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 financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
This entry was posted in Financial Implications and tagged , , . Bookmark the permalink.

2,229 Responses to Raising Interest Rates Can’t End Well!

  1. A Real Black Person says:

    Fast Eddy ” Elders most certainly understand the nature of this problem — the price of oil needs to be over $100 — but it cannot be — because that means growth ends.

    There is of course no solution — those are immutable facts.”

    So what do you do if you are running the show — do you just sit back and let it play out”
    The elders have been creating scapegoats to divert attention away from anything remotely systemic–so when the end comes, they cannot be blamed but undesirable people can be (Muslims, the “Alt-Right”, etc).

    • Fast Eddy says:

      Most definitely ….

      And ‘green shoots’ are forever around the corner —- well actually we are passed green shoots — we have saplings now …. we have full employment — just switch on Bloomberg and they will tell ya!!!

      • Kurt says:

        And your point?

        • Fast Eddy says:

          I knew it — you don’t understand what Gail writes — and you don’t understand what I write — I would have thought my point was obvious

          • Kurt says:

            Oh it’s obvious all right. Boring, predictable, wrong, and obvious. Have some more turkey.

            • Kurt says:

              Make a prediction FE. Any prediction. Oh wait, wrong again.

            • B9K9 says:

              Do you get paid to troll, or do it out of the goodness of your own heart? Doesn’t it get boring, or do you have a psychological disorder that compels you to engage in anonymous interweb taunting?

              Look, anyone with an IQ over 125 knows we cannot sustain infinite growth on a finite planet; QED. So the game isn’t trying to rationalize what is occurring. Rather, the play is to make sure the billions of suckers don’t infringe on the ability of the elders to manage its way out of this slot canyon.

              There is only one solution: reduce gross overall energy consumption. This can best be achieved through a combination of population reduction and (drastically) lower net per capita energy consumption. As the saying goes “it ain’t brain science”.

              Why do you think the left hates Trump? A, he’s either a moron who doesn’t understand what’s going on and is simply satisfying his narcissistic ego in becoming president on the basis of promising a return to an 30 year era that was a blink in time ie energy surplus. Or, **or**, he knows exactly what’s going down, but has betrayed his class by letting the peasants have one more turn at the bar.

              Ultimately, the end game is to defeat Russia in order to gain the last remaining energy reserves on plant earth to enable the intelligentsia once last chance to create a technological escape path. Really, when you step back and look at the overall picture, the only way out is to have everyone plugged into the matrix to provide a simulacrum of reality. Smart devices are only using milliwatts of energy. Billions engaged in dopamine transponders can both keep the peace and reduce real energy consumption to practically nil.

              This is the end game. Lots of money to be made understanding the only possible solution. Well, there’s another: global nuclear war in a conflagration of pique and frustration.

            • hkeithhenson says:

              “we cannot sustain infinite growth on a finite planet”

              We can even do it in a finite solar system. But we can have growth for a long time, longer than the entire industrial era, if we go into space.

              “the only way out is to have everyone plugged into the matrix to provide a simulacrum of reality.”

              That’s the other way. In the long term that runs humanity (and the planet) up against waste heat radiation problems.

            • hkeithhenson says:

              Sorry, typo

              We can’t even do it . . . .

            • Tim Groves says:

              The dinosaurs became extinct because they didn’t have a space program.
              And if we become extinct because we don’t have a space program, it’ll serve us right!
              Everything starts as somebody’s daydream.
              Building one space station for everyone was and is insane: we should have built a dozen.

              — Larry Niven

            • B9K9 says:

              Good replies; yes indeed, space is the only way out. Yet, we cannot possibly transport physical bodies – it must be electric. So, we must first answer the question, what is knowledge & intelligence ie the soul? A biological substrate (brain) that supports neurochemical activity which creates a perception of “reality”.

              While space provides the escape path, the technology necessary to achieve such a feat can be used in the interim to dramatically reduce overall global energy consumption. Why waste precious energy stores both manufacturing transportation devices and then the add’l energy necessary to drive/fly them? Why not simply recreate the process via simulation using mere milliwatts of energy?

              If one has reached a quantum state and is transacting on multiple levels of production & consumption per second 24/7, doesn’t that economic activity contribute to GNP? If so, doesn’t that solve the debt overhang problem? The issue has always been around growth, which is driven by combined efficiencies in both production and consumption.

              To date, our history as a species has been fossil fuel based, but is that necessary the case going forward? Doomers think we’re locked in to that model, and thus logically conclude there’s no way out. However, optimists realize that at the rate of technological discovery & knowledge, we’re very close to fully understanding the brain at its very essence. In that case, the next step is virtual simulation; if that is achieved, the path is clear.

              Which also raises an interesting question: if this is the logical end-game for intelligent life, who’s to say we’re first? Wouldn’t that be unlikely? Which then leads to the conclusion that we’re not first, and intelligent life already exists in the universe in the form of transportable electric (light) waves.

            • we send 3d printers to mars—various types and sizes

              then all we have to do after that is just transmit everything we need—journey time 20 minutes or so

              can’t see the problem

            • Fast Eddy says:

              BAU 2.0 — Man Colonizes Mars —- IN STORES NOW!

