Raising Interest Rates Can’t End Well!

The Federal Reserve would like to raise target interest rates because of inflation concerns and concern that asset bubbles are forming. Part of their concern seems to arise indirectly from the rise in oil prices, relative to their low level in early 2016.

Figure 1. WSJ figure indicating likely reasons for rate hike.

A finite world does not behave the way most modelers expect. Interest rates that worked perfectly well in the past don’t necessarily work well now. Oil prices that worked perfectly well in the past don’t necessarily work well now. It seems to me that raising interest rates at this time is very ill advised. These are a few of the issues I see:

[1] The economy is now incredibly dependent upon rising debt to prop up its spending. The pattern of total debt to GDP for the United States is shown in Figure 2.

Figure 2. United States’ debt to GDP ratios based on Federal Reserve Z1 data and BEA GDP data. The red line represents the increase over the latest three years.

There was a huge increase in debt in the period leading up to the 2008 crash. Every year between 2001 and 2008, the increase in debt was greater than four times the increase in GDP. In fact, for some years in that period, more than $8 of debt were added for every dollar of GDP added.

We now seem to be starting a new run up in debt. In 2015, the amount of debt added was $2.5 trillion ($66.1 trillion minus $63.6 trillion), while the amount of GDP added was only $529 million. This indicates a ratio of over 4.7 for the single year of 2016. (Figure 2 shows only three-year averages, because of the volatility of amounts.)

[2] The vast majority of the debt run-up since 1981 (Figure 2) seems to have been enabled by falling interest rates (Figure 3). Given how dependent we are now on large increases in debt to produce GDP, it would seem to be dangerous for the Federal Reserve to raise interest rates. 

Figure 3. US Federal Bonds 10 year interest rates. Graph produced by FRED (Federal Reserve Economic Data).

With falling interest rates, monthly payments can be lower, even if prices of homes and cars rise. Thus, more people can afford homes and cars, and factories are less expensive to build. The whole economy is boosted by increased “demand” (really increased affordability) for high-priced goods, thanks to the lower monthly payments.

Asset prices, such as home prices and farm prices, can rise because the reduced interest rate for debt makes them more affordable to more buyers. Assets that people already own tend to inflate, making them feel richer. In fact, owners of assets such as homes can borrow part of the increased equity, giving them more spendable income for other things. This is part of what happened leading up to the financial crash of 2008.

The interest rates that the Federal Reserve plans to change are of a different type, called “Effective Federal Funds Rate.” These also hit a peak about 1981.

Figure 4. US Federal Funds target interest rate. Graph produced by FRED (Federal Reserve Economic Data).

[3] The last time Federal Funds target interest rate was raised, the situation ended very badly.

Figure 4 (above) shows that the last time Federal Reserve target interest rate was raised was in the 2004-2005 period. This was another time when the Federal Reserve was concerned about the run-up in food and energy prices, as I mention in my paper Oil Supply Limits and the Continuing Financial Crisis. The higher target interest rate was somewhat slow acting, but it eventually played a role in bursting the debt bubble that had been built up. In 2008, the amount of outstanding mortgage debt and consumer credit started falling, and oil prices fell dramatically.

It is ironic that the US government is again trying to bring down food and energy prices, when they are at a price level similar to the price level when they tried this approach the last time.

Figure 5. Monthly average Brent oil prices, with notes regarding when the Federal Reserve changed its target interest rate.

The Federal Reserve looks at its favorite metrics, PCE inflation and PCE inflation excluding food and energy. From this high-level view, it is likely that they have no real understanding of exactly what energy price problems are causing the strange result. With this high-level view, they do not realize that a big contributor to the rising costs is the increase in oil prices between the January – March 2016 period, when they were under $40 per barrel, and recent prices, which were above $50. (They are now back below $50 per barrel, but this would not be apparent from the metric.)

When this high-level view is used, it is easy to miss how low energy prices are today, relative to the needs of energy producers. Most people who have been following what is happening in the oil industry know that prices are not high, relative to the prices needed for profitability. Even if some US companies claim to be profitable at $50 per barrel, it is clear that, in general, the industry cannot withstand prices as low as they are today. At the current price level, investment is too low.

Part of the problem is that oil exporters need higher prices if they are to obtain adequate tax revenue to fund their programs. For example, Saudi Arabia has found that because of its falling tax revenue, it needs to borrow money to maintain its programs. This is a big change from being able to set aside money in a reserve fund, out of excess tax revenue. This is another place where the shift is toward more debt.

[4] The pattern the Federal Reserve seems to want to follow is the 1981 model, in which temporary high interest rates seemed to force energy prices down for a long time.

If we look at oil prices compared to US wages per capita (dividing total wages by total population), we find that oil “affordability” was at a low point in 1981. We saw previously in Figures 3 and 4 that interest rates were raised to a very high level at that time. The gray stripes in Figures 3 and 4 indicate that a recession followed.

Figure 6. Average barrels of crude oil affordable by US residents, calculated by dividing the average per capita wages (calculated by dividing BEA wages by population), by EIA’s average Brent oil price for each year.

