A Video Game Analogy to Our Energy Predicament

The way the world economy is manipulated by world leaders is a little like a giant video game. The object of the game is to keep the world economy growing, without too many adverse consequences to particular members of the world economy. We represent this need for growth of the world economy as being similar to making a jet airplane fly at ever-higher altitudes.

Figure 1. Author’s view of the situation we are facing. World leaders look at their video screens and adjust their controllers to try to make the world economy fly at ever-higher levels.

World leaders look at their video game screens for indications regarding where the world economy is now. They also want to see whether there are specific parts of the economy that are doing badly.

The game controllers that the world leaders have are somewhat limited in the functions they can perform. Typical adjustments they can make include the following:

  • Add or remove government programs aimed at providing jobs for would-be workers
  • Add or remove government sponsored pension plans and payments to those without jobs
  • Add or remove laws regulating efficiencies of new vehicles
  • Change who or what is taxed, and the overall level of taxation
  • Through the above mechanisms, change government debt levels
  • Change interest rates

There are numerous problems with this approach. For one thing, the video game screen doesn’t give a very complete picture of what is happening. For another, the aspects of the economy that can be controlled are rather limited. Furthermore, the situation is very complex–there seem to be several “sides” of the economy that need to “win” at the same time, for the economy to continue to grow: (a) oil importers and oil exporters, (b) businesses and their would-be customers, (c) governments and their would-be taxpayers, and (d) asset holders and the would-be buyers of these assets, such as families needing new homes.

An even bigger problem is a physics problem that is hidden from the view of those operating the control mechanism. Jet airplanes in the real world cannot rise beyond a certain altitude (varying depending upon the plane), because the atmosphere becomes “too thin.” There is a parallel problem in the economic world. The atmosphere that allows an economy to grow is provided by a combination of (a) an increasing supply of cheap-to-produce energy, and (b) increased technology to put this growing energy supply to use. This atmosphere can become too thin for several reasons, including the higher cost of energy production, rising population, and growing wage disparity.

We know that in the real world, a jet airplane cannot rise ever-higher. Instead, at some point, the airplane hits what has been called its “coffin corner.”

Figure 2. Diagram of Coffin Corner by Aleks Udris of Boldmethod. On the chart, Vs is the velocity; MMO is the Maximum Mach Number.

According to Aleks Udris, “The region is deadly. Get too slow, and you’ll stall the jet at high altitude. Get too fast, and you’ll exceed your critical mach number. The air over your wings will go supersonic, you’ll pitch down, the aircraft will accelerate, and your wings will fall off. Also bad.”

What Happens As Coffin Corner Limits Are Reached in the Economic World?

What do world leaders do, as the world economy hits limits? One temptation is for the world leaders in Figure 1 to take their foot off the throttle that is operated by low interest rates and more debt, because they don’t seem to be providing very much benefit anymore. The leaders fear that if more debt is added at low interest rates, it risks creating “asset bubbles” that are easily disturbed if any little bump to the economy occurs. If a big bubble pops, there is a significant risk that the economy could fall down to a much lower level. This is like stalling the jet at high altitude.

World leaders can also use approaches that create situations more like “making the wings come off” the economy. These approaches involve favoring one group over another. For example, a government can give big tax breaks to businesses, but raise taxes on individual citizens. Businesses will ultimately be harmed by this approach, because they depend on individual citizens for their sales. The result is like tearing the wings off the airplane.

Another approach that would tear the wings off the economy involves actions by a different group of world leaders than those shown in Figure 1, namely the leaders from OPEC and Russia. These leaders have different video game screens and different game controllers. They can manipulate the world economy by reducing the supply of oil they provide. With this approach, they hope to increase the price of oil, and thus obtain a larger share of the world’s goods and services through higher tax revenue.

Raising the oil price would benefit oil exporters, but would make goods and services more expensive for oil importing countries. Ultimately, this approach would lead to recession in oil importing nations. The result would likely be worse than the 2008-2009 recession–another way to make the wings come off the economy.

Let’s look in a little more detail at what is happening, and what goes wrong:

[1] Energy plays a huge role in this game, because a growing supply of cheap-to-produce energy allows greater worker productivity.

It takes energy of various types to make the economy grow, because energy is needed whenever we move something, or heat something, or use electricity to operate something. We use energy products to leverage our human labor. For example, we use a truck to deliver a package, rather than walking and carrying the item in our hands. If fresh water is in short supply, we use energy to operate a desalination plant, and thus produce the fresh water we need.

