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.


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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2,300 Responses to A Video Game Analogy to Our Energy Predicament

  1. Baby Doomer says:

    Ford moving new self-driving vehicle, EV production from Michigan to Mexico


    • Sorry I have been offline. We were without power for several hours yesterday, because of a snow storm. My Internet is still down. Fortunately, I can get some access through phone lines.

      • Harry Gibbs says:

        Sounds like quite a storm!

        “A massive storm system that started in the Deep South is moving into the mid-Atlantic, the Northeast and New England. More than a quarter of a million people from Louisiana to Georgia are without electricity and there has been one weather-related death so far. Almost 2,000 airline flights were cancelled Friday due to the weather.

        “The pre-winter storm made its way through Atlanta during the busy Friday evening commute and some parts of Alabama saw a record 10 inches of snowfall, reports CBS News’ Mark Strassmann…”


        • Our internet is still down. I am using cell phone access with limited bandwidth right now. Yesterday we lost power from late afternoon until bedtime. Local roads are a problem because there are a lot of trees down.

      • Fast Eddy says:

        Sorry to hear about that ggg coooling thing hitting your region ….

        • A Real Black Person says:

          ikr, Climbdate change starts to get strong around this time of year
          in the Northern hemisphere.

          • Fast Eddy says:


            And down here in the south the GGG wwwwww is kicking in as the summer season starts… we had a rather balmy 29 degrees C day … a month without any rain … and just last summer we had enormous amounts of rain … and it was much cooler…

            Well that’s weather for ya!

            I’ll report back when the area has changed and is a desert — or a rain forest…

        • We learned several things:

          1. Weather forecasts aren’t very good. No one warned people about the possibility of a major storm. I sent my son off to work downtown on the 7:00am express bus, without thinking about the possibility that there would be a big storm and a major lack of public transportation to get back in the middle of the day. (The express bus only runs in morning and evening rush hours.) Schools in our area started to send children back home in the middle of the morning, when it became clear that we were in the middle of a major storm.

          2. Falling trees are a big issue in the South. They are very often too big for a person to move without cutting them into pieces with a power saw. Some fall and hit houses; some fall across streets blocking them. Some take down electric power lines, which are generally above ground. We were without electricity for several hours on Friday afternoon/evening, probably related to falling trees.

          3. When the electricity is out, there are many side effects. Gas heating in homes does not work, so homes get quite cool. Stop lights don’t work. In fact, quite a few stop lights were out on Saturday, after the storm on Friday. Gas pumps don’t work.

          4. On Saturday morning, the major issue was trying to figure a way out of the neighborhood, around all of the downed trees. Once a person got out the neighborhood, someone had taken care of clearing the snow and trees from major streets. But most stores were not really open, probably because employees couldn’t get out of their neighborhoods, with all of the downed trees. My daughter who was visiting New Orleans said downed trees were are problem there as well.

          5. Internet access was out longer than other services (except through telephone “cellular data.”) Fortunately, cell phones continued to work. We got internet service back on Sunday afternoon (today), after the storm on Friday.

  2. Creedoninmo says:

    What percentage of our gasoline comes from natural gas distillates?

    • The one thing I know is that the percentage is higher in the winter than during the summer. Short chain hydrocarbons tend to evaporate easily. For this reason, they are skimmed off and stored for use when the weather is cool. This is why gasoline is lower priced in the winter than the summer.

  3. Baby Doomer says:

    The economy’s biggest mystery — paychecks just aren’t growing

    “Economists believed heading into 2017 that the low unemployment rate would push wages higher, but they still haven’t broken out.”

    • Baby Doomer says:

      It’s obvious the US government unemployment numbers are fake.

    • DJ says:

      Maybe because percentage not working is astronomical?

      • xabier says:

        There are hardly any unemployed here in Britain -if we discount the incapacitated, etc – and yet an ever larger % of the fully-employed are receiving wholly inadequate wages: and an astonishing number need welfare supplements to pay all their bills. No need at all to put up wages to aid retention and recruitment, very easy for employers.

    • Self organizing systems are in general a mystery.

      At this point, the world economy is not producing a very rapidly rising supply of goods and services. Everything gets squeezed: inflation rates, interest rates, profits of companies, amounts paid to fuel producers of all kinds, from food to uranium to fossil fuels. It is logical that wages of workers get squeezed as well.