Figure 6 shows that after interest rates fell, affordability rose until 1998. To a significant extent this was the result of falling prices, but it also was the result of a larger share of the population working, and thus contributing to rising wages.

There were many things that allowed this benevolent outcome to happen. One was the fact that we already knew about available oil in the North Sea, Mexico, and Alaska. When this oil came online, oil prices were able to drop back to a much more affordable level. It is very doubtful that shale oil could play a similar role today, especially if it is likely that higher interest rates will drop oil prices from today’s $50 per barrel level.

One thing that helped improve affordability in the post-1981 period was improved gasoline mileage. There were also cutbacks in oil use for home heating and for electricity generation.

Figure 7. Average on-road fuel efficiency by Sivak and Schoettle, “On-Road Fuel Economy of Vehicles in the United States: 1923-2015,” http://www.umich.edu/~umtriswt/

Figure 7 suggests that the earliest changes in fuel economy provided the biggest savings. In fact, overall savings after 1993 are quite modest.

One factor that helped reduce oil consumption both in the 1970s and in the 2008 to 2013 period was high prices. Now that oil prices are lower, we cannot expect as good a result. If oil prices drop back further, there is even less incentive to conserve.

[5] Adjustments made using Quantitative Easing (QE) (a way of producing low interest rates) appear to have had a rapid, significant impact on oil prices.  

In late 2008, after oil prices had crashed, the US Federal Reserve implemented QE. Using QE created very low interest rates, which seem to have had an impact on world oil prices.

Figure 8. Monthly Brent oil prices with dates of US beginning and ending QE.

Clearly, lower interest rates encourage more borrowing, and discontinuing a program that gives very low rates would tend to have the opposite impact. Thus, we would expect the direction of the oil price changes to be similar to those shown on Figure 8.

One hypothesis regarding the rapid impact of QE was that it encouraged borrowing in US dollars, in order to purchase bonds in other currencies with higher interest rates (“carry trade”). When QE ended, the carry trade was cut off, reducing investment in countries with higher interest rates. Instead, there was more interest in investing in the US. These changes led to the US dollar rising relative to many other currencies. Since oil is priced in US dollars, these shifting relativities made oil more expensive in non-US dollar currencies.  Thus, the affordability of oil declined for buyers outside the US. It was this decline in affordability outside the US that brought down oil prices. Figure 9 shows the shift in currency levels when the US discontinued QE in 2014.

Figure 9. US Dollar vs. Major Trade Weighted Currencies. Chart created by FRED (Federal Reserve Economic Data).

Increasing Federal Reserve target interest rates would seem to have the effect of further raising how high the US dollar floats compared to other currencies. If this happens, we would expect lower oil prices, and more problems with excessive supply.

[6] The way increased lending seems to move the economy along is by using time shifting to provide a “layer” of future goods and services that can be used as incentives for businesses to invest in making goods and services now.

The problem when making goods of any kind is that resources need to be purchased and workers need to be paid, before the finished product is available for sale.

Figure 10. Image created by author showing how goods and services are created. It also needs a “government services sector,” but it didn’t fit easily on the slide.

As a result, at the time goods and services are produced, there aren’t enough already-created goods and services to pay all of those who have contributed to the effort of making the goods and services. To work around this problem, debt or a product similar to debt is needed to pay some of those contributing to the process of creating future goods and services.

One way of thinking about the situation is that an increase in debt during a time period adds a layer of future goods and services that can be distributed to those contributing to the effort of making the goods and services (Figure 11). This significantly increases the amount of goods and services to be distributed above the level that would be available on a barter basis, based on goods that have already been produced.

Figure 11. Figure by author showing how the “increase in debt” effectively adds another layer of goods and services that can be distributed. (As with Figure 10, this chart should include a category for government services as well.)

[7] The spending ability of US citizens has been lagging behind, even with the huge amount of debt being added to the economy. If the Federal Reserve raises interest rates, it will tend to make the situation worse.

The biggest expenditure for most households is housing costs, either for an apartment or a new home. As with oil, we can compare affordability by comparing prices to per capita wages (total US wages/total population). On Figure 12, one amount shown is the median rent for unfurnished apartments in the US, based on US Census Bureau data; the other is The People History’s estimate of “new home” prices over the years. In general, affordability has been falling. Figure 12 shows that the fall in affordability of apartment rent is a relatively recent phenomenon. The fall in affordability of home prices is a long-term phenomenon, no doubt enabled by falling interest rates since 1981.

Figure 12. Comparison of new home prices from The People History and median non-subsidized rental asking prices based on US Census bureau data. These are divided by (total US wages/ US population) from the US BEA. The indexes are different for home and apartments, chosen so that two would show separately on the chart. If amounts shown are falling over time, housing is becoming less affordable.

