Economists, including Ben Bernanke, give all kinds of reasons for the Great Depression of the 1930s. But what if the real reason for the Great Depression was an energy crisis?
When I put together a chart of per capita energy consumption since 1820 for a post back in 2012, there was a strange “flat spot” in the period between 1920 and 1940. When we look at the underlying data, we see that coal production was starting to decline in some of the major coal producing parts of the world at that time. From the point of view of people living at the time, the situation might have looked very much like peak energy consumption, at least on a per capita basis.
Figure 1. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent, divided by population estimates by Angus Maddison.
Even back in the 1820 to 1900 period, world per capita energy had gradually risen as an increasing amount of coal was used. We know that going back a very long time, the use of water and wind had never amounted to very much (Figure 2) compared to burned biomass and coal, in terms of energy produced. Humans and draft animals were also relatively low in energy production. Because of its great heat-producing ability, coal quickly became the dominant fuel.
Figure 2. Annual energy consumption per head (megajoules) in England and Wales during the period 1561-70 to 1850-9 and in Italy from 1861-70. Figure by Wrigley
In general, we know that energy products, including coal, are necessary to enable processes that contribute to economic growth. Heat is needed for almost all industrial processes. Transportation needs energy products of one kind or another. Building roads and homes requires energy products. It is not surprising that the Industrial Revolution began in Britain, with its use of coal.
We also know that there is a long-term correlation between world GDP growth and energy consumption.
Figure 3. X-Y graph of world energy consumption (from BP Statistical Review of World Energy, 2017) versus world GDP in 2010 US$, from World Bank.
The “flat period” in 1920-1940 in Figure 1 was likely problematic. The economy is a self-organized networked system; what was wrong could be expected to appear in many parts of the economy. Economic growth was likely far too low. The chance for conflict among nations was much higher because of stresses in the system–there was not really enough coal to go around. These stresses could extend to the period immediately before 1920 and after 1940, as well.
A Peak in Coal Production Hit the UK, United States, and Germany at Close to the Same Time
This is a coal supply chart for the UK. Its peak coal production (which was an all time peak) was in 1913. The UK was the largest coal producer in Europe at the time.
Figure 4. United Kingdom coal production since 1855, in a href=”http://www.davidstrahan.com/blog/?p=116″>figure by David Strahan. First published in New Scientist, 17 January 2008.
The United States hit a peak in its production only five years later, in 1918. This peak was only a “local” peak. There were also later peaks, in 1947 and 2008, after coal production was developed in new areas of the country.
Figure 5. US coal production, in Wikipedia exhibit by contributor Plazak.
By type, US coal production is as shown on Figure 6.
Figure 6. US coal production by type, in Wikipedia exhibit by contributor Plazak.
Evidently, the highest quality coal, Anthracite, reached a peak and began to decline about 1918. Bituminous coal hit a peak about the same time, and dropped way back in production during the 1930s. The poorer quality coals were added later, as the better-quality coals became less abundant.
The pattern for Germany’s hard coal shows a pattern somewhat in between the UK and the US pattern.
Figure 7. Source GBR.
Germany too had a peak during World War I, then dropped back for several years. It then had three later peaks, the highest one during World War II.
What Affects Coal Production?
If there is a shortage of coal, fixing it is not as simple as “inadequate coal supply leads to higher price,” quickly followed by “higher price leads to more production.” Clearly the amount of coal resource in the ground affects the amount of coal extraction, but other things do as well.
[1] The amount of built infrastructure for taking the coal out and delivering the coal. Usually, a country only adds a little coal extraction capacity at a time and leaves the rest in the ground. (This is how the US and Germany could have temporary coal peaks, which were later surpassed by higher peaks.) To add more extraction capacity, it is necessary to add (a) investment needed for getting the coal out of the ground as well as (b) infrastructure for delivering coal to potential users. This includes things like trains and tracks, and export terminals for coal transported by boats.
[2] Prices available in the marketplace for coal. These fluctuate widely. We will discuss this more in a later section. Clearly, the higher the price, the greater the quantity of coal that can be extracted and delivered to users.
[3] The cost of extraction, both in existing locations and in new locations. These costs can perhaps be reduced if it is possible to add new technology. At the same time, there is a tendency for costs within a given mine to increase over time, as it becomes necessary to access deeper, thinner seams. Also, mines tend to be built in the most convenient locations first, with best access to transportation. New mines very often will be higher cost, when these factors are considered.
[4] The cost and availability of capital (shares of stock and sale of debt) needed for building new infrastructure, and for building new devices made possible by new technology. These are affected by interest rates and tax levels.
[5] Time lags needed to implement changes. New infrastructure and new technology are likely to take several years to implement.
[6] The extent to which wages can be recycled into demand for energy products. An economy needs to have buyers for the products it makes. If a large share of the workers in an economy is very low-paid, this creates a problem.
If there is an energy shortage, many people think of the shortage as causing high prices. In fact, the shortage is at least equally likely to cause greater wage disparity. This might also be considered a shortage of jobs that pay well. Without jobs that pay well, would-be workers find it hard to purchase the many goods and services created by the economy (such as homes, cars, food, clothing, and advanced education). For example, young adults may live with their parents longer, and elderly people may move in with their children.
The lack of jobs that pay well tends to hold down “demand” for goods made with commodities, and thus tends to bring down commodity prices. This problem happened in the 1930s and is happening again today. The problem is an affordability problem, but it is sometimes referred to as “low demand.” Workers with inadequate wages cannot afford to buy the goods made by the economy. There may be a glut of a commodity (food, or oil, or coal), and commodity prices that fall far below what producers need to make a profit.
Figure 8. U.S. Income Shares of Top 10% and Top 1%, Wikipedia exhibit by Piketty and Saez.
The Fluctuating Nature of Commodity Prices
I have noted in the past that fossil fuel prices tend to move together. This is what we would expect, if affordability is a major issue, and affordability changes over time.
Figure 9. 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.
We would expect metal prices to follow fossil fuel prices, because fossil fuels are used in the extraction of ores of all kinds. Investment strategist Jeremy Grantham (and his company GMO) noted this correlation among commodity prices, and put together an index of commodity prices back to 1900.
Figure 10. GMO Commodity Index 1900 to 2011, from GMO April 2011 Quarterly Letter. “The Great Paradigm Shift,” shown at the end is not really the correct explanation, something now admitted by Grantham. If the graph were extended beyond 2010, it would show high prices in 2010 to 2013. Prices would fall to a much lower level in 2014 to 2017.
Reason for the Spikes in Prices. As we will see in the next few paragraphs, the spikes in prices generally arise in situations in which everyday goods (food, homes, clothing, transportation) suddenly became more affordable to “non-elite” workers. These are workers who are not highly educated, and are not in supervisory positions. These spikes in prices don’t generally “come about” by themselves; instead, they are engineered by governments, trying to stimulate the economy.