              Well… since there soon won’t be any stores — Click here to buy NOW

            • Fast Eddy says:

              Technology will save us.

              Technology will save us.

              Technology will save us.

              I keep repeating that…. hoping I can indoctrinate myself…. it’s not working.

              Is there a pill or something that I need to take?

            • yup—take this one

              ignore “rugby international” printed on it, and the bootmarks

            • timl2k11 says:

              “we’re very close to fully understanding the brain at its very essence. ”
              No. Not at all. We can’t even simulate the behavior of a nematode (c. elegans), which only has 302 neurons! A human has nearly a hundred billion. And then there is the behavior of neurotransmitters, synapse strength, epigrinetic effects on cell behavior, etc. If anyone thinks they khow how complex the human brain is, they are wrong. It is much more complex than that.
              And as for Keith, he doesn’t seem to understand scale. The Skylon doesn’t even exist except on paper, and has gotten virtually nowhere in over a decade. It will never exist. Keith is holding on to some delusional techno-utopia that only exists in his mind. Perhaps he’s read a little too much science fiction. But I find his lack of common engineering sense somewhat perplexing.

            • hkeithhenson says:

              Re Skylon, of course it may never exist. However, I was over there a year ago and they had close to a hundred engineers working on the design problems. The UK government has put at least $100 million into the project. They are not the only ones, the Air Force Research Lab has take an interest in precooled engines and is building some.

              I was, incidentally, rather skeptical about the precooler. Thousands of brazed joints and it isn’t going to leak helium? But REL figured out how to do it. I saw their first one full size test precooler in 2012.

              BTW, when I was at REL a year ago, in recognition of the potential market power satellites represent to their Skylon project, they gave me the entire engineering department for two hours. First hour was bringing them up to date on power satellite design progress, second hour was a discussion about how fast Skylon production could be ramped up.

              ” lack of common engineering sense”

              My paper, except for the last Sustech paper are on line. I would appreciate it if you would review them. If you can find any cases where they ” lack common engineering sense” I would appreciate you pointing out such places so I can fix them.

              Also, if you can point out any place where I don’t seem to understand scale I would appreciate that as well.

            • timl2k11 says:

              “If you can find any cases where they ” lack common engineering sense”

              Sure. In your paper “Beamed Energy and the Economics of Space Based Solar Power” you say “The way to beat the rocket equation is to cheat. Reaction Engines’ Skylon does this…” (p. 262) You can’t cheat the rocket equation. And you have zero references in your article to support your claim about the Skylon’s propulsion system, making the paper pretty much idle speculation. Then there is common sense, I’m pretty darn sure if NASA though such propulsion was a viable way to get things into space, they’s not just be all over it, but be doing it already, as well as every other space agency and private space entity. Technology will not save us, sadly. You can’t cheat the law of diminishing returns with anything, including technology.

            • hkeithhenson says:

              I am impressed that you were able to find that book. There were not many printed of that conference proceedings. It’s also from 2009 and the proposal is long out of date. I didn’t have an economic solution till last year.


              The word was used partly as artistic license. But Skylon isn’t a pure rocket except at the very end of flight into orbit.. It uses oxygen from the air for the first 26 km and to Mach 5.5. It takes about 690 seconds to get through the air burning phase. If it were a rocket going straight up, this would cost 6.8 km/s for gravity drag. It doesn’t because the gravity drag is carried on the wings at a low cost in aerodynamic drag.

              Even after a Skylon goes into using internal oxygen, the wings still offload much of the gravity drag. I spent considerable time reconstructing the REL spreadsheets. Skylon takes a remarkable flight path into space. You remember “Max Q” which is a reference to maximum dynamic pressure on a rocket? In the atmosphere, Skylon gains altitude and speed to go up a constant dynamic pressure path.

              “zero references”

              I reference Skylon and Reaction Engines. Anyone with an interest would go there and there is plenty of material. The focus of the paper was beamed energy propulsion rather than Skylon. Incidentally, Skylon is only half the solution. The other half is propulsion power satellites and tugs that use arcjets to get 20-25 km/s exhaust velocity for moving cargo to higher orbits. It’s described here:

              “if NASA thought such propulsion was a viable way”

              I don’t know how much attention NASA is paying to Skylon, probably not much. But if you Google on AFRL and Skylon you will get a long list of articles about the US Air Force Research Lab investigating Skylon two years ago and letting contracts for work on the engine.

              “Technology will not save us”

              You may be right. However, I can’t think of anything more likely to get us out of the fix we are in. Can you?

            • Fast Eddy says:

              Mentioning… and providing references… is not the same thing…

              FE: Did I mention that I used to play centre for the Toronto Maple Leafs?

              ???: Oh wow – that must have been cool. You would have played in the 80’s and I am a huge Leaf fan – and I don’t remember you. Can you provide references – perhaps a link to a team roster with your name on it?

              FE: I already mentioned I played — what more do you want? If you don’t believe me then let’s go outside and I’ll beat you to death. Is that what you F789ing want???? Would that be a good enough reference??????