It is generally workers who produce goods and services. If energy supply is inexpensive and readily available, it is easy for governments or businesses to create “tools” to make these workers more productive. These tools include such things as roads, vehicles, machines of all types, and even computers. If the quantity and capability of these tools are increasing, the labor of these workers is increasingly leveraged by the availability of these tools. This is what allows economic growth.

[2] The extent of world economic growth seems to depend primarily on how quickly total energy consumption is growing

If we look at historical economic growth, we see that the rate of growth of energy consumption seems to play a major role.

Figure 3. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil’s Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

The highest rates of world economic growth took place in the 1950-1965 period, and in the 1965-1975 period. These were both periods of very high growth in energy consumption. As we will see below, these were both periods when the price of oil was less than $20 per barrel, for almost the entire period.

If we look at economic growth over shorter periods, we also see a strong correlation between world economic growth and growth in energy consumption:

Figure 4. World growth in energy consumption vs. world GDP growth. Energy consumption from BP Statistical Review of World Energy, 2017. World GDP is GDP in US 2010$, as compiled by World Bank.

[3] On Figure 4 (above), the widening gap between GDP growth and energy consumption since 2013 could either represent (a) Much greater efficiency in using energy or (b) A problem in measuring true economic growth.

We can see true efficiency improvements in the 1975-1985 and the 1985-1995 periods shown on Figure 3. These were the periods when the world was truly trying to “get away from oil,” after a spike of high prices in the 1970s. Governments around the world were encouraging new smaller cars; electricity generation was being changed from oil to nuclear; home heating was being changed from oil to natural gas or electricity. The new furnaces installed were much more efficient than the old ones. Thus, during this period, efficiency/technology improvements were aiding economic growth to a greater extent than usual.

Now, in the period since 2013, much of the “low hanging fruit” has already been picked. We may still be finding some technology gains, but it seems likely that at least part of the problem is an “economic growth counting problem.” GDP looks like it is growing, but it is really very hollow economic growth. Governments invest in projects of essentially no value, and their investment is counted as GDP. For example, they invest in unneeded roads, in apartments that citizens cannot really afford, in educational institutions that do not produce graduates with wages that are sufficiently high to pay for education’s high cost, and in high-priced medical cures that are unaffordable by 99% of the population. Are these things truly contributions to GDP?

We also find businesses that look like they are growing, but in fact are taking on increasing amounts of debt as they sell off assets. This is not a sustainable model! We encounter energy companies that claim to be doing “sort of” alright, but their profits are so low that they need to cut back on new investment, and they need to borrow in order to have funds to pay dividends to shareholders. There is something seriously wrong with this growth!

[4] The economic “atmosphere” becomes thinner and thinner, when oil prices rise above an inflation-adjusted price of $20 per barrel.

Back in the time period prior to 1973, oil prices were generally below $20 per barrel, in inflation adjusted terms. Since then, prices have tended to be above this level.

Figure 5. Historical oil prices are Brent oil prices in 2016$ from BP Statistical Review of World Energy 2017; $20 per barrel is the maximum price level where oil is truly affordable; and $300 per barrel is the maximum price per barrel that the International Energy Agency seems to believe is possible for the world economy.

When oil (and other energy prices) were very low, companies could add tools to make workers more effective with little expenditure. As a result, the United States saw wages growing much more rapidly than inflation prior to 1968 (Figure 6).

Figure 6. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis of IRS data, published in Forbes.

Once prices of oil started rising, prices of tools (broadly defined) rose. Governments and companies needed more debt to buy these tools. It became more of a burden to add capital goods of all kinds. Governments tried to raise GDP by adding debt, but to a significant extent they ended up with higher debt to GDP ratios rather than the rapid growth they were looking for (Figure 7).

Figure 7. Worldwide average inflation-adjusted annual growth rates in debt and GDP, for selected time periods. See post on debt for explanation of methodology.

The changes in the economy that allowed continued growth (more debt and more technology) tended to push the economy toward more wage disparity, in part because more technology required more training for some of the workers, but not for others. This allowed wages of the workers with special training to rise.

Furthermore, the need to repay debt with interest tended to funnel wealth toward the financial sector, and toward those within the economy who could afford to hold financial assets. These changes left less of the output of the economy for non-elite workers.

Economists never really understood what was happening. They had never thought through the important role that energy plays in the economy. Cheap energy is needed to create jobs. It is jobs, and the wages that those jobs pay, that tend to suffer when oil prices are too high (Figure 8). Thus, high-priced oil has a double impact on the economy:

  1. It makes goods of many kinds more expensive.
  2. It reduces job availability and wages.

Figure 8. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Logic would suggest that the economy cannot really operate on high-priced oil. Lower wages and higher prices do not peacefully coexist! We should expect high oil prices to be very unstable. Even if prices can reach a high level in response to a specific shortage or stimulus, we cannot expect these high prices to be maintained for a sustained period, without added stimulus. Unstable high prices are not likely to give rise to more oil production; they cannot be depended upon.