In both the World War I and World War II price spikes, governments greatly raised their debt levels to fund the war efforts. Some of this debt likely went directly into demand for commodities, such as to make more bombs, and to operate tanks, and thus tended to raise commodity prices. In addition, quite a bit of the debt indirectly led to more employment during the period of the war. For example, women who were not in the workforce were hired to take jobs that had been previously handled by men who were now part of the war effort. (These women were new non-elite workers.) Their earnings helped raise demand for goods and services of all kinds, and thus commodity prices.
The 2008 price spike was caused (at least in part) by a US housing-related debt bubble. Interest rates were lowered in the early 2000s to stimulate the economy. Also, banks were encouraged to lend to people who did not seem to meet usual underwriting standards. The additional demand for houses raised prices. Homeowners, wishing to cash in on the new higher prices for their homes, could refinance their loans and withdraw the cash related to the new higher prices. They could use the funds withdrawn to buy goods such as a new car or a remodeled basement. These withdrawn funds indirectly supplemented the earnings of non-elite workers (as did the lower interest rate on new borrowing).
The 2011-2014 spike was caused by the extremely low interest rates made possible by Quantitative Easing. These low interest rates made the buying of homes and cars more affordable to all buyers, including non-elite workers. When the US discontinued its QE program in 2014, the US dollar rose relative to many other currencies, making oil and other fuels relatively more expensive to workers outside the US. These higher costs reduced the demand for fuels, and dropped fuel prices back down again.
Figure 11. Monthly Brent oil prices with dates of US beginning and ending QE.
The run-up in oil prices (and other commodity prices) in the 1970s is widely attributed to US oil production peaking, but I think that the rapid run-up in prices was enabled by the rapid wage run-up of the period (Figure 12 below).
Figure 12. Growth in US wages versus increase in CPI Urban. Wages are total “Wages and Salaries” from US Bureau of Economic Analysis. CPI-Urban is from US Bureau of Labor Statistics.
The Opposing Force: Energy prices need to fall, if the economy is to grow. All of these upward swings in prices can be at most temporary changes to the long-term downward trend in prices. Let’s think about why.
An economy needs to grow. To do so, it needs an increasing supply of commodities, particularly energy commodities. This can only happen if energy prices are trending lower. These lower prices enable the purchase of greater supply. We can see this in the results of some academic papers. For example, Roger Fouquet shows that it is not the cost of energy, per se, that drops over time. Rather, it is the cost of energy services that declines.
Figure 13. Total Cost of Energy and Energy Services, by Roger Fouquet, from Divergences in Long Run Trends in the Prices of Energy and Energy Services.
Energy services include changes in efficiency, besides energy costs themselves. Thus, Fouquet is looking at the cost of heating a home, or the cost of electrical services, or the cost of transportation services, in inflation-adjusted units.
Robert Ayres and Benjamin Warr show a similar result, related to electricity. They also show that usage tends to rise, as prices fall.
Figure 14. Ayres and Warr Electricity Prices and Electricity Demand, from “Accounting for growth: the role of physical work.”
Ultimately, we know that the growth in energy consumption tends to rise at close to the same rate as the growth in GDP. To keep energy consumption rising, it is helpful if the cost of energy services is falling.
Figure 15. 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.
How the Economic Growth Pump Works
There seems to be a widespread belief, “We pay each other’s wages.” If this is all that there is to economic growth, all that is needed to make the economy grow faster is for each of us to sell more services to each other (cut each other’s hair more often, or give each other back rubs, and charge for them). I think this story is very incomplete.
The real story is that energy products can be used to leverage human labor. For example, it is inefficient for a human to walk to deliver goods to customers. If a human can drive a truck instead, it leverages his ability to deliver goods. The more leveraging that is available for human labor, the more goods and services that can be produced in total, and the higher inflation-adjusted wages can be. This increased leveraging of human labor allows inflation-adjusted wages to rise. Some might call this result, “a higher return on human labor.”
These higher wages need to go back to the non-elite workers, in order to keep the growth-pump operating. With higher-wages, these workers can afford to buy goods and services made with commodities, such as homes, cars, and food. They can also heat their homes and operate their vehicles. These wages help maintain the demand needed to keep commodity prices high enough to encourage more commodity production.
Raising wages for elite workers (such as managers and those with advanced education), or paying more in dividends to shareholders, doesn’t have the same effect. These individuals likely already have enough money to buy the necessities of life. They may use the extra income to buy shares of stock or bonds to save for retirement, or they may buy services (such as investment advice) that require little use of energy.
The belief, “We pay each other’s wages,” becomes increasingly false, if wages and wealth are concentrated in the hands of relatively few. For example, poor people become unable to afford doctors’ visits, even with insurance, if wage disparity becomes too great. It is only when wages are fairly equal that all can afford a wide range of services provided by others in the economy.
What Went Wrong in 1920 to 1940?
Very clearly, the first thing that went wrong was the peaking of UK coal production in 1913. Even before 1913, there were pressures coming from the higher cost of coal production, as mines became more depleted. In 1912, there was a 37-day national coal strike protesting the low wages of workers. Evidently, as extraction was becoming more difficult, coal prices were not able to rise sufficiently to cover all costs, and miners’ wages were suffering. The debt for World War I seems to have helped raise commodity prices to allow wages to be somewhat higher, even if coal production did not return to its previous level.
Suicide rates seem to behave inversely compared to earning power of non-elite workers. A study of suicide rates in England and Wales shows that these were increasing prior to World War I. This is what we would expect, if coal was becoming increasingly difficult to extract, and because of this, the returns for everyone, from owners to workers, was low.
Figure 16. Suicide rates in England and Wales 1861-2007 by Kyla Thomas and David Gunnell from International Journal of Epidemiology, 2010.
World War I, with its increased debt (which was in part used for more wages), helped the situation temporarily. But after World War I, the Great Depression set in, and with it, much higher suicide rates.
The Great Depression is the kind of result we would expect if the UK no longer had enough coal to make the goods and services it had made previously. The lower production of goods and services would likely be paired with fewer jobs that paid well. In such a situation, it is not surprising that suicide rates rose. Suicide rates decreased greatly with World War II, and with all of the associated borrowing.
Looking more at what happened in the 1920 to 1940 period, Ugo Bardi tells us that prior to World War I, the UK exported coal to Italy. With falling coal production, the UK could no longer maintain those exports after World War I. This worsened relations with Italy, because Italy needed coal imported from the UK to rebuild after the war. Ultimately, Italy aligned with Germany because Germany still had coal available to export. This set up the alliance for World War II.
Looking at the US, we see that World War I caused favorable conditions for exports, because with all of the fighting, Europe needed to import more goods (including food) from the United States. After the war ended in 1918, European demand was suddenly lower, and US commodity prices fell. American farmers found their incomes squeezed. As a result, they cut back on buying goods of many kinds, hurting the US economy.