            • timl2k11 says:

              Here, just insert the short code; https://youtu.be/VEkZkINrJaA

              “I can’t think of anything more likely to get us out of the fix we are in. Can you?”

              Well… Yes. Acceptance. All we can do is try after all. Civilization is just an extension of who we are as individuals, and can be spoken of as such. It will try it’s best to live life to the fullest, have it’s ups and its downs… and ultimately die. And some are questioning it’s meaning, others are trying to allow it live and grow as long as possible, some are cheering on its death.

              There truly is nothing new under the sun.

            • hkeithhenson says:

              “Well… Yes. Acceptance.”

              Can you tell me how this gets us out of the problems we have? It sounds like you are proposing sitting around and waiting to die.

              “All we can do is try after all.”

              I don’t see where that is consistent with acceptance.

            • timl2k11 says:

              “It sounds like you are proposing sitting around and waiting to die.”
              Waiting for Godot.

            • hkeithhenson says:


              Are you aware that Godot *never* shows up?

            • timl2k11 says:

              Of course not!

            • Fast Eddy says:

              Keith — it just occurred to me….. you remind me of Elon Musk …. without the private jet….

              Now how do you make your silly dreams come true as Elon has done?

              You need a PR company. That really is only the difference between you and Elon….

              You on your own sound like a ranting mad man ….

              Can you imagine if you were to start telling people that they would soon have the option of living on Mars?

              You’d be laughed at – shunned.

              Elon does it all the time — and he’s taken seriously!

              Get a good PR firm behind you Keith — and you can be just like Elon — where the more money you waste on unfeasible ideas — the more people will want to give you another billion!

            • timl2k11 says:

              @FE “Is there a pill or something that I need to take?”
              The blue one, obviously. I don’t have one at the moment, but you can have this: 💊

            • Tim Groves says:

              timl and keith, I think we need to collectively embrace both of your strategies. We need to develop technology and we need practice acceptance, especially if and when the technology doesn’t work.

            • klaunf45bu says:

              “you have zero references in your article to support your claim about the Skylon’s propulsion system”
              What no links to Wikipedia?

            • vgybhu098 says:

              “Mentioning… and providing references… is not the same thing…

              FE: Did I mention that I used to play centre for the Toronto Maple Leafs?

              ???: Oh wow – that must have been cool. You would have played in the 80’s and I am a huge Leaf fan – and I don’t remember you. Can you provide references – perhaps a link to a team roster with your name on it?

              FE: I already mentioned I played — what more do you want? If you don’t believe me then let’s go outside and I’ll beat you to death. Is that what you F789ing want???? Would that be a good enough reference??????”

              Thats a good post FE. The reason why is KH displays some pretty disrespectful behavior all perpetrated with a smile. Name dropping and association is part of the technique he uses. Keith uses name dropping to associate himself as a authority. He does it as a deterrent to questioning the obvious mistruths he presents as facts. A person presenting a viable plan has no reason to talk about supposed associations, the plan can stand on its own merit. Use of that technique is one of the red flags that indicates that you are in the presence of someone with a agenda that serves their own purpose or needs. The fact that techniques are used that eliminate honest discussion are being instituted is defacto evidence of the extremism of actions driven by that purpose or those needs.

              Establishing supposed relationships prior to any hint of questioning also establishes a complexity that disallows simple questions. Simple questions now have to include the association made. The supposed association is easy to make but the effort needed to include the association it in questions responding to mistruth is considerable. It is certainly a primary technique used by KH but is foreshadowed by his favorite tool of deception; imagery that presents favorable outcomes. Modus operandi. Know it. KH does.

            • hkeithhenson says:

              ” Name dropping”

              I tend to mention the people who worked on what I write about. Is it name dropping to mention Steve Nixon who suggested moving the construction site to the gap between the belts and contributed a number of other ideas? Or Kris Holland and Anna Nesterova who did the animations? Or the beamed energy gurus like Jordin Kare and Keven Parkin? Can I credit Eric Drexler who (before he got involved with nanotechnology) co-authored a paper with me on space radiators? To avoid “name dropping” who should I not mention?

              “obvious mistruths he presents as facts.”

              Can you go into detail? If I got something wrong, I have no problem admitting it and correcting it. It’s not in my nature to knowingly say mistruths. In 1972, the last time I was an employee, not being willing to sign off on a document that was untrue cost me my job. (I was fired for being unwilling to sign a certificate about the MTBF of a part which–years later–I found may have gone into nuclear reactors.)

              “imagery that presents favorable outcomes.”

              I presume you are talking about the videos. Those things are expensive! Can you see any point in spending money to depict unfavorable outcomes?

            • seems ideal post collapse

              and more fun than being Amish anyway

            • Fast Eddy says:

              I thought that pic was taken at the Amish S&M convention … or was it the Mormon convention …

              I am told that they love that s78t.