Another product whose affordability is of interest is electricity. Electricity is an energy product whose affordability is important, because it is used in residential, commercial, and industrial locations. The affordability of electricity tends to be less volatile in pricing than oil, whose affordability was shown in Figure 6. Because the pricing of electricity is more stable, I have shown the affordability of electricity at three different spending levels:

  • Per Capita Wages – Total US wages divided by total US population.
  • Per Capita DPI – Total Disposable Personal Income (DPI) divided by total US population. Disposable Personal Income includes government transfer payments (such as Social Security and unemployment payments), in addition to wages. It also includes “proprietors’ income,”which is a relatively smaller amount.
  • Per capita DPI+Debt – Total Disposable Personal Income, plus the increase in Household Debt during the year, divided by population.

Figure 13. Quantity of electricity that an average worker could afford to buy, using three different definitions of income. (Average wages are based on BEA total salaries and wages, divided by BEA total population, and Disposable Personal Income is defined similarly, using BEA data. DPI plus debt includes the change in Household Debt, from the Federal Reserve’s Z1 report, in addition to DPI in the numerator.)

Based on Figure 13, electricity was becoming more affordable until 2001 on a wages-only basis. Since then, its cost has been relatively flat.

On a DPI basis, electricity was considerably more affordable until 2004, after which it declined, and then rose again.

On a DPI + Debt basis, there was a much bigger jump in affordability. This big increase in debt corresponds to the housing bubble of the early to mid 2000s. Interest rates were lower and underwriting standards lessened, so that almost anyone could buy a home. This allowed a run-up in home prices. Homeowners could borrow this equity and use it for whatever purpose they chose–for example, fixing up their home, buying a new car, or going on a vacation. The big increase in DPI+Debt, relative to DPI, gives an indication of the extent to which the housing-related debt bubble in the early 2000s affected spendable income.

Which of these scenarios is really correct? It depends on the segment of the economy a person is looking at. For people of modest income, in other words, those who rent apartments, the wage-only scenario is probably the most representative. For people who have high incomes and own a home, the DPI plus Debt scenario is probably more representative.

[8] All income seems to ultimately derive in part from rising debt, and in part from energy consumption. If interest rates are too high, the required interest payment exceeds the benefit of time shifting.

We can see from Figure 13 that debt is very helpful in producing income for workers. Some of this comes from the government transfer payments, funded by debt. Some of this comes from the wages paid by businesses, funded in part by shares of stock, which are debt-like in nature. The currency with which workers are paid is, in fact, debt. A person can see the connection, by thinking of currency as being similar to “gift cards,” issued by a business. The business would need to record the value of these gift cards as a liability on its balance sheet.

The underlying problem giving rise to the need for debt is “complexity,” and the need to obtain the services of many trained people and of many types of tools, before goods and services can actually be created. All of this builds extra expense and delays into the system, in the manner described in Figures 10 and 11. Somehow, there must be interest payments to compensate for the time shifting that is necessary: the whole string of events that must lead up to producing the products that are needed. Tools must be made far in advance of when they are needed. In fact, there is a whole string of “tools to make tools” that takes place. Factory buildings need to be built, and roads need to be built. Workers must be trained. In order for the people and businesses involved in these processes to be compensated for their effort, and induced to delay their own consumption of goods and services, there need to be interest payments made for the time-delay involved.

Debt (together with shares of stock, which are debt-like) cannot operate the economy alone. Energy products are also needed to provide the physical transformations required. These include heat and transportation, and electricity to operate devices that use electricity. Of course, human workers are needed as well. The major pieces of the system, and the way they operate together, are shown in Figures 10 and 11.

It would appear that an economy can start “from scratch,” using only debt, plus available resources (including energy resources, such as biomass for burning), and some sort of government (perhaps a self-declared king). If the king sees a productive project that might be undertaken–perhaps building a bridge, or cutting down more trees for farmland–the king can impose a tax on the citizens, and use the tax to hire a group of laborers to use the available resources. Once the tax is imposed, it is a debt of the citizens. It can be used to pay the laborers who do the work.

The debt-based system seems to build upon itself. As more wages are available, these wages allow workers to take out loans, and allow businesses to create new goods and services that can be purchased using these loans. These loans are promises that can be exchanged for future goods and services. Since energy is used in creating all goods and services, these loans are more or less guarantees that the economy, and its use of energy products, will continue in the future.

The thing that connects debt to the rest of the system is the interest payments required for time shifting. When the system is relatively efficient, the return on investment is high, so interest payments can be high. As diminishing returns set in, interest rates need to be lower. We are now encountering diminishing returns in many areas: extracting fossil fuels, extracting minerals, producing enough fresh water for a rising population, creating an adequate supply of food from a fixed amount of arable land, creating new antibiotics as bacteria become drug resistant, and the cost of finding new drugs to treat diseases that affect an ever-smaller share of the population.

[9] It is relatively easy to make economic growth occur when energy products are becoming more affordable, relative to spendable income. When energy products are becoming less affordable, it becomes virtually impossible for economic growth to occur.

We know that historically, the cost of energy products has tended to fall over time. This has been described in more than one academic paper.

Figure 14. Figure by Carey King from “Comparing World Economic and Net Energy Metrics Part 3: Macroeconomic Historical and Future Perspectives,” published in Energies in Nov. 2015.