One analysis of the economy of the 1920s tells us that from 1920 to 1921, farm prices fell at a catastrophic rate. “The price of wheat, the staple crop of the Great Plains, fell by almost half. The price of cotton, still the lifeblood of the South, fell by three-quarters. Farmers, many of whom had taken out loans to increase acreage and buy efficient new agricultural machines like tractors, suddenly couldn’t make their payments.”
In 1943, M. King Hubbert offered the view that all-time employment had peaked in 1920, except to the extent that it was jacked up by unusual means, such as war. In fact, some historical data shows that for four major industries combined (foundries, meat packing, paper, and printing), the employment index rose from 100 in 1914, to 157 in 1920. By September 1921, the employment index had fallen back to 89. The peak coal problem of the UK had been exported to the US as low commodity prices and low employment.
It was not until the huge amount of debt related to World War II that the world economy could be stimulated enough so that total energy production per capita could continue to rise. The use of oil especially became much greater starting after World War II. It was the availability of cheap oil that allowed the world economy to grow again.
Figure 17. Per capita energy consumption by fuel, separately for several energy sources, using the same data as in Figure 1.
The stimulus of all the debt-enabled spending for World War II seems to have been what finally encouraged the production of the oil needed to pull the world economy out of the problems it was having. GDP and Disposable Personal Income could again rise (Figure 18.)
Figure 18. Comparison of 3-year average change in disposable personal income with 3-year change average in GDP, based on US BEA Tables 1.1.5 and 2.1.
Furthermore, total per capita energy consumption began to rise, with growing oil consumption (Figure 1). This growth in energy consumption per capita seems to be what allows the world economy to grow.
I might note that there is one other exceptional period: 1980 to 2000. Space does not allow for an explanation of the situation here, but falling per capita energy consumption seems to have led to the collapse of the former Soviet Union in 1991. This was a different situation, caused by lower oil consumption related to efficiency gains. This was a situation of an oil producer being “squeezed out” because additional oil was not needed at that time. This is an example of a different type of economic disruption caused by flat per capita energy consumption.
Figure 19. World per Capita Energy Consumption with two circles relating to flat consumption. World Energy Consumption by Source, based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects (Appendix) together with BP Statistical Data for 1965 and subsequent, divided by population estimates by Angus Maddison.
Conclusion
There have been many views put forth about what caused the Depression of the 1930s. To my knowledge, no one has put forth the explanation that the Depression was caused by Peak Coal in 1913 in the UK, and a lack of other energy supplies that were growing rapidly enough to make up for this loss. As the UK “exported” this problem around the world, it led to greater wage disparity. US farmers were especially affected; their incomes often dropped below the level needed for families to buy the necessities of life.
The issue, as I have discussed in previous posts, is a physics issue. Creating GDP requires energy; when not enough energy (often fossil fuels) is available, the economy tends to “freeze out” the most vulnerable. Often, it does this by increased wage disparity. The people at the top of the hierarchy still have plenty. It is the people at the bottom who find themselves purchasing less and less. Because there are so many people at the bottom of the hierarchy, their lower purchasing power tends to pull the system down.
In the past, the way to get around inadequate wages for those at the bottom of the hierarchy has been to issue more debt. Some of this debt helps add more wages for non-elite workers, so it helps fix the affordability problem.
Figure 20. Three-year average percent increase in debt compared to three year average percent increase in non-government wages, including proprietors’ income, which I call my wage base.
At this time, we seem to be reaching the point where, even with more debt, we are running out of cheap energy to add to the system. When this happens, the economic system seems more prone to fracture. Ugo Bardi calls the situation “reaching the inflection point in a Seneca Cliff.”
Figure 21. Seneca Cliff by Ugo Bardi
We were very close to the inflection point in the 1930s. We were very close to that point in 2008. We seem to be getting close to that point again now. The model of the 1930s gives us an indication regarding what to expect: apparent surpluses of commodities of all types; commodity prices that are too low; a lack of jobs, especially ones that pay an adequate wage; collapsing financial institutions. This is close to the opposite of what many people assume that peak oil will look like. But it may be a better representation of what we really should expect.
A Google search for top reasons for 1930’s Depression found this:
http://www.beaconhistoricalsociety.org/top-5-causes-of-the-great-depression/
1. Stock market crash. Stockholders lost more than $40 billion (a lot in those days)
2. Bank Failures. 9,000 in the 1930’s
3. Reduction in Purchasing. Unemployment 25%
4. US economic policy with Europe. High tax for imports led to less trade.
5. Drought in Mississippi Valley (The Grapes of Wrath).
First, big thanks to Gail for an excellent piece of research. And while I’m going to disagree with the headline about the 1930’s, that more to do with an opportunity to see the bigger picture than a dispute about the fundamentals.
BTW, prior to 1914, conditions in the UK were horrendous, as mentioned elsewhere. Recruits to the British Army were not fit for combat, and rations, from some accounts, may have doubled calorie intake. Dublin had the worst slums in Europe with 14 families in a house in central Dublin.
Much of the crash of 1929 and later dislocations were due to economic mismanagement, perhaps due to attempts to restore the gold standard at an inappropriate time and way.
Prior to 1929, there were huge concerns about peak oil, resulting in the USA storing IIRC, six months worth of oil consumption?anyway, about twice present relative storage.
When new deep oil fields in Texas were discovered the oil price collapsed, and the government had to shut down or restrict oil wells to stabilise prices.
Together with coincidental malinvestment and overfarming and unregulated “investing” products, the whole thing imploded. Peak stupidity just about covers it.
My point is, when you look at the 1930’s through the energy lens, not much happens, and you need to see the bigger picture.
Energy is what allows the economy to continue. Energy to the economy is like food to human beings. Putting humans on 600 calorie diets will be a huge problem–perhaps not immediately, but later on. This is what a person expects to cause a crash.
Part of the economy can be doing well, while another part of the economy is doing poorly. Businesses seemed to be well in the “roaring 20s,” but both immigrants and farmers earned very low wages. I tried to explain more of what happened in an earlier comment.
http://ourfiniteworld.com/2017/12/19/the-depression-of-the-1930s-was-an-energy-crisis/comment-page-6/#comment-156772
Gail, thanks for that link.
I’ll speak just for myself here, to say that I can think about the energy systems in 1929, or about the misdirection of investment and its causes that led to a realignment of finances with the real world of that time. I cannot see both at the same time.
For those that like images, the old woman : young girl image should explain it.
http://mathworld.wolfram.com/images/gifs/young3.jpg
YMMV 🙂
“When new deep oil fields in Texas were discovered the oil price collapsed, and the government had to shut down or restrict oil wells to stabilise prices.
Together with coincidental malinvestment and overfarming and unregulated “investing” products, the whole thing imploded. Peak shutpidity just about covers it.
