people = less stuff = lower profits = lower wages. And then prices continue to decline until eventually all suppliers go bankrupt, resources can no longer be extracted, and then either the grid goes offline or we end up in some other desperate scenario like nuclear war. I concur with your assessment that deflation will ultimately lead to a collapse.
Derivatives are really the economic version of radiation ponds; those of us paying attention know that it’s going to end really, really badly.
That’s a good observation. I wonder if infinite money is going to protect us from the mother of all derivatives meltdowns?
It sort of did in 2008. It may work again but it can’t continue forever. At some point too many institutions or corporations will hit insolvency and faith in the system will be gone. Either way, “infinite money” cannot fix any of our real problems like overpopulation, resource depletion, or the total absence of cheap liquid fuels.
If we have infinite money then why is this happening? http://www.zerohedge.com/news/2016-12-08/dallas-police-pension-finally-ends-run-bank-halting-withdrawals
Incompetence? Ignorance? Wilful mismanagement? A result of being lied to? Take your pick.
I go for the last one, plus a whiff of incompetence due to political bastardry. It’s just not possible to cover the costs of pension funds in a deflationary spiral – todays’ picture.
The Fed has to step in and fund the difference. They had no trouble funding the GFC banksters. so they need have no trouble topping up pension funds as required. Long term it’s the cheapest option
LOL!!!
There is an awfully lot of funding needed, continuing over a long period. I don’t think it is safe to say, “They had no trouble funding the GFC banisters. so they need have no trouble topping up pension funds as required.” It is not just the pension funds. It is the banks, on a much bigger scale than 2008. It is Social Security and Medicare as well.
The headline figure I keep reading for the ‘non-performing loans’ at Italian banks is $360 billion, which is around one fifth of Italian annual GDP – but you’d guess there must be some hidden liabilities in excess of this, relating to derivatives transactions that have been covering up losses in a shady can-kicking exercise going all the way back to 2008:
“Deutsche Bank AG employees may have manipulated internal indexes as part of an allegedly fraudulent scheme to help Banca Monte dei Paschi di Siena SpA conceal losses, according to an audit commissioned by German regulators.
“The study, requested by watchdog Bafin and seen by Bloomberg, says an internal Deutsche Bank review described “abnormalities” in the values of proprietary indexes used to set the price for the Monte Paschi deal in December 2008. While investigators at the Frankfurt-based bank couldn’t “unequivocally” link that to manipulation or the deal’s outcome, Deutsche Bank didn’t have any guidelines for monitoring the indexes for potential rigging, according to the audit.
“The internal Deutsche Bank report has never been made public. Its findings are also cited in Italian court documents seen by Bloomberg.
“The audit shows banker abuse of benchmarks may have gone beyond the rigging of industry measures such as the London interbank offered rate, or Libor, that has already triggered probes and fines for global lenders. Deutsche Bank last year paid $2.5 billion to settle claims of interest-rate manipulation — more than any other lender — amid accusations of a widespread effort to rig rates for financial gain.
““The Paschi deal is dependent on indexes, and then the indexes may have been manipulated to be more in favor of Deutsche Bank,” said Michael Dempster, founder of the University of Cambridge’s Centre for Financial Research, who has consulted for clients suing banks over derivatives deals. “It is a subtle part of the structure that could be used to load it to the bank’s advantage.”
“”The index trades also show the layers of complexity underpinning a deal Italian prosecutors say was an illicit scheme to mask losses at Monte Paschi, which is fighting for survival eight years after the ill-fated transactions…”
https://www.bloomberg.com/news/articles/2016-12-08/deutsche-bank-may-have-rigged-index-in-paschi-deal-audit-shows
Italy could be one of the next country’s in the EU to divorce and attempt to go their separate ways. Notice I said attempt there. Britain has STILL not been permitted to depart the EU and its politicians are sort of attempting to setup another referendum until they get the vote they want. Do they know something we don’t? Could this set off the mother of all derivatives bombs? If DB is involved you know its big. Last I checked they have more derivatives than any other bank in the world.
I think it has been said regarding Brexit… either it does not matter… or it will ultimately not be allowed.
It seems the latter
Democracy is nothing but a gentle bump in the road
Perhaps, or until the whole rotten edifice is laid open like a splattered tomato. One way, or another, the UK will exit the EU.
Twenty percent of GDP is a big percentage. Once one part of the system fails, other things seem to fail as well. At a minimum, Italy will want to leave the EU. That will create a big hole there.
I agree. Tango Oscar has the story right about derivatives!
Once people discovered that they could build models with computers, it seems like they started believing the output of those models more than they really should have.
And once the people who build the models start believing them, the next step up the chain is for the sales people who sell the products to believe them. The people who build them are like the engineers who are convinced that they know everything that can go wrong with a nuclear power plant in advance. Instead, they have a model that seemed to work over the (say) last 10 year period. They assume it will work forever.
And then there is the “fat tail” problem that Benoit Mandelbrot wrote about. Too many people believe that the normal distribution works for everything. It doesn’t! The tails are not “fat” enough. It is the “black swans” that are much more abundant than anyone ever expected that create problems. And when the Opportunity Gradient is flattening, there are a whole lot of black swans.
Models are funny things. Men like to build things up towards the sky and then put all of their faith in them; the tower of Babel is a metaphor for the stock market. Permanency is a must for humans. Before this ability is realized in babies they will cry every time their mother walks out of their sight. Because she’s gone, forever. I think the roots of this problem lie in psychology and our evolution. Reach for the skies, aim high, and all that jazz about heaven.
Everything just keeps trying to go higher in a desperate attempt to grasp something better – as if that were the magical key to contentment. In a sense global debt, exponentially rising CO2, and rapidly rising human populations are all interconnected.
Nobody wants to accept reality so they put faith in other things, like models or Gods. Someone or something will save us, never realizing that there was never anything permanent in this world to begin with.
My belief is that permanency, like time and space, is an illusion or belief construct established for the purpose of learning. They are not real except within this vacuum and they are only useful in the sense of memory impressions and evolution. If you become blind or deaf your whole reality is instantly changed. This is also true for extreme experiences like rape victims, holocaust survivors, and residents of the Congo. In order to “progress,” so to speak, there needs to be a safe base established.
Enter Maslow’s hierarchy of needs. It too has an upward trajectory, with the highest level being self-actualization. Most humans will not reach this level and their towers, models, markets, sports cars and Gods are just manifestations of their own short comings. Failure to accept truth or see reality. Our current world is the result of multiple layers of perversion and misguided attempts at fulfilling our esteem or failing at finding a sense of belonging. Somewhere along the way, probably when we started big agriculture 12,000 years ago, we made some terminal mistakes for our trip around the mulberry patch.
I’ve been reading about the Sumerian civilization lately. I find it fascinating they had qanats, irrigation, canals, water wheels, law, scribes, all kind of firsts. The different stages of that civilization (different town-city states) lasted from about 6500BC to 1940BC. It could have been an even a longer lasting civilization with the findings of Gobekli Tepe (9000BC). Well, so, one can say they held it together for quite some time..
First comes the ability to make a food surplus. The Sumerians had a lot of qanats, irrigation and canals.. and with grains, food storage..
Then comes complexity. Law, timber from Anatolia, merchants and trade routes, priests and war lords.
Then comes even more complexity, empires, high priests, upper-class, a complex social structure with government, religion and culture.
And then at some point they forgot where the food surpluses came from and the qanats, irrigations and canals were not maintained. The soil blew away with the wind. And the civilization collapsed.
Tango Oscar, our species can maintain a civilization as long as we remember to have respect for the land. Improve the land with water wheels, wells etc. etc. Build intergenerational infrastructure for food production (and storage). Population overshoot problem is taken care of with regular diseases and territorial defence (war). But as soon as we try to go fully urban, create a city-structure with huge complex social structures, that no longer respect the land. Then collapse is not that far away.
“A society grows great when old men plant trees whose shade they know they shall never sit in”
Why would we do anything differently if we ‘went back’ – we are no different than the proverbial yeast in a cup of sugar…. whatever energy source is available we will use it up as quickly as possible.
It is in our DNA – it is the essence of survival of the fittest… if we were to not complete for the world’s scare resources we would been extincted long ago. It is the ultimate paradox
Virtually ever single person on this planet — if offered the private jet, homes around the world and 20 million dollars per year inflation adjusted – would take it.
Does that no tell us something?
Try telling a billionaire that he has enough and should retire.
Try telling a unionized worker that he has a very nice lifestyle already and that he should not strike for more
Does that not tell us something?
“Does that not tell us something?”
Our ancestors lived through things like this https://en.wikipedia.org/wiki/Extreme_weather_events_of_535%E2%80%93536
The ones who did were the ones who were not satisfied with a normal winter’s supply of firewood. We carry their genes, never enough!
The hunter gatherers made it through ice ages.
“The hunter gatherers made it through ice ages.”
True. This brings up something from Professor Gregory Clark.
“Genetically Capitalist? The Malthusian Era, Institutions and the Formation of Modern Preferences.
“Before 1800 all societies, including England, were Malthusian. The average man or woman had 2 surviving children. Such societies were also Darwinian. Some reproductively successful groups produced more than 2 surviving children, increasing their
share of the population, while other groups produced less, so that their share declined. But unusually in England, this selection for men was based on economic success from at least 1250, not success in violence as in some other pre-industrial societies. The
richest male testators left twice as many children as the poorest. Consequently the modern population of the English is largely descended from the economic upper classes of the middle ages. At the same time, from 1150 to 1800 in England there are clear
signs of changes in average economic preferences towards more “capitalist” attitudes. The highly capitalistic nature of English society by 1800 – individualism, low time preference rates, long work hours, high levels of human capital – may thus stem from
the nature of the Darwinian struggle in a very stable agrarian society in the long run up to the Industrial Revolution. The triumph of capitalism in the modern world thus may lie as much in our genes as in ideology or rationality.”
http://faculty.econ.ucdavis.edu/faculty/gclark/papers/Capitalism%20Genes.pdf
I highly recommend reading this article. There is considerable background for where economics, as we know it today, came from.
We know that personality is genetically based. You only need to read up on the Russian work making tame foxes out of wild ones. It seems that some human populations were subject to the same selection intensity over about the same number of generations as the foxes. There was, of course, a preceding intense selection for the traits that make farmers, especially high latitude farmers.
I have run across this issue before. Those who are most successful nearly always dominate in whose children live to maturity.
Once that it is clear that capitalism tends to be more successful in terms of the total goods and services produced (dissipate more energy) then the system changes in the direction to encourage more of this activity. This may include self-organizing in a way that is more hierarchical, and applying other capitalistic techniques.
“goods and services produced (dissipate more energy)”
We have a long way to go to use up the output of the Sun.
BTW, this isn’t the only case of selection in humans. There was a study in the last few years which was able to distinguish between Chinese who came from rice growing areas and those who came from wheat growing areas on the basis of psychological traits. Growing rice takes intense social cooperation compared to wheat and this is reflected in the personalities of the current day Chinese, most likely due to long term selection. The article was in Science, about May, 2014
“Large-Scale Psychological Differences Within China Explained by Rice Versus Wheat Agriculture”
T. Talhelm et al.
I connected the author with Gregory Clark.
Another if you are into this stuff.
https://psmag.com/8-000-years-ago-17-women-reproduced-for-every-one-man-6d41445ae73d#.5he802ygp
I could imagine selection for personality traits might happen. I also think some of what we think of as personality traits is taught (at home and in school). It would be hard to tell where one started and the other left off.
Northern Chinese are also taller than Southern Chinese, related to wheat vs rice.
The linked article is about more men than women being parents of children 8,000 years ago. A comment was made about a person owning a whole village. I wonder if this is related. The person in charge mated with a disproportionate share of the women. Slave owners seemed to have children by the female slaves.
Except we are self aware. At least some of us are self aware, I should say. We are capable of making choices or at least aware that there is a choice. Some humans would reject a posh lifestyle and free money. Yes, most would overwhelmingly take it, but not everyone. Just because humans on Earth are similar to yeast as far as DNA is concerned it does not mean that this is the fate of all life forms on all planets everywhere forever.
I actually do not think we have much choice in what we do…. we are programmed to want more… we are programmed to compete… we are programmed to procreate.. to survive
These irresistible urges drive our every decision — but for the most part we do not realize that.
Why do we buy certain clothes — why not just buy 10 plain gray shirts and matching trousers?
We will make all sorts of excuses but at the end of the day it comes down to attracting females…
Of course we are manipulated… but we could not be manipulated so easily unless the drive was already there …waiting to be manipulated…
Very few resist these urges…
Nobody has ever said they would not accept the jet, the houses and the cash — if offered…
Very few people do not have children
Very few people off themselves….
Very few people just drop out of society refusing to compete for a mate — or for a job….
And then the water ran out. It did that a lot in antiquity.
David Montgomery in “Dirt the Erosion of Civilizations” gives a fairly complete write-up regarding the how the Sumarian civilization fell.
At first its population was low enough that it only needed to irrigate a small portion of the available land. Gradually, the population grew, and they needed to irrigate more and more of it. Eventually, they also needed to leave it fallow shorter periods between plantings, to try to get enough food for the rising population.
The Sumerians needed to save groundwater from spring floods until near harvest time, when it was needed for irrigation. This ground water was already somewhat salty; letting it evaporate for several months in their storage system made it even saltier. Irrigation with this salty water created a problem for growing grain. They first shifted from wheat to barley, because barley was more salt tolerant. Even barley yields fell, with the higher salt content. (Also see, “The Recurring Dark Ages” by Sing Chew.) As a result of all of these problems, the Sumerians had a problem with falling grain production per capita.
The area gradually became more urbanized, and the population of urban workers who needed to be supported by the farmers grew. In Montgomery’s view, the amount of surplus food available to feed the non farmers set an upper bound on how far the economy could develop.
In fact, I expect the economy was another example of overshoot and collapse. The fact that they started with a small population, and it grew slowly, may have kept collapse away longer than in other areas.
It’s all hindsight now, but if the Sumerians had covered those surface water reservoirs to mitigate evaporation, they would have had more water and less salt to deal with. We stupidly do the same thing, because it’s far cheaper to have open reservoirs and canals. We get away with it so far, because we can throw cheap energy at the problem.
am i missing something here?
The sumerians communicated messages on baked clay tablets, yet should have covered reservoirs?
How would you go about covering a large reservoir of stored water? It’s not as if they had plastic sheeting or similar….
I think our mistakes were made when humans discovered how to control fire, over one million yeas ago. Or perhaps that is the way things were planned, as a way to dissipate more energy.
I think the Egyptians and the Sumerians lasted for millenia because they had the fortune of having “bad luck”..
Every few years the spring flooding was particulary bad, and everything was swept away.. as a side effect though, from this “bad luck”, all the fields were rejuvenated with fertile muck. All infrastructure had to be built again, sturdier and better. Skill and knowledge about becoming an ‘entrepreneur’ (build, fix, refurbish and grow things) was spread to large parts of the population.
Without the fortune of having bad luck.. the soils would have become infertile a lot sooner, me thinks. One reason why the Egyptians made it until the Greek/ Macedonian dynasty, could be, that the Nile was particulary bad every few years or so. And one reason why the Sumerians didn’t make it, could be that they learned to harness the Euphrates the Tigris too well. Too much control. No more spring floodings, no more fertile muck, no more rejuvenations.. eventually.. collapse of civilization..
The last time the Europeans had a streak of really “bad luck” they called it the Black Death and a third of the population was culled. What followed that bad luck.. The Age of Enlightenment
Now we’ve been having too much control of our situation, too much good luck.. and what will now follow.. total collapse..
Our culture, of too much success, is a decendant of Aristotle.. maybe there could’ve been another way.. less success.. more bad luck.. if all of Aristotles writings had been lost.. or all of them found.. hard to know.. because we only know what’s in the quarter we have.. no idea what was in three quarters that were lost..
Well.. anyways.. more mysticism.. and less of the Aristotle we have.. and maybe there could’ve been more bad luck for us.. and maybe.. in the end.. our species could have survived what’s coming..
I agree that the “bad luck” of periodic flooding has been very helpful, both for Egypt and the Sumerians. Th Aswan High Dam has cut down the flooding in Egypt, and made it harder to keep up the silting that has provided fertility to the soil.
I believe there’s a new delta forming at the head of the Aswan dam. It’s not good news for the mediterranean delta’s survival what with sea water invading etc.
the Egyptians now have to buy fertilisers instead of getting it free courtesy of Nile delivery.
The Aswan dam was bound to silt up
Egypt is a nightmare in waiting. 2% arable land and over 90 million population. A catastrophe scenario. Australia sells them millions of tons of wheat and doesn’t get paid so I have heard. The US wants us to do that for political reasons, keep the Egyptians on side with the west apparently.
agree totally
then add that 90m is going to double over the next 35 years or so
As in tools and eventually mining, leading us on the pathway of human leverage of labor? But what if fire is the reason we evolved to be homo sapiens in the first place? Modern evidence suggests that we were never ready or evolved properly to handle the responsibilities that came with the technologies we discovered from fossil fuels. To me this suggests that the problem traces back to at least agriculture or perhaps something happened around the time homo sapiens appears on the planet. Too smart for our own good perhaps.
I’ve often theorized that the world found itself with an excess of fossilised carbon, and evolved humankind to get rid of it
once that has been done, we are surplus to requirements
You are probably right!
Gail –
Excellent post that brings together many key principles.
A few years ago while in grad school, my mind was expanded by Nate Hagens’ perception of debt: “a spatial and temporal reallocator of resources, away from the periphery towards the center and away from the future towards the present.” Coupling that with your notion of “opportunity gradient” and of economies as dissipative systems, I reckon that economies can’t run in reverse. A contraction regime may look like an expanding economy in reverse on graphs of key indicators, but consider what a true reversal would imply: people having perfect (or at least perfect-approaching) knowledge of the future while only able to guess at the past.
Debt mechanisms always assume that “tomorrow will be at least as bright as today;” it is a bet made that the debtor will be able to repay, with interest. How will our economic systems function, even down to the individual level, when not only is that bet is not a good one but the bet “tomorrow will only be at most as bright as today” becomes a better bet?
Glad you touched on the distortion effects of intermittent renewables. In my presentation on utility-scale electrical energy storage of the sort you would need to go all-solar-PV for generation, I point out that intermittency and compromised dispatchability of solar-PV electricity makes that electricity a lower-quality good that, by rights, ought to be a less-valuable and therefore lower-priced good but that even so, this good can be converted to a more-valuable, high-quality good if you add complexity in the form of mega-infrastructure. The question then becomes, can you do that at net benefit to civilization?
The scale at which society would need to build out the mega-infrastructure to allow a transition to solar PV is (in my view) way too large. To even attempt to do so would hit other resource limits. Solar PV has three large downsides: 1. It is intermittent. 2. It has too low an energy density and 3. requires major infrastructure changes.
total area required to supply worldwide power needs today is a mere 366,375 km2. See linked map … not very much ….
http://fusion.net/story/129075/elon-musk-reminded-everyone-last-night-how-little-land-would-be-needed-to-power-the-u-s-with-solar/
for just the US it would take a little more than half a percent of the continental US land area to satisfy our entire electrical demand …. not very much…
https://www.good.is/infographics/solar-power-all-of-america
Use Solar for Electricity, Fossil Fuels for chemical and manufacturing
When I did the modeling for my storage presentation in which I sought to hypothetically supply BAU demand for the state of Georgia with nothing but solar PV, I assumed a transfer efficiency (both inbound and outbound) of 90%, which isn’t out of line for motors and generators. I did not model in-storage losses (i.e., proportion of stored energy dissipated per unit time). Given a proxied hourly time series and a proxied 15-minute time series for insolation that I could scale up and down as needed, I found that at 90% transfer efficiency I needed an oversupply factor of about 12 to keep the storage from running down completely or building up too much energy from one year to the next. Given an real-worid annualized effective power/land-area density of 5.5W/m^2, I found myself looking at a PV farm 115 miles on a side, feeding an electromechanical storage device that would be holding about a quarter of a Krakatoa explosion at maximum.
And that’s just for one US state, *assuming BAU demand.*
To implement this storage in Li-ion batteries, you’re looking at a cube a third of a kilometer on a side at a cost of about $2.8T (not including construction – just the batteries) using state-of-the-art cost and energy densities. *With* construction costs, well, you’re looking at roughly the cost of the Iraq-Afghanistan wars; that the US can undertake such an adventure is self-evident. I proposed using what is now known as Stone Mountain as a half-billion-ton kilometer-long motor-generator flywheel instead.
You are in the wrong place with this renewable energy garbage…. you have been warned…
Now imagine paying for all of this stuff in advance as well. Also, the interest payments on debt. Some things engineers miss in their vision of what goes wrong.
Solar cannot meet the electrical power of grid current. For large power tools and other devices a generator is simply a must. Furthermore in order to combat Solar’s intermittent supply it would require a massive lifestyle change that would absolutely NOT support economic growth. So we wouldn’t just need a new grid to support these billions of solar panels, we’d also need a new model for “growth” or some way to effectively remove 90% of the world’s population while sustaining BAU. These are just a few of the problems with solar, in addition to being at peak minerals and dealing with all of the mining issues. Mining is requiring more and more energy just to stay in the same place at a time where we are basically out of cheap energy.
The first problem is, if you make the solar power available at night, the solar system will likely never pay for itself. It will consume more money and energy, and emit more GHG, then it will ever provide/offset.
The second problem is, you want to burn 10 years worth of fossil fuels to make this solar farm in one year, that it will maybe pay off over 20 years.
The third problem is, there probably is not enough of the right sand, money, energy to build such a project.
At night you would use the Moon Panels….
Solar uses a ridiculous amount of silver, tin, aluminum, copper, and zinc as well and that’s just the panels. Wind uses upwards of 10X the nickel used to achieve the same power as today’s energy mix.
https://www.scientificamerican.com/article/renewable-energys-hidden-costs/
Now figure out how much debt would be needed to go with it, especially if it is also backed up with batteries.
“Way too large” is relative. in my presentation I point out that *we already built* a continent-spanning infrastructure intended primarily to generate and distribute mostly fossil-fueled electricity; in the US that infrastructure actually consists of three interconnect regions, each of which operate as a physically synchronized unit. Had we decided sixty years ago that we were going to phase out fossil fuels (recall that AEC Chairman Lewis Strauss gave his “too cheap to meter” speech in 1954) and pursue solar PV, concentration, or some other light-powered tech, our infrastructure would look very different today, as would our Mauna Loa CO2 time series.
Re your downsides: 1) I have to give you, but understand that the sun is always shining *somewhere*. So when we say solar generation is intermittent, we’re limiting ourselves to a given region with present-day transmission expectations and also presuming that the “always-on” civilization our fossil-based history allowed us to create must persist in a way such that the intermittency even matters. 2) Even given that PV energy density (whether we mean density in W/m^2 or W/$) and efficiencies continue to improve, to say it’s “too low” suggests BAU-think. If you take BAU and BAU-style growth off the table even a little bit, the capability and the expectations can be made to meet. 3) Going back to what I said above, compare present-day elec-gen/dist infrastucture to that of 150 years ago. What’s that you say? There *was* no elec-gen/dist infrastructure 150 years ago? Wow, look what Earthlings did in just four or five generations! Think of what we could accomplish with our modern planning and technological capabilities in just two or three!