            • trust you to know the difference between an Amish SM convention and an ordinary SM convention

              hope they dont try to meet on Folsom street on the same day

    • Yes, it’s all about running the show know-how, in long term sense, less about the money of the day. Simply, people who think in 4th turnings and 200-300cycles or even bit longer perspectives and the ability to merge it with delegated micromanagement level (hired govs and institutions).

      Are they omnipotent and everlasting, unless some further evidence provided, most likely in physical sense not. But in philosophical plane very much so. It’s like “secret script” how to run human farm, you can learn/unlearn.

      Now we seem to be near one of the thresholds of longer term realignments, increasingly other nodes of power and control like the orbit around China and Russia rise to the occasion of asking for larger pie share of the global loot. They could be accommodated by the older guard (taken on board), outmaneuvered (mostly by corrupting their inner players) or directly fight against.

      For instance, China is sending clear signals, it’s not interested toppling the cart just yet (in theory they could force non USD payments yesterday), however lots of know how and one way trade advantage remains to be realized in next ~10-20yrs. Not mentioning the necessity to beef up the defense and foreign alliance domains, that needs some more time. One of their top scenarios must be the older hegemons just crumble and implode into isolationism and fractured fiefdoms to protect, not one shot fired so to speak.

      Well, and if the single stage event doomers (as opposed to multi stage doomers) are right afterall, what’s not to like as of now, most of the global top players have it almost all already in some dosage: power & control, domestic & int prestige, luxury trinkets.

  2. timl2k11 says:

    The Fed’s Global Dollar Problem
    Yep, systemic risk as high as ever.

    • Fast Eddy says:

      That’s what triggered the Asian Financial Crisis in the 90’s…

      A friend of mine was in the jewelry business — he had mega USD denominated debt — revenues in Thai Baht — the currency went the wrong way and overnight he was bankrupt —- he was completely wiped out

    • There is also the problem of all of the debt that the Central Banks hold, as interest rates rise. It falls in value. If they try to sell the debt, it has the opposite impact that buying it in the first place (at least in my view). An awfully lot of debt in the US Central Bank is Mortgage Backed Securities. This article is called, Bond Market Calm Is Threatened by Fed’s $1.75 Trillion MBS Shift. I am afraid that the situation is worse than the article claims. The issue is more than volatility; the sale of these bonds will tend to force mortgage rates up further.

  3. timl2k11 says:

    This kind of blew my mind. An earthquake a while back (the one that damaged that big tall thingy in Washington DC), knocked 2 power plants offline. The effect of that rippled thru the entire eastern half of the country in just one second.

    • doomphd says:

      It’s the Washington Monument and it’s a national treasure (coughs in sleeve) but quite frankly, it’s poorly built and I would not recommend being in or around it in the event of an even modest earthquake. It will transform itself into a pile of bricks. BTW, the footing was built upon a swamp–I wonder if it leans some like the one in Pisa?

  4. Bergen Johnson says:

    Fascinating video of Tesla’s very large battery packs receiving excess energy during the day then feeding it back into the system at night, smoothing out the usage, i.e. improving energy efficiency. Musk has bet South Australia Tesla can put a system in to smooth out their usage in 100 days or he’ll eat the costs. Questions remain regarding how long the Lithium battery packs will last and continue to hold a charge, but for now it seems like an important step forward.

    • Fast Eddy says:

      No it’s not.

      Instead of just reading the MSM spin and not questioning it — you will note that I posted an article the other day that states that Tesla is massively subsidizing the offer they made to Australia — it also claimed that the requirements are much greater than what Tesla is quoting

      At the end of the day I have zero doubt that someone could fill a warehouse with batteries – charge them with solar panels — and power a city.

      The problem is the cost per kwh.

      Of course if you just make shit up – as Musk has —- as he ALWAYS DOES (yes we are moving to Mars…) then it all sounds wonderful.

      Solar energy is TOO expensive — as Gail and others have explained in great detail

      You want to bankrupt a country and drive all industry elsewhere then yes by all means pay Tesla to cover the country in panels and batteries.

      • Fast Eddy says:

        So how many times do I have to post this before it sinks in????


        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

        The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.


        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).



        • Fast Eddy says:

          Since Elon Musk is a joke — the king of liars — the guy who thinks we are going to colonize Mars…

          Can we please only mention him if the intention is to mock him

          If anyone else claimed that we were going to colonize Mars they’d be ridiculed and they’d be laughing stock.

          This just goes to show how truly stupid most humans are.

        • JT Roberts says:

          I’m not sure why but I just had an epiphany it’s not possible to power the world with solar.
          Where did that come from?😳

          FE have you been studying the propaganda model? Short sentences repeated often?

          • Jesse James says:

            “The manufacturing plant is a closed system”…snicker. I guess the raw materials just get mined and loaded on those trains with solar powere widgets.
            “All batteries are recycled”….shit they just started producing them there…no idea what the real recycle cost is…or if it is real.
            It is noteworthy no mention is made that EVERYTHING Musk has produced is produced at a loss and funded by free money.

            • Fast Eddy says:

              ‘EVERYTHING Musk has produced is produced at a loss and funded by free money’

              Some might wonder …. why does he get free billions much of it in the form of govt subsidies… who makes that decision…. it ain’t an elected person that is for certain.