My point is, when you look at the 1930’s through the energy lens, not much happens”
Oh, man the irony of this statement coming from you
You regurgitate the standard textbook explanations, which we know are always correct, are unwilling to take into account other factors which may have played a role in the Great Depression and you call others shutpid….
Take this into account…the various economies in the world started growing again when oil from the Middle East was brought online in the 1950s…
America won WII because it had more access to more oil (America was a net oil exporter) and because it had THE BOMB
Germany and Japan were net importers of oil,
(nuclear)
Oil has a higher energy density than coal…
The energy density of nuclear is so high that it cannot be safely used on a large scale…
1-4 sound more like the results of an energy crisis than they do the cause of depression.
I think people confuse cause and effect with respect to depressions. I am sure a lot of people think the bank bailouts caused the current recession. Or, tax policies, partisan politics, corruption etc caused the current recession. A lot of these are just symptoms, not really causes. Since energy powers everything, it makes sense to look at energy supplies first to see if there are issues there that are carrying-over into the economy. Diminishing returns with respect to energy really are the root cause of probably most of our current problems and likely previous depressions.
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This article is absurd because it doesn’t account for technology improving efficiency with time or lowering the cost of alternative energy sources. A flat or declining energy consumption is not necessarily a bad thing and does not necessarily indicate a problem. As we become more efficient, we can do more work with less energy. If I drive a Toyota Prius to work instead of a Chevy Tahoe it will show up as lower energy consumption but that is not a bad thing. The same is true when I replace my old furnace or AC with a new, more efficient one. We are in the early stages of mass producing electric cars and renewable energy has become really cheap. You could put 3.3kW solar panels on your roof for $10,000 and they will produce enough electricity to drive a EV for 12,000 miles per year. We are no longer constrained by the fossil fuels we dig out of the ground.
“If I drive a Toyota Prius to work instead of a Chevy Tahoe it will show up as lower energy consumption but that is not a bad thing. The same is true when I replace my old furnace or AC with a new, more efficient one.”
Figure 12 shows improvements over time in energy use efficiency, which has been dramatic.
Which leads me to ask the following question: We talk about the surplus energy from oil but is there also surplus energy from renewables; solar and wind? Surely people wouldn’t install renewables for the exercise, right, therefore it must generate surplus above energy to produce.
Ever heard of subsidies, JH? These little packages of financial support, which come in a number of shapes and sizes, are one of most essential the inputs to making “renewables” happen. My friend installed a solar roof system because he obtained a huge government subsidy for buying and installing the thing, and a long-term contract from the electric power utility agreeing to buy his output at a fixed price whether they needed it or not, and to sell him electricity on demand when his system wasn’t producing enough. Subsidies of these and other kinds make it attractive to install renewables regardless of whether they generate surplus above the energy investment imbedded in their manufacture. And ultimately these subsidies are possible because of all the wealth produced by consuming fossil fuels. The subsidies don’t grow on trees or materialize out of thin air.
As a general observation, by your own logic, your comment is absurd because it doesn’t account for everything—it’s incomplete. Please post again when you can account for everything, or else, when you’ve abandoned that particular logical fallacy.
More to the specific point, it is unclear that improving efficiency can make a significant difference to the outcome of an economic system that always needs more, or that the system globally can survive declining energy consumption for any length of time.
Lastly, since nobody thus far has ever built a solar panel or an EV without a considerable investment in either direct or indirect fossil fuel inputs, your final statement has yet to be confirmed by reality. I freely admit that we can build roofs unconstrained by fossil fuel availability, but solar panels, EVs and the other things you need to keep them operating have never been built using materials and processes that didn’t employ using fossil fuels.
I installed all LED lights during a renovation to our house. I save money on my power bill each month. I spent this months savings on a spear gun, fins, mask and snorkel — then I filled up my 4 bah 4 and drove 300km to the coast — and will try spear fishing over the holidays.
All Hail Mr Jevon… and his Magnificent Paradox!
We are massively supported by fossil fuels, including the theft of energy today by solar and wind installations that will not repay their energy debt for years and years. Do not confuse lower dollar costs with lower energy costs.
I have worked in industries where technology improved efficiency and lowered ‘costs’, but often/always resulted in increased complexity and wider dependancy. Factor in the huge planet-wide lifecycle costs of your EV nirvana and you will find the road to hell is paved in green intentions.
Have not had enough? More? Really? Ok…
http://www.reactiongifs.com/r/2013/08/chuck1.gif
For more good deals on EVs and PVs, please visit peakoilbarreldotcom.
” If I drive a Toyota Prius to work instead of a Chevy Tahoe it will show up as lower energy consumption but that is not a bad thing” – Are you sure the “total” energy consumption of a Prius is less than a Tahoe? Have you accounted for road maintenance, raw material acquisition, battery recycling, rare earth metal mining pollution costs and recycling costs? There is no free lunch in physics.
This is a story people would like you to believe. Unfortunately, the economy is a dissipative structure. The laws of physics tell us that it cannot get along without fossil fuels, given where we are today.
Fossil fuels are what allow you to have a job (other gathering wild food and digging with a stick in the ground for attempted agriculture). We don’t have enough wood to burn with 7.5 billion people. Toyota Priuses are made with fossil fuels, as are solar panels. They are part of today’s fossil fuel system.
Indeed you are correct today but renewable energy is growing very rapidly and its cost (including the cost of storing it) continues to fall. By 2030 we will get most of our energy from renewable sources. By the way the laws of physics don’t tell us that we must use fossil fuels; they simply tell us that in the long run ERoEI must be greater than 1. In most parts of the world, renewable is already the cheapest source of energy even without government subsidies. With storage the cost is higher; but even the cost of storage continues to fall. In another 10 years or so in most parts of the world it will be practical for many utilities to produce solar and wind power when it is available and store it for later use. Maybe we need fossil fuels for another 20 years or so.
We don’t have 20 years of fossil fuels left to keep maintaining and building the “renewable” infrastructure. Once fossil fuels begin to decline, so too will everything built with fossil fuels – including “renewable” energy. Energy is not renewable. Just because the costs of something is declining does not make it more or less viable. Where energy is concerned, our modern world needs energy sources that must be scalable and cheap and easy to transport and burnable to produce heat. Solar and wind (“renewables”) do not do any of these things. Maybe the cost are coming down because they are not worth anything.
“Maybe the cost are coming down because they are not worth anything.”
I’ve heard that the real reason why the prices for solar panels have come down has been lower quality.
There is also relatively little demand for it since it cannot reliably power anything that fossil fuels are used for. That low demand must be pushing prices below the cost of production. Solar projects have gone bust even with subsidies. This suggest to me that there is a supply/demand mismatch.
May I be of assistance?