Please tell me the cost and materials needed. Please include storage and transmission. Please remember in New York State the month of November is basically cloudy all month. But that is OK happy to have electric from Nevada. The flyover states may not be happy with the mile wide transmission lines from there to here.
My estimate is 300 $/meter square total with storage and transmission. So 100 trillion dollars for the system. As to how much cement, iron, aluminum, I do not know.
“Please tell me the cost and materials needed.”
Hey, much deeper dive into this and I’d probably need to be getting paid! 🙂 As I said with great relief and with polite titters from the audience in response, I was glad that I didn’t have to perform *all* the engineering necessary to design this storage system. When I first began the modeling, my goal was to model the entire southeastern US but I quickly found that my maximum rotation speed was going to be ridiculously high. Reducing my scope to just Georgia brought the max speed down to a still-frightening 17.5RPM. I didn’t work out the max power I/O but it would be stupendous, and a network of similar devices scattered around the country with a formidable array of PV farms to supply them would require some hefty interconnections – probably in the form of aluminum tubes (but they may have to be iron or steel – again, my hourly rates are quite reasonable!). Note that we *already* crisscross the US with metal tubes to deliver energy products, so this shouldn’t be a huge deal.
Renewable energy ‘simply won’t work’: Top Google engineers
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
http://techcrunch.com/2011/11/23/google-gives-up-on-green-tech-investment-initiative-rec/
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
Now scurry back to Doomdiner or Peak Prosperity or Green Groupie.com or wherever you came from ….
We do not do nonsense here
Great Post. Thanks
Since Robert Scribbler won’t allow any reality -based comments on his blog,and his primary subject is Anthropogenic Climate Disruption and his Dreamland Solution to it,which is BAU with renewable energy powering it, I would point out that the construction of all the infrastructure that FE mentions above increases atmospheric CO2 . I don’t know
what the figure would be,but it certainly wouldn’t be small. Worth remembering ,too,that
all of the infrastructure of our industrial civilisation has a limited life span,nothing can be recycled with 100% efficiency,and all recycling requires energy.
Eyetere Peyeture posted this today on xraymikes site.
For an idea, not even talking about storage and transmission:
(Lazy links, no quote)
http://energyskeptic.com/2014/alt-energy-too-much-steel-cement-aluminum-but-little-power/
http://energyskeptic.com/2016/solar-pv-cells-using-rare-elements-unlikely-to-scale-up-enough-to-replace-fossil-fuels/
http://energyskeptic.com/2012/solar-infrastructure-materials-land-and-energy-required/
A recent one about battery storage:
http://energyskeptic.com/2016/how-is-californias-ab2514-experiment-with-utility-scale-battery-storage-coming-along/
That was just an example, there are other sources (ex. Euan Mearns’ Energy Matters). One can also use the OFW search engine for further issues, such as grid stability, prices, etc…
“If you take BAU and BAU-style growth off the table even a little bit, the capability and the expectations can be made to meet.”
Without growth and BAU, we would need 95% depopulation and invoke Logan’s Run to purge all old and disabled people. The main need for taxes and interest and growth is pensions and health care for old people. Without fossil fuels, feeding the masses is likely not possible.
Then the problem becomes, people tend to fight back when you try to cull them. We grow, or we die. Or we grow and then die tomorrow instead of today.
Another big downside is the huge amount of debt any energy system that is made with capital goods (instead of burning fossil fuels or biomass) has to add. This additional debt for something of this scale would be a deal-killer on its own.
I think we both know the answer to how economic systems will function when “tomorrow will only be at most as bright as today.” Not well! We are already seeing declining life expectancies in the US, and a WSJ article said that only about half of Americans were doing better financially at age 30 than their parents. (I am doubtful it is really this high!)
Regrading whether solar PV it will ever make sense to add batteries at a net benefit to society, let me point out work that Graham Palmer did regarding this. He calculated the Dynamic EROEI over time, as replacement batteries were added to make the output stable. He only got to an EROEI of 1.30 after 30 years. It would take enormous resources to make all of these batteries. We would likely have to recycle materials so that diminishing returns did not “eat us alive.”
Yes, Graham Palmer nailed it. Solar PV likely does have an EROEI of 9.4 to 1 if you disregard the externalities and only measure the DC output at the panel. But, that is not a real world measure by a long shot. Graham Palmer digs deeper and his analysis gives a more realistic view of the real EROEI (1.3). It is easy to forget that solar PV is not a source of energy like crude oil is (never mind that crude can be used as feedstock for numerous other products) solar PV is energy capture (and only a small amount at that).
I agree too that the debt levels required to transition to solar PV and wind power are a non-starter as well.
Attention Permies!
Fast Eddy has involuntarily taken the Fast Eddy Ultra Lite Challenge … the one where you turn off the fridge…
Having taken the keys to the beach shack (possible venue for the End of World Party) I arrived to find that due to a misunderstanding the fridge was removed by the vendor.
As the property is a distance from any shops I had brought along some food – some of which was perishable…. thinking there would be refrigeration when I arrived…
When I saw the fridge was gone … I began to fill like those geniuses who get locked in an empty room and asked to make a baloney sandwich…. I walked about … pondered …. walked about… pondered… hmmmm… I rubbed two sticks together…. I prayed to the sea god for a fridge…. I raged at the vendor … I even raged at the lawyer for not including the fridge in the chattels … I raged at myself for not looking more closely at the chattels list… I blamed my dogs who had nothing to do with it…. I blamed it on the rain….
Yet that did not fix the problem — no fridge — 4 days out here — everything would go off… the beer would be warm…
And then I jumped back into my multi tonne vehicle and gunned the engine and drove 30 minutes into the nearest town …. and bought some large bags of ice glorious ice… and a cooler at the Wally’s World…. and rode the tonnes of metal back to the beach ….
Just a little whiff of what a post BAU world looks like….
Oh and BTW – I brought my mountain bike … and when I unloaded it I found that the back wheel was jammed — looks like the derailer might have been bashed on the way here… fortunately BAU is still on … so I can go into the town and fix/replace the broken part….
My thoughts are turning to the proper Fast Eddy Challenge…. I am imagining what it would be like to run without electricity and petrol for a week….. I can’t even begin to imagine a forever scenario….
http://d9hhrg4mnvzow.cloudfront.net/try.shudder.com/today/41841ac3-shudder-logo-color_04x00x04v00x000000.gif
You make far too much noise on this otherwise excellent blog.
Good one, Rob!!! Absolutely way too much noise and most of it arrogant like he’s the magistrate of what is correct and what is not.
Rob-
I don’t know how long you have been reading here but FE, for whatever anyone may think are his faults, is a good guy and brings any silly argument about the seriousness of our situation to a head like no one else can. There is no time for people who do not understand we face an existential crisis. If you do not understand that when you come here FE will straighten you out in short order.
+++++++++++++
I think of him as Eddy the Bouncer.
He makes sure that the riff-raff don’t completely take over the place.
I have been known to act as a bouncer as well. I can cut off or reduce the ability of commenters to make comments.
I agree Paul-WeeWillyWinky-FastEddy-WhoeverHeItis is very good smashing “people who do not understand we face an existential crisis”. He’s not the only one, but he’s the only one doing it 24/365
It’s kinda negative virtue… I’m still not sure why he spends his time doing this, instead of something more joyfull. He’s no longer here to learn, because he has already learned all he could. He’s perhaps expecting that against all odds something positive could arise here?
As I can see it, he has, however, a very big downside. Even if he is very aware of realpolitik his ethnocentrism doesn’t allow him to think about politics differently. He dismisses very probable outcomes: that organised aggregate of a few thousand people can go through a bottleneck if they think about themselves as independent political entities. He also seems to believe that US military asked Obama to spend two billions on electro magnetic pulse just to piss him off…
According to Aristotle’s definition, FE is not a political animal. Aristotle liked very much the concept of universality, but he found no use for it when he analysed politics (while, of course, this concept is at the core of modern politics). But FE is too modern, too much universalist… He can’t get any group between the individual and the species, and that’s a part of why he can’t distinguish between his own death and human extinction
He’s no longer here to learn, because he has already learned all he could
I have made most of the mistakes already … but there is wisdom to be gleaned from a dozen or so members on FW….
Regarding the other points — nobody has learned me on the fact that there will be no food post BAU — or that the spent fuel ponds do no represent extinction ….
Therefore the conclusion must be — has to be — an double whammy extinction event is imminent
Ya I know … I should have hope… I’ll try harder
“There will be no food” for who? For you, so for nobody? It’s truly amazing Gail allows this kind of garbage to be told here
Reg spend fuel ponds… I should assume you have a particular clearance among US army top officers…
As many people say, 95% of what you write is repetition or garbage
I can throw you out again, if this is what you want
What is repetitive garbage is Koombaya. that is what I am trying to drive off so that the serious commentators can get back to serious fact and logic based discussions.
Fee free to explain to me how we solve the problem of nearly all agricultural soil on the planet being unable to grow a crop when the petrochemicals stop.
Feel free to explain to me how spent fuel ponds do not release the equivalent of 56,000,000 Hiroshima bombs when the electricity goes off – forever.
I am hear to learn.
““There will be no food” for who? For you, so for nobody? It’s truly amazing Gail allows this kind of garbage to be told here”
As long as you have enough might to defend your food production from everyone else, you’ll be fine. Or you could just hope that everyone else just throws their hands up in despair and starves to death instead of trying to take it from you.
“I am hear to learn.”
Hogwash. You are here to bully and berate. You’re a bore. You’re the echo in the echo chamber. You’re the Donald J. Trump of OFW. Speak louder and repeat yourself. Why, with those fine skills you could even be president!
Unfortunately, I am afraid that Fast Eddy is right, or very close to right, if there is no religious solution. The idea that “organized aggregate of a few thousand people can go through a bottleneck if they think about themselves as independent political entities” is absurd in my opinion.
There are a lot of different forms of wrong beliefs that seem to come up. Fast Eddy may not be 100% right, but he presents a view of the situation based on what has happened elsewhere without adequate energy supplies, and based on some of the risks we seem to be up against. I personally believe that a religious outcome may be possible. I would be laughed at if I offered that as an answer to every third commenter, however.
I would be so pleased if some entity arrived at the last moment to snatch victory from the jaws of defeat…
I have virtually no expectation of this happening — so you can imagine the surprise factor would be immense.
It would be right up there with waking up in the middle of the night in two weeks to see a man in red dropping a private jet and a pile of gold bricks into my driveway
I do you hope you are right Gail — unfortunately it is not possible to prove any of this —- but that said — the question remains — how did this planet get started…..
Energy flows started everything, including this planet. The Genesis 1 creation story isn’t all that bad, if you substitute “energy flows” for “God created.”
Genesis 1:7 says “God made the vault and separated the water under the vault from the water above it.” There is now research that seems to say that there is a large underground body of water, which we have not been aware of.
Even the order somewhat makes sense (excepting Verse 14: “Let there be lights in the vault of the sky to separate the day from the night, and let them serve as signs to mark sacred times, and days and years,” which comes after creating of vegetation).
“Days” doesn’t make much sense, but many denominations don’t interpret these as earthly days. The length of time recorded in the Old Testament is more or less the time of the oral history being recorded. The views being recorded represent what people at this time believed.
Many other religions were self-organized by flows of energy as well. I don’t think that one religion necessarily has all of the answers. They seem to have insights, of various kinds. Some are no doubt contradictory. There are many contradictory things within the Bible as well–representing what people at a particular time believed to be true.
Gail, please avail us of your religious solution. Why not? Anything is better than Endless Eddie. We could certainly explore the idea of metaphysical answers to physical predicaments. Why should only scientific solutions be proferred here? If science is so great, how did we end up with Climate Change, Peak Oil, Industrial Civilization, Donald Trump. Why should we worship at that alter and denigrate a religious solution. Science is just another way for humans to explore the mysteries of life. But having reduced life to 1s and 0s are we any better off for it? I, for one, would be pleased to examine a new solution, if for no other reason then to give Eddie a rest. Thanks for your consideration.
You are encouraging me… again….
I am not sure I know the details of a religious solution. If flows of energy could give rise to the entire universe, and if physics is perhaps associated with creating the concept of time as well, it would seem as if the force behind the energy flows could direct these energy flows in some other way. Perhaps the outcome would be similar to life after death, or perhaps it would be continued existence in some altered state. I really doubt that humans will continue to live in our current world (except possibly a tiny remnant, who survive and will attempt to build a new civilization up, with today’s exhausted resources).
when you watch the water circling round and draining down the plughole in the bath, and watch galaxies circling in exactly the same way a million light years away, following the same forces—it would suggest that the entire universe is governed by the same laws of physics
humankind is a very insignificant part of that scheme of things.
no matter how we may wish for some form of alternative ”way”—it aint gonna happen
50 pages into the book…. it’s one of those reads that you can’t wait to continue… but want to ration it … like good chocolate….
Trying to save the rest for the holidays on the coast….
Superb effort — if anyone has not bought this I would highly recommend it
glad you’re enjoying it Eddy, it certainly helped when you and a few others on here kicked me into putting it in paperback—thanks for that
when you’ve finished it, maybe a critical appraisal of it on Amazon listing?
that helps to spread the word a bit
will do
JoeBanana, please don’t encourage him.
The Koombaya Krowd encourages me plenty…. I feel the need to respond to Idiocracy
Did you finally see that movie? I know I recommended it to a few different folks on here. The running joke is that it’s a documentary on Americans. Spraying Gatorade all over the crops and whatnot, wondering why they won’t grow.
I saw it quite a few years ago….
How are things going with the stockpiling of Paraffin wax?
Norman-
You just have to have faith…and a lifetimes supply of paraffin wax!
There are few who could pass the Fast Eddy challenge in most places but the country people. Refrigeration is a huge problem for most people but those with a root cellar and the ability to can meat would have little problem and should not rely on it to begin with.
If Eddy would listen to Permies…he could have been still drinking his cold ones…
https://m.youtube.com/watch?v=hjP0TnW9_lQ
And much to eat
https://m.youtube.com/watch?v=bBJoiSe0NMQ
But it can’t be possible after BAU
Where would all the canning supplies come from when Walmart closes…
This leads back to the Prepper’s Dilemma …. you can stockpile till you are blue in the face — but there is always going to be something critical that you run out of post BAU….
It is one of the main reasons I decided not to pursue this course of action — it kept occurring to me that so many things could go wrong — and would go wrong — that I decided it was a waste of time.
Throw in the fact that nobody else I know was doing anything to get ready — and would be at my gate asking for help…..
And then there are the spent fuel ponds….
Eddy, As always, you are 100% right. There is NO WAY possible for YOU to be able to do what Peter Bane did in the videos! I am certain that for YOU, it is just a waste of time.
In your case, it is far better to stock up in 20 foot containers whatever is necessary post BAU.
Good luck
Remind me where that waxy stuff for canning is gong to come from when the oil wells shut down…
Maybe Peter should stockpile ten tonnes of it — he could be he parafin wax king post bau
It’s not just running out of a critical supply here or a component there, but most of our habitat should be destroyed as someone is hypothetically attempting to survive collapse. The radiation from exploding nuclear ponds is a real concern and it would likely hasten up the death rate of humans/animals/plants by many orders of magnitude. Hell, even now there are fish that are toxic or even deadly for human consumption.
And then there’s climate change. It’s not just some far off in the distant thing that’s going to allow us a slow and survivable habitat. It’s already here. Now. Droughts, fires, floods, species extinction, and more. The megafauna are gone, entire herds of animals, fish, and birds by the millions are washing up on shores or lying dead in a field somewhere. I see more and more information every single day, so much that I can’t even process or keep track of it anymore. This pace is quickening and there is NOTHING that can be done to slow it down or reverse it. It will consume us without prejudice or bias as if we were ants. Have a fun hobby garden but don’t stress it. No one is surviving this one.
http://vignette3.wikia.nocookie.net/cookieclicker/images/e/e8/Exactly.gif
Root cellars keep things cold in the summer. In the winter, no worries. For canning, you can reuse the the lids over and over if you know how to make tallow, or have parafin wax on hand in great gobs. Its really not that hard, FE, you just gotta have the skills. Perhaps you don’t have the skills, but many, many rural people do, they are so ingenious and talented, and the skills they are missing can be over come through adaptation. That is the key word “adapt” “adapt” “adapt”…..Many more than a few thousand will pass through the bottleneck.
Paraffin wax is a white or colourless soft solid derivable from petroleum, coal or oil shale, that consists of a mixture of hydrocarbon molecules containing between twenty and forty carbon atoms https://en.wikipedia.org/wiki/Paraffin_wax
Rule Number One – Think before you post and embarrass yourself
Ever tried to store meat in a root cellar for any period of time?
Come on … it’s so easy — take the Fast Eddy Ultra Lite Challenge — turn off the fridge for a week and use the root cellar
Of course not — too scary…..
Cowards.
Eddy, next time around listen carefully to Peter Bane in the video. He clearly stated at one point that there are people that grow mulberries as a stable food source in lieu of other crops, grind them into a paste, DRY it to preserve it. They’ve been doing it for centuries.
So, no need to can if that is not an option.
But in your case, that’s not feasible. So, again, you are absolutely right.
So I should grow mulberries – and make paste – and I will survive?
What about the thousands of people within walking distance of me who have no mulberries — who will come to my land and ask for mulberry paste — what about the thousands with guns who will demand mulberry paste — what about the hordes who won;t ask at all and instead will just come over the fence at night and tear out my mulberry bushes and ravenously eat the berries before I can even make my life saving paste.
This is beyond ridiculous.
I actually have meat that I canned four years ago, It is still fine. Root cellars do work very well. I grow Yukon gold potatoes that last well into the next summer. You have to experiment to find the food that stores best. I tried one type of onion that did not make it to Christmas but the type I grow now will keep for at least one year.
As for the lids, eventually they would wear out but it takes very little tallow or wax to get a seal. I’ve got enough for several lifetimes.
On another note, I got myself a nice one man crosscutt saw yesterday. I put it to work and bucked about five days worth of wood in about six hours. Honestly, for me the Fast Eddy Challenge is no problem but I’ve been thinking about the critical things you mention for a long time and just enjoy living without modern convenience.
I meant fresh meat…. hope you have a lot of parafin wax stockpiled… when BAU goes there won’t be anymore — ever
After you cut the wood…. did you use any electricity … how about petrol? Did you wash your clothes by hand? Did you flick on any electric lights?
Seriously – try a week without petrol or electricity.
“Paraffin wax is a white or colourless soft solid derivable from petroleum,”
Supposing that somehow, there is no nuclear war and the spent fuel ponds are dealt with, and you manage to be far enough away from the ravenous hordes, and global warming, diseases and *cides don’t wipe them out, beeswax would probably work for sealing things, making candles, making things water resistant.
Bee wax for sealing cans… for preserving… that should end well….
Let’s add this to the Challenge.
Turn off the power – use no petrol — let’s go with a month. Find bees — make wax — seal your cans…. it all sounds so easy – in theory….
Please try it
We have bee hives, the problem is that under the current regime, we must use electric fences to protect them; we are not allowed to discharge firearms to kill bears and other pests. Will try sealing cans with beeswax next fall maybe.
Exactly, there is no use to prep…it is all hopeless for the likes of Fast Eddie’s…
Crawl in the steel 20 foot container close the door and place thumb in mouth rolled in a fetal position…
https://m.youtube.com/watch?v=eHlKFNnc6HE
Nothing will be open…
Fast-
I don’t know if this will show up in the right spot but of course we have lamps and candles and can wash clothes by hand. Actually, having light in the winter is one of my greatest concerns and can’t figure out anything but animal fats to make candles with (which I have done, btw). Seriously, we have to haul some water but no electricity for us is nothing more than a pain in the a$$. It is certainly not anything we cannot deal with. I can say one thing for sure, families are better off without modern convenience. We were not made to live with it and mine is far better off without it.
I dunno … I kinda like a chain saw… and lights…and my fridge … and coffee machine.. etc… I have absolutely no desire to chop and split a tree with an axe… ever.
Someone really needs to walk the walk and take the challenge… it all sounds sound wonderful….
Come on … try a week without petrol and electricity….
Talk is cheap…. I am not interested in talk…
BTW – I invented the challenge when the power went off for a day in Bali when I lived there…. it was during that very short period of time what a nightmare it will be when the power does go off … for good.
Still too scared? Wait till dark wherever you are… then pull the breaker…. sit there in the dark… and contemplate life like that — forever…
The organic alternative to paraffin wax is bee’s wax, I think. Paraffin wax is also very stable, and could be stored cool for many years, so stocking up would work, for awhile. It’s also recyclable.
There’s something very raw, primitive, and satisfying about splitting wood with a maul or a large, sharp axe. It’s hard physical work that you can pride yourself on. Gardening and woodcutting are the antithesis of westernized civilization. Most these days can’t stop staring at an iPad or iPhone long enough to be bothered to connect with the living world.
“Rule Number One – Think before you post and embarrass yourself. Ever tried to store meat in a root cellar for any period of time?”
Not embarrassed by you at ‘tall. A case of parafin wax can last a fellow an entire lifetime. Canning with tallow also works just fine. You don’t store meat in a root cellar, fool, you jerk, smoke and dry meat. I have many friends who don’t even have a refrigerator.
Regardless, its better to do something positive then roll over and die after spending a shiftless existing crossing off some lame “bucket list” lifestyle.
Action is the antidote to despair.
We go back to the problem of …. you might have your case of wax … but nobody else does… you might have your cellar of food … but nobody else does….
Despair? Me?
I am joyful — I couldn’t be happier (other than no private jet….)
I accept death is imminent — there is no way around that — so no despair at all…
Despair is what you will experience when the electricity goes off… the petrol stations empty … and you are left out there in the bush … in the dark… in the cold… and you realize that it isn’t Little House in the Prairie after all..
I am trying to imagine the intense disappointment you will feel….
Fast Eddy Challenge anyone… anyone?
http://www.alittlenudge.com/wp-content/uploads/2013/10/walkthewalk.jpg
Bucket list:
– hunt wild game
– eat meat killed previous year, not frozen
– grow food from seed saved from previous year
– eat food grown previous year
– eat food you dug down last year
– trap small game
– forage and eat new kind of food each month of one year
These adaptations work for a while, but then they fail. How do you decide who to “vote out of the village” when you no longer have enough food to go around?
‘parafin wax on hand in great gobs’
http://a5.files.maxim.com/image/upload/c_fit,cs_srgb,dpr_1.0,q_80,w_620/MTM1MTQzMzI3MDA4MDY4ODgy.jpg
“How do you decide who to “vote out of the village” when you no longer have enough food to go around?”