Economists have never understood this situation. Instead, they have made pronouncements that at some point in the future, they expect that oil would become scarce. Because of this scarcity, oil prices would rise. In their view, when oil prices rise, high-priced substitutes would suddenly become the best option available; somehow, the economy would become able to operate using these high-priced substitutes. (If energy products were not needed for labor productivity, this view might make some sense. In the real world, it does not.)

It never occurred to organizations such as the International Energy Association (IEA) that high oil prices might be a problem for the economy. The IEA has shown exhibits suggesting that oil prices could theoretically rise to $300 per barrel. Of course, at such an elevated price, there would be an almost unlimited amount of oil available to extract (Exhibit 9).

Figure 9. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much oil can be produced at various price levels.

[5] The real enemies of continued economic growth are (a) diminishing returns with respect to oil and other energy production, (b) continued population growth, and (c) increasing wage and wealth disparity. 

We seem to be playing a video game where the players don’t understand who the real enemies are.

Diminishing returns with respect to oil and other energy production have to do with the cost of energy extraction rising ever-higher, as more resources are extracted. There are a lot of resources that we can “see,” but that we cannot economically extract, unless prices rise to very high levels.

Figure 9. My version of the resource triangle for oil. Note that oil shale is not the same as tight oil, found in shale formations. Oil shale is kerogen that must be processed at very high temperatures in order to produce oil. This is rarely done, because of the high processing cost. Tight oil is not on this chart. Tight oil probably would be above “onshore heavy oil; oil sands.” It still would disappear, if oil prices permanently fell to $20 per barrel or less.

Continued population growth is a problem because it is really “energy per capita” that matters. Each individual needs food, transportation, and housing. All of these things take energy. Many years ago, when most of the workers were farmers, it was necessary to create ever-smaller farms, as population rose. This clearly would lead to lower food production per farmer, unless some sort of technological breakthrough was taking place at the same time. Today, we have a parallel issue.

Increasing wage disparity tends to be associated with the rising use of technology. When most labor is hand labor, workers truly do “pay each other’s wages.” All wages can be fairly equal. With increased technology, some workers have specialized training; others do not. Some workers are supervisors; others are laborers. Unless the overall output of the economy is rising very rapidly, non-elite workers find themselves increasingly unable to afford the output of the economy. It is this falling “demand” (really affordability) that tends to pull an economy downward.

[6] High oil prices can be temporarily tolerated by an economy, if interest rates are lowered to make this arrangement work.

Clearly, lower interest rates make capital goods of all kinds more affordable to both businesses and individual workers. If we look back at the period since 1981, we see a long period of falling interest rates, acting to stimulate the economy.

When oil prices exceeded $20 per barrel, the economy did not collapse immediately. In “normal” times, lowering interest rates was sufficient stimulus to keep the economy growing (Figure 4).

Figure 10. Ten-year treasuries through Nov. 17, 2017. Chart produced by FRED.

When there is a very big drop in oil prices (as in 2008, related to falling debt levels), then Quantitative Easing (QE) has been helpful (Figure 11). The US began its program of QE in late 2008, when oil prices were near their low point. There were three phases of the US’s QE. The US discontinued the third phase in late 2014, just as oil prices started to slide again.

Figure 11. Monthly Brent oil prices with dates of US beginning and ending QE.

[7] It is quite possible for a disconnect to occur between (a) the cost of oil extraction, and (b) the selling price of oil.

Oil that costs more than $20 per barrel is never very affordable by the economy. It really needs continual stimulus to keep prices at an elevated level. Once debt growth falls too low, the balance between the supply and demand for oil is settled in the direction of the amount of goods and services made with oil that non-elite workers can afford. Prices fall below the cost of production. This seems to be what has happened since 2014.

[8] In fact, since 2014, the selling prices of oil, natural gas, and coal have all fallen below the cost of extraction.

Figure 12. Price per ton of oil equivalent, based on comparative prices for oil, natural gas, and coal given in BP Statistical Review of World Energy. Not inflation adjusted.

It is popular to think that the reason why oil prices are too low is because of overproduction by the United States or Saudi Arabia. When a person stops to realize that essentially the same situation arises for all three fossil fuels, a person begins to understand that there likely is an affordability issue underlying the low prices for all three fuels. The affordability issue, of course, arises because energy supply is not rising quickly enough because (at over $20 per barrel), it is too expensive to be truly affordable. The “atmosphere is too thin” at today’s high cost of energy extraction.