A United Nation’s report also shows the same pattern (the bottom two categories are energy related):

The only way that energy costs can fall relative to GDP, at the same time that energy use is rising, is if energy products are becoming less expensive over time, compared to the incomes of the citizens. This falling price level allows more energy products to be purchased. As energy prices drop, it is possible for the economy to afford the increasing quantity of energy products required to produce even more goods and services.

There are many ways that energy products can become less expensive. For example, the mix can shift among different energy products, shifting to the less expensive products. Or new techniques can be found that make extraction less expensive. Finding more efficient ways to make use of energy products, such as the increasing miles per gallon shown in Figure 7, also contributes to the falling relative cost to workers. Of course, “falling EROEI” tends to work in the opposite direction.

Unfortunately, we are now running out of ways to truly make energy use cheaper over time. The ways we seem to be down to now are (a) paying energy companies less than their cost of extraction, and (b) reducing interest rates to practically zero.

We can see from Figure 6 that oil was becoming more affordable relative to wages between 1981 and 1998. Falling interest rates and rising debt seemed to play a role in this, as well as success in drilling for oil in places such as the North Sea, Mexico and Alaska. Since then, the only way that oil affordability could rise was by oil prices falling below the cost of extraction, starting in mid 2014.

The situation for electricity is shown in Figure 13. Electricity was becoming more affordable on a “wages-only” basis, until 2000. Since then it has plateaued. The economic push that would have come from falling electricity prices must come from elsewhere–presumably from adding more debt.

Affordability of electricity on a “DPI plus debt” basis rose considerably more, with a peak in 2004. Thus, adding more debt, in the form of transfer payments and rising debt for homes and vehicles, added considerable spendable income. But it has not been possible to regain the affordability of the 2004 period in recent years.

We are now reaching limits because we no longer are truly seeing a reduction in energy costs. Instead, we are seeing very low interest rates and oil prices lower than the cost of production. These seem to be signs that we now are reaching limits. Energy prices really need to drop for the economy to grow; the economy will make them drop, whether or not producers can profitably extract oil at the low cost that is affordable by the citizens.

[10] China seems to be cutting back on growth in debt now, at the same time the US is talking about increasing interest rates. Energy products, especially oil, are sold to a world market. If China cuts back on debt at the same time as the US raises interest rates, energy prices could drop dramatically. 

Figure 16. UBS Total Credit Impulse. The Credit Impulse is the “Change in the Change” in debt formation.

UBS calculates a global “credit impulse,” showing the extent to which there is a trend toward increasing use of debt. According to their calculations, since 2014, it is China that has been keeping the Global Credit Impulse up. If China is cutting back, and the US is cutting back as well, the situation starts looking like the 2008-2009 period, except starting from greater problems with diminishing returns.

Observations and Conclusions

The economy looks to me like a type of Ponzi Scheme. It depends on both rising energy consumption and rising debt. Judging from the problems we are having now, it seems to be reaching its limit in the near term. Raising interest rates will tend to push it even further toward its limit, or over the limit.

Debt is used to pay participants in the economy using a promise for future goods and services. This allows the economy to appear to distribute more goods and services than are actually available. In a way, adding debt is like being able to manufacture future energy supplies that can be used to pay those who participate in making the goods and services we produce today. When energy products are high-cost to produce, and delayed in timing (such as wind and solar PV), the need for debt especially rises.

Part of our problem today is the extent of specialization of those analyzing our current problems with energy and the economy. This means that virtually no one understands the full problem. Bankers seem to think that debt, and interest rates on debt, can solve all problems. Energy analysts think that energy resources in the ground are all-important. They both create incorrect analyses of the overall problem. Rising debt is needed, if energy products that have been created are to be absorbed by the world economy. The energy gluts we are seeing are signs of inadequate wage growth. A major function of growing debt is to add wages. Unwinding debt leads to the kinds of problems that we encountered in 2008.

It is tempting for world financial leaders to think that they can find a solution to today’s problems by using higher target interest rates to slightly scale back economic growth. I don’t think that this is really a good option. The world economy is operating at too close to “stall speed.” The financial system is too fragile. If any solution can be expected to work, it would seem to need to be in the direction of re-starting QE. Even if it produces asset bubbles, it may keep the world economy operating for a bit longer.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
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2,228 Responses to Raising Interest Rates Can’t End Well!

  1. unravel?iframe=true&theme_preview=true says:

    Fast Eddy – you may have seen this – about a couple living a few years as hunters gatherers in NZ.. A pretty good effort at the fast eddy challenge .. especially going from vegan to meat eating when things got tougher. However theres a few things quite clear from this
    – it took them some time to adjust
    – they need to go into town for their vege fix
    – they moved from bows and arrow to guns … requiring ammo etc
    – they use quite a lot of area to make it work (they keep on the move)

    • Fast Eddy?iframe=true&theme_preview=true says:

      I was listening to radio pravda (radio NZ) this morning working in the garden and I heard an interview with the woman in the story…

      You make some good points – very difficult to go full HG… I notice the gun… the groceries.. the spices… the back pack… knife…vitamins… ($5000 per year…) etc….