The (possibly true) tale of a great famine in the Kingdom of Lydia was that the king decided everyone would be divided into two groups. On alternating days, the groups would either work and eat or play games and not eat. The idea was that the games would take their minds off their hunger. Probably dice games, definitely not contact sports.
This worked, but after 11 years the famine persisted. So finally, the king called for a tournament between the two groups with whatever game it was they were playing, and the losing group had to leave. Supposedly, the losing group left peacefully, and eventually founded Rome.
I guess you vote out the ones with the least amount of skills.
The old and those in poor health would probably also be voted out quickly as well.
According to Keith you don’t vote out anyone you attack the next village.
Jane Goodall observed chimps first driving out a small minority faction then systematically hunting down the member of the outcast group until they were all dead. Kill off the minority and do it in a way that is relatively safe for the majority.
I’m only debating the point for fun but around here people salted meat for storage. No canning required. Plenty of salt in the sea.
As we know – Canada has strict limits on hunting kills —- because without them there would not be any animals left in a very short period.
Thing about the damage that a few poachers do to African wildlife….
7.4 billion people — many with guns — it would not take very long to kill just about everything that moves… every dog cow chicken deer moose elephant pig antelope
And as any hunter knows — animals are not stupid – during hunting season animals avoid humans … they head for the hills…. So if any animals do survive the onslaught — you would have to expend huge amounts of energy finding them …
So the question about meat is moot… there won’t be any.
Fast-
Don’t get me wrong, I pretty much agree with you but only because I think you are right about the fuel ponds. If not for them, I have not a doubt in my mind that humans will make it. As for hunting you are right, but if we have a fast collapse, which I think we will, most people will starve to death or freeze in short order. Those of us far away from the urban areas and know how to live without electricity and fuel will make it. There will be plenty of meat where I live as seals crawl right up on my lawn, I sh$t you not, during the winter. There is plenty of fish here, the soil is good and we have plenty of wood fuel. What we don’t have is very many people.
Hungry people will come to where the food is — like flies to a light.
Joe…best not let on about your whereabouts to Eddy….or you may be getting yourself a new neighbour… Eddy has a wanderlust trait if he thinks it gives him an edge.
Tell Eddy you have a new challenge….going without food for Four or Five days and not frying up the pets…Fluffy the cat or Felix the poodle.
When animals are not easy to get humans will hunt humans. That should drive numbers down fast 70% in one year?
I would be surprised if anyone is left within a year…. the last to go will be those who already live unplugged… unlike the hobby permaculture farmers…. who will go down very quickly experiencing violent deaths at the hands of those in search of food…..
I mean tribes living very remotely who don’t even have a plastic bottle….
The radiation will get them…
Ed,
I estimated a half-life of a month for can nibals.
If half long pig is edible and contains 2000 kcal/kg (fatty meat). And you need about 30 kcal/kg for a sedentary lifestyle.
So month 0 = 7.4B
month 1 = 3.7B
month 6 = only about 100M remaining
(Do NOT eat the spent fuel pond technicians!)
I love how the Permies act as if they are tough guys… trapping animals…. living off the land …
Like armchair aborigines!
As you sit in your BAU homes — with your BAU electricity — your BAU vehicles – your BAU chain saws – your gear that you bought from the outdoor shop
You delude yourselves into believing you would walk into the forest and survive.
Yet you won’t even try a week without petrol and power.
What a f*&ing joke!
Salted meat also has the inadvertent benefit of culling the population of elderly people with high blood pressure and low sodium diet obligations.
There was a comment about how do we console each other.
Well, I doubt I can console anyone, but here is what I do to psychologically deal with collapse:
-each day I remind myself of who I am and what it is that I am doing; this prevents flights of fantasy which are so common in our world; if you are old don’t pretend you are young; if you are laboring in podunksville, don’t pretend you are jetsetting around the world with celebrities, etc.; know thyself
-choose some things that you want to do, and do those things – you are going to regret what you don’t try (within reason)
-ignore the masses, the crowd, who are always wrong, even when they are right; doesn’t mean you can’t participate in popular things, just that one should always maintain a distance from celebration, from jubilation
-don’t prepare, – at most learn a different skill or trade if you must, relocate, etc., but otherwise I really do think that all alternative energies, food storage, etc. are one giant waste of time; what is my argument for this? Well, massive amounts of capital go into the agriculture, energy, etc., which are needed to keep the global plantation of billions of workers going; it’s not ending immediately
You were doing reasonably well until this:
‘Well, massive amounts of capital go into the agriculture, energy, etc., which are needed to keep the global plantation of billions of workers going; it’s not ending immediately’
I agree. Our system could end quite abruptly.
At any given time our life could end almost instantly as well. It’s always good to keep in mind that we only have the present moment and that living in the past or planning for the future tends to bring about anxiety or depression. Sometimes it’s better to just go for a walk in the forest rather than make too many plans for the future. Acceptance of the things you cannot change and so forth.
“-don’t prepare, – at most learn a different skill or trade if you must,” This is good advice, actually. In fact, the best trade to learn is nursing or paramedic skills. Unlike being a doctor which takes big $, you can be a nurse in a few years with relatively less $ or time. After TSHTF, a nurse will be worth their weight in gold in any community, anywhere, forever. Medical skills are the way to go. Basic stuff: setting bones, staunching blood and stitching wounds, removing impaled objects, treating infection without antibios, delivering babies. These are all easy skills to master. I have maintained an EMT certification for 22 years. Comes in handy in bush living, which we are all soon to experience.
May be good skills to have. Modern doctors don’t necessarily have these skills–they only learned which antibiotics to use for what, and also learned which tests to run. Don’t know how to set a bone without X-rays, for example.
Very good paper Gail!.
We agree I think that collapse is inevitable and that it is no one’s fault. We also agree that a widening wealth gap is a natural and expected outcome of the process.
I’ve been thinking that a wise society that understood what was coming would take 3 actions to reduce harm on the down side. First implement a one child policy because there is no problem on earth that does not improve with fewer people. Second, limit the use of debt to maintain status quo and accept an earlier decline. The idea here is that the higher the debt level the greater the harm when collapse occurs. And third, implement taxation policies to limit the wealth gap in the interest of social harmony. To be clear, I’m not saying make everyone equal, but rather set some limit between haves and have-nots that society can tolerate.
Do you agree these 3 responses would be wise? If not, what do you think a wise society would do?
A one child policy would result in a deflationary death spiral ….
Limiting debt would result in a deflationary death spiral….
I fail to see how taxing the rich would improve the situation….
Back to the drawing board
You seem to have a pithy opinion on everything. I am aware that slowing down will reduce the time until collapse. But it might reduce the elevation from which we have to fall which could be good thing. And I note you offer no alternate suggestion. In any case I was asking for Gail’s opinion which I actually care about.
Rob, in a perfect world with perfectly rational beings we could come up with all kinds of mitigations to this crisis. Unfortunately we are dealing with real human beings. There are no possible solutions or mitigations given human nature. I suggest you adopt FE’s plan and come up with a bucket list and start checking them off. You may still have a few months or even years.
“I suggest you adopt FE’s plan and come up with a bucket list and start checking them off.” Yes, fast freddy, whatever you say, oh master of doom.
I imagine that when the electricity goes off… permanently … and you are on death’s doorstep soon after… you will regret no bucket listing…
I couldn’t resist…
Oh.. I don’t have opinions… I have arguments.
There is no reducing the elevation we are at – the system MUST grow — or it will collapse
I refer you to the find piece of work by the eminent Norman:
You won’t like downsizing
http://www.endofmore.com/?p=1464
Norman – I’ve brought along your book to the shack…. just finishing up This is London then will dive in
You’re nasty and arrogant. You don’t seem to be even capable of considering the notion that you might be wrong about something — a lack of intellectual humility that usually indicates underachievement and insecurity. You never have anything new or interesting to say. Even if you’re factually correct your “advice” is not helpful in any way — in fact, it’s actively harmful. But it seems to me unlikely that you’re factually correct.
I don’t know if you’d ever noticed, but it’s hard to predict the future and the certainty with which you make your pronouncements is unwarranted. But even if you’re 100% correct about a fast crash — even if standards of living and life expectancies decline while the death rate increases — there is much that can be done to reduce the suffering caused by the process of collapse, and the sort of fatalism you preach is counterproductive.
It’s impossible to have a good faith discussion with you — you’re a broken record, there can’t be any give and take — and you’re incapable of taking seriously opinions that are not your own. I think you should try to learn some intellectual humility and reflect on all the ways you’ve been wrong in the past and all the ways you could be wrong about the future. But I predict with quite a bit of confidence that you never will, even as all your predictions fail to come true.
Yeah but he’s right. Watch wwe Battle of the Billionaires starring the Trumpenfuror for clues.
On the contrary — I have been wrong many times — that is how I learn.
Most people on this site do not learn – no matter what facts or logic is presented — they will NEVER change their minds.
Even though their positions are not backed by any fact or logic — they do not even attempt to argue their positions — because their positions are based on hopium and Koombaya
We have people on this site who have been spewing the same utter garbage for years — in spite of the good efforts of Gail to explain issues in the simplest of terms – in spite of the efforts of the serious commentators to explain how they are wrong.
Someone has to call this idiocy out. Otherwise FW is ruined.
I’d rather not have to spend most of my posts having to explain to people with the intellect of an average 7 year old how they are wrong — over and over — and then because they still do not get it — have to smash them in the back of the head with a shovel.
I am hear to learn. Unfortunately many others are not. They are here to destroy
There are parallels with Atlas Shrugged playing out here on FW… if you do not get that …. then you probably don’t belong here
I would imagine that there are those who might suggest that Fast Eddy provides a daily shot of EPO to FW…
http://sportsscientists.com/wp-content/uploads/2013/02/EPO.jpg
As for the black heart comment … I can understand how Koombayaists who without their daily dose of hopium … would fall into deep despair…
And my daily doses of Koombaya-busting commentary would make me Public Enemy Number One in DelusiSTAN…..
That … I can live with….
Fast Eddy Challenge… anyone… anyone?
Who wants to agree to feel a tree with an axe.. split it … and haul the wood to the shed? No cheating — no chainsaw…
Anyone? Volunteers? Gold medal to anyone who gives this a go….
I see no hands… absolute … silence…. (fear?)
Mr F Eddy,
you’re one person with a view, not representative for all. To me, your picture of a life worth living is stuffed with superfluous things, see jetting around to see Switzerland etc as a typical example. Oh Eddy – mankind were, are and will be so much more, including laugher and love, no matter surroundings, no matter just a little simple food to eat.
“And I note you offer no alternate suggestion.”
The suggestion is that there is no solution, only an outcome that we want to experience as far away from today as possible.
You said it brother.
a wise society would need to do something about the spent fuel pools and then maybe we would have a glimmer of hope and not end up blowing ourselves up 56000 000 hiroshima bombs with a biblical climax
and the nuke techs need to do this quietly so as not to spook the herd into a self-fulfilling prophecy too soon, or sooner than would be expected.
There are some things… that you just can’t do anything about…. running out of cheap oil is one… spent fuel ponds are another
Yes, that’s because most are trapped into thinking BAU will last forever. I guess the military establishment thinks about/plans for the end times for modern civilization in the form of wars. Too bad they can’t foresee that there can be an end, or an effective end, with grid power instability/loss and no further BAU. They could quietly begin to fast-forward dry-casking spend fuel rods at all military and civilian facilities in the USA and allies, as a precaution.
Cannot take fuel from a reactor and dry cask it… it must remain in a spend fuel pond for years….
I don’t think that any of those things would really help. They would just move up the date so collapse would be quicker. Having fewer children means having fewer workers, so that it would be very hard to repay debt with interest. Less debt means fewer jobs, less output of the economy, and the inability to pay back debt; not really the effect a person wants. Limiting the wealth gap means that more people would be able to afford to use resources, so that they would be used up quicker.
If one group could corner necessary resources for themselves, and somehow allow a subgroup to survive, that might help (at least for that subgroup), at least for a while. I suppose some people with solar panels off grid are thinking that they may be doing this. Or, if the US could be cut out of the world economy (since it is a disproportionate user of resources), perhaps the rest of the world could continue for a bit longer. Of course, it wouldn’t be very long before these were at the same place as before.
Joseph Tainter’s solution is less complexity. That would mean getting rid of overhead of the system. Getting rid of programs to reduce carbon emissions would be in this category. So would getting rid of programs to help the poor. Getting rid of army and the overhead that involves would be another piece of the total. These things seem to be in the direction Donald Trump is headed. As awful as these “solutions” sound, they actually may have a tendency to postpone collapse for the system as a whole. This is not to say that the poor would do well. It is just the way the system has of cutting off somewhat unneeded pieces, so that part of the system can survive. Climate change problems may indeed get worse, but that is the price that is paid for this solution.
That’s not the only thing Trump is going to cut. Here comes those benefits and entitlements cuts we’ve all known were coming down the pipeline. Republicans are proposing raising the age to collect benefits until 69 and reducing them by 1/3. I’m sure this will go over well with Americans.
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-social-security-gop-20161209-story.html
In my opinion, there is no way that current benefit levels are payable long term, given the energy problems the world has.
The use of the alternate measure of inflation sounds like it is something that could “backfire” relative to the intent of those suggesting this method of cutting benefits. The proposed method stays closer to 1.000, so gives less of an inflation increase. But what if we are faced with deflation? Will it stay closer to 1.000 as well? That would help the retirees.
The system will stop paying as much benefits, one way or another. One way it could stop paying (or reduce) benefits is if the US government totally dissolves. Another way it could stop paying is through benefit reductions, such as the one shown.
Medicare is in terrible shape as well. It also needs adjustments, relative to what is affordable.
It is hard to imagine any Congress voting to substantially reduce benefits, except through a slow reduction related to the cost of living adjustment. If this is really a deflationary adjustment, this will be harder to do.
I would say it’s mostly a case of math and physics. Medicare, medicaid, social security, even 401K’s and the stock market, none of it is sustainable. More people are retiring and less are working; add in the cost of soaring health care and it’s clearly impossible to pay out these benefits even a few years down the road from now. Either we’re going to see huge overhauls or the system will collapse.
Yep, the only reasonalbe solution is to unplug from the machine the best you can, go local wherever you can, take care of those closest to you even if they don’t believe you, and “hope without hope” for the deus ex machina.
https://www.righton.net/2016/12/03/the-republic-of-flanders-the-last-fires-an-archeofuturistic-short-story/
At the moment of the great collapse, in 2025, the luck of history had allowed one tiny European territory to escape total catastrophe. Here is how the events unfolded: at the start of the second decade of the twentieth century, various small groups of people had seen the storm coming and had organised themselves in networks. The most striking thing about these networks was their diversity; they transcended all social divisions.
I
Comfortably seated in the great room of a beautiful bourgeois home in Berchem, a community bordering on Antwerp/Anvers, Major-General Mac Cauley and High Burgermeister Leuwen were negotiating in English. The late autumn of 2065 was harsh, as though the extinction of the Great Civilisation had brought back the old climate, from before global warming. A large blaze crackled in the hearth, diffusing its burning rays into the room, which was lit by oil lamps. They needed to economise on electrical production and keep it for essentials, mostly military and industrial activity.
As they did every month, the two highest officials of the Republic of Flanders were briefing each other on their situation. The same question came up at each meeting: had they found any scraps of civilisation which had survived the great collapse? Their main methods were regular air patrols and their surveillance of the short-wave radio waves — the ones with the largest range. A third man was present for the interview, the Director of Reconstruction: the engineer Lambert. To put it lightly, he did not look optimistic.
Mac Caulay made his report, first summing up what his interlocutors already knew: ‘Apparently, thanks to short-wave radio and our flyovers by what working F-22s and Rafales we do have left, we have discovered four centers of civilisation that are maintaining a modicum of technological sophistication, more or less similar to our own: the first is in California, in the San Francisco region; the second in Japan, in the south of the archipelago around Osaka; the third is in China, in the coastal band from Shanghai to Hong Kong; the fourth is in Canada, in the zone running from Quebec to Ottawa. In Europe, we’re alone.’
‘What about Africa? Or the Middle East, or Latin America?’
‘You’re joking, right?’
[…]
Utter utter nonsense from start to finish
Osaka has never been a center of civilization and never will be one.
Just ask anyone from Kyoto. 🙂
This is an excerpt from a fairly long short story. The author has a book out as well.
Gail, thanks for the article, possibly one of the best so far.
Have only one small objection, although you mentioned the scope here being US not ROW/global. Specifically, the tapering by the FED, can’t be taken seriously, since 2008/9 the whole global cartel (FED-BoE-ECB-BoJ-SNB + BOC & others..) just switched printing presses on/off and passed the baton around in circles to the next guy, or several of the lesser ones print for a while for the whole amount. And as you know we are living in sort of ~60% globalized (export/import share per GDP) economy, so we have to always watch the machinations of the whole gang cartel in global.
Good points.
I think the US plays a special role in our current problems, because oil is priced in dollars. It is not quite equivalent if the others turn their printing presses on; the US has to be “leader of the pack.”
At the same time, there is a lot we don’t know. How could Japan get this far, with all of its debt and its declining population? How will the huge debt bubble in China play out? Will the EU fall apart?
Remember when Fast Freddy and his clique were wringing their hands that China and Russian were going to partner up to kill the petrodollar and then life as we know it would end? How’s that working out? Russian can’t rub two rubles together and very soon China will be a basket case. Now that the decline has solidly set in, the USD has been, is and always will be the best house in a bad neighborhood. No patriotism baiting, please. Just the fact of the matter.
I fail to see how America is any better off that much of the rest of the world…
Real unemployment is in the 20% range… just like Europe….
Remind me of how many people are on food stamps… is it 50,000,000?
What does economic growth look like these days?
Basically zero — if you strip out health care increases http://wolfstreet.com/2016/12/04/why-no-one-will-tame-u-s-healthcare-costs/
Guess what — America is as knee deep in sh it as the rest of the world…. it is hanging on by its nails….
Do you have an American flag flying over your outpost? Do you sing the anthem on a daily basis?
Is there some sort of pill you take every day that allows you to ignore the fact that America is coming apart at the seams?
Any cops get shot today? How about cops killing more blacks… gotta love that!
Nothing will give me more pleasure than to watch as this cesspool of hate and diseased ‘culture’ go up in flames…
The best will be when the 1.6 billion rounds come out to play ….
I will applaud – I will rejoice…
FE said,
“Real unemployment is in the 20% range…”
I agree. This is a major reason why trump got elected. Too many unemployed and under-employed people.
Mansoor
I was interested to hear an interview with Tony Blair recently, it turns out he was never very concerned about climate change whilst he was British Prime Minister, his belief was that human ingenuity will solve the problem in time. It makes me suspect he would have a similar casual approach to the issue of finite resources. Sometimes I wonder if the worlds leaders are aware of the predicament we are in, then I hear snippets like this and I’m convinced they either don’t know about it or don’t take the idea seriously.
I suppose at some point those in power will have to start seriously questioning what is going wrong with the global economy but from everything I read at the moment they’re still coasting along expecting things to improve anytime soon. It’s quite astounding really.
I’ll bet that Tony Blair takes the same stance as I do on climate change.
He would not give a sh6t one way or the other because as is very obvious fossil fuels make the economy go around the economy go around…..
And if we stop or even slow the burning of fossil fuels — the economy stops going around and BAU collapses…
So he would know – we have no choice — burn baby burn – or die….
I can say this — Tony Blair for obvious reasons cannot — so he spews claptrap…. which he knows to be untrue
What leaders actually know, that’s a bit unclear to me..
They should know.. they should have the right info.. they should know what’s coming.. but.. the way they act, invest money, makes me think they have something wrong..
Why are super rich people investing in hairbrained ideas ? http://terravivos.com/secure/vivoseuropaone.htm
https://www.bloomberg.com/news/articles/2016-09-30/secret-swiss-gold-vaults-are-the-new-swiss-bank-accounts
And why is Trump making plans of rebuilding infrastructure? And why does Europe have a lot of hairbrained ideas about carbon neutral circular economies.. http://www.sitra.fi/en/ecology/circular-economy
And why the he-ll isn’t Elon Musk bankrupt?
IF they really know what’s coming.. shouldn’t these people be investing in something that would be at least of some use.. ?? Buying a private island like Richard Branson did in a wet-bulb tempreature area.. isn’t the smartest move to make.. http://www.nytimes.com/2015/06/07/opinion/sunday/the-deadly-combination-of-heat-and-humidity.html http://www.dailymail.co.uk/travel/travel_news/article-3549486/Why-just-visit-paradise-jaw-dropping-islands-belong-world-s-super-rich.html
So.. just saying.. if leaders know.. if super-rich people know.. really know.. why aren’t they investing in anything that would be useful in real life ??
I would imagine that people on this level would understand that there is no surviving this…
I have asked some very intelligent people to play along with me — pretend that oil was gone — the electricity was to go off permanently …
Every single person I have asked to play this game — and I have asked an engineer, a high flying finance lawyer, a couple of PHDees….
The response is the same
‘Well of course — we are all dead’
That is perhaps why they cannot acknowledge the situation …
The Preppers and the other fools who think they can survive this somehow …..can accept the situation because they believe there is a way out. They believe in Little House on the Prairie.
They gloss over the fact that there will be no food… no medicine…. no hospitals… no dentists… epic violence and suffering….
So at the end of the day who is the bigger fool — the people who refuse to accept collapse is imminent — and who are able to go on living their lives in blissful ignorance… without a care in the world
Of those who accept the end of days is coming — and fret over whether they have stockpiled enough tooth brushes to make it till the end of their lives.
Yup, but still.. there are leaders or ex-leaders, rich or super-rich people who buy islands, yachts, silo-bunkers and put gold in swiss vaults in the mountains.
The Terra Vivos people sell their exclusive underground survival facilities to millionaires with the idea: “when SHTF, go underground for 2 years or so, then come back up again and be the king of the hill”
They expect everybody to be gone, when they come back up again.. all infrastructure intact..
If I was selling some hairbrained survival scheme to millionaires.. that would include some walipinis and metalworkshops in the Norwegian and Swedish mountains, near the hydropowerplants.. at least some actual chance of a prolonged agony..
No doubt about that.
Where everyone has it wrong — from the small time prepper to the billionaire with the island — is that there will be no reset… it will never get any better — because we have already burned up all the energy that is available.
So what you have in your lifeboat is all that you will ever have.
Fast Eddy Challenge —- I really don’t know why the preppers don’t try this — I would think that a month unplugged would give you some insights into the things that you wished you would have stockpiled while BAU was still alive.
For instance … it would really suck to have your canning contraption then realize — sheeeeit — Paraffin Wax is made from oil —- and I really should have bought hundreds of kg of this stuff when it was on sale at Walmart….
Dry runs can be useful!
“Paraffin Wax is made from oil”
And if it gets to burning, it’s not a lot different than gasoline. Do be careful with this stuff.