9. Coal production seems to have “peaked” because at today’s low prices, few mines find the extraction of coal profitable.

It is popular in “Peak Oil” circles to believe as the economists do: oil and other energy prices can rise endlessly, because of growing “demand.” Economists have never stopped to think that at any given price, there is an affordability issue for customers. If prices drop too low, there is a profitability issue for those operating extraction facilities.

If we look at the situation with coal, we see a situation where peak production seems to have been reached because of low prices. China has closed down mines because falling prices have made mines that were previously profitable, unprofitable (Figure 13). Coal is the lowest-cost fuel; if it cannot be mined profitably, the world economy has a problem.

Figure 13. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

In fact, it appears as though we have reached peak coal on a worldwide basis, as a result of low prices (Figure 14). It is hard to see any major production area that can grow substantially in the future, without much higher prices.

Figure 14. World coal production, based on BP Statistical Review of World Energy Data. (For 1965-1980, consumption is substituted for production, because only consumption is given, and imports/exports are likely small.

[10] The world economy needs to be able to keep repaying debt with interest. If world economic growth slows too much, this will not be possible. 

We may already be reaching a “too slow growth limit.” Below this growth limit, it becomes impossible to repay debt with interest, especially if interest rates rise. We may already be reaching this point, based on the lack of growth in energy consumption per capita shown in Figure 15. (Also, as noted in Item [3], it seems quite possible that recent GDP growth indications are overstated.)

Figure 15. Average energy prices (averaging oil, coal, and natural gas) versus the total quantity of energy products consumed per capita, based on BP energy consumption data and UN population data. (Prices have not been inflation adjusted.)

Figure 15 suggests that affordability and price go together. When the world economy is growing rapidly, energy prices tend to rise (as does energy consumption). When energy consumption per capita falls, it is a sign that the world economy is not doing well.

One of the things that confuses matters is the very different economic growth results for different parts of the world. If oil prices are low, this improves economic growth prospects from the point of oil importers, such as the United States and China. This is what our video game players are looking at, not the results for the world as a whole. It is oil exporters, such as Venezuela and Saudi Arabia, who are having problems.

If we look at world news, Venezuela may collapse because of low oil prices. Saudi Arabia has found it necessary to take on debt, and has undergone regime change, at least partly related to low oil prices. Norway is proposing that its oil and gas fund no longer invest in oil and gas companies, because it expects that there is a significant chance the oil price will not rise high enough to bring companies back to adequate profitability.

[11] The whole “game” has been confused by a lot of not-quite-correct pronouncements from academic circles.

A lot of well-meaning people have tried to solve our energy problems, but haven’t gotten the story right.

Economists have gotten the story pretty much 100% wrong. Energy is very important for the economy. Furthermore, energy prices don’t rise endlessly.

Peak Oilers have confused matters by talking about oil, coal and natural gas being determined by the amount of technically recoverable resources in the ground. This might be true if energy prices could rise endlessly, but clearly they cannot. By following the wrong views of economists, Peak Oilers have led world leaders to believe that far more resources are available to be extracted than really is the case.

People who call themselves Biophysical Economists haven’t really gotten the story correct either. The Biophysical Economists realized that there was a need for a measure for diminishing returns. They put together a measure which they called Energy Returned on Energy Invested. The measure, unfortunately, only “sort of” works. It gives a lot of wrong answers. It does not suggest that oil prices above $20 per barrel are a problem. It also does not suggest that substitutes for oil that are priced above $20 per barrel are a problem. It tends to give a lot of “false positives” when it comes to the question of whether renewables can be substituted for fossil fuels. It seems to suggest that a particular ratio is important, when it is really the total quantity of an energy product available at a very low price that is important.

I should not pick on the Biophysical Economists. There are many others with academic credentials who produce metrics that really aren’t very helpful. Energy payback time is not a very helpful metric, especially from the point of view of deciding whether or not to use a particular device. It is not the energy that the economy must pay back; it is the full cost of manufacturing the device that needs to be recovered, including human labor costs and taxes. In some applications, the cost of mitigating intermittency may also need to be considered.

Even the standard Levelized Cost of Energy calculations can give misleading indications, if they are used on intermittent renewables without taking into account the cost of mitigating the intermittency.


Conclusion

With all of these issues, it is not surprising that world leaders have difficulty playing the energy and economy game. In fact, it is hard to see any winning strategy.

One of the issues that makes the game impossible to win is the fact that all sides must win. A solution that cuts out the oil exporters is a problem for an economy dependent on oil. Any solution that cuts out the workers is a problem, partly because businesses need workers as consumers, and partly because governments need workers as taxpayers.