              What purpose does Musk serve? He obviously has a very important role to play in the matrix for him to get that much free cash.

              How do I sign up?

            • timl2k11 says:

              “It is noteworthy no mention is made that EVERYTHING Musk has produced is produced at a loss and funded by free money.”
              This. Exactly this. Nothing but smoke and mirrors really. Keeps the masses placated.
              That and the same could be said of solar, wind and shale.

            • timl2k11 says:

              @FE “What purpose does Musk serve? ”
              He produces Hopium, FE, pure, refined, undiluted Hopium. Something the techno-optimists can mainline.

          • Fast Eddy says:

            I was adapting the yoga mantra model….

      • hkeithhenson says:

        “Solar energy is TOO expensive”

        For ground solar, the current technology and cost, FE is correct.

        Space based solar power has to come in at less than coal or we just don’t do it. That’s not easy, but it does seem to be possible. Incidentally for any moderately low maintenance, high utilization power source, divide the cost by 80,000 and that gets you the cost per kWh. Work it backward, and for three cent power you can spend no more than $2400 per kW to build it.

        • A Real Black Person says:

          How much weight do you expect your judgment to have in the comments section on OFW when you have expressed the belief that artificial gravity can be created in outer space for a low price?

          • hkeithhenson says:

            “expressed the belief that artificial gravity can be created in outer space for a low price?”

            That’s just a fact. You spin the space station to get acceleration like gravity. It’s not cost effective for small numbers of people, which is why the ISS doesn’t have it. but the extra cost to spin a space habitat of moderate size is low. Ask any space engineer.

            It’s much more expensive to shield a habitat from galactic cosmic rays.

            • Fast Eddy says:

              Not so expensive

            • A Real Black Person says:

              Keith, I know gravity can be stimulated with centrifugal force. It is possible with current technology on a small scale.
              I don’t share your belief that an economy of scale would emerge if artificial gravity was created within a large circular space habitat.
              A large circular space habitat would be very expensive to build, therefore the energy required to spin it fast enough so that it would create artificial gravity would be very expensive.

            • hkeithhenson says:

              “on a small scale”

              It depends on what you consider small scale.

              “An O’Neill cylinder would consist of two counter-rotating cylinders. The cylinders would rotate in opposite directions in order to cancel out any gyroscopic effects that would otherwise make it difficult to keep them aimed toward the Sun. Each would be 5 miles (8.0 km) in diameter and 20 miles (32 km) long, connected at each end by a rod via a bearing system. They would rotate so as to provide artificial gravity via centrifugal force on their inner surfaces.[1]”


              “the energy required to spin it fast enough so that it would create artificial gravity would be very expensive.”

              Assuming I didn’t make a math error (please check it) the power needed to spin up or down a pair of 50 m diameter spheres with an internal surface mass of 1000 kg/m^2 is 712.68 kWh. At ten cents a kWh, that would cost about $71.27. Couple of 500 hp motors would spin the pair up in an hour. A 500 m diameter sphere takes 1000 times as much energy, but $71,000 is not significant given the cost of such a project.

              If you want to check the spreadsheet, email me for a copy. hkeithhenson at gmail dot com.

        • Fast Eddy says:

          Hmmm…. hundreds of billions are thrown at land solar —- it actually exists…. but there is a much cheaper option – space solar —- but for some reason it doesn’t exist.

          • hkeithhenson says:

            ” space solar —- but for some reason it doesn’t exist.”

            It didn’t, not even a rough sketch, up to about a year ago. Nobody had a clue as to how to get the cost down. I knew the methodology, design to cost, but not how to do it. That came from the projected (by REL) cost of hauling cargo into space by more than 25,000 Skylon flights per year and the use of large arcjets to get the cost from LEO to GEO down.

            I should add that the last study Boeing did came in at $145,000 a kW or $1.81 a kWh. That was back in 2009 and was not a solution. Power has to come down to 3 cents a kWh to make synthetic oil at $70/bbl. Gail wants $20 synthetic oil. That will take 0.5 cents per kWh. The vast majority of the cost was due to expensive one time use rockets. If you can’t get the cost of hauling power satellite parts to GEO under $200/kg, then power satellites are uneconomical and should not be done.

            Simple as that FE.

            • Fast Eddy says:

              Yes Keith …. of course Keith…. now be a good crazy coot and take your meds…

              Let me get the key to the attic… it’s so quiet up there isn’t it — I know the pills make you drowsy — have a nice nap…. and later we can go back in the garage and pretend we are astronauts — yes of course we can

            • isn’t that where you keep that portrait of yourself Eddy?

            • Fast Eddy says:

              Ha ha ha… I wish…. I do have a mate who’s 50 …. we refer to him as Dorian…

            • A Real Black Person says:

              FE”” space solar —- but for some reason it doesn’t exist.””

              Keith “It didn’t, not even a rough sketch, up to about a year ago”

              Keith, proposals for space based solar power have been around for much longer than ” a year”. Another bungle by the illustrious Keith .