      • JH Wyoming says:

        So you’re saying deflation has taken hold. Is there an underlying cause?

        • dje says:

          Debt deflation will be a large factor, along with speculative bubbles being the only way to profit driving additional capital into the FIRE economy over the goods & services economy.

        • Instead of high prices limiting supply, low wages are limiting supply. We have assumed that shortages can appear only one way, but they really can appear in multiple ways. Deflation is a sign of shortages; it is the sign of a system trying to get smaller. Quite a while I wrote a post about what a cook does, when the cook has too little of a necessary ingredient. The answer is, make a smaller batch. Deflation is what hits when the economy needs to make a smaller batch.

          • Dennis L. says:

            Why is everything I purchase going up? Health care costs go up, education goes up, eating out goes up, groceries I am not sure of, gasoline appears to be mostly up, RE taxes are up, dental care is up, housing costs are up, mortgage rates are up, stocks are up, bonds are up, auto’s appear to be up and last of all, bit coin is up.

            Dennis L.

            • dje says:

              >Health care costs go up
              Government backed monopoly/oligopoly (artificial scarcity), in addition to paying customers subsidizing those who can’t afford to pay

              > education goes up
              Student loans flood the education market, causing isolated inflation since the loans are specifically tied to education

              >eating out goes up
              Demand has been going down, businesses need to raise prices to remain open

              >housing costs are up, mortgage rates are up, stocks are up, bonds are up, auto’s appear to be up and last of all, bit coin is up.

              The FIRE segment of the economy has inflation due to QE, and the bubbles induce more capital flow into FIRE causing more inflation in FIRE economy and deflation in the economy of goods and services.

            • Dennis L. says:

              Reply to comment below:
              We eat at a restaurant periodically, basically the same items. In the last 15 years the cost has increased 100% or 6% per year non compounding. Autos are not down in cost, the cost of servicing an auto, e.g. an oil change, is not down, dentistry which is not affected by various insurance programs is definitely not down. Plumbers, carpenters, electricians, HVAC service technicians? Farm land is not down overall, the ten year trend seems to be up. It seems to me that internet service is up, I don’ t watch TV so I am not sure of cable, but I suspect it is up, utilities are up. In 1991 the cost of a gallon of gas was $1.14 according to energy trends insider, now let us say twice that or 100% increase, about 4% per year I believe non compounding.
              Minimum wage is up not down, wages are up not down, but prices are up faster from what I can see.

              Are smart phones up or down? I don’t have one, don’t know. Is FE’s Gulfstream up or down? Is the cost of maintaining it up or down? Anyone priced a new F35 lately? Say with all the options.

              What specifically is down? E. g. a specific service or commonly purchased item. .

              Dennis L.

            • Not because of “inflation,” at least the way it is counted. This doesn’t show much increase recently. I found this chart that can be used to show how the inflation rate has varied over the last 20 years, for various categories. https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm

              You click on a line, at it shows the inflation rate over time for the particular category, at least the way the Bureau of Labor Statistics counts things.

            • Dennis L. says:

              I am empirical, for me my Quicken accounts tell me things are increasing in cost. Talking on the phone at one time cost me about $25/month, now maybe double. There is nothing I need to say on a cell phone that didn’t happen perfectly well on a land line. My last oil change was in excess of $50, not that long ago it was less than $30. My last dental cleaning/exam was $200 which is up from $100 not that long ago. Electrical rates in Germany are off the map. My last Camry hybrid was maybe $26K, a new one is maybe $33K over ten years, same car for all practical purposes. Accounting rates are up, legal fees are up, eating, drinking, driving, housing, education, healthcare are all up. I am eagerly awaiting FE to chime in on the cost of Gulfstream ownership over the last ten years. He could easily answer if landing fees are down over the globe.

              No sarcasm intended neither explicit nor implicit. It would be nice to know where the deflation is occuring.

              Dennis L.

            • Fast Eddy says:

              I have not reached the point where I am checking on landing fees….

              My understanding is that deflation is dangerous when it involves resources… consumer prices continue to rise — because extraction costs have increased — but resource prices deflate — because consumers cannot afford the higher prices required to allow resource companies to remain solvent.

  4. Artleads says:

    Hi Gail,

    So many of us have said how much we’d like to see your message spread further in the mainstream world. I’m reposting something here that needs to be thought out more. If we decide on a course of destroying nothing, physical or psychological, we’d be stuck with all manner of abominations. How does this figure or not figure in a hopeless world? I don’t have an energy analysis that either supports or refutes the following. I’m looking for a paragraph or two from you that is simplified to the point that is truth is obvious to the fiercest denier. Any thoughts?