      The best attempt yet at the FE Challenge… but still… a long way from what life will be like post BAU….

      • Fast Eddy?iframe=true&theme_preview=true says:

        I might add that I am reserving a spot for Miriam in the harem.

      • jeremy890?iframe=true&theme_preview=true says:

        We maintain,” declare Helen and Scott in the introduction to “Living the Good Life,” “that a couple of any age from twenty to fifty, with a minimum of health, intelligence and capital, can adapt themselves to country living, learn its crafts, overcome its difficulties and build a life pattern rich in
        simple values and productive of personal and social good

        In Vermont the Nearings lived without electricity, indoor plumbing, or any source of heat beyond hand-split firewood. They ate most of their food raw out of wooden bowls with chopsticks. They foreswore alcohol, caffeine, and tobacco. They divided their days into three units: four hours for “bread labor;” four hours for music, writing, and other avocations; and four hours for social interaction. They avoided cash as much as possible. What money they did handle came as a result of a maple sugaring operation they used to create specialty candy and syrup. Scott’s exacting practices amazed even Helen. “I bet you fold your toilet paper neat and square,” she once chided him. He acknowledged that he did
        Living the Good Life” draws directly from these experiences, constantly circling back upon the themes of self-sustainability, feasibility, and the need to dissociate “as much as possible, from . . . the plunder of the planet; the slavery of man and beast; the slaughter of men in war, and of animals for food.” The book’s subjects range from detailed explanation of how to build a stone house to the importance of eating “whole foods” in synch with the seasons, from improving soil with natural fertilizers to improving human nature through hard work
        But others understood. As Rebecca Gould (an early “resident steward” at Forest Farm after Scott and Helen had died) writes in her forthcoming cultural history of homesteading, that “the Nearings’ decision to make homesteading `look easy’ was, in part, an expression of their evangelical enthusiasm for the ways of life they had chosen.” These folks helped Helen care for Scott after he announced, at the age of 100, “I think I won’t eat any more.” And after Helen died in a car crash in 1995 they helped transform the Harborside farm into a nonprofit working homestead called the Good Life Center.

        (They also found the groupie-like enthusiasm of many pilgrims to be downright silly at times. After Scott died and Helen began spending winters with a sister near West Palm Beach, Eliot Coleman recalls, some neighbors suggested posting a sign on Cape Rosier Road: “Scott’s dead. Helen’s in Florida. Get a life!”)

        Scott and Helen crushed the Fact Eddy Challenge!

        • Kurt?iframe=true&theme_preview=true says:

          Uh oh, here we go again. 3…2…1… Helloooooo FE!!!

        • Artleads?iframe=true&theme_preview=true says:

          “They divided their days into three units: four hours for “bread labor;” four hours for music, writing, and other avocations; and four hours for social interaction.”

          Maybe something I do could pass for social interaction. But I do find myself somewhat preoccupied with this range of activities, only not knowing how to plan and manage them. It’s instructive to see how the Nearings divided them up so neatly and systematically.

        • Fast Eddy?iframe=true&theme_preview=true says:

          Do you use any power tools (rototiller, etc.) in your farming or gardening? And did you prepare your soil extensively?

          The only “power tool” we have ever used is a pickup truck. Our garden was plowed once the first year we came to :Maine, some 25 years ago, and never since (how convenient — didn’t even have to clear the land!)

          Do you use electricity for any purpose (such as refrigeration, heating, etc.) and, if so, from what source(s)?

          We didn’t have electricity at all in Vermont. It is available in Harborside and we use it chiefly for lighting and to run a freezer and a bathroom heater. Otherwise we heat and cook with wood. (keep in mind a lot of people did not have electricity during the period they lived in Vermont – he was born in 1883 for F789 sake!)


          I’d like to ask if they used any shovels – rakes – or other tools that were made in factories in China…. but they are dead.

          Did they make the pick up truck out of rocks and mud? Where does the gas come from? And the spare parts? What about tranny oil?

          What is self sustainability?

          A system is self-sustaining (or self-sufficient) if it can maintain itself by independent effort. The system self-sustainability is: the degree at which the system can sustain itself without external support.

          The Nearings are million miles from being self – sustainable …. an 18th century farmer would look at these clowns as we would Jamie Dimon — living in the lap of luxury….

          The Nearings are a Cult.

          • Fast Eddy?iframe=true&theme_preview=true says:

            The Nearings developed slipform stone masonry based on the work of New York architect Ernest Flagg (1857-1947). Traditional, cut and laid stonework was too expensive for the common man, so Flagg devised a new method in which any person of limited skills and experience could build a permanent and beautiful house of stone. Rather than doing freehand stonework with a trowel and a level, Flagg erected a vertical framework as tall as the wall, then inserted 2 x 6 or 2 x 8 planks as forms to guide the stonework.

            Stones were placed with a good face against the formwork, and the space behind them was filled with concrete, making a hybrid wall of stone and concrete.