The reason I have not included any discussion of renewables is because at this point in time, we do not have any renewables that are sufficiently inexpensive and sufficiently scalable to represent a solution.

 

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.
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1,788 Responses to A Video Game Analogy to Our Energy Predicament

  1. Fast Eddy says:

    Re Breeding…. this is what happens when you take the strongest male slave and hook him up with the strongest female slave….

    Keep in mind this guy was a third rate college football player before this…. guys that run as fast as him but are close to 100kg … are a dime a dozen in the NFL…..

  2. Davidin100millionbilliontrillionzillionyears says:

    I have my next new year’s prediction…
    though it’s a long shot, so really it falls outside of my recommendation that new year’s predictions should be largely based on repeating the situation of the previous year…
    so it’s more of a wild guess.

    I think that in 2018 there will be a missile attack from North Korea that will possibly start WW3 and will certainly lead to the loss of millions of lives.

    what I’m sure of is that this missile attack will go off course and will surely hit an unintended target…
    my best guess is it will hit New Zealand.

    no need to panic, though, as the nuclear weapon will not take out very many lives.

    but, I see the attack taking down the entire power infrastructure of NZ, and soon after that, there will be a pandemic of cholera.

    that’s fairly certain.

    the cholera will take out at least 99% of the population of NZ, and only the strongest, wisest, and Fastest of New Zealanders will survive.

    sorry, folks, but this is almost a sure thing for 2018.

    ps: 25 days until 2018 but for now…

    BAU tonight, baby!

  3. Fast Eddy says:

    Just a few hours ago, Bitcoin surged above $13,000 and now, on notable volume, it has reached the stunning $14,000 level… up 20% today…

    For those keeping track, this is how long it has taken the cryptocurrency to cross the key psychological levels:

    $0000 – $1000: 1789 days
    $1000- $2000: 1271 days
    $2000- $3000: 23 days
    $3000- $4000: 62 days
    $4000- $5000: 61 days
    $5000- $6000: 8 days
    $6000- $7000: 13 days
    $7000- $8000: 14 days
    $8000- $9000: 9 days
    $9000-$10000: 2 days
    $10000-$11000: 1 day
    $11000-$12000: 6 days
    $12,000-$13,000: 17 hours
    $13,000-$14,000: 4 hours

    I am thinking this is some sort of barometer of what is happening to the global economy…. spinning faster and faster … at some point it spins so fast that the centre cannot hold …

    • Maybe I still will be right about a downturn in 2017. At this rate, we will not make it until the end of the year.

      • Fast Eddy says:

        Maybe the idea here is that people see that financial independence is as easy as buying Bitcoin…. if you have no money to buy then you get an interest only loan from the bank….

        The more people resist the more Bitcoin is pushed higher — look at what you are missing out on!

        Eventually everyone capitulates and buys Bitcoin and we all Live Large forever…. perpetual prosperity…. private jets for all…. blah blah blah….

        Finally – we are now seeing Plan B. And it is looking good!

    • psile says:

      Insane. What used to take years of speculative mania to achieve now takes not days, but only hours!

      • Fast Eddy says:

        Perhaps this is Al Bartlett’s ghost playing a little trick on us…. he’s demonstrating exponential growth using Bitcoin….

        • psile says:

          They must be using the energy equivalent of a small European country to mine this amount of crypto now. Quick, who can they bump off the modernity ladder to keep the scam going?

          • Lastcall says:

            Still a lot less energy ( and lives) than is required to keep the petro-dollar alive in my guesstimation. This is the candy floss stand in the corner of the circus.

            • Fast Eddy says:

              +++++++++++

            • psile says:

              Still, it’s the derivative exposure to BTC that might truly whack the system and take down a big trading house or two leading to a domino effect. GFC redux anyone?

            • Fast Eddy says:

              Since Bitcoin exists … without any real purpose … other than it is supposedly going to make CBs obsolete… yuck yuck yuck…..

              So I am assuming the CBs are involved in this…. are tolerating this ….

              The question is … why?

              The only thing I can thing of is that it has been thrown out there as a distraction for the masses.

              Bread and circuses…

            • Bit Coin seems to act like debt; it acts like a promise for future goods and services (to the extent it can actually be traded). In that way, it is helpful, especially in countries that cannot count on their own currency.

              It is a way that the economy can generate more debt. The debt, in a sense, is backed by the energy used to generate the bit coin. Of course, at some point it becomes not feasible to make more bit coin, given their high energy cost.

            • Fast Eddy says:

              Relatively insignificant at 250 B cap….