Solar Industry Braces With Looming Glut Eroding Panel Prices
August 24, 2016, 7:00 AM GMT+8 Updated on August 24, 2016, 9:57 PM GMT+8
Panelmakers boosting capacity 18% this year as demand slows
Supply glut comes five years after industry’s last downturn
https://www.bloomberg.com/news/articles/2016-08-23/solar-industry-braces-as-looming-glut-threatens-to-erode-prices
“Where energy is concerned, our modern world needs energy sources that must be scalable and cheap and easy to transport and burnable to produce heat. Solar and wind (“renewables”) do not do any of these things.”.
The above is so absurd that there is no point in arguing with you. Some doomers have an emotional need to be doomers. Gail is probably just defending her brand. She has a story to tell and she has been telling the same story for over 10 years and she has been wrong so far but cannot admit that without losing credibility.
OK, so when is this catastrophe supposed to occur and how will it play out? Will is just be a depression or will industrial civilization collapse? In what time frame? If by 2030 virtually all our energy comes from the Sun and the wind will you change your mind or simply postpone the date of the second coming?
Suyog,
Are you aware that the global economy runs on diesel? Trucks and freight ships do not have an alternative fuel source..
Are you aware how much petrol and diesel are used for the maintenance of solar and wind. Helicopters for offshore wind farms etc. etc.
Are you aware how much energy is needed to get the raw materials out of the ground, to build your basic solar or wind?
Yeah.. the story isn’t nice. Try reading Alice Friedemann ‘when the trucks stop running’. And Norman Pagett ‘End of More’.
It’s all just basic maths and logic. No need to get personal about our predicament.
Most energy from sun and wind.
Fertility rate below replacement, preferably falling population numbers.
Getting most raw materials from recycling.
No longer falling fish stocks or species going extinct.
Not relying on artificial fertilizer.
And a few other things.
When I meet someone like you — and that happens frequently — I am forced to listen to verbal diarrhea …. I generally do not engage in arguments… you know that saying about arguing with fools…. so I just nod … as if I agree (like Dale suggests….)
But this is what I am thinking…. this is what I am so wanting to do…. but for obvious reasons … cannot ….
http://www.reactiongifs.com/r/2013/08/chuck1.gif
We don’t have 20 years left of cheap fossil fuels. We don’t have enough cheap fossil fuels left to rebuild our nation’s failing infrastructure. We don’t have enough fossil fuels to spare making the trillions of panels this would require. You’re looking at a growth trajectory and price distortion and merely extrapolation that by 2037 everything will be free rainbow nirvana. My main question for you is do you prefer indica or sativa?
https://herb.co/2015/09/13/indica-vs-sativa/
I do sativa personally unless it’s medical, then indica. Anyone who says otherwise is the type of person who likes couch lock.
Listen… learn…. change…. or face utter humiliation … and destruction
“but renewable energy is growing very rapidly…”
Solar and wind technology, after 50 years of subsidies, produces less than 1 percent of the world’s energy, and, because the sun and wind provide only intermittent energy, continue to require fossil fuel backups.
Lmao. Do you have even the slightest idea how EV’s are made or the amount of stored energy in each one? A Prius has a higher carbon footprint than an SUV until it goes over 100,000 miles and then it starts to slowly offset it. I had an 08 Prius I got rid of with 108,000 miles on it when my $5,000 hybrid battery started to die. The mechanic told me to sell the car for $500 and walk away. So it’s either getting junked or a new battery, which then makes that car have a much, much higher footprint, way beyond any other vehicle. So no, EV’s are awful and you’ve been bamboozled.
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1973 I believe it was, H.T.Odum in an eco seminar stated that the depression was probably caused by the fact that the coal to oil transition caused a prolonged lag in total energy expansion, that the economy could not again accelerate until a great deal of the transition to oil, a better energy source, had taken place. This surely is what happened during WWII as the world’s militaries moved into oil-fired mechanized warfare. Smart guy no?
Right. It is necessary to build devices to use the oil, and transportation for the oil. It is necessary to build all of the infrastructure necessary to expand production and transport the oil. All of this takes many years, and a lot of funding.
So now we are only feeling the lag before having transitioned to a solar and wind economy?
Solar and wind cannot be scaled up to anything reasonable. They are about 1% of world primary energy production, now, according to the IEA.
https://gailtheactuary.files.wordpress.com/2017/12/iea-primary-energy-suppy-1973-and-2015.png
We will all be dead, before any scale up occurs. There are many other issues as well–not enough materials, and the need for fossil fuels to make them, for example.
If only.. our economy had listened to Jimmy Carter, and begun building solar and wind like crazy in 1980..
Then our wind and solar infrastructure would be ready today.. yay !!
But.. hmm.. the lifespan of wind and solar is give or take some 30y. So..
We wouldn’t have raw materials, resources, commodities to build it all over again..
Dang! We would be in the exact same situation today, as we are in today.. Dang-twice!!
Ok, back to lassoing asteroids.
Wow – look at the growth in ‘renewables’!!!!!!!
In 42 years we have increased by 1.4% (0.03/year!) — after wasting how many trillions of dollars?????
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So, when a peak-oil economic collapse occurs, peak government will also occur and force reductions in all economic endeavors, creating secondary ripple effects in the private sector. It is inevitable..
-Professor Douglas B Reynolds PhD “Oil and Energy Economics” University of Alaska, Fairbanks.
I would agree I am afraid is will be worse than “secondary ripple effects,” however.
“… when a peak-oil economic collapse occurs…”
that quote sounds more like Great Depression 2.0 than The Collapse.
his use of the word “collapse” seems different than the way it is commonly used on OFW.
but also, he has it backwards…
peak government will not “force reductions”…
the shrinking economy will force government to become smaller.
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excellent article!!!!!!!!!!!!!!!!!!!!!!
I want to comment on the conclusion.
this point seems to be implied but not spoken:
the world’s economy recovered from Peak Coal because it had about 5 decades of cheap oil ahead.
we have no other such cheap energy resources ahead.
this is truly the beginning of the end.
there is no cure for Creeping Collapse.
But until then, BAU tonight baby!!!!
true, what you say is…
BAU, baby, tonight is!!!!
I didn’t talk about wind and solar, but I thought about it. Their quantities are way too small to make a difference, if nothing else.
Wind and solar are growing very rapidly and exponentially. In another 5-10 years they will be significant contributors to total energy consumption.
Gail – did you have a graph that shows ‘renewables’ (made from coal….) are a lower percentage of total energy use?
https://www.eia.gov/todayinenergy/images/2017.07.03/main.png
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
http://movieboozer.com/wp-content/uploads/2013/11/vampire-staked-through-the-heart.jpg
“To provide most of our power through renewables would take hundreds of times the amount of rare earth metals that we are mining today,” according to Thomas Graedel at the Yale School of Forestry & Environmental Studies. So renewable energy resources like windmills and solar PV can not ever replace fossil fuels, there’s not enough of many essential minerals to scale this technology up. http://energyskeptic.com/2014/high-tech-cannot-last-rare-earth-metals/
http://www.chrisbeetles.com/sites/default/files/stock-images/NEW-MESTAKE-THROUGH-HEART-1-C23263.jpg
Renewable energy ‘simply won’t work’: Top Google engineers
Two highly qualified Google engineers who have spent years studying and trying to improve renewable energy technology have stated quite bluntly that whatever the future holds, it is not a renewables-powered civilisation: such a thing is impossible.