    I’ll have to return to the drawing board to figure this out. I was trying to bring intuition, religion, the sacred and analysis into relationship, but it’s still elusive. The part of it I’ll stick with–it’s the intuitive part that I was trying to combine with energy–has to do with land use planning.

    – Any given scene in a built environment supports a social system.

    – If you disrupt the scene, you disrupt the social system, in physical and emotional terms.

    – The social system reflects energy flow of a certain type, along with its emotional corollaries.

    – That energy flow is too complex and subtle to grasp intellectually.

    – But the sense of the sacred, based on “aesthetic intuition,” can make physical disruption jarring and offensive. It realizes that subtle flows of energy are being disorganized and subjected to entropy.

    – Ergo, it concludes that the purely intellectual calculation based on arbitrary rules of development are grossly destructive, and can only lead to deteriorated energy and social situation.

    – But since aesthetic excellence tells you how to add new things without disturbing the old (to a significant extent anyhow), you can have a lot of new development as long as it is nuanced and camouflaged.

    • Artleads says:

      (JMG blog)

      JC says:
      December 7, 2017 at 11:56 am
      Mr. Greer, I will attempt to do the atheist route for you, starting from the science angle and arriving at nature spirits of a sort.

      The gaining insight where things just click is an application of pattern recognition. It’s what artificial intelligence researchers have been playing with for a few decades now, with some partial success. When you practice on an instrument, the patterns are being embedded in your brain until you don’t think about it anymore but just do it. When at that state, you start to assemble patterns of the patterns you leaned. Once those larger patters establish themselves, things just connect and seem obvious. You don’t seen separate things anymore, you see patterns of patterns of things. You feel it and see it in a whole different way.

      The same applies for feeling the vibes. You don’t see it, or hear it, or smell it. But somehow your brain recognizes a pattern in a combination of a lot of little subtle things from all senses that you don’t consciously perceive but is there nonetheless. You recognize it as ‘a vibe’ but will almost never be able to say what exactly makes up the vibe. It doesn’t make it any less real of course.

      Now I’ll tell you that religion has a function that nature has put into humans for a reason besides just being religious. Humans are terrible in long term view, especially multi-generation. But there are some things that the next generations should understand, like not cutting down too many trees or you have soil erosion and people die. It’s pretty hard to do a long term study and convince people, certainly several years BC. An approach that works, is by coding long term behavior into rituals, and link rituals to religion. You don’t stop soil erosion consciously, but you have sacred groves of Demeter that have the same result.

      I’m not trying to talk down on religion. In fact, you could see religions it as a living entities living in symbiosis with humans. They live in our minds and writing, multiply, mutate, cross-fertilize and can die. Bad religions with bad rituals let their host do things that destroy the support structures. The host will eventually die, and so does the religion. Good religions makes the host thrive and will outlast the other religions.

      In the same way you can wonder if a storm system is alive. It maintains a certain structure, in a dynamic balance using energy and material from its environment. Just like most living things. You can wonder if species and ecosystems are alive, mutating, adapting, reproducing. They are not alive as we are, but still they form a pattern recognizable as a living thing. Even evolution seems to be alive, to have a spirit, and even works as a system that leans, collects knowledge, builds in fail-safes and backups (the more we learn, the more we see those nifty things). It just thinks on geological timescales.

      • The world is full of self-organized systems. Religions of various types seem to be some of these religions. I believe there is a god behind all of the self-organization. It is a miracle that humans have been able to be on earth as long as they have been.

        • jupiviv says:

          The concept of god or some sort of universal orderliness is irrelevant to the explanation of cause and effect, since that concept itself assumes causality or ‘self-organising systems’ as you put it.

          • God seems to me to be a god of endless coincidences. The fact that the Universe can exist, with all the rules of physics, seems to me to be a miracle. Energy plays an amazing role.

            Religious writings include stories to illustrate beliefs that seemed to be helpful at the time. People today will want to decide whether these beliefs still make sense. In a sense, we have to believe something. Do we believe, “Technology will save us,” or “He who dies with the most toys wins,” or “A beautiful body is what success is all about”? Or do we balance those views with some older views?