            • psile says:

              I believe they’re going to try and take it out by shorting it on the futures market, which is set to start trading in BTC in just a few days. The volumes are relatively thin and heavily on the long side. Imagine the windfall profits that might be had from such a play?

            • Fast Eddy says:

              That would be entertaining!

              And without a doubt … if the CBs want this gone …. they have some very clever people who would invent a way to end it….

              Just as they invent ways to get rid of leaders in countries that do not kiss the ring.

              All it would take is the pitter patter of a few nervous feet… to take this down

              https://www.bloomberg.com/news/articles/2017-12-08/the-bitcoin-whales-1-000-people-who-own-40-percent-of-the-market

            • DJ says:

              Great idea. Krypocurrencies as collateral for even more debt.

              Unlike housing that can’t rise much more than building cost there is no real limit for kryptocurrencies.

              Intrinsic value of a bitcoin is less than $.01 and still it is traded for $20k, why not $1M?

          • DJ says:

            When the last tree is cut down and the last fish is caught man will realize he can’t eat Bitcoin.

      • At some point, the bubble has to burst, though.

        • psile says:

          Futures trading in BTC commences in a few days, so institutional traders will be able to short the thing. I feel this is a massive pump and dump to clean up the foolish, as they are all on the long side of the market. If it pans out like I think, it will be a bloodbath.

    • Volvo740 says:

      interesting article series on Bitcoin over on theautomaticearth.com Looks like the author there is in support of Bitcoin. I know Nicole wrote an article not too long ago in the support of physical cash. Oh well. At least ponziworld is sticking to a consistent story: this is bullshit.

      • DJ says:

        Isnt Raul always a bit inconsistent?

      • Volvo740 says:

        I think so too. I was also a bit surprised when Nicole suggested not buying land & property. The deflationary crash was imminent. Jason Heppenstall has a different opinion over on 22billionenergyslaves.com

        • xabier says:

          Nicole is always to be taken with a pinch of salt in so far as she recommends a specific course of action.

          She can’t even get her own act together, always running from one place to another.

          Jason is far more practical and sensible.

          • Fast Eddy says:

            I saw an interview with Nicole some years ago – she was insisting her daughter learn to bang a drum of something like that — because it would be a valuable skill in Koombaya…

            I was thinking … better to learn how to fire an automatic weapon…. and how to clean it…. maybe learn some ambush tactics….

            She should change the name of her site to Automatic Weapon

            • theblondbeast says:

              I keep telling people to consider a career as a warlord. Join my army. I promise to take care of the local spent fuel rods with my slave labor bucket brigade.

            • Being near the center of power is no doubt a good idea. Warlords have existed since Old Testament days. Other than the detail of spent fuel rods, not a bad idea.

      • Volvo740 says:

        Great new article out by Steve!

        • Steve Ludlum of Economic Undertow?
          https://www.economic-undertow.com

          Excerpts:
          Since 2009, Americans have been privileged to participate’ in one of the great Wall Street bull runs in history. . . Governments’ number one job was to make necessary resources available to business cartels at the lowest possible cost.

          Today, the government purposefully aims to make itself irrelevant, to shrink itself until it can be drowned in a bathtub, to give free rein to gamblers without heed, to do so for obsolete ideological reasons. How can this end well?

          The cryptocurrencies are Ponzi schemes, . . .

          Q: How would you describe the economy?
          A: It is a system that allows a select few to borrow immense fortunes. The rest of us; you, me, everyone else, repay the debts.

      • Jesse James says:

        Bitcoin is rising because of the Chinese…and previously the Japanese. In the Japanese case their CB has made the Yen worthless to own so what do you do with your money? The easiest thing is BC. For the Chinese, it has become a way to get wealth out of China through BC outfits in HongKong. The value of BC is supposed to be electronic work. I think it is actually now based on advantage. Whoever has the cheapest electricity and the fastest computers can mine new BC.
        Think about an exponential function where BC keeps rising, therefore more and more of electricity is used to power ever more larger number of ever powerful computers to mine it. With an increasing exponential function of resources devoted to mining BC, soon a significant part of the planets resources are consumed for this purpose. Imagine if BC goes to $1M….or $100M. Our planetary power system will collapse under the mining efforts. Soon, all computer production is devoted to BC mining. Eventually…thangs break.

    • Pintada says:

      Forget bitcoin – it was so last night! Im all in with criptokitties.