Yep, but you can also make tallow from animal fats of any kind. Takes about 2 hours. Once your stockpile of parafin runs out. A modest supply of parafin will last about 20 years or so, depending on how much you can. Keep coming up with excuses, FE, and I will keep coming up with answers.
FE said:
“The response is the same
‘Well of course — we are all dead’
That is perhaps why they cannot acknowledge the situation …”
The purpose of life is “electron looking for a place to rest”
https://www.youtube.com/watch?v=HxTnqKuNygE
If there is nothing after death (a life after?) then this is all we get.
Mansoor
I believe that all the people I asked to play the game are atheists.
If anything I’d expect them to join me in making the most of what little time is left…. seeing as they do not expect to be floating on clouds post BAU….
FE,
“If anything I’d expect them to join me in making the most of what little time is left”
Just because I believe in after life does not mean I don’t want to and try to make the most of what little time is left.
Mansoor
Right. But maybe there is something after death.
It is hard to know how much they know, and how much they don’t. I expect most of them thing that if energy prices are down, everything is fine. Just wait a bit, and they will bounce back up.
Thanks Gail !
Draghi Says ECB Can Do More as QE Heads for $2.4 Trillion
https://www.bloomberg.com/news/articles/2016-12-08/draghi-says-ecb-can-do-more-as-stimulus-reaches-2-4-trillion
I wonder what happens to QE if the Eurozone starts falling apart? Italy votes to leave?
Wow, that’s big news. Definitely a wake up call to the progress myth.
I don’t think that people understand even a tiny fraction of our problem.
US life expectancy declines for first time in 20 years
http://www.bbc.com/news/world-us-canada-38247385
Passed peak longevity then…
How long before we hit peak obesity?
We have multiple problems here. One of them is what we eat (way too energy dense); another is lack of exercise; a third is wealth disparity, and a lack of meaningful jobs for many.
“Bond markets all over the world are under pressure after the European Central Bank announced it would extend its quantitative easing program until at least December 2017, but would taper its purchases from €80 billion per month to €60 billion per month.
“Selling is hitting Italian bond the hardest… [Italy has the third largest bond market in the world btw] …The tapering of the ECB’s bond buying program has reignited worries surrounding the health of the Italian banking system. Monte dei Paschi, the world’s oldest bank, is teetering on the brink of default and is currently in talks to be rescued.
“And the rest of the bond markets in peripheral Europe are under pressure as well.”
http://uk.businessinsider.com/treasury-bond-market-update-december-8-2016-2016-12
Wow! And the US is planning to raise its interest rate. Not a good situation!
Yes, Italy is in line to become the next Greece:
http://www.telegraph.co.uk/business/2016/12/08/europes-comfort-blanket-pulled-away/
Poor Italy. Just look at all the talent we’ll lose:
https://www.youtube.com/watch?v=576uoOikT7I
Go to the 1:24 position to savour those wonderful lyrics:
“Always the war, in 1983
This is the world of today.
In our mind, there is only the money
And there is nothing for you.
Then hours’ work
No flowers in the mind
The life runs without happiness
Every day dreams, to go to a better life
But they remain only dreams.
You are the children
Your life will be very hard.
You are the children
You’re singing every day.
To have a friend
To explain your little problem
Can you say now to have it?
Sometimes you hope
It’s only an illusion
Don’t hope
It’s better so.
But children power
Will win
I am sure
Will see sweet lovers for us.
Your fantasy will find new nice colours
But now it’s time to go.”
Ah, such poetry!
“P. Lion (Pietro Paolo Pelandi) is an Italian singer and musician who achieved his greatest success in the 1980s. He took the name of “P. Lion” because of the three “P”s in his name and because the symbol of his family is a lion.”
(Three “P”s – how about “pathetico, pathetico, pathetico” ? )
“Very famous in Italy, he achieved international fame with his two hits ‘Happy Children’ (1983) and “Dream” (1984). ‘Happy Children’ has been remixed to become the new theme of the French Top 50 in France since 2000.”
Oh dear. Think of all that culture we’re going to lose. I’m devastated. 🙁
More 1980s dreck from Italy – I can’t resist it. Go straight to 1:14 –
https://www.youtube.com/watch?v=Jfc-knHB41U
“When you find the light to an upset shade away
If you never, never let me go with every melody
And you often were at leaving just my life
If you’re really not to tug and and
Buy to my fantasy
Me too
When you need to get another chance today
For a thunder is the past a path, we are human being
Do you rather like to feel what is my life
If you’re really going to listen, baby
At my fantasy
And me
Don’t let me go
Don’t cry tonight
Don’t let me go
Don’t cry tonight
Just a random access memories of dreams
As you’re ‘angin’ upon me, do you love melody
Thief of golden toys to an upset time away
As we’re human being, at last we have the melody
We too”
I haven’t laughed so much since I heard the name “Pussy Riot”. To think that in 1936 Mussolini fumed that his Italians were only good for singing opera and eating ice cream. Well, it’s been downhill all the way since then. 🙂
Is that Air Supply?
A humorous interlude, to lighten the tension before the coming crash. 😉
Nice recording!
Europe starting tapering makes a person wonder how low oil prices will fall. Europe hasn’t been doing well to begin with. Getting to the end seems likely to be a problem.
Gail: Yes, logically, insightfully, mediately, succinctly and, even for this subject, lovingly put:. So I conclude: “We’re doomed. … Your are never more lovely than your are now (Homer).”. And Fast Eddy (the crew waiting) chimes in with his usual guardianship of this our virtual community of like minds. How do we console each other with honesty, respect, and loyalty? How do we encourage each other with strength and happiness? How do we join in this therapy. In the end, I think, most of us our informed mainly by the Buddha, the Western Enlightenment, for me personally by Don Cupitt (http://www.doncupitt.com/don-cupitt ), and I think some of the sayings of I’shoa (Aramaic for Jesus: “Do what you would want”), and let’s not forget Saul of Tarsus: “Do good to all while we have time.”. Now is the time for us to speak out what we love and cherish and to do what we speak. Don says to shine like the sun from the first waking, I add like the moon and stars – Solar, Lunar, Stellar Living. Guy Mcpherson says: “Be with the person you’re with.” – And I dadd really with them!”.
Or… we need to lash the hopium out of people so that they realize the end game is extinction …. and get on with the dissecting the dying carcass of BAU…. while continuing with our pre-wake (and bucket list) dedicated to the end of BAU … understanding that the pre-wake is also our wake….
https://youtu.be/tJpkg8wMEbE
I don’t have any hope. I relinquished that a few years back. Not a difficult thing to do when you are a Spurs fan. And I don’t have a bucket list. I just have a long list of chores and projects to get done on the homestead. It passes the time very pleasantly.
Thank you for guarding this site from waste-of-time hopium and thus allowing it to be, as you say, a therapeutic forum for us. I like to think your loyalty to this forum indicates you’re self-actualising into authenticity and self-acceptance. A joy to read your posts. We’ve got no worries now with heartbeat at one pulse a minute having been blasted into satori by the ego-shattering realisation of how little time we have before the end. It’s been so healing for me after having twisted and turned through the stages of grief I experience from 1998 on when I first realised collapse was inevitably coming. I find now I’m much more generous, equanimous, humorous, happy, and whole-hearted. Action without any attachment. Like you I have a beach shack, mine only a few minutes walk to the centre of this most delightful beach and river tourist town in South Western Australia. When armed military appear in front of the supermarket, electricity and petrol are rationed and then cut off, water stops coming out the taps, I’m thinking of going out quietly – maybe helium or nembutal – but need to buy soon I think.
There is a certain inner and outer peace that goes with acceptance of the situation…. as if a weight has been lifted… the burden of ‘what to do’ about this vapourizes…
Thanks for your thoughts, and your link. We certainly do live in a challenging time! While there is a chance that some of us will make it through the bottle neck ahead, there is a good chance that most of us will not. Somehow, we need to be thinking through the implications for our lives, and making the best use we can of the time we have left.
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“Nope, Gail. If it had happened in the 80’s, a really large number of mammalian species would have survived. Now, there will likely be no mammals. If BAU continues into the 2020’s or 2030’s there will likely be nothing more sophisticated than a lichen left on land. The quicker the collapse comes and the steeper the crash the better.”
Yup. There were spent fuel ponds in the 80’s
We don’t have a very good understanding of exactly what goes wrong, and how that starts a whole chain of events. You may be right–spent fuel pools may have a very profound influence. On the other hand, mutation often produces changes that allow modified species to live in conditions where no species could live today.
Yes, if bacteria can survive in total darkness at the bottom of the ocean living off of hydrothermal vents of boiling water, then creatures can also adapt to the radiation from spent fuel ponds. Might take awhile before they evolve into something like a land based mammal though.
Agreed!
Thank you, Gail for this post.
But I am afraid I do not understand:
Figure 1
“Between 2008 and 2015, only 17% of “Gross Capital Investment” actually became “Net Capital Investment.” With this small amount of true addition to capital investment, it shouldn’t be surprising that what seems to be “productive investment” doesn’t really raise productivity by much. It mostly raises the debt level, without necessarily providing a corresponding benefit to the economy.”
I read the figure as replacement + net investment = 17 %, but net investment per se is only approximately 4 % of the gross capital investment and replacement approximately 13 %. (?)
(‘energy gradient’ is the same as ‘opportunity gradient’, I suppose?)
To calculate the amounts I show here, I had to subtract Household Capital investment (new homes and apartments) from the total. When I added up the dollar amounts for 2008 to 2015, I calculate that net investment is only 17% of gross investment. I don’t know where you got the 13%.
Regarding “energy gradient” and “opportunity gradient,” these are two very closely related ideas with very closely related amounts. Since I hadn’t talked about energy gradients vs opportunity gradients, I changed the two “energy gradient” references to “opportunity gradients.” Thanks for pointing this out!
Thanks for the new article
brilliant post… This article should be tagged “Explain like I am a five year old.” I think an Actuary, armed with systemic thinking, has a better understanding of economy than the so-called ‘economists’.
Here in the UK, Mark Carney, Head of the Bank of England, has been puzzling aloud about the stagnant wages and productivity that have given our economy the first ‘lost decade’ since the mid 19th century. Chief Economist, Andy Haldane, is talking up negative interest rates and a cashless economy. Clearly they both know something is amiss but neither of them are showing any sign of understanding that energetic and planetary limits underlie our current economic malaise.
I did note though that William White, Chairman of the Economic and Development Review Committee at the OECD in Paris, has been making some sensible pronouncements about the self-organising nature of the global economy:
“The error is that we assume the economy is a kind of machine that is both understandable in terms of its operation, and therefore controllable,” White said. “The economy is not understandable and controllable. It’s not a machine. … It’s a complex adaptive system. And it’s a system that is so complicated, and so constantly changing, that it’s just naïve to think that you can understand it, much less control it.”
http://www.financialsense.com/contributors/william-white/negative-side-effects-ultra-easy-money
But I suppose it hardly matters at this juncture what our leading economists have to say, as there doesn’t seem to be much that can be done by way of mitigation, and sounding the alarm would only hasten the end by puncturing the ill-founded confidence that is allowing the system to maintain its remarkable levitating act.
‘Clearly they both know something is amiss but neither of them are showing any sign of understanding that energetic and planetary limits underlie our current economic malaise.’
They would be aware that the break even price on a barrel of oil is $120+
They would understand that the economy cannot function for very long if oil were priced where producers could make a profit.
They cannot exactly come out and say ‘we’ve run out of cheap to produce oil — enjoy the little time you have left’
Remember what Bernanke said when he stepped down … something to the effect ‘I know a lot of people hate me for what I have done — but when you someday understand why I did these things – you will thank me’
Translate — what I have done has delayed extinction for some years — when the moment comes — I will be a hero.
That is as close as it comes to admitting what the problem is….
Imagine being these high officials and knowing the deal — and having to keep a straight face at press conferences…. the pressure must be incredible….
Yes, if the truth was more widely distributed, I fear collapse would come much sooner.
Agreed!
FE-
Right on. I was driving down the road with a younger guy I work with yesterday after a meeting. He was talking about investments and pensions and whatnot. I didn’t have the heart to burst his bubble. On a lighter note, I got a new crosscut saw and bucked about five days worth of maple for heating in about two hours. Anyone planning to be batting in the final innings needs one of these set up properly.
also remember fast eddie what bernanke said later on when he was asked about interest rates where they were heading in the years to come and his reply was interest rates would never reach 4% at the fed in his lifetime, http://www.reuters.com/article/us-usa-fed-bernanke-insight-idUSBREA4F0OG20140516
and that is why lads a seneca cliff collapse is not on the cards because our saviours the elites have a plan
Let’s hope its a cunning plan.
https://youtu.be/AsXKS8Nyu8Q
Maybe Bernanke understands that rising interest rates would cause the economy to collapse.
Thanks for the information! Since William White is interested in complex adaptive systems, I sent the BIS a link, and suggested that William White might be interested in my article. Don’t know whether it will actually get to him, but I tried.
Thanks! Perhaps not having the standard brainwashing of economists is helpful.
https://videos.files.wordpress.com/Ky3EBvKz/is-it-possible-to-decouple-economic-wealth-from-carbon-dioxide-emission-rates-part-i_merge_std.mp4
Thanks Gail! Fantastic article! Here is also an interesting video for those who are also concerned about the climate change problem. Tim Garrett effectively argues that we can’t reduce CO2 levels. I think it ties in nicely with your story on renewables not helping.
https://videos.files.wordpress.com/Ky3EBvKz/is-it-possible-to-decouple-economic-wealth-from-carbon-dioxide-emission-rates-part-i_merge_std.mp4
Thanks for the link. I am familiar with the paper that Tim Garrett’s talk relates to. Perhaps I can share this post with him. I have corresponded with him in the past.
Fig.2 (comparison of DPI and GDP growths) is breathtaking, both for close correlation and for long-term trend since 1980. Talk about leverage.
That was my “Wow” graph. I had discovered a similar phenomenon, on a shorter time series earlier. In fact, I had tried some variations, and discovered they were not very close.
Leverage and a lot of faith.
Debt is issued with the expectation that labor and resources, some of which are embodied in previously developed machines and technologies, will be available to repay the debt. This draws on the future, so in effect if the debt is indeed pulling then the future labor and unexploited resources are the ‘stake in the ground’ to which the debt rope is tied. In reality the primary unexploited resource has always been an energy source. Before fossil fuels it was solar, animal and human energy. It is the diminishing supply of available energy (especially on a per capita basis) that has concurrently diminished the net result of using debt for growth.
I agree. Good way of describing the situation!
@edwinlloyd: It is a good thing that most folks don’t understand this. Otherwise, collapse would have already occurred due to loss of confidence.
Great one Gail, Thanks,
but… where is point (4) ? 😉
Never easy to deal with time, however you made a good demonstration that the economy runs on expectations.
This shouldn’t be surprising, since this time-lag between cause and effect (aka Hysteresis) is actually what pulls everything forward (and btw makes the transformations irreversible, 2nd law of TDs).
I fixed the point numbering. This is not the first time. I have English majors helping me with the English, but counting can get overlooked.
Hysteresis has not been part of my vocabulary. It sounds like something I should get more familiar with. This write up says
For that to happen in the current situation, we would need to include both the rise and collapse of systems using debt.
There definitely is a problem with transformations not being reversible in the Economy, too. Even though Hubbert wanted to “reverse combustion,” no one has come up with a way to do it.
Wrt Hysteresis, the paper you link to seems very complicated (to me).
It’s all moving and non-linear, so I’d rather stick to more basic definition and quote some parts of the wikipedia article:
Etymologically, hysteresis means “lagging behind”, so it can be seen as the effect of the inertia of a system, that takes some time to adapt to changed conditions.
“Hysteresis can be a dynamic lag between an input and an output that disappears if the input is varied more slowly.
(…)
This kind of hysteresis is often referred to as rate-dependent hysteresis. If the input is reduced to zero, the output continues to respond for a finite time. This constitutes a memory of the past, but a limited one because it disappears as the output decays to zero. The phase lag depends on the frequency of the input, and goes to zero as the frequency decreases.
When rate-dependent hysteresis is due to dissipative effects like friction, it is associated with power loss.
(…)
Energy: When hysteresis occurs with extensive and intensive variables, the work done on the system is the area under the hysteresis graph.”
(work done = quantity of energy dissipated)
https://en.m.wikipedia.org/wiki/Hysteresis
I see it as a sort of gradient between a system and its environment. The bigger the distance, the more energy has to be dissipated (by the system in order to adapt to he changeing environment). If the distance becomes too big, or if the energy is no longer available, the system breaks down.
It’s a bit tricky when the changes of the environment are caused by energy dissipation (rather, entropy production), because the system has to dissipate more energy, which speeds up the changes and then pushes the system to increase its energy dissipation. Red Queen Effect.
As for the relation with debt, I think obvious that our environment is now changeing too rapidly for our systems to adapt, especially if the energy becomes more difficult to obtain. The growth is made of debt, not of increase of real economy (at least since 2008), which means that we’re merely borrowing time, waiting for the trigger to squeeze.
Thanks! I went back and read the rest of the article. It seems like it has become the buzzword in a number of different field.
Gail,
Maybe my interpretation of hysteresis is plain wrong. If so, it’s likely because of the notion of cycles, around which I’ve hard time to wrap my mind.
François Roddier says the economies (today: the economy) follow 4-phase cycles (expansion, stagflation, collapse, depression, and again) around the critical point, which behaves like a strange attractor (https://en.m.wikipedia.org/wiki/Attractor). Not really simple to connect all that together, but it makes sense.
François Roddier’s statement is consistent with (and perhaps based on) the work of Turchin and Nefedov in Secular Cycles.
The way that future promises (including debt) pull the economy along seems to me to be stronger than the simple lagging-behind phenomenon, noted in practically every field, called hysteresis. Instead, we have a situation in which extra energy that can be dissipated can be captured by the rising debt amount, as long as the opportunity gradient is positive. This pulls the system forward.
In a way, it is the difference between (a) an ecosystem that doesn’t contain humans and (b) a human economy. An ecosystem has the same lag effect, but it cannot capture energy from outside the system. As long as additional debt can be used to capture additional energy to pull the economy forward, it has an advantage. As the opportunity gradient fades, an economy enters stagflation and then collapse.
So I see a different phenomenon here than the simple lagging behind effect.
It also seemed to me as two different phenomena, but in order to be pulled forward (like the economy), you need something that pulls (ie some kind of attractor).
What -I think- makes the difference is the cycle (or I don’t know how to integrate it). Is it because we’re dealing with a multidimensional space (“of phases”) where the lines are never straight..?
Your concept of opportunity gradient is very interesting, because it introduces the notion of time, in the form of perspective for the future: more energy will likely be dissipated, or less (I actually thought of something very similar, about the perimeter of cooperation, defined not only by present energy rate, but also by future chances of increase or decrease).
Then you have the question of the reason why this opportunity gradient (or return on investment, or efficiency of the debt) fades at the end of the expansion period. We know it’s because of diminishing returns and other effects of the entropy we cannot expel ; so we try to mask/replace the lack of future energy with exponentially increased debt. Couldn’t that be interpreted as the result of changes in the parameters of the attractor..?
NB: rhetorical, speculative and open questions that don’t call any answer.
The total amount extracted is pretty much determined by (a) fossil fuel supplies available, and the energy/entropy distribution of extracting them; (b) other energy supplies available (solar, nuclear, etc.), and the energy/entropy distribution of extracting and appropriately concentrating them, and (c) the lower limit on interest charges, as the return on investment falls.
Clearly, the ultimate amount of concern is the return on human labor, for those at the bottom of the hierarchy. Once this falls too low, the whole system collapses.
Most impressed with this article. It feels like THE book, or an important part of it. 🙂
I was surprised at how well it turned out. I didn’t really think of the circulatory-heart analogy and the sensory system analogy, until I got the rest of the post put together.
I started with my usual approach of putting together a few charts for my new post. I kind of said “wow!” when I saw a couple of them. I then thought of some older charts I could update to add to the collection.
I need to figure out appropriate people to send copies of the article to. It would also be would nice to make a book too, but I am less sure about that.
Just a couple of corrections here. It should not be “surprising” that “cash is debt” Of course it is. All forms of money are IOU’s, promises to pay. Dollars don’t actually exist, they denote the level of debts and promises to pay. You never actually own a dollar in today’s fiat money system.
Governments make “promises for future benefits”. These are not debts and certainly not “unfunded liabilities”. When the need to pay a pension etc arises, the Federal government can simply “write a cheque” in full , every and any time into the future. Future liabilities like future wealth can be ignored. They don’t exist in the here and now, just a possible future position.
We will collapse when borrowing, credit and debts no longer represent a way forward to prosperity. Our economic system can only grow. It cannot function in reverse.
Here’s a link to a news article in broadcaster ABC’s efforts today. The author attempts to link the prevailing lies with the poor performance of politicians and economists;
http://www.abc.net.au/news/2016-12-08/the-great-living-within-our-means-con/8064268?pfmredir=sm
It’s unusual to find a truth telling article in the MSM. Normally they are complicit with the PTB.
Of course, when the Ponzi Scheme stops, there will be an even bigger pile of unpayable debt. But more debt does tend to keep the system operating longer.
“Debt that can’t be paid won’t be paid” Michael Hudson/Steve Keen.
We all agree on this one!
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I never said I wasn’t doomer. Merely, my posts have been about integrating some uncomfortable facts of sociology and human dynamics into our understanding of collapse. Gail’s blog is one of the few remaining places we can discuss this. To her credit she doesn’t delete everything. Meanwhile, other sites like zerohedge are drowning in irrelevance and conspiracy, while the oil drum is history.
For example, I have pointed out repeatedly here that capitalists and hebrews play for keeps, for total control. They have zero interest in you, you are commodified labor, and there are billions of you across the planet. Do you think they are going to just disappear because of peak oil? No, they are going to double down on everything, as the last 8 years proves, and shift and inflate the debt around, while they foreclose on your lifestyle and use the media to proclaim that we just need to tax you more to educate the blacks, and then we’ll have nuclear fusion plants and spaceships.
It’s all about keeping the useful little workers in line. This is why, for example, Trump won’t do anything about immigration. It’s just play to get elected by the white workers, even when the American capital system desperately needs cheap Mexican and Asian workers.
It is an unfortunate fact of history that there are specific groups that are on top, and others that are at the bottom. The relative placement of these groups varies over time. Whenever there are negative comments about one or another groups, I start getting e-mails from people who are upset by the characterization of their group. The whole topic is not an accepted topic for discussion currently.
That said, there is a complexity-related reason why the Jews came out on top in the financial arena. As I understand the situation, when the Jews returned to Israel in 538 BC after their captivity in Babylon for many years, they found that their farms and other businesses had been taken over by others. They needed to find a new way of life. They also were moderately educated, and seemed to understand the need for debt to pull the economy forward. They needed to find new professions, and discovered that the financial sector was one area open for potential growth.