            • Tim Groves says:

              When humans are born and start growing up in the world, they will develop emotionally and psychologically all by themselves. Even if they are raised by wolves as is sometimes the case, they develop as humans because the human brain nervous system has evolved to develop that way. But without the aid and support of an already well-developed and function human social environment, they will not develop the social and linguistic skills they need in order to function smoothly in society or to indulge in deeply abstract and intellectual pursuits.

              Human society molds its members in various ways. The kids have to be filled up with something and the adults have to be kept cooperative or society won’t continue. “Religious” beliefs, ideologies and rituals have long been part of the mix. And for adults, the beliefs don’t even have to be believed. As long as the orthodox doctrines are publicly acknowledged as true, individuals can believe anything they like in perfect freedom. But it takes a certain degree of intellectual and emotional maturity for an individual to accomplish this feat. It isn’t something one can pick up while being raised by wolves.

              I’m ready to chuck out the word “religious” as being “not very useful”. I think it sheds more darkness than light these days on the things it attempts to describe. The ancient Romans coined the word, according to one theory, to describe duties and rituals that formed ties between people and those things that were above them, which were in those days personified as gods. Thus spake WIkipedia: ” According to the philologist Max Müller in the 19th century, the root of the English word religion, the Latin religio, was originally used to mean only “reverence for God or the gods, careful pondering of divine things, piety” (which Cicero further derived to mean diligence).”

              Fortunately for readers, I’ve been called to elevenses — the morning tea ritual my people practice, and I have a religious duty to accept a cup of Orange Pekoe and a chocochip cookie — so you are spared any more of my half-baked sermonizing this Sunday morning.

    • I am not sure I am giving you the answer you are looking for.

      It is not us humans who destroy things; it is primarily the laws of the universe that destroy everything that we think we have made. We create an antibiotic; micro organisms quickly adapt so the antibiotic no longer works. We learn to build plows to help in farming. We quickly discover that their use leads to soil loss. Also, they quickly break. If nothing else, the fuel used to power the tractors that pull the plow quickly gets used up and needs to be replaced with new fuel. The oil well from whence the oil comes quickly depletes, and needs to be replaced with a different oil well in a different location. Even we humans need to have a new supply of food and water to keep our bodies going. With these supplies, we still age and eventually die.

      The world is made with many replaceable parts. We err in thinking that anything is really permanent.

      • dje says:

        “Nothing endures but change.”
        – Heraclitus

      • Pintada says:

        “Impermanent, subject to change, are component things. Strive on with heedfulness!” This was the final admonition of the Buddha Gotama to his disciples.

        And when the Buddha had passed away, Sakka, the chief of the deities, uttered the following:

        Impermanent are all component things,
        They arise and cease, that is their nature:
        They come into being and pass away,
        Release from them is bliss supreme.

        Aniccaa vata sa”nkhaaraa — uppaada vaya dhammino
        Uppajjitvaa nirujjhanti — tesa.m vuupasamo sukho.
        — Mahaa-Parinibbaana Sutta (DN 16)[1]

      • Artleads says:

        I think I’m trying to say the same thing in a different way: There is nothing we can do to make things better. You have a carbuncle of a high rise in a historic neighborhood. There’s an L overpass that divides the neighborhood and blocks access to the water. You removed old rail lines and widened the road for auto traffic. Just to briefly touch on the limitless list of “improvements” to our lives. So now there are those who want to tear down the L, put back rails, blow up the carbuncle and the dams…to make things better. Thanks to you and others here, I’m seeing that you can’t make things better. There is some justification for the old axiom: “when in doubt, don’t.” What I’m saying is don’t. I’m perfectly capable of following this philosophy. There is no overriding principle forcing me not to follow it, regardless of what others do. Would you disagree with this view?

        • If people see a way that they think they can make money, they will aim for whatever improvement that they can profit from. This is what drives improvements. When there is no money for them, they will stop, and the neighborhood will just go downhill.

      • Artleads says:

        You once recommended a new housing paradigm: Instead of building new structures, people would share existing buildings, move into basements that already existed, etc. That is what Mexican (undocumented) immigrants do. Might my intuitive judgment about how things should look–if I had stuck to them against all odds–have led to this being more commonly practiced? For decades, it’s been clear to me that building anything on virgin land was less good than leaving the land alone. Has I stuck to the point and gotten help in the process, might your housing scenario have had a better chance of success?