  4. Baby Doomer says:

    USA may not attend 2018 Winter Olympics over fears of war with North Korea

    http://www.cnn.com/2017/12/06/politics/nikki-haley-olympics-north-korea/index.html

  5. The Second Coming says:

    Posting this here because it caught my eye with the catch phrase “Business as Usual”

    The paper, published on Wednesday in Nature, found that global temperatures could rise nearly 5 °C by the end of the century under the the UN Intergovernmental Panel on Climate Change’s steepest prediction for greenhouse-gas concentrations. That’s 15 percent hotter than the previous estimate. The odds that temperatures will increase more than 4 degrees by 2100 in this so-called “business as usual” scenario increased from 62 percent to 93 percent, according to the new analysis.
    Darn it..don’t these Egghead’s know there won’t be an end of the century for humans…
    Climate models are sophisticated software simulations that assess how the climate reacts to various influences. For this study, the scientists collected more than a decade’s worth of satellite observations concerning the amount of sunlight reflected back into space by things like clouds, snow, and ice; how much infrared radiation is escaping from Earth; and the net balance between the amount of energy entering and leaving the atmosphere. Then the researchers compared that “top-of-atmosphere” data with the results of earlier climate models to determine which ones most accurately predicted what the satellites actually observed

    Man, talk about an alternate reality of being…must be nice to live as an Egghead

    • Fast Eddy says:

      Notice how the dates are always left so far out in the future?

      We can’t even tell what price Bitcoin will be tomorrow….

      I wonder (well … I don’t wonder… I know) if maybe they keep pushing the date of catastrophic GGG wWWWWW further out — because if they were to put a closer date on it … and that date was reached … and nothing happened ….

      That would lead to them being dismissed as clowns. Which of course they are.

  6. MG says:

    What is the difference between the Christian and Muslim religions? The Christianity is the religion of the energy limits that cause the collapse of the human population.

    The muslim religion is the religion of woman: the Kaba stone vagina and the moon cycle of the woman are the most evident symbols

    “Kaaba cube mean in Arabic, but the Kaaba itself is the old “Kaabou” , the Greek word for ‘girl’ , and refers to the goddess Astarte , that is to say Aphrodite in Greek mythology is the Roman Venus and al-‘Uzza (العزى) Arabs considered the goddess of fertility.”

    http://fishcalledsanda.blogspot.sk/2013/07/origins-of-islam-godess-allat.html

    The key role of energy in populating the world by the humans is overlookeed by the majority of the religions. It was the destruction of the fetishism in the Judaism that allowed for seeing the reality as it is.

  7. Fast Eddy says:

    Keep in mind … this is not total collapse …

    http://www.zerohedge.com/news/2017-12-06/what-life-million-people-puerto-rico-who-still-dont-have-power

    …there is very little food, no fresh water, 97% are still without power, limited cell signals have stymied communications, and hospitals are struggling to keep people alive. There is no 911. Help is not on the way. If you have no cash, you can’t buy anything. As people get more desperate, violence increases. (source)

    “My family has lost everything. My uncle with stage 4 cancer is in so much pain and stuck in the hospital. However, conditions in the island are far worse than we imagined and my greatest fear has been made reality. The chaos has begun. The mosquitos have multiplied like the plague. Dead livestock are all over the island including in whatever fresh water supplies they have.

    My family has been robbed and have lost whatever little they had left. The gang members are robbing people at gunpoint and the island is in desperation. People are shooting each other at gas stations to get fuel.

    They’re telling us to rescue them and get them out of the island because they are scared for their lives. We’re talking about 3.5 million people on an island, with no food, no drinking water, no electricity, homes are gone. Family if you have the means to get your people out, do it. This is just the first week. Imagine the days and weeks to come. These are bad people doing bad things to our most vulnerable.

    Imagine a few weeks with no resources and the most vulnerable become desperate. What are you capable of doing if your children are sick and hungry? We have to help.”

    The sounds of automatic weapons firing were audible Tuesday evening in San Juan. We were told the National Guard had arrived, but I hadn’t personally seen a Jeep or uniform in the streets yet.

    Total darkness has swallowed Puerto Rico, as it has every night since the 12-hour monster Hurricane Maria roared across the island with more than 20 inches of rain and 155 mph winds. I’ve never experienced anything like it: wind and rain from every direction, pounding continuously.

    Now, a war zone best describes what’s left of what was once an emerald green gem in the Caribbean…

    …after Maria, we face hours upon hours of waiting in lines for gas that might not be there; hours waiting in bank and ATM lines for money that might not be there; hours waiting in grocery store lines for food that might not be there.

    • Fast Eddy says:

      It’s dangerous to venture outside at night. An island-wide curfew was lifted last week, but without streetlights, stoplights or police, driving and walking are dangerous after dark.

      Trash and debris from the storm remain a rampant problem. The U.S. Army Corps of Engineers reported it has removed more than 639,000 cubic yards of debris. But it is still tasked with removing at least 2.7 million remaining cubic yards.