The instruction in Deuteronomy is ambiguous about whether interest could be charged.
Deuteronomy 23:19 Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest.
Deuteronomy 23:20 Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the LORD thy God may bless thee in all that thou put test thy hand unto, in the land whither thou goest in to possess it.
A later parable by Jesus seems to suggest that it is OK to take interest:
Matthew 25:27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.
Clearly, there is a need for interest (or a substitute, such as dividends on stock) on loans. If those who make loans are able to include an amount for themselves, on top of the required increment, it is clearly a way to enrich one’s self. Thus, it is a way to pull money/resources out of the system for one’s self. Needless to say, with the big possibility for self-enrichment, it is not a way to make a group popular with other groups.
The use of debts with interest was widespread by the time the Jews got involved. Wikipedia says, “Among the Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and often fixed by the state.” But Israel and other areas without regulation seemed to have problems. Wikipedia mentions the following religious leaders and philosophers denouncing the use of usury, in the original sense of meaning, “any interest at all”: Moses, Plato, Aristotle, Cato, Cicero, Seneca, Aquinas, Muhammad, Jesus, Philo, and Gautama Buddha.
I expect that at least part of the historical reason that Jews have tended to stay in positions related to making loans is because Christians didn’t want anything to do with debt. In fact, fairly early any collection of interest was declared to be “theft.” This clearly doesn’t work. It is sort of like the Kyoto protocol in 1997 damning carbon emissions. This also clearly doesn’t work, either, but it makes those in charge feel virtuous.
When one group outlaws something that is clearly necessary, it leaves a huge vacuum for others to enter. The 1997 Kyoto protocol indirectly encouraged the developed economies to send their high emissions industries to countries with lots of coal availability. The Christian prohibition on interest effectively forced loan making outside of the system, to an unregulated system which Jewish people tended to oversee. A much better approach in both cases would seem to have been proper regulation, rather than unrealistic demands forcing those outside the system to take over to handle the need in whatever way they saw fit.
The Jews found a niche to fill. Persecution helped reinforce their strong family ties, and these strong family ties help the Jews to prosper, despite persecution. (I know that Dmitry Orlov talks about persecution being helpful for long-term success of a group.)
It is sort of an unfortunate situation, but if all economies are dissipative structures, someone needs to figure out a way to make debt and debt-like structures work, and that requires a lot of lending with interest. The abdication of the Christian community of a suitable role in this helped sustain the long term Jewish role.
A somewhat related thought comes to mind: When it comes to “Jobs Rated” in the US, “Actuary” comes out very close to the top. In fact it is #1 in 2015, and I think it is in most years as well. Actuaries are people who work with interest assumptions and make financial forecasts. They are very much part of this interest-related world, insurance companies and pension plans (in a very different way than economists, who seem to be more theoreticians, and more tied to academics). Is it simply a coincidence that Actuaries have come out on top? Jews may have come out on top for a similar reason. Having a significant exposure to the wealth that is added to the economy is good for the incomes of those working in that area. But there is not as bad an anti-actuary sentiment as there is an anti-jewish sentiment.
How interesting, Gail. Ashkenazim tend to do well in IQ tests and have a higher per capita incidence of genius than other races, and this may well be because historically circumstances pushed them into professional roles that require a high degree of intelligence:
“Ashkenazim generally do well in IQ tests, scoring 12-15 points above the mean value of 100, and have contributed disproportionately to the intellectual and cultural life of the West…
“What can, be shown from the historical records is that European Jews at the top of their professions in the Middle Ages raised more children to adulthood than those at the bottom. Of course, that was true of successful gentiles as well. But in the Middle Ages, success in Christian society tended to be violently aristocratic (warfare and land), rather than peacefully meritocratic (banking and trade).
“Put these two things together—a correlation of intelligence and success, and a correlation of success and fecundity—and you have circumstances that favour the spread of genes that enhance intelligence.”
http://www.economist.com/node/4032638
What is intelligence? It’s… what is measured by IQ tests… Intelligence, in the way you are using the word, is only a three centuries old social construction
Btw, the owners of The Economist are… Jews, did you know that?
See Tiger Moms…. if as a group you have a relentless focus on education … you will likely produce a disproportionate amount of ‘professionals’ —- if you run the world — there are likely to be large numbers from your group in high positions.
I do not believe that any group of people are genetically endowed with higher levels of intelligence.
I think some ethnicities have a different mix of abilities. The Asian people seem to do amazingly well on computational math exams, for example. I don’t know why, except that order has been highly valued in Southeast Asia for a long time, perhaps leading to selection for that trait.
When I visited Cuba, I was told that Africa slaves were imported to work in the sugar cane, because they were able to work longer hours in the hot sun than others. If they come from a warm part of the world, I can almost believe that would be the cases.
I suggest reading Outliers ….. http://gladwell.com/outliers/
The author was at a hockey game and noticed that most of the players were born in the first quarter of the year….
He thought that was strange — but then he thought about it and he determined that the reason for this was that if you are born in January … you are almost a year older than someone born in December…
You are likely to be more physically and mentally advanced … you are likely to be selected for the top teams …. get the best coaching etc etc…
He comes up with interesting theories on all sorts of things – including why some Asians are good at math…
Another thing he suggests is that you do not need to have a seriously high IQ to succeed — in fact he discusses a man with the highest IQ ever – near 200 — who is a total failure….
What he concludes is that 125 is sufficient to propel you to wherever you want to go in life…. at this point other factors determine where you end up …. effort, passion, good teachers,. good role models, diligence, luck, willingness to take risks … etc etc…
Self organization seems to work in strange ways. I understand that Gladwell’s book is quite anecdotal, but that seems to be the way that the system works too–different from case to case.
There is something else… I have a Jewish friend, who is also an expert (in academical and social terms) on Jewishness. Many years ago we were discussing his first paper on the subject, and he remarked most of the sons of the Jews that migrated to Argentina (the first generation born here) studied medicine or engeneering, but almost no law.
I told him it was because, as a landless people, Jews tend much more to the most universalistic disciplines, and law is very localised: you can move to another country and a bone will still be a bone, as Iron will still be the 26th element; but, while the principles of law are somewhat the same everywhere, the codes and the articles are completely different, and a lawyer that moves to another country must almost get back to high school
He agreed. So, it’s not that Jews are more intelligent, it’s rather that they cultivate the more universalistic forms of intelligence
Of course, reg. politics they’re the antipodes of Aristotle
You can summarise this reasoning simply by seeing that to make money you need to be where the money is concentrated.
Very good summary, Gail.
The parallel with the Kyoto agreement seems very apt, and makes me think of Judaism as an externality of Christianism (and likely other religions as well).
Another example where narrow thinking eventually leads to problems.
Thanks! Each group seems to think in what theoretically might be best for their own group, without understanding the overall problem.
Debt as a pull to propel the economy forward is a nice concept – it makes me picture a sail boat which we are frantically adding new sails to keep the boat moving as we charter “lower density” winds… Each one propelled by more hot air/ promises of what can be created given the resources on the boat…
Meanwhile we add more crew & throw our rubbish into increasingly murky water. At some minimum wind speed, all the sails will collapse.
Good analogy!
Investments can include everything from land leases and equipment to the pizza parlor down the street. We tend to think these things are of lasting value and that sometime in the future someone will buy the house or the business, retiring the old debt and creating new debt to be serviced, in a continuous cycle. In their myriad forms investments all serve as conduits to accomplish the reduction of high-grade fuel to waste heat. The long-lasting value was in the fuel deposits and by making an investment in the stuff of civilization, you are not increasing value, but are making an investment in destroying it. As the energy flows through the conduits everyone seems to be making money, but in reality the wealth is going up in smoke. The civilization is simply the heat engine, the conduit (machinery) between stored energy and waste heat. Since we have evolved in body and mind to function within this heat engine and are destroying our former habitat as we get “rich”, there should be quite an unpleasant surprise when all investments fail to achieve their goal of turning more fuel into waste heat.
At some point, especially considering increasing complexity, the tools and infrastructure necessary to turn more fuel into waste heat cannot be supported by the energy content of the fuel. We are at the point of turning to low-grade deposits of fuel like oil fracking, shale and tar sands. When the jig is up the uninvested funds disappear and the conduits (infrastructure) dies and undergoes entropic decay. Eventually you’re back to the sun but on a planet where most of the plants have been wiped-out by climate change along with the food chain that fed on them. That’s going to be really rich.
Yes this is right. But the question is, how long does this process take.
Human extinction from climate change could come as soon as 5 to 10 years although hardly any scientists are saying this; I believe that almost all of them are being too conservative and it appears that estimates for catastrophe are frequently being updated to a sooner time frame.
This year is looking like it’ll finish as the hottest in our records, at +1.2C above an 1880 baseline; it is theorized that +2C or higher is needed to eradicate our food sources. If the temperature increase mimics the exponentially rising CO2 then we could be just starting a rapid climb.
There are also some pretty scary things happening. The ice sheets are in some sort of free-fall in what appears to be an Arctic state change. Yesterday air temperatures in the Arctic were close to 55 Fahrenheit above average in some spots. In the Arctic nobody really cares since like 800 people dwell there. If it were all of a sudden 100 degrees right now though in Oregon on December 9th, I can guarantee you people would be absolutely losing their minds.
https://robertscribbler.com/2016/12/07/arctic-air-temperatures-are-set-to-hit-35-to-55-f-above-average-by-thursday-out-of-season-sea-ice-melt-possible-again/
https://sites.google.com/site/arctischepinguin/home/sea-ice-extent-area/grf/nsidc_global_area_byyear_b.png
James,
I like your biological point of view, and the way you put it.
http://megacancer.com/
I presume that is a link to Commenter James’ website.
Yes, looks like I’ve been a bit lazy.
Megacancer is a good read, including the comment section.
Been lurking on this site for years now, but had to reply to your comment. Great way of summing up our modern civilization! The richer we get, the poorer we are.
James, you have a good way of describing how our system works. Obviously, as we get to all of this, we end up with a lot of debt and a lot of shares of stock that act a lot like debt. Unfortunately, their total value is zero.
Yes I agree. Increasing debt is representative of money in the bank. Releasing the debt into the market place in one way or another would devalue marketed products and the work to create them. Energy of course is one of the many products or commodities if you like. The various stock markets are storing an unimagined and unrealised amount of debt. If that debt gets “realised” in one form or another, the crash would be monumental to say the least.
if the elites have a masterplan to solve humanities little problems it seems that the next phase is ready to be rolled out namely for selected world governments to massively increase their deficits to increase growth. http://www.politico.com/story/2016/11/deficit-donald-trump-republicans-231372
Increasing deficit spending seems to have been part of what keep the world economy from completely crashing in 2008. May not be a bad idea to try now as well, bizarre as that idea might seem.
that is our only hope l.thurmon renewable energy along with a lower world population the fossil fuels wont be around forever so clean renewable energy is the way to go forward
Very interested in the “clean renewable energy”. What we will be using, especially as “the fossil fuels won’t be around forever”. I don’t think you mean trees, they don’t burn cleanly, you might mean humans and pack animals……yes that must be it.
solar , wind and tidal energy with batteries that will be recharged at least 250 000 times ,
Which would not fit in with your phrase “clean renewable energy”. Not clean due to manufacturing processes being polluting. Not renewable due to dependence upon finite depletable non-renewable resources (including oil, among many others).
Did Keith give you some?
Building all of this can’t take many resources either.
LOL!
See my comment to Thurmon. We don’t really have a way of doing the renewable energy cheaply enough, though, when you count solar panels, batteries, inverters, and multiple replacements for all of these things. And renewables are not really all that clean–pollution of different kinds is a problem. We moved this pollution to China for now, but on the scale we are talking about, it would need to be more widespread. At some point, we run into diminishing returns on the materials used as well. Recycling requires energy as well, and always results in materials loss.
Another post! Let’s celebrate:
https://www.youtube.com/watch?v=5EveM3kZT08
That will remind dolph of his youth. 😉 Because the good times don’t and won’t last, you know.
The good times may just be beginning if you want to see this system crushed.
Only a mad man would want to see the system crushed. It may very well be like The Road, but with radiation poisoning and all the trees cut down and burnt.
I guess it depends on what we’re talking about, Matthew, such as if the system is already fundamentally corrupt to the core and crushing the planet.
But yes, the dystem has us by the ball (the planet), so maybe we can both crush it and save our ball in the process.
Part of the process has to be equability and transcending pseudoleaders. (Have you looked at Loomio?)
The Road doesn’t have to happen and there may still be nuclear guys to take care of things. The longer we dillydally, however, the closer to The Road (or worse) things may become.
On a potentially-positive note, in the realtime Emoji Tracker for Twitter, the heart emojis appear to be edging out the tears. So maybe there’s hope.
I’ll wrap up my comment in honor of our recently-departed, Leonard Cohen in speaking of the future; “Love is the only engine of survival…”.
I’ll start and finish with a song for my first post of the day….
Maybe more along the lines of tough love, Fast Eddy, like how Mother Nature might dole it out where some of her kids, who should know better, still don’t play fair…
Follow the bouncing bean…
https://youtu.be/A4wdbibV3IM
I bet you won’t be saying this when you see what the implications are of crushing the system….
Ahhh, the poor humans will suffer…that’s too bad…
Like we don’t deserve to…OY
Actually it’s likely to the point that everything will die except jelly fish, cockroaches, and bacteria in the next few years. We’re much too busy arguing about who gets to go peepee in which bathroom to be able to reverse an extinction rate that is outpacing the dinosaur’s.
Sorry I can’t get posts together more quickly. As with a battery, I need a recharge time, for more ideas to gel. Also, I have a bunch of non-OurFiniteWorld.com commitments.
The video is cute!
I follow your posts and find much to think and ponder about. Also, I do not doubt your thoughts and comments about renewable energy, but recently I saw one of Elon Musk’s comments about a typical Nuclear plant along with it’s setback requirements requires about a 5 square kilometers footprint and an equivalent installation of solar panels would generate approx. the same power as the nuclear plant. There are many ways of poking holes in this like the sun doesn’t shine all the time and you need large batteries to continue providing that power at night, yada yada yada ….. but the cost is less than one tenth the nuclear plant and you’ll not be generating plutonium or need to continuously cool spent rods, etc. etc. – Shouldn’t we be working toward power generating solutions now given the dangers of nuclear and the finite amount of fossil energy remaining?
Solar and Wind should still be limited scale R&D projects, I think. Rolling out a bunch of stuff that will never pay for itself and becomes obsolete in 5 years seems far more wasteful than beneficial.
The bigger problem is either working with the greatly increased expense of making intermittent renewables dispatchable, or changing from an on-demand grid to decentralized on-supply power. Currently, it seems that once you add batteries or molten salt or any other storage, the facility may never generate a net return on energy, money, or GHG emissions.
There is no way we can maintain our electric grid for very long. It doesn’t make sense to go to great expense to mitigate intermittency to put solar and wind on the grid.
If anyone wants to have it, it needs to be a strictly local project. I can’t see a reason for governments to subsidize it either.
It is absolutely necessary to have batteries or some equivalent to go with the solar energy. Also inverters with the capability of getting the electricity up to true grid standards–not some lower half-way point. And even with this, all it gives us is electricity. We really need oil, natural gas, and coal, to operate existing equipment that use these materials directly (coal less than the others, but it still is used directly in China, India, and other countries).
It would also be necessary to have replacement batteries on a regular basis, and ways of handling all of the waste.
Current nuclear operating costs is not a good base for any kind of comparison. We need wholesale electricity costs in the 2 cents per kWh range to make any sense at all. There is no chance that this arrangement would come out in this range. The 2 cents would need to include taxes paid to governments as well, including real estate taxes, taxes on profits, and other taxes, to compensate for loss of taxes on other kinds of energy production.
One counter-example is the growing co-op movement.
Corporations are generally required, by law to operate in such a way as to maximize return on investment. They are legally obliged to conduct themselves in a way that damages carrying capacity for future generations!
On the other hand, cooperatives (and some other legal entities, such as limited-liability partnerships) can be chartered for any legal purpose, including social or ecological goals. Here’s our “purpose” as filed with the British Columbia Corporate Registry:
We restrict financial return in our co-op to share equity equal to or less than the rate of inflation. Our “red herring” notes that the best your financial investment will ever do is keep up with inflation! And even then, it’s in the form of an incremental stock split, not a cash payment.
However, our “return on investment” is clean air, fresh water, and healthy, organic food, in a low-carbon life-style. What’s that worth? In a world where everyone knows the price of everything and the value of nothing, I’d say, “priceless.”
Getting back to the topic, our intent is to limit or eliminate the speculative value of our property such that “investment growth” is no longer part of the equation. Needless to say, it’s a hard sell. 🙁
(Because of noise, I am not subscribing to comments here. Let me know off-line if you’d like me to respond to something here.)
What you are saying sounds very noble; it is the practical application that seems to me to be difficult.
My guess is the issue you will have is that most of the people who will subscribe to this kind of investment will be ones who are older, and thus cannot contribute greatly to the work involved. It will make it hard to find enough able-bodied people to keep the operation going.
Also, the existence of natural variability requires says that considerable surpluses need to be built up in good years to compensate for bad years. We have gotten away from this idea, with government catastrophe programs and insurance programs. But without these, your group need much larger surpluses. Furthermore, these surpluses need to be in goods (food, extra equipment to replace future breakdowns, etc.). Your accounting needs to have a way of showing your buildup of surpluses as “reserves,” rather than as a financial gain–otherwise you are guaranteed to have problems.
You also need to think about what you do with feeding/taking care of people who are no longer able-bodied. Hunter gatherers seemed to simply leave them behind. If you plan to keep non-able bodied people on, you need to structure your program to handle this contingency.
I don’t know whether as a practical matter, this approach will come out differently than any other one. Without fossil fuels, it is very difficult for people to do more than meet very basic requirements for food and energy.
More jibber jabber from hobby farmers who have no idea what awaits them post BAU.
They assume – or delude themselves – that things will be so Little House on the Prairie post BAU…
They cut their wood with chain saws… they wash their clothes in an electric machine … the pop into town to buy a toothbrush … they use a lawn mower and weed whacker…. they haul stuff around the farm using a truck… they cook over a proper stove — they have hot water on demand…. the lights go on when the switch is flicked… the fridge keeps the food cool…. they preserve food replacing the seals each year with new ones from Walmart…. they go to the doctor and dentist…. they brew coffee in the morning …. they sometimes go to the market or to a restaurant
They take for granted the security that BAU offers them without understanding how fragile that is….
It all seems so wonderful! It is wonderful…. it feels so… so … Scott Nearing….. cement and pick up truck wonderful….
Unfortunately when the plug is removed from the BAU socket…. it will all change to drudgery … misery … deprivation … hunger… violence… disease … spent fuel ponds…
Oh well… carry on believing otherwise….
The fridge is the metaphor for BAU…. remember to always keep it plugged in…. to do otherwise would be to invite in the demons that shatter your little Koombaya world….
I can’t understand why you think life without electricity is all drudgery. I’ve taken your challenge and gone well over a week with no power, no gas, hauled water, no toilet but the woods and no refrigeration. If is far from the end of the world. In fact, it brings people together because you have to work together to get things done. We evolved in a world without electricity. Yes, we could get sick and die or break a bone or have a crop failure and starve to death too, but that is life. My father grew up without electricity, a guy I work with is 62 and had no electricity until his teens and even then it was used for lights only for some time. We were laughing the other day about being the one who had to empty the bowl that people used without spilling it. Hay was cut with a scythe, saws and axes for wood, oars for the boat, the well to keep things cool in summer, drying, salting, smoking and canning meat. Work was seasonal and visiting and story telling was a huge part of life. People can be perfectly happy this way.
The additional energy of coal, oil and electricity allowed for the immense quantitative and qualitative rise of the population. You can not expect that the easy old days will be back when the population goes down together with the energy.
MG-
Not in the least do I see the old days coming back. That culture is gone forever. We would be back to 1830 rather than 1930 if we are around at all. My point is that there were happy people in 1830 too.
“qualitative”?
Joebanana,
one can be happy even when they are going to kill you: it depends on how you view the reality.
Recently, I have read a story of a family in Slovakia during the WW2, when a German solder came to their home and announced them that he is going to kill them. The members of the family were neither suprised, nor freightened. One of them, humorously noted, that they are not complete, that the father is in the field, so they should sent somebody for him or wait a bit. He or she remarked, that, finally, they all will be liberated from the hard work in the fields. The German soldier said that he has not encountered anything like that before and let them live…
I have packed up my BAU sleeping bag and food and other kit and gone camping for a week as well — completely off grid. No big deal. It can be done easily
But I was supported by BAU — make no mistake…all my gear came from a factory… including my food.
I have also been on a 10 day trek into the most remote parts of Irian Jaya – a handful of people make it to such places each year …. fetid malarial swamps…. freezing hill tops … all in a day…. again I had my wonderful BAU back pack and other gear… but I suffered.
I was able to observe what people lived like who did not have anything from BAU…. it is misery.
People in the 1800’s had their own version of BAU — they had tools – they had energy and the relatively pure ores and the ability to make more tools… they had light from whale oil … they had healthy soils …. they had knowledge … and most importantly they had security — police, government, military…
And still – if you read accounts of the lives of people living during these times — they were extremely difficult – they suffered…. they often went hungry
You seem to think that it was like Little House on the Prairie…
The fact that you believe what you believe leads me to conclude that have not ever completely unplugged from BAU… you are half plugged in …at least
You’ve done a week? Try a month – try getting past the point where the pantry runs out … where you have to actually forage for everything you eat. Where you run out of clean clothes and have to start washing by hand…. when the soap runs out … when the clothes wear out..
Then you have to spend hours every day chopping and hauling wood — with an axe… you have to sharpen the axe…
Food… do you have a rifle – what happens when the bullets run out? What happens when the animals nearby are all hunted… and you have to start walking many miles to find kill …. and hauling your kill back many miles… you surely are aware that when animals hear gun shots they avoid those places…. they go deep into the forest.,…
Now try all of this in the middle of a Canadian winter.
Now imagine all of this without any security — no 911 — no prisons – no courts – no police – no military … only hunger… and desperation .. and darkness….
Think it through…. I have … I have tried a few items on the Challenge…. it is not Little House on the Prairie… Little House on the Prairie was not Little House on the Prairie… hard, experienced men suffered…. and died..
None of us are hard. None of us are experienced.
We go to Mountain Equipment Co-op … we buy thermals… and fishing rods… and canoes… and gas stoves… and high tech hiking boots… and down filled sleeping bags…and bug spray…. and the latest greatest tents… and various other gadgets….
And we walk into the bush like Eco Robo Cops…. and tell ourselves that we are tough bush men….
Not a single one of us would last a month without our BAU support team.