        Was my not trying hard enough (not believing in myself enough) and others not supporting me an indication of how the universe destroys everything, or was it indicative on a social failure?

        Part of the problem here, though, is a chain of events where the original decision acted as a domino to hit down all the others. One huge problem is the (unconscious?) discarding of the rural, as the world increasingly urbanizes and population increases. But you’ve stressed that people living together in the same place lowers reproduction. So, preventing building, leading to living together would equal fewer people?

        Where I live, a Flying J truck stop is being proposed, and local residents are up in arms. Mostly those that live in a large suburban development at the county line. I had railed against that development from the moment I saw it 6.5 years ago. There was something vile about it in my mind. It was destructive of the area’s rural character. Then we come back to the domino effect: The county has previously allowed the city to annex half the rural land and build up to the present county border. That helped to put pressure on remaining county land. Dwindling agriculture dwindled further. Plans and thoughts about things rural vanishes. No one could distinguish the difference between urban, suburban and rural anymore. The county plan does nothing much to protect rural values. Since local agriculture has given way to distant industrial agriculture which requires trucking we find ourselves down the chain of fallen dominoes… Nobody is alarmed at the monster new interchange at the county border, which most likely had the Flying J truck stop in mind without disclosing that to residents. And the result of all that unconsciousness is that the suburban newcomers are fighting tooth and nail to stop the development…even though they are part of the domino chain that brought it on. You have to shake your head.

        • Slow Paul says:

          It’s that good old friend NIMBY you are talking about.

          In my town there were a similar development, they built a big suburb in a rural area with single family homes. After a few years a developer was allowed to build big apartement complexes deep in the suburbs, so the local inhabitants started protesting and said this would result in too much car traffic and that “this area should be for single family homes only”…

          • xabier says:

            The answer to this kind of Nimby-ism is, clearly, for red-blooded Real Men to create a harem in their ‘single-family’ property, thus increasing density of occupation, and making more than one woman very happy indeed (women like nothing better than bitching about other women, haven’t we all noticed? Harem life is perfect for that!) Children can be packed in like sardines, keep them warm and teaching them to fight for survival – an important Darwinian lesson. 🙂

        • xabier says:

          Well, Artleads, we have a ‘County Plan’ here too – they are I suspect the same everywhere.

          In this case, the central government in London threatens that if a plan for dumb, ugly
          and poorly-built developments isn’t produced by local authorities, in a hurry, they will simply remove all restraints and let the developers do just what they like! And of course all the usual lies about the properties being ‘affordable’ and ‘answering social need.’

          It’s like saying ‘One bullet in your body, in a vital organ, or a whole magazine unloaded: you choose?’

          I do sometimes find myself longing for this civilisation to end – but it will, soon enough. To destroy through concrete is the only logic it knows, and it will destroy itself.

          • Fast Eddy says:

            If I was over 70… and in declining health…. I’d wake up every day hoping it was the last for every single one of us.

            Meanwhile… I prefer that BAU staggers on … so that I can continue to enjoy raping and pillaging Mother… this is one thing I have in common with Green Groopies … although they would never admit that.

            Rape the Mother. Steal from Mother’s Purse. Live Large!

      • xabier says:

        ‘Change is the only constant thing’.

        We just have to learn to accept that.

        In many ancient mythologies, even the gods change and die.

    • If we had a chart of “feet drilled”, I wonder what that would do. I know that there has been a switch from vertical to horizontal drilling rigs and laterals are getting longer. I imagine that is part of the change taking place.

  5. Baby Doomer says:

    Warning: Keep your hands on the wheels of driverless cars

    Series of surveys this year by institutions ranging from MIT to the AAA show that most motorists don’t want to drive, ride in or be on the road anywhere near an autonomous vehicle.


    • I find it hard to believe these cars will go much beyond shuttles within a warehouse complex in the next ten years. There is too much that can go wrong.

      • Dennis L. says:


        A TriStar jet could land itself in the seventies, robotics is growing at an unbelievable pace; it is an area of interest. Last month I attended a medical manufacturing show in the Twin Cities, the advances from IMTS in 2014 were incredible. Machine learning is the basis of Amazon, Mars rovers are autonomous to a fair extent and ancient technology. Technology is somewhat questioned on this sight, but it is pretty incredible to watch it develop.

        Betting against technology to date has not been a very good bet.