    • Sungr says:

      At least PR has massive amounts of outside aid coming into the island.

      In a few more decade of oil depletion, nobody will be coming to help.

  8. aubreyenoch says:

    Oahu Hawaii
    Dec.6,1941 – another day in paradise.
    Dec.7,1941 – bombs and bullets rain from the sky.
    Most days are like yesterday.
    All days are not like yesterday.
    Remember Pearl Harbor.

    • Jarle B says:

      “Remember Pearl Harbor.”

      … or Hiroshima *and* Nagasaki.

      • doomphd says:

        out here in paradise, we keep waiting for the bright flash and that awful rumbling sound of crumbling sky scrapers. nice view, if you remember to bring your dark sunglasses.

    • With our health, it is similar. Every day is like the previous one, until something changes. We are injured in a car accident. Or we trip and fall and break an arm or leg. Or we are diagnosed with cancer, or a heart attack. Or, in the case of women, we find out that we are pregnant. Health doesn’t look like it would change, but it does.

      • A Real Black Person says:

        I’ve been reminded of this with recent passings and sudden health problems from people I know lately. Someone might seem completely healthy or today and may need a major operation tomorrow based on something unpredictable

  9. Sungr says:

    Wall Street Tells Frackers to Stop Counting Barrels, Start Making Profits
    Dec. 7, 2017

    “Twelve major shareholders in U.S. shale-oil-and-gas producers met this September in a Midtown Manhattan high-rise with a view of Times Square to discuss a common goal, getting those frackers to make money for a change.”

    “In the past decade, the shale-fracking revolution has made the U.S. the world’s largest oil-and-gas producer and reshaped markets. Yet shale has been a lousy bet for most investors. Since 2007, shares in an index of U.S. producers have fallen 31%, according to data provider FactSet, while the S&P 500 rose 80%. Energy companies in that time have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore ISI.”

    “Investors are tired of getting burned,” Mr. Heltman says. “Many are telling companies that unless this becomes a more disciplined industry, they aren’t going to come back.”

    https://www.wsj.com/articles/wall-streets-fracking-frenzy-runs-dry-as-profits-fail-to-materialize-1512577420

    • I think we keep seeing versions of this story.

      And farmers are not making enough money either.

      Coal producers are not making enough money; this is why China keeps closing coal mines. Uranium prices are low.

      I think that this is what we expect as collapse nears. Revelation 18: 11-13 indicates that when ancient Babylon collapsed, the problem was a lack of demand and low prices. Merchants found no one to sell their cargos to; no one would even buy human slaves–an energy product.

      • Sungr says:

        I am wondering if this is what happens as we approach the point of net zero return on oil- everything just sort of grinds to a halt. Some of the indicators that I am seeing are-

        *CBs are barely able to raise interest rates above zero. If we were really on a 3.3-4.0% growth path, the US economy would have enough demand for capital to pull those rates strongly upward toward normal ranges.

        *the huge number of young people who are unable to get anything going with many living in parents basements etc. I know of young couples whose lifestyle and financial situation resembles that of the Joads of Grapes of Wrath.

        *the opioid epidemic appears to be a cry for help from millions of mostly younger people who see poor opportunities ahead. Most may be understanding this instinctually that we are heading down economically.

        *the world is not rebuilding those nations & cities who have experienced climate disasters. New Orleans is still half wiped out. Haiti waits in vain for international help to rebuild. If we were in the 1960s, these places would likely be rebuilt better than new.

        *And of course, the low energy prices that can’t get much traction.

        Lots of other signs.

        • I think you are right. We are seeing these signs of “low energy” problems all around us. Young people especially are having a hard time earning enough (two or three part-time jobs) to repay educational loans, plus take care of themselves. Certainly can’t have a family or buy a new home.

        • JesseJames says:

          The Dow Jones average has not ground to a halt.

          • Sungr says:

            Duck and cover. Now.

          • Sungr says:

            Some financial commentators are diagnosing hyperinflation in the US. This based on a big recent uptick in US inflation numbers. My thinking is that any hyperinflation would be linked more to end-of-empire geopolitics rather than to an overheating economy. A situation to watch….

            Stocks can be a reasonable place to be during high inflation periods because stocks represent ownership of real companies with real operations. Quality companies have power to raise prices to combat inflation losses in product pricing, factors of production, etc. So, the prices of quality stocks MAY rise to hold value in an inflationary environment.

            Also, individual or organizational investors may seek out the stocks of strong companies for protection as they find themselves losing out on declining cash & bonds.

            DOW 50,000?

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