Both men are Stanford PhDs, Ross Koningstein having trained in aerospace engineering and David Fork in applied physics. These aren’t guys who fiddle about with websites or data analytics or “technology” of that sort: they are real engineers who understand difficult maths and physics, and top-bracket even among that distinguished company.
Even if one were to electrify all of transport, industry, heating and so on, so much renewable generation and balancing/storage equipment would be needed to power it that astronomical new requirements for steel, concrete, copper, glass, carbon fibre, neodymium, shipping and haulage etc etc would appear.
All these things are made using mammoth amounts of energy: far from achieving massive energy savings, which most plans for a renewables future rely on implicitly, we would wind up needing far more energy, which would mean even more vast renewables farms – and even more materials and energy to make and maintain them and so on. The scale of the building would be like nothing ever attempted by the human race.
In reality, well before any such stage was reached, energy would become horrifyingly expensive – which means that everything would become horrifyingly expensive (even the present well-under-one-per-cent renewables level in the UK has pushed up utility bills very considerably).
http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/
https://media1.tenor.com/images/446cf660504fd9575ab12776792cfbb0/tenor.gif
http://www.reactiongifs.com/r/2013/08/chuck1.gif
This is EXACTLY how I feel when I am forced to listen to a Green Groopie from DelusiSTAN
http://www.reactiongifs.com/r/2013/08/chuck1.gif
Really and how in the hell do you suppose our archaic electrical grid is going to handle massive erratic loads? Oh right, nothing to fear as I’m sure all the republicans are just giddy to approve a couple trillion dollar deficit to make a new one.
We can’t totally count out cheap zero-point energy, can we?
Or smart fusion—unlimited energy in a small handheld tablet device?
Keith and his fellow transhumanists may yet pull a rabbit out of a hat to save us all, although why they should bother beats me. The boffins and their masters have seen what their efforts to lift humanity out of abject poverty have wrought. Perhaps they have decided that as a default strategy they should keep any really good inventions to themselves.
I am quite pleased to see that Keith has taken my advice…. instead of wasting his time posting on FW…. he is in his basement or garage…. diligently working away on his space solar contraption ….
Any day now he will make headlines …. I am sure of it.
Go Keith Go! And don’t forget Fast Eddy when you make you first trillion
You seem to have covered enough parameters to be able to construct a spreadsheet with formulae to model the world economy. Doing that would highlight any other parameters you might have missed and make it possible to project into the future.
It feels like this Christmas is starting with sales and special offers BEFORE the consumer rush is over. New cars with $4,000 off and free extras. Holidays now, on credit. I expect many closures in the new year and a fast collapse due to Korowicz interdependencies. http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf
Uh, no. It is a chaotic system so predictions are pointless, just like the weather. Educated guesses are interesting and that’s why we vome to ofw.
my educated guess is that there is no economic solution to the ongoing depletion of cheap oil with its high energy content.
predictions are pointless, but can be quite entertaining…
I predict BAU for the USA in the entirety of 2018…
while Creeping Collapse perhaps ensnares another country or three…
and Bitcoin to $1 million ha ha.
This quote fits you well Gail..Thanks for all that you do!
https://imgur.com/a/QqYTk
The Great War (1914-1918) had a big impact on coal production. In the UK the post-1918 decline was greatly influenced by manpower – miners killed in the war and later strikes. In much of Europe, minefields and steel works that used coal were destroyed, especially in France. After 1918 France took over many German coalfields.
http://www.nationalarchives.gov.uk/pathways/firstworldwar/aftermath/p_labour.htm
https://www.express.co.uk/news/world-war-1/479552/For-men-used-to-mining-fighting-in-trenches-was-seen-as-an-escape-FROM-HELL
Very interesting! Especially the second article. It points out that those in the war would be paid more than those in mining, when one considered the irregularity with which miners were paid. And both were very dangerous jobs. So many left mining. According to the article, “Eventually, the government had to take measures to stop miners leaving the industry for fear output would collapse.” In fact, output did collapse.
I hadn’t thought about minefields and steel works that used coal being destroyed, especially in France. This would reduce “demand.” The mines had significant fixed costs. They could not get along selling less, unless the price was higher. The price may have been higher during the war, but I am sure that it was not higher later.
Interesting post. Thanks Gail. However, correlation is not causation.
The laws of physics win, however. The economy is a dissipative structure. It cannot function without enough energy. This is the expected result.
So true! We have learned only in the 20th century that in complex systems Newtonian causation isn’t an accurate way to see the world. We’re dealing with a system. Much of this comes from cybernetics, systems theory – even biology has it’s Autopoiesis (Maturana).
It’s accurate to say the economy cannot function without energy. I think the difficulty many people have is that in a complex system you can’t always say what FORM a dysfunction or discontinuity will take. Will it look like a depression? A war? A peripheral nation falling completely apart? This is where system factors make it hard to both predict future events and also make it difficult to say precisely “x causes y” in a complex system.
Ugo Bardi in his new book,”The Seneca Effect,” talks about the different forms fracture can take, and our inability to predict how the fracture will occur. One model is an avalanche of snow. Another is a breaking piece of glass. Another is a boat that develops a crack, which enlarges and eventually sinks the boat.
https://2.bp.blogspot.com/-454Xp89ZGCs/WHvZnedqXZI/AAAAAAAAJjw/VTtrU-ryeY018XvXZtoF42FjZ-ot2knxgCLcB/s1600/crack-in-dam.jpeg
I wouldn’t go there. It’s the old, “if man were meant to fly he would have wings” argument. Invoking “physics” always sounds more learned and attempts to take some laughable scientific high ground. Sorry, it doesn’t work.
I would go there…
the abundant energy contained in cheap oil was the key factor for the growing post-WW2 (post Great Depression) economy.
there is no other remaining (cheap and plentiful) substance with that quality of abundant energy.
post Peak Coal had a solution based in physics.
post Peak Oil has no solution.
Invoking physics, at least in Gail’s case, is not an attempt to sound learned or take the high ground. It is merely an attempt to describe how the economy or any other complex evolving system works by dissipating energy.
As a fairly simple case, lets take a whirlpool or a vortex in the water of a mountain stream. The whirlpool takes shape, whorls around for a bit as it travels down stream, then stops whirling around and peters out. It is formed out of water molecules and relies for its existence on the kinetic energy or the momentum of those molecules as they move downstream under the influence of the earth’s gravitational field, the pushing and shoving of their neighboring molecules, and the contours of the stream bed such as rocks, hollows, water plants, etc.