              Keith ” Nobody had a clue as to how to get the cost down. ” And what has changed since you drafted up your own proposal for space-based solar power satellites? Did you find some miraculous way to cut costs without cutting corners ?

              If the answer is “no”, then why do you continue to bring up a problem on which very little progress has been made?

            • hkeithhenson says:

              “Did you find some miraculous way to cut costs without cutting corners ? ”


              Even if Skylon delivers cargo to low earth orbit (LEO) for $100/kg, the cost in chemical propellant to get cargo to geosynchronous orbit (GEO) is too high for power satellites to make economic sense. (I define economic sense operationally as undercutting the cost of electricity from coal.) To reach the required $200/kg, the cost of moving cargo must be reduced to less than $100/kg for the LEO to GEO leg. That includes the cost of the LEO to GEO propellant that has to be hauled up to LEO. The only way to get the amount needed down to some reasonable number is to use high exhaust velocity, 20-25 km/s. However, that eats up lots of energy since the Ke in the exhaust is proportional to the exhaust velocity squared.

              Before I looked into space based beamed energy bootstrapping, one of the things we considered was beaming the energy up from earth, an old proposal by microwave guru William Brown. https://www.youtube.com/watch?v=q-Lrj35HcbQ This didn’t work very well, mainly because the ground transmitter was in use around 1% of the time when the cargo was starting out in LEO. The “time on target” improved as the vehicle got higher, but it wasn’t a satisfactory solution.

              It turned out to cost less to produce a couple of 800 MW propulsion power satellites at ~$1.2 B each rather than an 8 GW ground station at around $20 B. This reduced the cost of the tugs as well since their arcjet engines ran all the time and not in bursts like the ground station solution. The video about this method is here https://www.youtube.com/watch?v=VEkZkINrJaA It is slightly out of date. Current thinking is that we build the first two propulsion power satellites in LEO and push them out above the space junk with chemical rocket engines rather than building them in a 2000 km orbit.

              None of these ideas is fixed in concrete. Better ideas are welcome. A lot of people have contributed.

            • Jesse James says:

              The guy in the SkyLon video actually talked about cooling the space array with water without breaking out laughing. Imagine one space leak resulting in loss of all functionality due to complete loss of water. I can hardly keep my own plumbing from leaking.
              Absurd assumptions

            • hkeithhenson says:

              “Imagine one space leak”

              Leaks have been considered. There are 30 sets of tubes, so losing one set would cost 3.3% of capacity. The bigger problem is holes in the radiator tubes punched by micrometeorites. The puncture rate is around one per hour because the area is so large.

              Lase year a Japanese researcher asked about leaks.

              > Re holes, a 1 cm hole would be very unusual, extremely large. I get 4.9 x 10^-4 kg/s for a one cm orifice, using the pressure and density of 20 C deg steam . Considering that the radiator tube is filled about 5000 kg of water/steam, it would take around 10^7 second for it all to leak out or ~116 days. Patching a one cm hole within a day keeps the steam loss to 1% of one tube in 60.
              > We can also use sized rubber balls inside the tubes to plug leaks.
              > There may be reasons we don’t want to use steam filled radiator tubes in space, but fluid loss from punctures should be controllable.

              He responded:

              I agree that a 1 cm hole would be very unusual.
              I understand your estimation for the radiator leakage.
              Jesse, you are not the first one who brought up this concern. Good catch though.

        • timl2k11 says:

          “That’s not easy”
          And if it ain’t easy it ain’t cheap.
          Keith, do. you REALLY believe SBS would EVER be cheaper than traditional solar? Wait, you also believe having a leaf inserted in one’s head to meet caloric needs is plausible. Nevermind, you’ve read WAY too much science fiction.

          • hkeithhenson says:

            “Keith, do. you REALLY believe SBS would EVER be cheaper than traditional solar?”

            If it is not, then we should not do power satellites.

            My analysis is that we can get the cost to 3 cents per kWh for power from space. The lowest cost I have ever seen for dispatchable power is from StratoSolar. With built in gravity storage, Ed Kelly thinks they can get the cost down to 5 cents a kWh. That’s the lowest I know about. Do you have a non-intermittent energy proposal that’s lower?

            The leaf story is mostly a joke, but there is no reason that really advanced biotechnology could not give it to us. There are, after all, lots of examples where animals have taken up photosynthetic cells. Some of them live mostly off light.

            “leaf inserted in one’s head”

            You don’t stick a leaf in your head. This was published in 1991

            ” Human relations with engineered “domestic animals” might get real
            weird. Nomads in Africa drink the blood of their cattle. A less messy
            method would be to grow plugs on the animals which could be connected to
            humans and supply energy and materials directly to the human bloodstream.
            Instead of killing the sheep, you bring in a batch and “recharge” from
            them. A “lower on the food chain” alternative would be to have a
            “backpack” which would unfold when you lay down in the sun into a large
            photosynthetic area. Assuming the nomads’ sheep didn’t trample you, a few
            hours a day soaking up rays on 30 square meters of surface would eliminate
            the need to eat animals or plants. This is getting far afield from the
            simple uses of nanotechnology, but being modified this way would allow
            living the “simple” life par excellence. Such people would really leave
            “nothing but footprints.”