            Environmental impact of concrete. … A major component of concrete is cement, which has its own environmental and social impacts and contributes largely to those of concrete. The cement industry is one of the primary producers of carbon dioxide, a major greenhouse gas. https://en.wikipedia.org/wiki/Environmental_impact_of_concrete

            Sustainable housing:

            • jeremy890?iframe=true&theme_preview=true says:

              In Vermont the Nearings lived without electricity, indoor plumbing, or any source of heat beyond hand-split firewood. They ate most of their food raw out of wooden bowls with chopsticks. They foreswore alcohol, caffeine, and tobacco. They divided their days into three units: four hours for “bread labor;” four hours for music, writing, and other avocations; and four hours for social interaction. They avoided cash as much as possible.

              You are just barking and huffing, and can’t admit you are wrong.
              Get a life.

            • Fast Eddy?iframe=true&theme_preview=true says:

              In the 1930s and 1940s, Nearing and Helen Knothe lived together in Winhall in rural Vermont, where they had purchased a rather large forest tract for $2200 and a moderate-sized farm for $2500. https://en.wikipedia.org/wiki/Scott_Nearing

              Turning on the Lights: Electricity Comes to Rural Vermont 1943


              They lived without electricity in the 1930’s in rural Vermont — but then so did everyone else.

            • jeremy890?iframe=true&theme_preview=true says:

              Yes, they lived without electricity in Vermont the whole time 20 YEARS!
              Pack it in Eddy, they exceeded the Fast Eddy Challenge, best you read their books.

            • Fast Eddy?iframe=true&theme_preview=true says:

              Not exactly…. they had a pick up truck — petrol — cement — and so on…

              The Fast Eddy Challenge is more than just not using electricity…

              It involves completely unplugging from BAU….

              Let’s remember the reason for the FE Challenge — it’s to give Doomsday Preppers an idea of what they are facing when collapse hits (but it is Collapse Lite — nobody will kill or rape them or steal their food during the Challenge….)

            • jeremy890?iframe=true&theme_preview=true says:

              But Eddy, unlike yourself, they stayed at their post here in America to wade out the storm. There was and is a functioning Government with demands, such as, property taxes that had to be paid, hence money, business and equipment.
              For all practical purposes, they lived up to your Challenge 100%. So, clam up and accept you are wrong, again.

            • Fast Eddy?iframe=true&theme_preview=true says:

              Ah no.

              My challenge says – no petro – no pick up truck – no BAU tools – no cement – no food that you did not grow or kill — no medicine or doctors — and ESPECIALLY – no flying on jet planes to Florida in the winter…

              Basically they’d need to live like these fellas:

              I ask the question again:

              Do you think that farming caused the population explosion to 7.5 billion?



            • Fast Eddy?iframe=true&theme_preview=true says:

              What storm did they wait out?

              Oh right – the one where as electricity and flights were broadly available — and they quickly adapted to make good use of all of these highly sustainable services.

              Well Done!

              And if I had a private jet and I said hey Scott – Helen… I like you guys — and I don’t need the jet this week — so if you would like a free lift down to Florida — it’s on me….

              How much you wanna bet they’d pack their bags in 20 minutes…

        • says:

          four hours of social interaction sounds good to me

        • says:

          I’m afraid you likely won’t make inroads there with the Nearings.

          For years people here occasionally provided good info on notill and other real proven techniques of land/husbandry management and their results. Basically, if there is a bit of precipitation/moisture you can develop pretty diverse agriculture almost everywhere on this planet. That’s not the problem.

          The problem is the twisted (genes?) path dependency of human societies.
          As long the urge to control, steal from others, yoke others into submission is present, nothing changes, nothing can be achieved and scaled up from working individual conditions in the long term for the larger system. There have been crude and stupid attempts to eradicate this phenomenon like killing all intellectuals/bourgeois/foreigners before, but that’s apparently not the workable way. Most likely some sort of voluntary critical mass adoption is necessary first and from that point vigilantly keep the “destructive virus” under control, i.e. being immediately socially ostracized if you try it again. Not sure how this could be implemented, unless some massive die-off first or other similar events bulldozing the dominant paradigm, so there is a cleared space provided for this development. However, I remain skeptical, although the understanding to these processes is available, the human-ape as an collective interactive body seems unable to upgrade.

        • xabier?iframe=true&theme_preview=true says:

          Really, the Nearings were like the Greek philosophers, each creating their form of the Good Life – the Cynics, the Stoics and Epicureans, etc.

          But the Good Life is always embedded to some degree in the whole system.

          Diogenes tested the limits in his barrel, carrying out all physical functions in public and leading as bare a life as possible (interesting that he was the son of a banker and speculator).

          However, when Diogenes begged his food, it came from the system, no doubt grown, harvested and transported by a slave.

          It’s salutory to realise that moral purity is simply impossible.

  2. says:

    Well, I just got out of the hospital. I think I had a near-term-collapse anxiety attack. Holy hell does the “system” try to indoctrinate in every conceivable way. Even if it means driving you insane. But I will not submit. I had an epiphany, and everything is going to be just fine. (I’m not suggesting there won’t be a near instant collapse though, guess I came to terms with my own mortality).
    FE, you and I ought to have a drink before SHTF.