While the whirlpool may seem to the causal observer like an individual thing, it could not exist without the stream of flowing water and the stream bed that contains that flow, the mountain to provide a gradient for the stream, the gravity to provide a potential difference to maintain the flow, the atmosphere to keep the water liquid, and the sun to drive the evaporation/condensation cycle so that water from the ocean is carried back to the mountain.
These kinds of phenomena can be nicely described in everyday language that Forest Gump could be made to understand by invoking physics. No equations are necessary, just general principles. The important thing is to get the description correct in general terms. Invoking physics to look smart or to defend an erroneous description of a system (as many a charlatan has) would of course be deplorable. But the way Gail invokes physics is commendable.
Thanks, Tim.
Usually she does. But using it to rationalize an argument about the depression isn’t necessary.
Why is it not necessary?
Can we assume that you view the standard explanations of greed and trade barriers necessary, even though they do not provide the whole and complete truth?
I should have added a link. Autopoiesis is a subject which should interest many readers of this site – namely it is how a complex system continues to perpetuate itself and exist through time: https://en.wikipedia.org/wiki/Autopoiesis
One fundamental concept is viewing the complexity of a system (such as industrial civilization) relative to the complexity of its environment. A system which creates more complexity than its environment does so by increasing the entropy within its environment in order to increase its ratio of complexity vs the environment. Safe to say if we want more complexity we need more entropy of the resource base. Anything which reduces the rate of entropy cannot possibly produce more complexity and sustainability as such is a myth.
All sustainability is a myth here as it runs contrary to natural patterns.
Always find your thoughts fascinating. Given current global population trends, ex Africa, the world seems to be short babies and, while it does not negate your thesis, that energy per capita is the major impediment in our present economy, it may suggest that the post millennial generation may enjoy a wage boom.
Generation Screwed: Why millennials are facing the scariest financial future of any generation since the Great Depression
http://highline.huffingtonpost.com/articles/en/poor-millennials/
and cheap oil was the main ingredient in getting the post-WW2 economy growing.
there are no other remaining cheap energy substances.
after the next depression or even recessions, the recoveries will be minimal to non-existent.
that’s the bleak future, but for now…
BAU, baby, tonight is!
A riveting article, Gail. I learnt a lot. I wonder if The Spanish Flu pandemic of 1918-19 is part of the story as well, killing off perhaps around 1% of US and European populations, as it did, and picking off a disproportionately large number of formerly robust, young breadwinners. Can’t have helped our collective purchasing power on top of the loss of life incurred during the war itself.
I expect the Spanish Flu pandemic spread, because so many people were malnourished at that point in time. Actually, lower population was better going forward for resources per capita.
Another disease that will spread everywhere post BAU when mosquito control ends – see the interactive map
http://edition.cnn.com/2015/09/01/health/dengue-fever-mosquito/index.html
https://www.yourgenome.org/sites/default/files/illustrations/chart/malaria_chloroquine_resistance_yourgenome.gif
Luckily these vectors (i.e. specific species of mosquitos) that are required to spread malaria, zika and dengue do not live in the colder/temperate climates of most OFW’ers.
Malaria was prevalent in some parts of the US
https://en.wikipedia.org/wiki/National_Malaria_Eradication_Program
One has to wonder how far it might spread when the eradication programs are halted….
The situation here in Slovakia is that people again use more coal for heating after the years of the rising natural gas consumption, as the prices of the natural gas are higher than the prices of the coal and the low wages and pensions pose the real limit to what the people can afford. Who cares about the saving the Earth? The Russians must provide additional incentives for the buyers of their natural gas:
https://www.reuters.com/article/us-russia-serbia-gas/russia-lifts-gas-re-export-ban-for-serbia-idUSKBN1EC1YH
That’s interesting, MG, and provides a real life example of people choosing the lower priced energy source (regardless of the difference in impact between coal and NG on the planet). Which makes me think that same scenario will play out in other countries as well. In more developed countries the mandating of using renewables is well under way, like California, and in that case people don’t have a less expensive choice.
If electricity turns out to be too high priced in California compared to other states, businesses will move elsewhere. That is a choice, indirectly driven by choices of this kind.
The production of the new German Porsche Cayenne is completely made in Slovakia.
https://spectator.sme.sk/c/20642026/volkswagen-kicks-off-production-of-made-in-slovakia-porsche-cayenne.html
“Bratislava-based carmaker Volkswagen Slovakia (VW SK) has produced the first Porsche Cayenne vehicles at the beginning of September. It is the first Porsche model completely made in Slovakia.”
I would say that the most important components, that made the Germans to invest into the complete production in Slovakia, besides the network of the suppliers, are also these 2 components:
– electricity price lower than in Germany
http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Electricity_prices,_first_half_of_year,_2015-2017.png
– the lower wages of the new workforce from Serbia, which compensates the lacking (and ageing) Slovak workforce in the Slovak production plants (often of Slovak origin, as Slovaks emigrated to Serbia around 300 years ago and tens of thousands still live there now).
(By the way, Serbia is heavily reliant on coal: https://bankwatch.org/project/kolubara-lignite-mine-serbia, but the country is depopulating due to the low wages and lack of work: https://en.wikipedia.org/wiki/Demographics_of_Serbia; https://tradingeconomics.com/serbia/unemployment-rate)
One more comment to Serbia and its coal: it is lignite with a low calorific value and this coal is not a reliable source of electricity (in comparison to nucelar power in Slovakia, which plans to export the electricity from the new blocks in Mochovce nuclear power plant to Serbia, too):
“In May 2014, heavy rains hit the Kolubara and Kostolac lignite basins, flooding mines and damaging associated facilities, including TPP Nikola Tesla and TPP Kostolac. The worst situation occurred in the Kolubara mining basin where an artificial lake of 20 square kilometres and 50 metres depth formed at the open-pit mine Tamnava West Field. Mining machinery and equipment was trapped underwater, affecting production for almost a year. The flood damage was estimated at €100 million and cut Serbian power generation by 40%, forcing the country to boost electricity and coal imports.”
Source: https://euracoal.eu/info/country-profiles/serbia/
I have been to Bratislava — but not traveled extensively through Slovakia….
But let me guess… if I were to …. I would not see a landscape filled with wind mills and solar farms…
But I would notice plenty of coal fired power plants.
It is good not to have your leadership infiltrated by DelusiSTANI agents….
There are some solar farms, some biogas plants, some co-generation biomass plants but almost no wind farms. The government does not believie in scaling up renewables. As there is only little low quality coal and imported natural gas power plants seem to be uneconomical, all depends on the nuclear power.
As we can see on the example of the Great Britain: when the reality kicks in (i.e. Brexit), the nuclear seems to be the only (although not cheap) source of the reliable electricity supply.