            • timl2k11 says:

              “This was published in 1991”
              Yeah, not bad sic-fi, Keith. Pretty good actually 🙂 . But outlandish nevertheless.

    • I don’t know what is supposedly fascinating about it, you could have easily hacked diy similar unit (as many people did), at least for the past ~10yrs when the available parts (batteries and power electronics) became available. The only difference is few insignificant % of efficiency gain and bit smaller form factor of the mass produced/assembled unit by the Musk team..

      It’s very unfortunate and frustrating, when people can’t see through basic concepts.

    • Joel says:

      Musk’s bet to smooth ( to what extent ) not solve seems a safe bet. In other solar news, though non profit, we have the http://solarvillageproject.org/ .Offering these night light kits, light is nice! Do people living on less that $2 / day really need solar toys?

      • A Real Black Person says:

        Solar ovens would be more practical. Providing toys to a society ends up raising people’s expectations about the future.

    • Hightrekker says:

      • Fast Eddy says:

        I am wondering … why Mars? Why not just choose any barren place and set up a colony?

        The Moon would make perfect sense — it is totally barren as well — but is much closer to earth.

        And closer still we have the Sahara desert… barren – no water – looks a LOT like Mars! And the kicker — humans can breathe the air in the Sahara…

        • @Eddy

          unless the inhabitants of the Sahara detach your neck from your shoulders, in which case breathing might get difficult

          a problem you wouldn’t get on Mars—I bet you hadn’t thought of that

          • Fast Eddy says:

            How about here:

            A few well placed machine gun turrets operated remotely would easily take care of any Sherpas who tried to get to your colony.

        • timl2k11 says:

          Mars. It’s part of the narrative people carry with them to still believe in the future. To believe that their are still frontiers yet to be explored. That growth will continue forever. It is part of societies’ “immortality project” as Ernest Becker would say.

        • psile says:

          The only thing missing from this picture is one of these:


          Perhaps they could use it for the return journey?

        • JT Roberts says:

          And that’s the point try to fight that one. If space is so grand develop the desert and prove your point.

        • Jesse James says:

          FE, Musk actually serves a purpose. He is a hero. Every culture and society needs heroes. We don’t have many these days. Musk is visionary…he is the essence of technology and well, whatever heroes are. Give me a billion $ and I’ll show you some vision. But back to Musk…he allows the synthetic meme that technology will save us and solve all our problems to be demonstrated. As humans, we are pron etc believe lies, including the lie of technologies blessings. Technologies track record is actually very poor, it had allowed us to poison the earth. Our system requires guys like Musk to deflect our attention from reality.

          • ygc67903 says:

            “Give me a billion $ and I’ll show you some vision.”

            Is that the “hero” creed?

            Hero salary firefighters, paramedics, police getting pretty high. No $ no heros?

    • ygc67903 says:

      Friends prius is going through aftermarket battery packs. One a year with under 5k miles on the vehicle every time. On the fourth one. All replaced under warranty so all is good. All will be well as soon as the conspiracy against battery technology and the physical laws of the universe end.

      The efficiency of hydrocarbons in storing energy in a form that lends itself to use is unmatched. Just because we don’t like that doesn’t mean it is not true.

      • Fast Eddy says:

        The two happiest days of an EV owners life are the day they buy the EV — and the day they sell it.

  5. New practical toy for the permanent police state, in copies of low hundreds can easily patrol/deny access at the major arteries and squashing skirmishes with restless plebeians (plus some choppers etc.) Relatively cheap, under ~3M, variable protection options totaling 20-30t vehicle weight, super off-road capabilities at high speed and good endurance <700km, 2x crew + 10x soldiers, ..

    • xabier says:

      Rather amusing: so much complexity to deal with ‘un homme arme’, ie. just one fool with a gun.

      I’m inclined to think of the heavily armoured -and very expert – knights of France who , in 1415, stumbled to their deaths in the mud at the hands of English archers armed with daggers and hammers.

      And let’s not whisper to the salesmen: ‘What happened to Germany’s King Tiger tanks in 1945, when the fuel ran out?’……..

      It’s a kind of mobile Maginot Line -the threat will probably be very different to the one anticipated by the film makers.

      • You could be right or not, it depends..

        The platform is super off roadish, yet nimble to operate in the streets. It could be lightweight or heavily plated against IEDs, even turret machine gun post could be mounted on the top. It is certainly much leaner to operate in quasi-urban theaters, basically out of learning the lessons from ambushes in Iraq/Afghan where patrolling in light armor “jeeps” was not safe after while and or not feasible for tanks etc.

        If you look at the videos they are training various riot (malcontent public) suppression techniques with 10+ people hauled inside or standing outside on the rails or both (20x)? As I said above, with very little money and training, few of these can barricade a highway or disperse rioters, set up impromptu checkpoint at food distribution points during Doom days etc.

        For some reason, most of defense contractors now push the dispersed mobility factor, riots suppression, and similar themes. This seems to be the best in the light and fast/offroad category so far.