    • Fast Eddy?iframe=true&theme_preview=true says:

      When I look at the commercial property market…. retail sales… auto sales… corporate earnings… I do feel twinges of anxiety…. and I have woken up in the middle of the night a few times of late…

      A lot of the data is 2007ish…

      I don’t feel the need to Abilify … but the pressure is there…

      Feels a bit like uni exams when I’d leave everything till the day before then marathon memorize…. and try to guess which sections of the term were likely to be on the exam because there was no way in hell I could digest everything in such a short time period.

      I generally thrive under pressure …. but this is different — there is nothing that can be done about it…

      This is the best I can do

      • Fast Eddy?iframe=true&theme_preview=true says:

        Oh jeez… who put those ice cubes in the glasses…. that is blasphemy… sedition …

      • says:

        “I don’t feel the need to Abilify …”
        Seems all the doctors here have a “Medicate first” strategy and is practically all they do anymore. It can be a vicious cycle. It’s crazy. Doctor’s (most) are some of the most indoctrinated people of all.

        • Rainydays?iframe=true&theme_preview=true says:

          Agreed! I have a young niece who has troubles with headaches. So they gave her pills for the headache. Then she had trouble sleeping. So they gave her sleeping pills. Those pills made her nauseus. So they gave her pills for nausea…

          I suggest to her mother that maybe it’s the lifestyle that causes these problems. Staring at the iGadget day and night, no physical activities, only eating junk food… The human body isn’t built for this! Her only reply is to “find a better doctor” (with another set of pills).

      • Harry Gibbs?iframe=true&theme_preview=true says:

        I’m feeling it today, too – unsettled by adumbrations of impending chaos. The data is indeed looking 2007’ish. Re corporate earnings, this quote rather caught my eye:

        “The mesmerizing recent gains mask a very scary fact: Corporate profits remain at levels first hit three years ago. As equity prices have risen since then, shrugging off everything from renewed weakness in crude oil to the quickening of the Fed’s policy normalization, cyclically adjusted equity valuations are now at levels that have only been exceeded heading into the 2000 dot-com and 1929 stock market peaks.”


    • says:

      Take care of yourself. I’ve been battling with anxiety for years, including the occasional attack. I’ve found lots of little tricks to manage it so that it largely doesn’t interfere with my life. But if you let it get out of hand its easy to imagine ending up in a hospital and/or medicated. People who haven’t experienced it often don’t realize just how real/physical it is- definitely not just “in one’s head.”

      If you find yourself interested I’m happy to discuss what works (and what doesn’t) for me.

      • says:

        Sure. It’s good to know what works/doesn’t work.

        • says:

          Here’s my short list:

          Vigorous exercise (pick a goal like running a half marathon, and train for it)

          Yoga once a week

          Glycine (an amino acid), 3 grams sublingual relieves acute anxiety symptoms

          Kratom (leaf of a tropical plant), for long-lasting anxiety relief along with focused energy like a great cup of coffee. Research extensively before using, as dependency is a real possibility. For me no more than 2-3x per week, at 2-3 grams each time is perfect. Goes great with exercise.

          Phenibut (a GABA antagonist), another long-lasting anxiolytic with a mood lift. Good for Sundays if you’re facing Monday with dread

          Propranolol (prescription beta blocker) shuts down the body’s physical reaction to anxiety without any impact on mental function. Completely resolves things like racing heart, difficulty breathing, tight chest, etc.

          Best of luck!

          • says:

            Thanks! I have heard of Kratom, not sure if it’s legal here. I was put on Propanolol once, but the odd sensation it gave me led to a panic attack. But anything that can wean me off my dependence on psychiatrists is good.

      • says:

        Cold water swimming apparently does a great job with depression and anxiety. The buzz of endorphins is why people go in for the iceberg conditions. I don’t know how cold the water has to be but 12 degrees is enough I think. A drug free solution.

    • Van Kent?iframe=true&theme_preview=true says:


      Just some thoughts.

      You are here NOW. There is no other time, future, or past, only NOW. This very second. This breath. This instant, NOW.

      YOU does not exist. Its an physical being, but an intellectual, emotional interpretation of an simulation of you. Tomorrow THAT you, doesn’t exist anymore. THAT you, did not exist, will not exist, shall not exist. It was an illusion all along. Tomorrow, you, have changed. Just stick along and enjoy the ride.

      You are free. There is no need to worry about anything. You are absolutely free. Free of the future. Free of the past. Free of YOU. To do as you very well please. Free to live in the NOW. In the long run, we are all dead anyhow.

      Breathe. Breathe again. And again.

      What is your plan for the next 15min ? Not tomorrow, not a year from now. Just the next 15min?

      Just some thoughts.. hope you’re feeling better..

      There has been several instances in my life, when I was under severe stress. I realized in those moments the worst enemy of actually coping and performing under the severe stress, was me. So I’ve developed some techniques for myself to be able to function at peak performance no matter what happens. I’ve often found out, its not about being smart, or being strong, competetive, a winner, or anything like that. The only thing of selective importance, peak performance, is to just keep functioning. That will do nicely. Just do the next 15min, nothing else. A time for a deeper contemplation comes later.