Fast-
I’ve packed moose out of the woods in pieces a long way, I work two jobs, one of them involves plenty of lifting heavy objects and in all weather. I know what hard work is. I’m the farthest thing from a preppy Mountain Equipment Co-op guy you could ask for. Plain old rubber boots for me. I expect to suffer like hell, the worst of it will be watching my children suffer. But I do hope to have moments of happiness through it all as well. You seem think anyone who says they might have a moment of happiness in the future is delusional.
Rubber boots come from factories….
Scythes and axes are not possible with fossil fuels (certainly with our depleted resources and level of population). Even now, I doubt that there are enough to go around for our large population. They will last a long time, but not forever. Then we will have to figure out what to do next.
These old timers would have still had a shop where they buy stuff… not exactly a Walmart… they had vehicles and petrol … doctors… hospitals… etc…. not the levels of convenience we do …
But they were living large compared to people who are completely unplugged…
http://i1.trekearth.com/photos/16358/hati.jpg
Post BAU there will be no energy – beyond wood – which is the energy that those people have access to — and that is why they live like they do …
Sure we will not run half naked … and we will have detritus of BAU to scavenge… but that’s about it…
The old timers will not recognize the post BAU world…. it will be far beyond their wildest nightmares…
And there will be no reset. It will not get better. In fact it will get worse — as the nearby wood supplies are burned up….
**** I am pretending this is not an extinction event… to humour those who think they can play Little House and live happily ever after
I can see that fridge incident has shaken you up. Out in the sticks, you could dig a root cellar. In NZ, that would probably give you 15 degrees year round. And if you had access to a spring of cold water, you could use that to cool your beer.
I would willingly give up my fridge if in exchange I could keep the rest of BAU. I’d toast that with warm champagne.
I could … but like everyone else who does not want to go there because it is too grim a thought…. (Fast Eddy Challenge) ….. I will go back to town tomorrow to buy more ice….
Ice is Life.
Root cellars — warm beer…. drudgery —- hunger —- disease — violence — no coffee …. if that is what my remaining days were to look like…. I’d prefer death…
Living just for the sake of saying I am alive is not my thing….
Anyone who disagrees….. has no idea what being unplugged really means…
FE said,
“Living just for the sake of saying I am alive is not my thing….”
Do you have a plan for bringing your death earlier at will once collapse reaches a certain point?
Mansoor
I purchased a very fast car about 4 months ago —- I have identified a very ominous rock cut… I have spray painted a large black X on that rock cut….
Some interesting comments from Mark Carney big man in “the bank of England” the other day. Not saying that I agree with his nuances or his “metanarrative” and totally ignoring the stuff about “robots are going to put us all out of a job”. The UK economy is centered around the “city of London” financial sector and 85% of jobs in the UK are in the service sector. That is one of the reasons why I say that the UK must be broken up now into totally independent and self-governing regions. The UK must end now. Everyone is working in some shop while the fat cat London js make all their money. It might have made sense back in the 16th century when William of Orange invaded with the Amsterdam bankers but this is getting really silly.
http://www.dailymail.co.uk/news/article-4003756/Robots-steal-15m-jobs-says-bank-chief-Doom-laden-Carney-warns-middle-classes-hollowed-new-technology.html
…
‘This was true of the eclipse of agriculture and cottage industry by the industrial revolution, the displacement of manufacturing by the service economy, and now the hollowing out of many of those middle-class services jobs.’
The Bank’s chief economist Andy Haldane warned in an earlier study that automation threatened much of the workforce – but said that hairdressers, carers and nannies were among the lower earners who were deemed to be safe.
Speaking at Liverpool John Moores University yesterday, the Governor also claimed workers had suffered ‘the first lost decade since the 1860s’, with living standards suffering the biggest squeeze since Dickensian times. Calling for the Government to tackle ‘staggering wealth inequalities’ through redistribution, he said: ‘Real wages are below where they were a decade ago – something that no one alive today has experienced before.’
The 51-year-old, who earns £874,000 a year, said globalisation has seen ‘the superstar and the lucky’ thrive while others have struggled. He said: ‘Now may be the time of the famous or fortunate, but what of the frustrated and frightened?
‘From the rising spectre of global terrorism to intensifying geopolitical tensions and financial crises, for too long, for far too many people, the world seems to be getting riskier. They are right.’
He added: ‘One of the things that I think contributes very understandably to the level of anxiety that households feel in this economy, in other economies, is the fact that it has for them been almost a lost decade of growth.
‘Real incomes in this country have not grown for the last ten years. That is incredible and that shines a light on inequality, inequalities that exist in this economy, exist in other economies and make people question what is being done to address those and what are the fundamental causes of those.’
Globally, the share of wealth held by the richest 1 per cent rose from a third in 2000 to half by 2010. In the UK, the income share of the top 1 per cent tripled from 5 per cent in the early 1980s to 15 per cent in 2009.
Canadian Mr Carney said a typical ‘millennial’ – someone who became an adult early this century – earned £8,000 less in their 20s than their predecessors had.
By contrast, since 2007, over-60s have seen their incomes rise at five times the rate of the population as a whole, he added.
‘Experience shows that when the economy enters recession, the poorest are hit the hardest,’ Mr Carney said.
‘During recessions the lower-skilled, lower-paid people tend to lose their jobs first. And recessions disproportionately affect the young.’
He added: ‘For free trade to benefit all requires some redistribution. We need to move towards more inclusive growth where everyone has a stake in globalisation.’
The Bank’s monetary policy committee (MPC) has come under fire for cutting rates to 0.25 per cent, with Theresa May criticising the ‘bad side effects’ of its policies.
But Mr Carney hit back, declaring: ‘Has monetary policy robbed savers to pay borrowers? Has the MPC been Robin Hood in reverse? In a word, no.’
Defending low interest rates, he added: ‘Monetary policy has been keeping the patient alive. It has averted depression and helped advanced economies live to fight another day so that measures to restore vitality can be taken.’
The Governor also warned a return of protectionism would be a disaster for the global economy – a concern which has grown since Donald Trump’s victory in the United States.
In his first major speech since the US presidential election last month, Mr Carney said: ‘Public support for open markets is under threat. Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk up front.’
Right. The UK is an example of where wealth disparities are occurring. High-wealth people don’t obtain a proportionally high amount of commodities for their spending, because they can only eat three meals a day, sleep in one bed per night, and drive one vehicle at a time. They can buy more expensive homes, and heat them better, and maybe have an extra home, but all of this does not increase their indirect commodity use proportionately.
Taxing these wealthy people more tends to bring on collapse quicker, I think. The funds (debt tokens) that these people do not spend will end up in the hands of people who could use them to try to buy more homes, cars, better food, and other things made with commodities, including energy commodities. Energy products that “work” for this purpose aren’t really available, however, so the additional funds in the hands of less wealthy will mostly bid up prices of commodities, without really raising production. These higher prices will defeat the benefit of the higher incomes for the less wealthy—they have more money in their hands, but there really isn’t more to buy. Perhaps, temporarily this approach might work in one country, but not for the world.
Also, businesses are one place where the wealth seems to be stored up. (For example, they are the ones that benefit from automation.) Taxing them more doesn’t work very well, because they tend to move to tax havens. Even if automation brings cost savings, competition soon brings prices down, so the excess profits that they hoped for are not really there, to be taxed away.
And plans that are based on debt are likely to result in a steep drop in the British pound relative to the dollar.
“Perhaps, temporarily this approach might work in one country, but not for the world”
But we don’t care about the world. We care about the US. Why would the US be the dominant military force otherwise. Killing off demand in other places could extend the US lifestyle for a little while longer. Iraq is the best example of this. Country in shatters. Still – max export volume. That helps getting around ELM problem.
omg i hope you’re not serious. If you are then I’ve never heard such arrogant BS in my whole life.
Yes, the US only cares about itself (it is very arrogant). Just to set the record straight. I personally don’t think the US has the right to go to war in other places and go steal resources. Listening in to Noam from time to time helps me mentally.
https://www.youtube.com/watch?v=vRbnPA3fd5U
https://www.youtube.com/watch?v=0Leay8-VGFM
For most of my life I would have agreed with you…
However in middle age I came to my senses and realized… I benefit when the US goes to war to steal resources… and if they failed to act then some other country with which my interests are not aligned — would steal the resources…
And I’d be living like a Somalian
The way the world works:
– The luckiest, fittest, smartest, with the capability for ruthlessness survive – always have – always will
– Resources are finite and therefore ownership is a zero sum game
– The strong always take from the weak – if they do not then that is a sign of weakness and a competitor will take from the weak and will usurp the formerly strong dropping them into weakling status
– Humans tend to group by clan or on a broader basis by nationality (strength in numbers bonded by culture) and they compete with others for resources
– Competition always exists (I want it all!) but it becomes fiercer when resources are not sufficient to support competing clans or nations
– Tribal societies understand these dynamics because they cannot go to the grocery store for their food – so they are intimately aware of the daily battle to feed themselves and the competition for scare land and resources
– Modern affluent societies do not recognize this dynamic because for them resources are not scarce – they have more than enough.
– One of the main reasons that resources are not scarce in affluent societies is because they won the battle of the fittest (I would argue that luck is the precursor to all other advantages – affluent societies did not get that way because they started out smarter — rather they were lucky – and they parlayed that luck into advances in technology… including better war machines)
– As we have observed throughout history the strong always trample the weak. Always. History has always been a battle to take more in the zero sum game. The goal is to take all if possible (if you end up in the gutter eating grass the response has been – better you than me – because I know you’d do the same to me)
– And history demonstrates that the weak – given the opportunity – would turn the tables on the strong in a heartbeat. If they could they would beat the strong into submission and leave them bleeding in the streets and starving. As we see empire after empire after empire gets overthrown and a new power takes over. Was the US happy to share with Russia and vice versa? What about France and England? Nope. They wanted it all.
– Many of us (including me) in the cushy western world appear not to understand what a villager in Somalia does – that our cushy lives are only possible because our leaders have recognized that the world is not a fair place — Koobaya Syndrome has no place in this world — Koombaya will get you a bullet in the back — or a one way trip to the slum.
– Religious movements have attempted to change the course of human nature — telling us to share and get along — they have failed 100% – as expected. By rights we should be living in communes — Jesus was a communist was he not? We all know that this would never work. Because we want more. We want it all.
– But in spite of our hypocrisy, we still have this mythical belief that mankind is capable of good – that we make mistakes along the way (a few genocides here, a few there… in order to steal the resources of an entire content so we can live the lives we live) — ultimately we believe we are flawed but decent. We are not. Absolutely not.
– But our leaders — who see through this matrix of bullshit — realize that our cushy lives are based on us getting as much of the zero sum game as possible. That if they gave in to this wishy washy Koombaya BS we would all be living like Somalians.
– Of course they cannot tell us what I am explaining here — that we must act ruthlessly because if we don’t someone else will — and that will be the end of our cushy lives. Because we are ‘moral’ — we believe we are decent – that if we could all get along and share and sing Koombaya the world would be wonderful. We do not accept their evil premises.
– So they must lie to us. They must use propaganda to get us onside when they commit their acts of ruthlessness.
– They cannot say: we are going to invade Iraq to ensure their oil is available so as to keep BAU operating (BAU which is our platform for global domination). The masses would rise against that making things difficult for the PTB who are only trying their best to ensure the hypocrites have their cushy lives and 3 buck gas (and of course so that the PTB continue to be able to afford their caviar and champagne) …. Because they know if the hypocrites had to pay more or took at lifestyle hit – they’d be seriously pissed off (and nobody wants to be a Somalian)
– Which raises the question — are we fools for attacking the PTB when they attempt to throw out Putin and put in a stooge who will be willing to screw the Russian people so that we can continue to live large? When we know full well that Putin would do the same to us — and if not him someone more ruthless would come along and we’d be Somalians.
– Should we be protesting and making it more difficult for our leaders to make sure we get to continue to lead our cushy lives? Or should we be following the example of the Spartans https://www.youtube.com/watch?v=eZeYVIWz99I
– In a nutshell are our interests as part of the western culture not completely in line with those of our leaders – i.e. if they fail we fail – if they succeed we succeed.
– Lee Kuan Yew is famous for saying ‘yes I will eat very well but if I do so will you’ Why bite the hand that whips the weak to make sure you eat well…. If you bite it too hard it cannot whip the weak — making you the weak — meaning you get to feel the whip….
– Nation… clan … individual…. The zero sum game plays out amongst nations first … but as resources become more scarce the battle comes closer to home with clans battling for what remains…. Eventually it is brother against brother ….
– As the PTB run out of outsiders to whip and rob…. They turn on their own…. As we are seeing they have no problem with destroying the middle class because it means more for them… and when the weak rise against them they have no problem at all deploying the violent tactics that they have used against the weak across the world who have attempted to resist them
– Eventually of course they will turn against each other…. Henry Kissinger and Maddy Albright bashing each other over the head with hammers fighting over a can of spam – how precious!
@FE. You’re smoking. Inhaling deep. Hallucinating. Injecting. If you saw first hand the kind of shit the US pulls off you would change your mind instantly. Pilger does a good job of showing you.
I can go one better…
If it means that BAU can continue for 5 more years — I would be willing to order that every child born this year be immediately put to death.
I would not like it — but I would do it — because if BAU goes down now — it is extinction
But wait, I have rice, some water bottles and couple stacks of the POS ‘firewood’ they sell at the store. Surely you and I can survive a few years in my tent in the forest. I can drive.
“willing to order” : Coward. You do it personally – or not at all. And I think you will find that the additional 5 years will torment you every day until you realize what you actually need to go do.
You have missed the point… completely …. and even if you read this you will still not get it
First time on internet?
You are absolutely brilliant. I am astonished how well you present your ideas. J’aimerais lever mon chapeau à la Gail
It usually takes two or three starts on the post, before I figure out an approach that might possibly work to present my ideas. The first attempts usually seem to be way too focused on details that readers cannot be concerned with. Once I more or less finish the post, I look at it, and come up with some more ideas to include.
I don’t know how much longer your model can hold up. Debt is a disaster. Did you miss the derivative crisis? Weren’t they plays on debt instruments?
I know your blog is called “finite” but that term, while apt for most things in this life, is dead wrong when it comes to money. We have an infinite amount of money. Because of that fact, and it is a fact, it is a self-evident fact, there is no need for debt. Letting debt do its work is a way for companies that should not be in business to stay in business, it is a way to keep a bubble going, a way to keep an over-heated industry stumbling along while keeping the rest of our economy from responding to the facts of our energy and climate crisis.
We can quickly eliminate all “debt” with our infinite supply of money, and put everything on a pay as you go basis. This will force us to finally face the truth and assign proper values to our various ways forward.
I know that I will receive the usual catcalls and insults when I say things like this, but at the same time, I know that those who attack what I say can offer no facts that prove we have a finite supply of money. Most of my attackers, when responding to my challenge, can only pat me on the head is if I were a four-year-old, while they patronizingly explain how the current system works as if it were a force of nature, a law of the universe, like gravity. I’ll concede that the belief that our supply of money is limited is like gravity in one respect: it is pulling us down, and it is accelerating..
You are right in the sense that they could print and lend any amount of money, just in one day, if they wanted. But what would happen in the longer term?
Gail is saying that money is ultimately constrained by global energy – which you must admit is finite – as follows:
1/ GWP is directly proportional to energy used per annum. This has been empirically established by many people.
2/ Outstanding debt cannot exceed the energy to be produced and used in the future.
The major imminent problem is that the amount of outstanding debt exceeds that future energy by several-fold(!), and there will come a point where massive debt defaults will occur when it is accepted such debts cannot be serviced or repaid.
Global energy is a limiting factor on money? Global energy certainly constrains the kind of world we would have, but it places no limit whatsoever on money.
The unlimited printing of money is a common mistake that people make when they hear of my idea. If we were to just print and print and print we would be making a big mistake, so why would you do it? I know that I never would.
With an unlimited amount of money there would be no need for debt, so all this commotion about debt is correct only so long as we remain under our current capitalist system. I agree that that system will eventually crash and burn so why keep riding to global catastrophe.
Governments can buy up debt to get to lower and lower interest rates, and they can try to incentivize banks to lend more money. But if the opportunity gradient isn’t there, it is hard to get any “takers” for the new debt outstanding. This is a big part of the reason why even though the US government has seemed to be printing money for quite a while, the total debt is not “shooting up.”
Governments are much more successful in spending more than they take in in tax revenue. But this too, gets pushback. Outside the US, relativities of currencies to the dollar tend to fall.
The big thing that governments have been able to do with lower interest rates is raise asset prices, such as stock prices, bond prices (due to low interest rates), home prices, and farm prices. Commodity prices don’t rise at the same time, because their inflation is governed mostly by wages of the people lower on the hierarchy, and their ability to get loans to buy goods and services. The mismatch between commodity prices and asset prices leads to very low yields on debt–something that tends to discourage future “demand” for debt. Why start extracting more oil from another marginal oil field, if the dollar return is negative, and oil prices cannot be made to rise?
In my system there are no loans, only advances on the SSLS to come in future years. There is therefore no interest on loans. There is no government debt either. No debt anywhere. Bonds will disappear because government will finance all public projects including those now funded by municipal bonds and the like. The financial part of our economic system will vanish, except for a form of venture capitalism. Private money can be used to invest in private enterprises but no interests and no claim on assets. The venture capitalist will have a percentage of the stock of the new company and he will assume risks just like the people who are starting the company.
Commodity prices will be still be set by markets as will other prices. But borrowing money to leverage a buy of stock or commodities will be prohibited. Private money can invest in private ventures but all of this crap which leverages the invest is not acceptable.
There will be no taxes except for a few sin taxes to discourage unacceptable behaviors such as smoking and dumping waste into our streams.
No debt, no taxation, no government bonds (I’m a little flexible on this), and none of these derivatives and their kin.
Yes wonderful…. but how does your system overcome the problem of running out of cheap to extract oil?
Saying that “governments are much more successful in spending more than they take in Tax revenue” is a really weird way of explaining what actually happens.
The national governments are Monetary Sovereign and are empowered with total control over their currency. This facility allows them to choose what to do about their currency. First, they can never go broke -except deliberately.
Only Federal spending puts money into the economy to match growth. [Bank money sums to zero]
If the government ‘saves” by spending less than they spend – called a budget surplus, the result is less money in the economy and the economy goes backwards. Budget surpluses only work when there is a boom on. That ‘saved’ money however has to be made up by the private sector so that the annual books balance back to zero. BTW, Budgets are an annual bookkeeping event. Every year resets to zero.
For the economy to grow we need a budget deficit, and that’s where your pushback comes from. It is because opponents misunderstand deficits. Budget deficits arise when the taxation withdrawn from the economy, a big cost, can only be made good by the government buying debts and instigating works to grow the economy. It’s a net credit operation, no liability.
Governments fail rather often. Also, in Europe, we have a lot of national governments that do not have control over their own currency. They are part of the Euro Zone.
I agree that budget deficits tend to grow countries and savings tend to work the opposite direction. But this can only work as long as there is an opportunity gradient, with cheap energy and other resources that are available. At some point, things hit the wall.
The usual political line is that budget deficits are bad, and budget surpluses are good. It is an annual reckoning of the state of the economy over 1 fiscal year compared to taxation taken out of the economy. It’s the opposite of the truth.
It’s not all that relevant to whether or not the resources are present. I believe mainstream economists leave that factor out. That’s just the way the economy is described according to their models.
Politicians will never get it right without a major wake up call from the public domain.
“It’s the opposite of the truth.”
I sure wish I could spend ten times as much as I earn every year forever without negative consequences; sign me up!
Very funny. Ignorance speaks louder than knowledge according to you?
You’re saying that running deficits is good, and running surpluses is bad. So, shouldn’t we all try to borrow ever more money, so we can all be richer and have the most good?
Yes, That is what I am saying, but it ONLY applies to monetary sovereign nations, ones who have their own currency. It has no relevance to compare them with what we must do or Greece for example. They use a foreign currency, the EURO.
Yes a budget surplus is a bad thing, except it boom times. A budget surplus says the government is spending less than it takes away in taxation. So that means the spending into the economy is restricted by the difference. It can mean the economy will go into recession as the private sector has to top up the missing money [the budget is an annual reckoning and starts each year from zero]
I trust you can understand that now?
Yes we should all borrow more money — because to keep the ponzi scheme going — that is a necessity.
This is only true, within very defined limits. In particular, the opportunity gradient has to be positive, so that the government can spend its surplus on things that truly enhance the ability of the economy to grow in the future.
Once the opportunity gradient is negative, or even if the opportunity gradient is positive but the government chooses to spend it funds on projects that make it worse off in the future (such as helping the elderly live longer, but not working longer), then the use of growing debt is not helpful. Funding for solar panels and wind turbines which “mess up” the pricing of electricity on the grid (high entropy projects, in other words), have a problem as well.
You talk as if there is a transparent system here….there is no law and order in the land of creating money….we have no idea what the fed is doing. Everything and anything can be manipulated….there is a dark state that controls things and we have only a small idea of the truth….tumor is growing
Dolph and you should get together. 7.5 billion, million dollar gold coins distributed monthly to every person on the planet. Instantly everyone is a millionaire……..that is your solution? I think all the attacks you receive are entirely justified. I doubt many here would bother entertaining your delirium.
I do not understand you reference to gold coins. I did not mention gold coins. You must have been responding to some other thread.
But just in case you were responding to my comment then perhaps you noticed that I said that none of my attackers could ever present a valid reason to believe that our current system operates on the foundational idea it has a limited supply of money. I noticed that you failed this test as well.
You said MONEY, I said DOLLAR gold coins. Don’t you understand what “MONEY” is. Maybe you have your own interpretation that you can share.
Yes, I do have a definition of money. What it boils down to is that money is an agreement within nations and between nations. It is a convenient way to conduct, track, and manage our economic activity. We are free to print, really “activate” is a better term, as much of it as we please, and we are free to distribute it by any system we choose. We should be grateful that we do have an unlimited supply of money, and we should use it for the benefit of all. Money is not paper, it is not gold, it is not debt, it is electronic bits in a bank account. We sometimes use proxies for these bits so we can conduct economic activity where we are not connected to the computer bank accounts. When there were no computers trade was very cumbersome, slow, unreliable, and subject to theft. But over time we have moved toward a completely computerized monetary system and we will not have to worry about proxies.
But the question I raise is how much money is there that is available for use in conducting our economic activities as a nation. This question is answerable.
Gail approach is to declare that there is a finite amount of money and it severely limits our economic activity. But in my opinion she is wrong. Money is not the limiting factor, but those who control our economic system, those who want to get rich by manipulating our economic system have been able to create the concept of a shortage of money which leads to the concept of debt. There is no shortage, there is no debt, there is no limit to our money supply. We have to manage it wisely, but that is not a new problem. The real limitation is natural resources, trained personnel, equipment, and the like. If Gail would just rethink her conclusions with the basic idea that money would be available when needed and in the amounts needed she would find that the future would look very different and it would call for a different approach in how it is managed and in who does the managing.