        • These kind of behemoths are great for making lots of dough for the defense contractors, not so great for accomplishing what they are designed for.

          Sooner or later these behemoths will acquire the same reputation as the ‘baka’ one-way kamikaze subs – at least the japanese didn’t spend too much steel to make metal coffins.

      • doomphd says:

        one well placed Molotov cocktail and bye-bye million dollar armored vehicle and inhabitants. for every dollar spent on offense, you generally need ten dollars spent on defense, mobile or not.

    • Joel says:

      What market was this promo directed toward, sorry I see its French, and already out on the streets. It’s an eye catcher, looks mean. Another video:

      • Well, copy paste from brochures, Nexter seems to be French defense contractor, recently partnering with the off road specialist Tatra on next gen army/homeland security vehicles such as this 6×6 Titan or the 8×8 155mm howitzer Caesar.. Most of their products is design just to fit inside usual fleet of cargo planes..

        Target audience for now, NATO members in Europe and 2.5world customers like India, ME, ..

        • Fast Eddy says:

          I be that gets really crummy mileage…. since diesel will be in very limited supply post BAU…. do they have a solar powered version?

      • Will make great targets for hand-held missiles.

        Bigger mass, bigger targets. If I were an overlord I would be investing in bee-size drones which will enter the ear/mouth of the insurgents and turn their brains into scrambled eggs.

  6. JT Roberts says:

    Last month we had a 70 deg day followed by a 19 deg day with snow. There is a small herd of deer that pass my house each morning and as usual they came by unfazed by the sudden change. Unreasoning animals have no memory of the past and no thought to the future. They live in perpetual a perpetual moment. If one dies the others don’t mourn the loss neither do they celebrate the birth. To them those activities would be incomprehensible.

    Without a knowledge of history humans are no different. This is the current state of the American public. The average American graduates high school with a knowledge of American History, as if the world began with the founding of The United States. From a political perspective this is how it should be. This allows a society to coalesce around the erroneous idea of exceptionalism. Higher levels of education don’t improve the matter much because they focus on the glorious democratic and republican systems of Greece and Rome ignoring East Asian developments or kingdoms in Africa.

    In general we have a population that exhibits the intellectual prowess of Archie Bunker. They believe in the carousel of progress which is the extent of their technical training. Like my herd of deer they have no point of reference they simply take each day as it comes. Unless of course they feel hungry then they protest. My deer just forage harder. There is no thought what so ever about sustainability rather they like my deer live in the moment.

    They don’t know why more is more or less is less it’s just the way things are. They can’t comprehend that you can only live in one room at a time and that in the moment every thing else is a memory as well as this moment will become.

    I’m happy for my deer they live lives unburdened by the trivialities of a past or a future or any possessions to measure it by. They just accept what has been will always be, nothing lost nothing gained. Nothing to see here boys just walk away.

  7. @Fast Eddy

    David Rockefeller just checked out at the age of 101.

    Guess the “Elders” have not yet found the elixir of immortality.

    • Fast Eddy says:

      They also have no idea how to continue BAU without cheap energy…..

    • Tim Groves says:

      Either checked out, or checked into his bunker in order to sit out the firework show.

      • Fast Eddy says:

        Getting very hot in the Eld-ers kitchen …. we might see a few of them performing this feat….

    • dolph says:

      Interesting, but being an elder is never about personal immortality. It’s about wealth immortality – making sure it all stays in the family.

      • “Family” can mean vastly different things. An ambitious granddaughter-in-law might circumvent the founder’s fortune in a way the founder might have never imagined.

  8. Hightrekker says:


    “The researchers reviewed data and demand forecasts on the sustainability of global mineral supplies in coming decades. The study showed that mining exploration is not keeping up with future demand for minerals and recycling in and of itself would not be able to meet the demand either. At the same time, transitioning to a low carbon society will require vast amounts of metals and minerals to manufacture clean technologies and the researchers say society is not equipped to meet the additional needs for these raw materials…
    “For instance, the last major deposit for copper was discovered in Mongolia 15 years ago and only began producing in fall 2016, creating huge supply challenges… Then there is the common consumer misconception that we can just use something else. For many mineral uses, there are no alternatives. There are few commercially viable replacement minerals for many applications of copper wiring, for example…
    “The same may be true for technology metals that could become essential in green technologies — like neodymium, terbium or iridium. These minerals are only needed in small quantities, but they are indispensable to making the technology work, meaning that while the scale seems small, the value is immense…People have been so concerned about climate change that it’s created a real movement around it. We don’t see this around resource use and recovery, even though it is much closer to us on a daily basis.

    (HT DL)

  9. JT Roberts says:

    So oil has once again been falling and is trading below cost on a marginal barrel. Let’s look at this from a new perspective. Who has access to credit growth game. So it seems private credit has peeked but corporate credit has breathing room. If that dynamic shifts prices can rise but both conditions are symptoms of net energy below affordable conditions.

  10. Stinging Nettle says:

    One of the “elders” checked-out early:

    He seemed to have good teeth to the end.
    Wonder if they will freeze him for post BAU lol

Comments are closed.