      • says:

        ” I realized in those moments the worst enemy of actually coping and performing under the severe stress, was me.”

        I think I have come to this realization to. I appreciate your post a lot, and agree with pretty much all of it, it’s part of the “epiphany” I had, though still a work in progress (and always will be). Thanks.

      • says:

        Good points! The only time we really have is now!

      • Artleads?iframe=true&theme_preview=true says:

        Such wise words. Thanks!

  3. Artleads?iframe=true&theme_preview=true says:

    Failing States, Collapsing Systems: Biophysical Triggers

    “(The Book) will contain a large number of graphical illustrations concerning oil production data, population issues, the food price index, economic growth and debt, and other related issues to demonstrate the interconnections and correlations across key sectors.”


    • says:

      To get into my simpler mentality: if “green tech” will save us, why is it that:
      (A) nowhere has an AC power grid yet been run on IRE (intermittent renewable energy — wind, solar, tides, etc.)
      (B) nowhere has AP (artificial photosynthesis — using sunlight to make fuels) been commercialized?
      If such things don’t happen, even WITH the fossil-fuel-based infrastructure in place, how could either of them function WITHOUT it?
      We seem to be experiencing “peak oil” about now (http://crudeoilpeak.info/latest-graphs), with the recent sag-off in oil prices (http://oil-price.net/) — is this situation sustainable?

      • says:

        Very good points.And simplicity is a virtue as long as we don’t overdo it.

        I don’t see how the current situation can be sustainable in the medium to long term.

        But it’s OK. For everything there is a time and a season.

        So gather ye rosebuds while ye may.

        Because all those moments will be lost in time, like tears in rain.

      • Greg Machala?iframe=true&theme_preview=true says:

        “If such things (renewable energy) don’t happen, even WITH the fossil-fuel-based infrastructure in place, how could either of them function WITHOUT it?” – It really is that simple, RE won’t work! It is just a diversion.

  4. jeremy890?iframe=true&theme_preview=true says:

    When we’ve lost the right to grow our own food, we’ve truly become subjects of the state. Lately it seems we’ve been hearing of more and more people being forced to dismantle their vegetable gardens in order to appease city ordinances or homeowner’s association rules. These same policies don’t ban things like pesticides, Christmas lights, or tacky lawn art—just edible landscaping. The most recent case comes to us from Florida, where a couple was forced to dig up a 17-year old organic garden.

    Hermine Ricketts and Tom Carroll have gardened in their front yard for 17 years. Their back yard doesn’t receive enough sunlight. But recently, their community in Miami Shores decided to make such front yard gardens off-limits. That new rule was enacted in May and the couple had until August to remove their vegetables or face fines. Other towns threaten with jail time for growing produce in the front yard.

    While Real Farmacy reports the couple dug up the garden after appearing twice in front of the Code Enforcement Board and facing $50 each day the garden remained, there are also reports that they have filed a lawsuit targeted at overturning the zoning regulation that made their garden a battleground.

    With the help of the Institute of Justice’s National Food Freedom Initiative, the couple is arguing that the ordinance violates the states Constitution by stopping them from exercising their right to “acquire, possess, and protect” their property.

    “The right to grow and harvest your own food on your very own property is certainly part of that right to acquire, possess, and protect property,” said Ari Bargill, attorney for the Institute.
    Their prospects don’t look good, however, in light of a similar legal battle in which Florida’s state courts upheld a zoning regulation in Coral Gables that banned homeowners from parking pickups in their driveways, an asinine law that was eventually overturned.

    • Greg Machala?iframe=true&theme_preview=true says:

      More proof that humans are no smarter than yeast!

    • Artleads?iframe=true&theme_preview=true says:

      We need to determine, also, whether part of neighbors’ objection has to do with aesthetics.

  5. Fast Eddy?iframe=true&theme_preview=true says:

    How Sheldon Adelson’s Bet on Trump Made Him 2016 Election’s Biggest Winner


    Sheldon Adelson backs Trump trip to Israel after $100m pledge, sources say

    The multibillionaire and Republican Jewish Coalition are arranging visit before July convention, as Adelson also plans to donate millions to Super Pacs for GOP congressional campaigns, conservative sources told the Guardian


    Kissy kissy….

    • Fast Eddy?iframe=true&theme_preview=true says:

      • jeremy890?iframe=true&theme_preview=true says:

        Not only you are sure about THAT, but you do one better, on your knees and pucker up.
        Yep, you got to know your limitations, and Fast “It can’t be done” Eddy knows his place.

        One thing Scott Nearing refused to do to ANYONE.

  6. Fast Eddy?iframe=true&theme_preview=true says:

    InAlaska: I think they were referring to you…

    If you’re among the growing minority of investors still under the impression that ‘everything if awesome’ in the auto industry simply because new car sales volumes continue to hover around all time highs, while turning a blind eye to soaring incentive spending and that pesky little debt bubble, then we may need your help with how we should be interpreting the following subprime auto loan delinquency stats from Morgan Stanley.


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