I have designed the systems for that future, but I cannot get traction in explaining it to people. I rarely get a reasoned response of the kind that Gail offers. Instead is usually get the wise-guy nonsense that of the kind that you have hurled my way. But I will keep on trying and if my ideas get traction and if they change the future for the better then I will say to you, “you are welcome.”
You should try to be part of the solution not part of the problem. Open minds can save us. Closed minds and closed systems will, are, destroying us.
“You should try to be part of the solution not part of the problem. Open minds can save us. Closed minds and closed systems will, are, destroying us.”
The Universe seems to be a closed system. Our Earth plus its input from the Sun seems pretty close to a closed system. How do you propose to open them up?
The earth is an open system, because it gets energy from the sun. The universe may very well be an open system as well–we don’t really know.
Money is a claim on energy. Period.
I was about to write exactly the same comment.
Then i thought someone would do it anyway…
It’s a claim on the output of the system, assuming all parts of the system still work. We have several candidates for not working: banks, international trade, oil, electricity, all of the foregoing.
Dollar coins are tokens of debt, whether they are made of gold, silver, copper, or zinc. You can’t eat any of these things.
Hestal thinks money is a token of wealth. He doesn’t understand that too much money devalues it. A combination of a rare commodity and money to create a value would destroy the “money”, if the value was increased disproportionately. The rare commodity would return to its intrinsic “value”. Of course owing “money” means debt. Work can be owed and mostly it is valued. A valuation of work is required in today’s world and if money had no value, working for a living would be problematic, similar to bringing home your pay in a wheelbarrow. Digits on a bank statement are no different.
I am afraid you are not understanding what I am saying. Money is a form of debt, so it makes no sense to say, “We can quickly eliminate all ‘debt’ with our infinite supply of money, and put everything on a pay as you go basis.” Near the beginning of my post, I said,
If you return some goods, very often the store will give you “store credit,” so you can buy something else in the store. Sometimes this store credit looks like a gift card, for the amount of money you are owed. This “store credit” is a debt of the store to you. In the same way, the dollar bill you have in your pocket is the debt of the US government, that you can use like a gift card. It is broader in scope, but it is still very much a debt that is owed to you, or to some other bearer of the dollar bill.
So I think you are confused. If money is debt, you certainly can’t eliminate debt with money.
Perhaps you mean that individual people should not take on loans. If that is the case, they will need to save up money before they can buy a house or a car. As a practical matter, that may mean that they cannot really buy a house or a car. Is that what you mean? That is not a great solution for anyone. Hopefully, there are rental apartments and mass transit, so that they can “piggy-back” on the debt the apartment owner holds and the mass transit system holds.
Maybe we can say that money is the participation on the output of the system: if you do not have money, you are not entitled to buy things that are produced by the system that operates using them.
Based on the abovementioned, if the debt is cancelled (i.e. the creditors do not receive their money back) or is not available to the people (i. e. they do not get the money), the ways of supplying the basic needs of the population must be satisfied, otherwise its members die. That is why the food stamps are introduced.
Recently, Slovakia passed the law that prohibits allowing the persons who receive the social benefits to enter the gambling rooms. Also there will be no slot machines in the pubs as of 2019. Furthemore, also illegal online gambling is going to be limited, so that only those who have the licence from the Slovak Republic can provide their services on the territory of Slovakia.
http://aktualne.atlas.sk/ekonomika/slovenska-ekonomika/socialne-slabi-su-z-hry-von-vlada-schvalila-bic-hazardne-herne.html
I think you are right about money being the thing that enables participation on the output of the system. Today, only pixels are needed to indicate the presence of “money.”
If we read David Graeber’s The First 5,000 Years of Debt, we learn that early markets set up in temples kept track of how much people brought to the market and how much they had already spent in the market (converted to common units, such as bushels of wheat) on clay tablets. The remaining balance could be used for additional purchases. Thus, in a sense, the “simply debt” form of money preceded the physical tokens that people generally associate with money.
Thanks, Gail, for your response. I could be confused, it wouldn’t be the first time. But here is what confuses me about what you are saying.
Money is an agreement within nations and between nations. It is a convenient way to conduct, track, and manage our economic activity. We are free to print, really “activate” is a better term, as much of it as we please, and we are free to distribute it by any system we choose. We should be grateful that we do have an unlimited supply of money, and we should use it for the benefit of all.
It is not currency or coins or gold or debt, those things are tokens that are part of a system that manages our economic activity. In fact we live in a virtually cash-free world. Only last week I computed how much money I use each year—I am talking about paper dollars and coins. It amounts to 8.3% of my spending. The other 91.7% is spent is in the form of computer bits in various accounts. I daresay that most of us who visit your blog are in a similar position. Very little of our spending is done by means of cash, or gold, or currency, or coins, or… it is done by means of computer bits in bank accounts.
Our very first national currency, a currency issued by the government through its own equipment, paper, ink, etc. was Abraham Lincoln’s “Greenback Dollars.” It was not connected to debt of any kind. It was not backed by gold of any kind. I depended, not so much on the stature of the national government, but on the ability of the money management system to settle up as money was moved from buyer to seller in exchange for goods and services. No form of money would serve the nation unless the seller believed she could use the money she gets from sales to later buy what she wants with it.
So, it is a mistake for you or anyone to think that money is a debt. Debts can be, and usually are, paid off with money, but it is not absolutely required that money be used to retire debts.
Now, here is the problem you, most of your followers, most of those who attack me for expressing my ideas, and the civilized world have with money. You are still stuck in the “money is gold” world. Debt is simply a substitute for gold. We cling to the idea that money cannot be created out of nothing, it is simply a proxy for something substantial, like gold. Our system, the one you defend so elegantly, is structured as if we were still on the gold standard.
But I do thank you for trying to help me out of my confusion, and, if you will permit me, I will use your example to aid me in my defense. In my system people would follow the same process they follow today when they buy a home—except they will not incur “debt.” The government will provide each citizen from birth a stipend. It will be called the Social Security Lifetime Stipend (SLS), and it is given to each citizen in two monthly deposits into two different citizen accounts. First, $2,000 is deposited each month in the citizen’s UniCheck account, and, second, $1,000 is deposited each month in each citizen’s UniLife account. The Uni, or the Universal Bank of the United States, will provide the UniKey which is sort of like a debit card, except in addition it can be used as a secure login/identification card. Money in the UniCheck account can be used for any legal purpose.
Money in the UniLife can be used for certain important things that come up in life like building or buying a home, buying a car, starting a business, starting a family, furnishing a home, getting accredited education beyond high school, and the like. The purpose of this fund is to help the citizen build a long life worth living which includes building a secure, comfortable retirement. The UniLife money accumulates at interest which is set by actuaries. My own calculations indicate that when a citizen graduates from high school, say at age 18, she will have $256,000 on deposit. If she wants to buy a house she can either pay cash if she has enough on hand, or she can ask the Uni to advance her the additional money she would need. This advance would be drawn against her future deposits of the SSLS. She would not be charged any interest.
The system that is made possible by this simple construct takes a long time to explain, so I won’t attempt it here. But it should be clear to you that such a system has no debt. It does do the “time shifting” that you talk about, but the payment is guaranteed.
The primary benefit of such a system is that there is no “debt.” The house cannot ever be taken away from the citizen because of a failure to pay. Instead of loans this system depends on advances against future payments from the SSLS. The SSLS amounts to $36,000 per person per year from life to death. The basics of life are paid for. People are freed to go as far as their talents and efforts can take them.
Now, before you bring it up, let me say that there is a process by which excess money is drained from the system, but it is done in such a way that we will essentially live tax-free lives.
The way that debt is used in our current system, the one you and so many others think is a law of the universe, is to restrict growth—just like the gold standard did. Your blog posts repeat this point in many ways, and you are correct to do so—that is the way things work. But in my system the government is free to issue money to pay for all worthwhile, non-inflationary projects. You know what they are. Without my system, or one very much like it, we are doomed—we cannot fight effectively the onrushing catastrophe of global warming.
You use debt as if it were an immovable object, a hard limit on what we can do. Without Lincoln’s Greenback dollars the Union war effort would have been severely limited—perhaps fatally.
Debt is the last remaining vestige of the old world, it is time to move into the new.
Now, about retiring debt today. College loan debt is a serious problem, but under my system there would be no such debt. But today, when we switch to my system: democrato-capitalism, we will just pay it off. By “we” I mean the national government. We will pay the lenders full value and then we will drain any excess money from the system.
Your use of debt is, as you explain, the end of our civilization. And I agree. If we do it your way, then the end is in sight for many people who are living today.
And, finally, your tutorial about debt is the same one that everyone gives me. All you, and they, are doing is explain to me in a very gentle, but still patronizing way, how our current system works, a system which you and they think is a law of the universe and cannot ever be improved.
I have encountered this attitude many times in my working life. For example I was part of a small team that developed the first Medicare payment system. Everybody said that Medicare would not work, at the very least it would bankrupt the nation because we would have to print money to pay for it. But it did, and does, work and it did not bankrupt the nation.
So, your argument is not with me, it is with Lyndon Johnson and Medicare, it is with Abraham Lincoln and his method of financing the Civil War, and it is with Franklin Roosevelt when he unilaterally took us off the gold standard shortly after he took office. All three of these men did things that kept us, at least in part, free from the predations of “debt.” It is now time to finish the work they started.
“We cling to the idea that money cannot be created out of nothing, it is simply a proxy for something substantial, like gold.”
I agree money can be created.
I also agree it is a proxy for something useful.
So if you create more money it takes more money for the same amount of useful goods/services.
I did not say that we should print “more” money. I said that we should do away with debt. If we need to finance some huge project to combat global warming then rather tax or borrow to get the money we will just issue it. The project will still cost the same as it would under today’s system except there would be no interest burden. In effect, my approach actually creates “less” money than the one you defend.
We could finance more projects than under tyranno-capitalism, the system you defend. Inflation could occur as demand for scarce resources occurs, but my system also has a way to control inflation. But under your approach there are two obstacles to funding essential projects, one is debt, the other is asset inflation. But my system handles both and thereby requires “less” money than tyranno-capitalism, the system you defend.
‘we need to finance some huge project to combat global warming’
Any details of ‘some huge project’
“I did not say that we should print “more” money. I said that we should do away with debt. If we need to finance some huge project to combat global warming then rather tax or borrow to get the money we will just issue it.”
What is the difference between ‘print’ and ‘issue’?
You don’t combat global warming with issued money. You pay people to do something to combat global warming, and for these money they buy ‘something useful’.
More money chasing same amount of ‘something useful’, probably there will be less of ‘something useful’, because more people will be involved in producing ‘something useful’ when they instead can get paid to ‘combat global warming’.
‘some huge project’
Power satellites would certainly qualify.
If we want people in space to unjam the automation, it takes $9 B of shielding against galactic cosmic rays for 400 people. Not sure this makes economic sense, it certainly does not for a small project.
I fear you do not understand human beings. If you create more than a few percent of new units of money in a given year, people lose faith in the currency. If the US government just printed 20 percent of GDP every year and stopped collecting taxes, people would panic and flee out of USD. People hate it when their currency loses value too quickly. Boiling a Frog.
Creating more units of money does not increase the amount of energy available, the goods and services, so all you do is make each unit worth less.
Let’s see if I understand you. In our nation right now more than 50% of our population have a per capita annual income of about $7,000, So you say that if their income should increase to $43,000 they would flee the country? Obviously they don’t pay taxes now and they would not pay taxes under my system, but you insist that they will flee.
Creating more units of money does not increase the amount of energy in the ground, but it would increase the amount that was dug out of the ground and made available for our use.
I have no idea where you came up with 20 percent, but how did you decide on that number?
“Let’s see if I understand you. In our nation right now more than 50% of our population have a per capita annual income of about $7,000, So you say that if their income should increase to $43,000 they would flee the country? Obviously they don’t pay taxes now and they would not pay taxes under my system, but you insist that they will flee.”
Please take a look at Venezuela. If you increased the amount of money, the value per unit becomes less. If you double the amount of money, the cost of everything doubles. The stores will run out of goods on their shelves, because of course after you increase the money supply, the next thing you would do is implement price controls and rationing to prevent the stores from charging more for their goods and services.
“I have no idea where you came up with 20 percent, but how did you decide on that number?”
The US government(s) historically make up somewhere just under 20 percent of the economy. I’d have to double check if that is just Federal or all levels of government combined.
You can’t just go around distributing money without a care in the world as to hard limits like resource depletion or any real fair manner of handouts. What about the billions of people across the planet, they’re hungry too? Suddenly you would realize very quickly that money is a proxy for energy-goods and they can run out. Infinite money doesn’t address overpopulation or resource depletion.
Where did you get the idea there is “Infinite money” ?
Exactly: ” Infinite money doesn’t address overpopulation or resource depletion.”
If we drain the swamp will the swamp monsters die?
It’s communism but you don’t know it or understand it.
I am sorry. You are still very confused. Money has essentially nothing to do with gold–except that gold may be used as a token to represent government debt.
Your statement,
really isn’t true.
If a failing country tries to issue unlimited currency to try to make up for the fact that its currency is crashing relative to other currencies, it doesn’t work. The amount of debt triggers responses by other countries, who refuse to accept the currency, except on a very discounted basis.
Don’t ask me to remove the splinter from my eye until you have removed the log from yours. Just look at what you claim is true. You claim that America is a failing country but you did not say why. You claim our currency is crashing when it is not. You mentioned debt again, but in my system there is no debt. The log in your eye keeps you from seeing that the system you are defending is illogical. Where does your debt come from? Remember Abraham Lincoln financed a good part of the Civil War using Greenback dollars. Those dollars were simply printed. They created no debt. The Treasury department had never done it before. In fact, they had to buy the printers before they could print the bills. These bills were not tied to gold or another metal. They were not tied to any physical thing. It was not necessary to borrow in order to print these bills–they were just printed. They continued to be printed until into the 1960’s. I remember as a little boy that I was paid for helping haul some hay from the field to the barn and I was paid in part with Lincoln’s money. The bankers did not like these dollars precisely because they incurred no debt. Bankers get fat off government debt and they finally bought off congress and we had to actually borrow money and create debt before we could print our own money. I have asked you many times to defend your position and you won’t do it. So I’ll ask again, where does debt come from? Why is it necessary to create debt? And if you want to say as many do that it is necessary to create debt through government borrowing then I will give up. But, I am betting that you won’t do that. I’ll bet that you are smarter than that. I know that debt is created through government borrowing, but I am asking why is it necessary? The answer is that it is completely unnecessary–it a multi-trillion dollar scam.
Some people refuse to use this site to learn….
The United States is part of a world system that is failing. The world system is failing indirectly because of diminishing returns with respect to resource extraction, of all kinds, including energy products. Also, population keeps rising relative to arable land, so arable land per capita keeps falling, leading to a need for more resources for extraction (not less).
I said that the US currency is unusually high right now. That would seem to be the opposite of it failing; it is doing better than most, although of course it is part of a failing world system.
All currency that is printed is debt. That is simply the way it is. I can’t understand why you think it is not. The currency provides an obligation to provide a share of goods or services available. Debt doesn’t need to be tied to gold or any other metal.
Once the country has lost its “Full faith and credit” in its government, the ruin is upon it. This fact precedes hyperinflation.
Falling opportunity gradient is the problem.
What do you mean exactly by “falling Opportunity Gradient”? Are you referring to ERoEI for example? For me the end game is what is happening now. We produce junk and most of our production is for junk, such as bells and whistles on phones, cars and homes with more and more gadgets etc. Looking after the elderly is what we do as a polite society, but even it is caught up in the profit motive that has taken us along this road to ruin.
Essentially, “falling Opportunity Gradient” means that borrowing money provides less and less benefit to society, and thus profit to those taking out the debt. A person can obtain debt to extract oil from shale, but the price at which that oil can be sold never will rise high enough to cover its cost of production. The same thing will happen with setting up a dairy farm, or mining minerals.
Our self-organized system sets a limit regarding the extent to which debt actually “works” with the intended benefit. Once we hit that level, we are stuck, because adding more debt isn’t helpful anymore.
Your friends didn’t understand diminishing returns, so they did not build that into MMT.
EROEI is one way of attempting to measure diminishing returns. I am not fond of it, because it doesn’t measure very much of our real problem. But if EROEI actually worked as intended, the issue would be that falling EROEI leads to falling profits, so adding debt no longer is profitable.
Got it, thank you.
Re MMT it is a pure discipline and has enough on its plate to do already. So in ignoring ERoEi and similar factors driving us to ruin, it’s no different from mainstream economics – also not concerned with such issues. People like you and I are interested in these follow up problems, but basing them on mainstream models buggers their validity.
When I say taxpayers do not pay for federal spending it means the government’s restrictions on its ability to deal with such issues as failing pensions is very difficult. So not only is this a fact [provable] it frees up the options the government can [and eventually will] take. It will be forced to take such action as already it did to bail out the GFC banks in 2008/9. Necessity will force an adjustment even to the most religious adherence to mainstream thinking.
Another shibboleth is the view the economy can go broke, and that our unfunded liabilities will impoverish our children. Both of these are proven by MMT to be completely false. And there are other false beliefs.
It’s not going to stop or dynasty from crashing as resources are No1 there, but hamstringing governments with [deliberately] false ideas is no way to proceed! The Choices are political, 100% but the knowledge to base choices on needs to be truthful.
The old view is that increased debt can cause the economy to go broke, and that the unfunded liabilities will impoverish our children.
I agree that these things are not true.
What is true is that diminishing returns can cause however much debt has been accrued to become unpayable. It banks fail, the economy as a whole will collapse. This outcome seems likely to be a lot worse than simply “unfunded liability will impoverish our children.”
So MMT replaces one untrue story about how the economy works with another story that isn’t really true either, because (a) it omits diminishing returns, and (b) it omits changes in currency levels in response to rising debt levels. If there were no problem with diminishing returns, and if the actions of one sovereign country were not counterbalanced by how high or low the currency of that sovereign country rose/fell relative to other countries, the story might be true.
I’ve never seen MMT propose the ideas you criticise in them. MMT makes several pertinent observations regarding limits. An MS government can [theoretically] buy anything for sale. It cannot create money to save for later. There has first to be a debt. [similarly for a commercial bank].
The limits to this operation are twofold. One] is the Output Gap. This is the difference from the current economy’s output and the possible production when at full employment [<2% unemployment] Two] is inflation pressure. As long as there is no runaway inflation spending can proceed safely. The economy benefits and will be recognised as such by outsiders.
It is no way replacing an unworkable scenario with another failed model. All the failed models are postulated by mainstream economists. 100% success there!
Unpayable debt is a separate issue. It's a political operation above all to skew financial profits to the wealthy parasite minority. They will make sure banks don't fail next time and the next time as well.
If they do, all bets are off, as no one will have any money except a few banknotes and coins.
I do not want to hear any more about MMT. Clearly, there are alternate names for things, that make discussion impossible. They are calling “debt” something other than what true debt is. Cash is clearly a form of debt, whether or not they have a new definition for debt.
I have explained in my post where inflation pressure comes from. Clearly the MMT people got this issue wrong as well. Inflation pressure changes to deflation pressure as we hit limits.
The “Output Gap” comes from energy resources that are too expensive (due to diminishing returns) to increase in quantity at low prices. It is related to diminishing returns.
The whole thing is over your head, and not of much interest to other readers here. MMT theorists have an inkling of an idea that might be right, if we didn’t have many other issues to deal with. As far as I am concerned, MMT is simply a big waste of everyone’s time.
Gail,
I agree with you money is a form of debt or a claim against the national economy’s output (income).
However, games can be played with money to buy more time for the BAU. BOJ has been printing money and buying up stocks and corporate bonds to keep these markets from collapsing. This cannot go on for too long. This form of buying is essentially “helicopter cash” by another name.
Right. In this case, I don’t believe that the helicopter cash is actually getting back to individual people. The currency level is not doing well. It currently is .00868 to the dollar. It was as high as .1320 in 2011.
You are right that things have not collapsed yet.
Gail, the Japanese government wants the yen to be lower in order to help exporters and to keep more manufacturing jobs in the country. It’s the consequences of the high yen that are a major concern.
However, Japan remains mired in deflation because consumers aren’t spending. They aren’t spending because workers wages are stagnant and the percentage of retirees who are forced to live on a fixed low income and who don’t have as much need as younger people to buy stuff is increasing. This reduces income for companies, who obsess over cost cutting, so they spend less too and this also lowers employment and wages. It’s a vicious circle that doesn’t look like it’s going to end any time soon.
Exactly. Japan has the same problem as the US. If the disposable personal income of its population is too low, the people can’t afford to buy much.
Japan wants the yen low, so that they can sell more vehicles and other products overseas. The problem is that a low yen makes all kinds of imported fuel higher priced. As a result, the cost of manufacturing vehicles does not drop proportionately to the drop in the yen. Also, the citizens find that their energy-related expenditures are more expensive, leaving them with fewer yen to spend on other goods and services. This tends to cut back on their spending. The net effect of a low yen is not nearly as favorable as modelers would expect.
It seems like it may even lead to a vicious cycle down, if the world growth rate starts topping out, and heading down. I haven’t really worked out the details of this yet.
In one of his Federalist essays, I think it was Federalist 30, Alexander Hamilton defined money this way:
“Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.”
As it turns out, things are even worse than Hamilton feared—our Madisonian republic has failed to provide “a regular and adequate supply” of money, the people have been “subjected to continual plunder,” the “public wants” have not been satisfied, and our government has fallen into “a fatal atrophy” which prevents us from maintaining and improving our infrastructure, and which blocks the prudent, aggressive, large-scale, time-sensitive actions needed to deal with the adverse effects of global warming.
Alexander Hamilton’s definition of money is correct as far as it goes. What he omitted, and may not have known, is that money is a natural, national resource much like water. Throughout history, civilized society has worked to improve the water supply and distribute it directly to the people so that they may use it to nourish themselves and their families, and to businesses and other institutions so that they can use it for the permanent and aggregate interests of the community. Money should be managed in the same way. So, let’s adapt Hamilton’s definition of money—let’s bring it into the 21st century:
“In any large human society money can correctly be considered as an inexhaustible natural resource that is essential for the welfare of all human beings—from individuals, to families, to communities, to nations, to entire civilizations—by means of which they can sustain their lives, and carry out their most essential function: to build a community, and help to build a world, in which all persons can live long lives that are worth living. Therefore, a regular and adequate supply of money should be distributed directly to all citizens to be used for any appropriate purpose, at the appropriate time, in the appropriate way, in the appropriate place, and in the appropriate amount.”
Money, like water, sustains our lives and our society, and, like water, it should flow directly into every American household. Our new system of democrato-capitalism, along with our new faction-free democracy, will enable us to make certain that it does.