        Thanks for all the effort, thanks for no advertising and thus an unbiased site.

        Dennis L.

        • The problem with technology is that it creates too much was disparity. Some people have no jobs at all. Others have very low paid jobs, while managers and those with higher education tend to be much more highly paid. So while technology is helpful in some ways it still creates a problem for society. I would bet against technology because robots cannot buy finished products. Thus, using an army of robots leads to an economy that make a lot of goods, but has no one to buy them.

        • Fast Eddy says:

          Machines do NOT think. They do NOT learn.

          I have two decades of experience working with computer programmers – one of the things I do is I tell them what I want the machine to do — and they write the code — and the machine does exactly what I tell it to do.

          It is a STUUUPID slave. The machine does not provide feedback. It does not improve on any instructions. It does not run away. It does not even think that it should run away. It does not talk back. It is never lazy. It does not require the whip. It has ZERO IQ. It would not exist without my input. In fact it doesn’t even have a brain – that is how STUUUUPid it is.

          AI is an oxymoron.

          I will help you with this concept – think of a hammer — if you don’t swing the hammer it is useless. Same with a computer.

          If the machine could figure out what to do without me or the programmers — I could slash quite a few jobs and save the money to buy more wine — and I could drink the wine every day because the machines would have no need for me.

          To make that happen you would need to reproduce the human brain.

          Not gonna happen. NEVER. Not in a billion years.

          I guarantee you – we will never see self-driving cars on the road.

          The cost to create a vehicle that could react to a wide range of situations would be off the charts. And even then — I guarantee you — these cars would still be less safe than driving with the Little Old Lady from Pasadena in the driver’s seat.

          Here’s the master telling the slave what to do….

      • Fast Eddy says:

        I’ve seen a battery powered golf cart make it through 18 holes…

  6. Baby Doomer says:

    I was watching my local news tonight and they said “The economy grew at 3 percent last quarter and that was the highest level since 2014″…They cherry picked one quarter of GDP instead of giving the yearly average. And I was watching CNN the other morning before work and they did the exact same thing. There CNN MONEY pundit said “The economy grew at 3 percent quarterly, so that is good.”..How pathetic the MSM is grasping at straws now…

    • Baby Doomer says:

      The Great Depression Economic Growth 1% GDP
      2006-2017 Economic Growth 1.5% GDP

    • xabier says:

      The EU is boasting about growth, too. Tell that to the young in Italy, Spain, Greece, even France.

      It reminds me of the death of the sister of a friend from a remorseless neurological illness.

      They would say ‘She looks better, don’t you think?’ when there was a temporary remission. but as I only saw her every few months,I could see that she was much worse.

      The MSM is not merely seeing what it wants to see, as they were, but lying.

  7. The Second Coming says:

    Took in a PBS Nova program about Extreme Animal Weapons…very surprising findings and for a Domesday Prepper may help in planning…
    Here is one link, hope it connects


    Surprising evolution at play, nature is less concerned regarding survival of the individual, rather reproduction to perpetrate. The most “peaceful” appears to be the most menacing weaponry.
    It is very entertaining to watch the strategy to keep life in the mix.

    • Artleads says:

      But humans don’t have any particular need to reproduce, even if it’s not crystal clear whether or how more people in a given context helps or hurts.

      • The Second Coming says:

        Artleads, we are unusual in one regard…we mature human adults are hot wired ready to mate 24/7 in child bearing years…we are obvious real good at doing it…judging from the headlines coming out of the media nowadays.
        In my younger days, was a Tropical Fish Hobbyist and set up numerous breeding tanks for various species of egg laying fish. Generally speaking, a vast number of brood was produced and culling was required to prevent overcrowding. Rather heartless task, but necessary, the fastest growing, robust were picked naturally. Glad I live that we humans have largely bypassed that check and balance…for the time being.

  8. Tim says:

    Entropy is always the winner. There is no point to this madness.

    • Perhaps what is of interest is what we do along the way, and not the end point.

      We humans were given one chance to see what we could do in this beautiful world. The end point has always been known.

      • grayfox says:

        This world does not belong to any one particular species of animal. I’m sure the life of a squirrel is interesting to the squirrel, too.

    • Davidin100millionbilliontrillionzillionyears says:

      “There is no point to this madness.”


      but it’s a fascinating madness…

      and we get a virtual front row seat via the internet…

      if IC and BAU are madness, please give me more madness in 2018.

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