Tyranno-capitalism created hyperinflation in the Weimar Republic in the aftermath of World War I, then it created the Great Depression and the Dust Bowl, then World War II, then the collapse of the savings and loan industry, then the recent Great Recession, and for the last thirty years has exacerbated global warming. The immense economic harm done to American citizens by our economic system is surpassed only by the harm flowing from the perennial oppression of non-whites, non-males, non-Christians, non-heterosexuals, non-natives, the disabled, and the not-well-to-do that our national and state governments have practiced under the guise of states’ rights. The Federal Reserve is a sham, and the officers of the system should be ashamed of themselves for accepting money under false pretenses. And I grow weary cataloging the sins perpetrated by those who practice the bogus “science” of economics. And the fact that “creative destruction” is accepted as an essential part of tyranno-capitalism is appalling. It is obviously invalid and it is obviously easily corrected—that is, if one wants to correct it.
https://athenae25.files.wordpress.com/2015/11/my-brain-hurts.jpg?w=450&h=338
Hestal, I owe you a debt of gratitude for your brilliant idea that with an infinite supply of money we can eliminate all debt. And I shall of course immediately be recommending you for a Nobel Prize for Economics and having a word with my bank manager and credit card service provider to see how they can arrange to infinitize my accounts. The solution you offer the world is both mind-boggling and epoch-making.
There is no doubt that we have the ability to create an infinite supply of money. I don’t think anyone disputes that. But the idea that this money could be used to eliminate debt is controversial to say the least. Gail makes the point that money itself is a form of debt. if we grant this as true, then by creating a certain amount of money, we simultaneously create the same amount of debt. And if we also employ the miracle of compound interest to create interest-bearing debt, then we create more debt than we do money. Do you see this as a slight potential flaw in your otherwise truly excellent idea that we can use our infinite money supply to eliminate all debt?
Tim, see above my reply to Gail’s helpful comment.
Hestal, your reply you Gail is very interesting. You seem to have done a lot of serious thinking on the subject. For me, the idea of a debt-free system with an infinite supply of money is brand new and I will need to take some time to let it sink in an ponder the implications.
But at the outset, it seems to me that for the average person or business, money needs to be scarce and hard to get in order to encourage us to work diligently. If we are all given a free income to cover the basics, many of us would take the option to opt out of the workforce and cease engaging in productive labor. This exacerbate a number of problems such as more people becoming depressed or turning to crime or drugs due to ennui.
On the other hand, if the economy was sufficiently computerized and robotized, it might produce sufficient goods with minimal need for human labor, allowing large numbers of people to join the ranks of the idle not badly off. Without going into the minute details, it is possible to imagine such a socioeconomic system working.
But in order for it to work, such a system would need to be able to produce a sufficient surplus to keep itself running and also provide for the needs of the idle layer. And it would need to be protected against the tendency toward inflation that would result if the amount of money in the system was allowed to increase without limit.
You are on the right track. All of your concerns have good answers but I have neither the space, nor the time to go into them here. If you want to read more about these ideas and others then go to jerryrhamrick.com.
I’m so glad Venezuela has volunteered to test this theory for us. I read that they’re so rich right now, they weigh the bills rather than bothering to count them. I want in on a piece of that!
++++++++++++++
Aren’t they eating domestic animals in the streets right now too? Sounds like infinite money is working splendid!
No need to preserve meat when you get to the hand to mouth scenario…. i.e. eating your neighbour’s dog….
Nope. I live among deer but am thinking I survive too long in a collapse scenario the deer will disappear because of other hungry humans or exploding nuclear ponds. Saw today that Fukushima radiation has now actively hit Tillamook Bay, Oregon.
Why would a farmer give you a gallon of milk when you show him the money?
For the same reason he does it today.
You kind of punted there.. I think it would be because the money is more valuable to him than the milk. In a world where money quickly becomes worthless the farmer might be better off bartering – just guessing here. Cash … you just want to get rid of into stuff that keeps value better. (like a shovel, drill bits, box of nails, what have you)
Why do you think that increasing the money in circulation would automatically make the price of everything go up. Inflation does not work that way. Severe inflation, or hyperinflation, as some call it is always the last stages of a nation that has collapses. The examples of hyperinflation that have taken place since 1900 are all examples of severe disruptions in a nation’s governance and economy. Usually war. The difference to the farmer would be that the demand for his product would go up because more people had the money to buy it. Right now, more than 50% of the people in America earn less than $7,000 per year. Under my system their income would jump by $36,000 and also businesses would be able to fund expansions to meet the demand and we would be able to undertake the mammoth projects to deal with the onrushing catastrophe of global warming.
If you are an economic expert, or at least think you are, then surely you know about john Maynard Keynes. He said that in economic downturns the government should spend more money in order to get things humming again. Paul Krugman said recently that when the economy is stuck and there is not enough spending, the government must step and start spending more. Both of these economists would give the money to government to put into building roads, bridges, and the like and they would hope that some money would trickle down to poor people like me. My approach is to do just what Keynes and Krugman suggested and in addition I say we should give the people a regular and adequate supply of money so that they will spend and keep the economy humming.
Remember, under my system you and all of your family, and all of your friends and every other citizen would have an additional $36,000 per year to spend wisely. I suppose that if you don’t want it you could do like Donald Trump and reject it. I have to say that I never thought such a thing would happen, but it would be easy to implement so, thanks, I will add it to my system. As a matter of interest, do you think that all of the people you know would turn it down as well?
This plan smacks of allowing 4 DelusiSTANIS into Harvard Business School… and giving them a project to come up with a new global economic system….
I can imagine them coming up with something along the lines of your plan… utterly simplistic…. utterly not thought through… devoid of any logic…. no consideration for the implications….
Have you ever studied MMT. Modern Monetary Theory? Reason I ask is that some of your ideas concur with it. Where it differs from Mainstream Economics is that it’s not a theory, but an explanation of the reality of macroeconomics. The mainstream promotes theology, a belief system which insists on silly assumptions and without fail produces models with a 100% failure rate. It amazes that there is no sense of embarrassment at that, but that’s where its theology intrudes. The worst thing is that it’s infected the entire political establishment and led us to a lot of the massive dysfunction in both society and the economy;
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf [this is a booklet]
http://www.youtube.com/watch?v=khaypwRG5C0 [This is a talk]
Governments collapse fairly frequently. Warren Mosler obviously hasn’t figured this out. In his view, the Soviet Union would simply have needed to issue more debt, to solve its problem. Its problems were low oil prices, worldwide. There was no way the Soviet Union could have issued enough debt to get oil prices up.
“Why do you think that increasing the money in circulation would automatically make the price of everything go up. Inflation does not work that way. ”
What do you mean when you say “inflation”? Are you referring to changes in CPI?
“He said that in economic downturns the government should spend more money in order to get things humming again. ”
A big problem is that government, especially representative democracies, fail to run surpluses during boom times to compensate for running deficits during bust times. So instead, the debt just grows until the system collapses.
“Remember, under my system you and all of your family, and all of your friends and every other citizen would have an additional $36,000 per year to spend wisely.”
One of two things happen; either a whole bunch of people just stop working, or the purchasing power of the money goes down. Creating more units of currency does not create more oil, or food, or water, or lithium. You seem to think our problems are only monetary, and not about physical limitations of a finite earth.
“As a matter of interest, do you think that all of the people you know would turn it down as well?”
I think a lot of people would go for it, but if we take Switzerland as an example, we see that ideas like a Universal Basic Income tend to be rejected by a large majority at referendum, so perhaps fears of the ignorance of the masses are unfounded and the majority secretly has a pretty good grasp on things.
Another slant on Communism.
To ejhr2015, Gail, and all the ships at sea.
The question is who came first to these ideas. They are not original with me. I first heard them in 1949 when a group of WWII veterans used to meet at our house to discuss everything under the sun. They began to talk about money, its uses, and how to manage it. Many of them remembered when FDR took us off the gold standard and they began to debate whether we should return to it. Somehow, I don’t remember just how, they began to talk about what would happen if we were on the gold standard and discovered that the Rocky Mountains were made of pure gold–in effect we would have unlimited money. They spent quite a lot of time over that summer discussing the ins and outs of such a situation. Their discussions were entirely different from the ones we undergo here and elsewhere on the Internet. Their discussions were rational, constructive, and cooperative. Our discussions are irrational very often, filled with insult, and are not constructive at all. Our discussions here and elsewhere on the Internet are filled with participants who are trying to show off. It is dismaying to me. The Internet has so much potential for developing ideas, but the jackasses among us block the path to progress. But these WWII vets were truly trying to build a better world. They had lived through the war and the Great Depression–they wanted something better.
So they really tried to work through what our world would be like if we had unlimited gold and we were still on the gold standard. They found that problems that were unable to be funded by our system of finance but were nevertheless essential to the welfare of the people could suddenly be paid for. They found that limiting factors would be the availability of natural resources, trained personnel, equipment, and the like. They found that demand for engineers, equipment operators and other skilled trades would rise and create more, better-paying jobs. They found that an unlimited supply of gold would enable America to build a better life for all.
And, because they were not idiots, they understood the simple idea which many here on this thread are unable to understand. They understood that to just turn our unlimited supply of gold loose and throw it at every problem and give each citizen a million gold dollars each year would be like trying to drink from a fire hose–we simply could not handle it. They saw however that allocating the unlimited gold to projects that were worthwhile, like infrastructure development and maintenance, would be non-inflationary and would help build better lives for us all. Such rational, intelligent, constructive discussions seemed natural to me, but it is rare on the Internet, especially here. Gail is a voice crying in the wilderness.
But back to MMT. I grew up with the ideas that those veterans developed, and many years later, when I first read about MMT’s theories I was excited. I participated in their discussions and offered the ideas that those veterans had developed. But I was met with another problem of the Internet–the MMT people, not all of them, but one of their leaders was hostile toward me–the not-invented-here-syndrome was working overtime there. It was sad. Their books, and I have read most of them, fall far short of the work and ideas that those veterans produced so long ago. I have written a book in which I try to carry on the work they did. Because I made a career in designing and developing large-scale computer hardware and software systems I applied that skill to the veterans’ ideas. I have worked through what it would mean to apply an unlimited supply of money to our national problems. But the predominant reaction here and elsewhere is ridicule of my ideas. Everyone seems to think that I am stupid enough to give each citizen a million dollars a year and sit back and watch what happens. I am alarmed by this reaction because if it is truly the state of our collective intellectual powers as a community then we are doomed. I am an old man so I won’t feel the worst of catastrophic global warming, but you can bet your butt that it is coming, and it is coming fast.
Gail has made the case, and made it well several times here, that a lack of funding blocks progress in developing energy for our future needs. But even she rejects the idea of unlimited money, while saying that we need more money. I am trying to tell her that we already have an unlimited supply of money. It exists, and it has always existed, and our financial systems are making slow progress toward that fact. But because of the way our government is structured, those in power are tied to the status quo. They don’t want change and they have the power to block it. We may have already run out of time. And take if from an old man–in matters of life and death, running out of time is a very bad thing.
From time to time I wonder what those veterans would think of what happens on the Internet. I wonder what they would think of this thread.
“The Internet has so much potential for developing ideas, but the jackasses among us block the path to progress. ”
1. Sounds like you are from a politer time. First suggestion is, since most people are anonymous on the Internet and thus less polite, you need thicker skin.
2. The reason people get that way, is that there is a never ending revolving door of people who show up, read one article, and post a bunch of “solutions”, while people have been on here for years and have hundreds, even thousands of hours of research into these issues. If you go back and do a few dozen hours of reading, you may find that what you currently consider irrational, is actually based on a realistic, factual understanding of our current predicament.
“They found that an unlimited supply of gold would enable America to build a better life for all.”
They lived during the wealthiest time for America, at the wealthiest place in the world, at the wealthiest moment in history. The wealth being an abundance of fossil fuels that allowed for tremendous growth for quite a long time. We don’t have a massive amount of oil left to keep doubling our consumption, and if we did, we would hit many other limits shortly after.
“They saw however that allocating the unlimited gold to projects that were worthwhile, like infrastructure development and maintenance, would be non-inflationary and would help build better lives for us all.”
The Federal government does this already. They simply choose the financial system and the military as the big things to spend the money on. They could just as easily spend trillions per year on other projects that some people would find more useful and others would consider less so. It is quite interesting the sacrifices people will make for war, that they won’t for any other crisis.
It sounds like large government projects plus Universal Basic Income is pretty much what you are calling for; am I missing anything?
I should have added this about the veterans who met in our home in 1949. They thought for themselves and they never stopped. They began to do what Albert Einstein did when he produced the General Theory of Relativity and shook the universe. They designed their own thought experiments. Beginning in the late 1940s, over a period of about eight years, they pondered five economic questions with purpose and objectivity:
• Did the gold standard impose a limitation on our money supply? They decided that it did.
• Did this limited supply of money impose a limitation on economic growth? They decided that it did.
• Did disconnecting from the gold standard remove all limitations from our money supply? They decided that if we could control inflation our supply of money would be virtually unlimited.
• Was there a way to control inflation? They decided that there was, and they designed it.
• What effect would our unlimited supply of money have on taxation? They decided that we would live tax-free lives.
As I have watched economic events unfold over the years I found that they were right much more often than they were wrong, and I found that their ideas are understandable—they make sense to me. Their conclusions were not developed from their formal educations because most of them had very little. Their discussions were an impressive display of sustained, cooperative, and rational acts by ordinary men, or as they described themselves: “common men seeking a common goal.” I was an eyewitness.
“• Was there a way to control inflation? They decided that there was, and they designed it.
• What effect would our unlimited supply of money have on taxation? They decided that we would live tax-free lives.”
The problem is, in the real world, humans lack the discipline to run such a system. In order to get elected, the representatives have to promise to do stuff for people. If they do not make promises, then the other person who makes promises gets elected. Then, more money is needed to fulfill the promises; either more tax or more inflation through increased national debt (or “issuing more money” in your version).
Why would a farmer even have a gallon of milk to sell? Why would any one bother to work with a guaranteed income?
Who would do the dirty job of pumping your septic or gathering your garbage or working outside all day in the sweltering heat and the brutal cold? Would there be a section of humanity forced to do that work? Slaves?
I don’t think this has been thought through well enough.
Regards
I have thought it through and I have written a 600 page book about it. It should be out by late January. Half our population would love to have the stipend I talk about it. They would like to be able to live a decent life and the additional income might push them over the hump.
Until a few years ago I owned a ladies dress shop on a historic square in Texas. Over the years I found that the ladies always wanted new clothing and accessories. I saw that year after year, I would get the same numbers of customers coming into the store, but the dollars they spent would go up and down as the economy went up and down. The last big surge we had at my shop was when the oil and gas well drilling was underway in our area. I sold clothes like hotcakes. The ladies had money to spend and they spent it., But when the drilling dried up everything went bust. Nobody had money to spend. Stores on the square that had been there for year had to close because of a lack of income, not a lack of demand. The ladies wanted new clothes but they did not have the money. By infusing the ladies with additional income the economy would boom. It ain’t rock surgery.
If you want to get an idea of what my system includes then go to jerryrhamrick.com.
Let me guess – the book is called The Perpetual Economic Prosperity Machine – How Giving Money to Everyone will Lead to Happiness.
You are the new Keynes – on steroids
http://2.bp.blogspot.com/-nsJwBH73kr4/UQgJaT0vdbI/AAAAAAAAq0E/lnN0WWFtgsg/s1600/409034_364379873652317_579069085_n.jpg
“Nobody had money to spend. Stores on the square that had been there for year had to close because of a lack of income, not a lack of demand.”
Demand does not mean want. It means desire to buy the good or service at the current price. Not just wanting to do it, but actually going out and spending the money to buy the thing at the price. Your solution may work in the short-term but could have dire consequences in the long run.
to Matthew Krajcik: I live in the real world. I have probably lived in it much longer than you have, and I am absolutely certain that I have been thinking about these ideas much longer than anybody now alive. I started in 1949. It is amazing to me how so many people, probably most of the people who comment on blogs, always assume that they know more than everybody else. They always assume that the other guy could not possibly have thought of things that they are just now thinking of. But, I’ll give you a little credit for asking a reasonable question, but I will have to offset the credit with a demerit for asking the question in such an offensive manner. You assumed that in my system people would get elected and therefore we would put a lot of greedy people into office and they would do what comes naturally. I agree with you in this instance. That would be a dumb thing to do, so I would not do it, and in my system i do not use elections. The ancient Greeks, especially the Athenians, knew of this problem long long long ago, and they figured out a way to solve it. So, I knowing that there are more people who are smarter than me than there are people who are dumber than me thought I should look for an answer rather than try to dream one up so I adapted the Athenian method of choosing representatives into my system. Problem solved–even before you thought that there was a problem. In other words your attitude keeps you from learning anything. Remember, my attitude is that there are lots of other people who are smarter than me so it would be smart of me to try to learn from them. Once I learned to do that I found that I was smarter than before. Life got easier and better for me and my family. But if you have all the answers then you already knew that, didn’t you. I could tell you a lot more about how my system works, but it is of no use. At the end of the day, people like you will have the last laugh. You will drag us down with you. Have a nice life.
To: Gail, I think you are smarter than me, and that is why I come here.
Thanks!
Do you mean via Sortition?
https://en.wikipedia.org/wiki/Sortition
A much bigger issue here is that you are talking about money and politics as being the issue when this blog’s articles seem to be primarily about how limited real resources are the primary problem, not the unlimited man-made resources of ledger entries.
That is one way, and my system will use it in much the same way that the Athenians did. But the most important process they followed was when Cleisthenes was given dictatorial powers to make some reforms. He divided the Athenian population into ten new tribes with new names and with new members. In effect he broke up voting blocs and put enemies in the same tribe. Then he assigned them key duties for running the government, not as decision makers but as administrators. it was a hell of an idea and an early version of random selection across a large population He was doing what we now know to work. By using his process we will never need elections again. We may use something similar to elections when we vote on hiring someone to serve a position that requires professional skills and experience such as Secretary of State.
Lastly but very importantly, Paul Cartledge a big name in professors of ancient history, especially ancient Greece, has just come out with a new book about Greek democracy, and at the end of the book he said that has consulted with computer specialists and he believes that it is now possible to emulate the workings of Athenian democracy in a large nation. He is right. I have believed that since the Internet cranked up and I have spent the last twelve years designing systems to bring Athenian democracy into modern times.
My book is scheduled to go to the publisher by 12/18/16 and should hit the shelves shortly thereafter. I am an old man, and not much excites me anymore, but I am excited now. I hope I live long enough to see what happens. All I need is about one more year. Fingers crossed here.
I can see that putting potential trouble makers to work was a good strategy.
I think the key thing you have missed is that we are operating in a very different time. Our problem is falling ability to extract resource profitably. No amount of “money” or debt will change this problem.
We have used debt as long as we could, when the opportunity gradient was positive. Once it turns to negative, there is no point in using debt, because you end up with less after you make your investment than you had before. No matter how much debt (or money) the government may try to make, it doesn’t fix the resource problem.
I understand what this blog is about, and I have been impressed from the start. I have long had a high regard for actuarial science as a profession. The work they do is truly useful while the profession of economics is nothing that intellectual prostitution. )A very famous scientist made that observation. I came here to learn from Gail and if gained very much from the time spent here. She is aces in my book. I have tested her ideas pretty strongly in recent days, but she is a smart cookie and handled everything I threw at her. When you know what you are doing you can stand ground without doubt. Don’t tell her what I said, okay?
OK
Meanwhile in Norway:
The western part is where the oil magic used to happen, but lately many have lost their jobs. Problem is, there’s no new jobs for them. Soon the tide will turn, says the politicians. Yeah, sometimes it helps to wish upon a star, but not this time I’m afraid.
If we had $300 per barrel oil, I am sure we would be drilling for much longer. Getting the price up is a problem, however. I notice that WTI is back under $50 per barrel again.
I suppose the swedes who does the jobs the norwegians don’t won’t soon comes home? And starts doing the jobs in Sweden the immigrants do now.
Polish construction workers has started leaving already, Swedish waiters etc will follow.
Dear Gail,
Numerous growth opportunities would exist if energy costs went down substantially. For example desalination of seawater and its transportation to deserts for agricultural purposes, or the colonisation of Mars, the Elon Musk dream of creating a multiplanet civilization…
It all goes back to EROEI. With a compact energy source having an EROEI of 10 000 to 1 numerous things would become profitable projetcs.
John
I agree that numerous growth opportunities would exist if energy costs went down substantially. I also agree that an energy source of EROEI of 10,000 would allow numerous projects to become profitable.
I am not convinced it “all goes back to EROEI,” however. We need specific kinds of fuels to work in built infrastructure; we do not have the resources or ability to start over again. EROEI doesn’t really tell us as much as people think it does. At 10,000 to 1, it is probably good, but I wouldn’t make bets at lower levels. It depends on who is calculating it. It depends on the timing of the energy return. It depends on whether the energy is intermittent. It depends on whether you are using a good quality energy source to produce a poor quality energy source.
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Complexity is Entropy
But most people think that complexity is our savior.
As always, the presented data (in aggregate) are compelling. Multiple economic and energy constraints to growth (the expectation (wish) for exponential -compounding growth year to year) leads to limit because most humans don’t understand way the exponential function works.
Increased Complexity occurs at the expense of a decrease in Entropic value (increased order, more constraints) and requires Energy to create (and maintain) this complexity. It is best to use high-density abundant low-cost Energy.
In addition, as I think you (Gail) have pointed out before, our switch to other energy sources is rushed, inadequate, parasitic (on other energy sources) and perhaps (or definitely) too late. We should have been putting monies into research to develop high efficiency solar transfer /battery (energy ) storage a long time ago (30 years ago or more). Our research infrastructure and investments are on the decline (costs too much without immediate profit gain) just at a time where it needs to be increased. But as you point out, this expenditure is in the debt column. But unfortunately we are not proactive beings. I don’t see any real solutions for these overlapping predicaments (I wish I did).
Someplace in the background, for a very long time, research has continued in the direction of trying to figure out solutions to our energy problems. I am afraid our real problem is that the physics of the situation is such that there really are not good, inexpensive solutions. Otherwise, all of this research would have found them. Fossil fuels were about as good as we are going to get. Cost is a much more important constraint than most ever expected.
A lot of people were under the illusion that prices would rise endlessly, and because of this, high-priced alternatives would at some point become cost effective. Unfortunately, this is not really the case.
Well said. This is the core issue. I would add that if we did solve the energy problem then some other resource like soil or water would take it’s place.
“Otherwise, all of this research would have found them.” This is also fairly telling about our own limitations. Wherever we are on our line of evolution as homo sapiens, there exists ample evidence that we were not prepared for the technologies we discovered as a result of refined fossil fuels. As evidence we have created things like nuclear weapons and nuclear power plants without a whole lot of forethought. Further we spend countless trillions in healthcare resources fighting Darwinism and natural selection. We are a victim of our own success and the current evolved state of homo sapiens appears to have reached its mental limitations. Another way of thinking of the situation is that our technology has evolved faster than we have.
It was not easy for a person brought up in the ways of classical thermodynamics to come around to the idea that gain of entropy eventually is nothing more nor less than loss of information.
Gilbert N. Lewis
Interesting way of putting it!