Slovakia — the new manufacturing powerhouse of Europe — powered by relatively cheap coal electricity — and run by sensible leaders (vs DelusiSTANIS in Germany)
How to Kill an Industry
Germany’s massive push into renewable energy has a dark side. As green policies drive up the cost of power, entire industries are shrinking.
https://global.handelsblatt.com/companies-markets/how-to-kill-an-industry-479057
https://www.askideas.com/media/37/Funny-Laughing-Gif-Dr.-Evil-Image.gif
The races and the various sunshine zones of the Earth of their origin are closely connected (vitamin D):
https://www.ncbi.nlm.nih.gov/pubmed/26366714
https://www.ncbi.nlm.nih.gov/pubmed/18614733
https://www.ncbi.nlm.nih.gov/pubmed/25876674
https://jamanetwork.com/journals/jamaneurology/fullarticle/2436596
So … go outside and get some sun?
Will do.
It depends…
What do those pulling the levers know?
It just occurred to me ….
That they generally NEVER tell us what they know.
For instance — most people believe WW1 was caused by the assassination of a nobody. It takes a comedian to provide the real story https://www.youtube.com/watch?v=sehmmzbi3UI
What was Iraq about? WMD of course — and also because Saddam planned 911.
Libya? Ummm… why did we blast that country to bits?
Ukraine — that’s all about Putin being evil.
Syria — Assad is evil…..
A small number of curious people may be able to dig and find out the reasons behind these conflicts — however 99%++++ of all people simply believe what the MSM tells them…. they believe the lies…
Peak Cheap Oil is what is feared by those in control — these conflicts are generally related to energy ….
We have been battling this enemy for over a century now ….. and now the enemy is outside the gate…
Does anyone really think the PTB are going to show their hand now? They did not show it before — and showing it now would spell immediate disaster as it would set off global panic
Just reading the article — excellent insights Gail ….
This reinforces my comment above:
‘Economists, including Ben Bernanke, give all kinds of reasons for the Great Depression of the 1930s. But what if the real reason for the Great Depression was an energy crisis?’
We are closing in on 100 years since the Great Depression – and not once has it been suggested by the MSM that energy was the cause….
Again – the MSM does NOT exist to inform — it exists to control what the masses believe.
It is the primary machine used to create the matrix.
Everything — and I mean absolutely everything — from man walking on the moon — to GGG WWW — must be challenged.
Simply saying ‘I read this in the MSM’ so it must be true… ridiculous. We can pick bits and pieces from the MSM and maybe get closer to the truth…. but if you take any single article or theme in its entirety – and you find it repeated across the spectrum (e.g. WMD) … then you can be certain —- it is a LIE.
This is true..I watched CNN the other morning and their CNN MONEY host said “The economy grew at 3 percent quarterly so that’s good “.They cherry picked last quarter and try to imply the yearly average was three percent. When the first quarter was only one percent and we have a total of 2.4%..
Then I watched CNN a few nights ago and the host was arguing that the economy was in such great shape thanks to the stock market that corporations didn’t need trumps tax cuts.
.And then I was watching my small town local NBC news the other night and they did almost the exact same thing. The host said “The economy grew at 3 percent last quarter and that was the largest increase since 2014”..Once again they choose to cherry pick quarters instead of just telling you what the yearly average was including all quarters.
The Economic Scholars at University of Michigan already. said. The US Economy is not seeing a “Trump bump”..
http://www.mlive.com/business/index.ssf/2017/11/experts_say_us_economy_not_see.html
But as FE points out th MSM does NOT exist to inform — it exists to control what the masses believe.
“But as FE points out th MSM does NOT exist to inform — it exists to control what the masses believe.”
That’s a crock. News services exist to make money from advertising – it’s a business.
My Xmas gift to you — because you are not worth arguing with ….
Death to Stuuuupidity in 2018!
http://www.reactiongifs.com/r/2013/08/chuck1.gif
Reposting:
https://www.youtube.com/watch?v=jH8dejYGa5A
I am sure you could find exactly the same thing happening with the tag line you just posted.
That’s because all MSM ‘news’ emanates from the Ministry of Truth (mind control division)
A better rant??? (now 25 years old)
https://www.youtube.com/watch?v=RYcybfrjuP4
(Thanks for the new article too)
“Does anyone really think the PTB are going to show their hand now? They did not show it before — and showing it now would spell immediate disaster as it would set off global panic”
They might be wrong about this. They (if they exist) have never shown their hand because they never thought it necessary. The foregone conclusion of inevitable doom has never been this compelling before. Not showing their hand leads to extinction anyway, so why not show their hand and see what happens?
I am confident that people need to know very clearly what’s coming. The problem is that they won’t believe you if you tell them. Not that they will panic. I tell them as best I can. Sure, they think I’m a loon, but they don’t panic. MY problem is that I can’t explain it clearly enough (even to myself) to prevent them tuning me out. (In fact, they don’t tune me out now; they just “file” the info deep under junk so it will never be found.) Everybody on this blog is so educated in business and energy terms that no one can understand how to make the subject simple enough for the average person.
Art, when I try to explain these things it usually goes like this:
1. Do you believe our economy can grow forevermore?
If the answer is anything other than an clear NO, then further discussion is not needed with that person. He or she is so unversed with these topics, that anything I say will be of no consequence.
But if the answer is a solid NO. Then I can start to ask him or her what that person sees as the limiting factors. Listening more than talking.
Energy, food, debt load, supply chains, global economy and central banks can be thrown in the conversation only if that other person is first aware that these have limits in themselves.
The standard MSM narrative of development developing to an utopian future in space, is so strong. That I can not brake that mythology in the other person, if it hasn’t cracked already.
“Energy, food, debt load, supply chains, global economy and central banks can be thrown in the conversation only if that other person is first aware that these have limits in themselves.”
Thanks, Van Kent. This addresses the issue clearly. But if we’re not versed in business, we can maybe only grasp some of the following (below)–not debt or central banks. We don’t understand the money system at all. Supply chains might stand a chance, but that has to do with cheap labor abroad, economy of scale, philosophy of civilization… Not easy nuts to crack, but remotely possible.
“Energy, food, debt load, supply chains, global economy and central banks “
Wrong.
If the MSM were to run articles on a regular basis explaining that EVs and renewable energy are utter nonsense… something along these lines:
“To provide most of our power through renewables would take hundreds of times the amount of rare earth metals that we are mining today,” according to Thomas Graedel at the Yale School of Forestry & Environmental Studies. So renewable energy resources like windmills and solar PV can not ever replace fossil fuels, there’s not enough of many essential minerals to scale this technology up. http://energyskeptic.com/2014/high-tech-cannot-last-rare-earth-metals/
The masses would very quickly ‘get it’
If the MSM published proper info on shale demonstrating that they are massive money burning machines… and that conventional oil peaked over 10 years ago
The masses would very quickly ‘get it’
If it were explained to them by the MSM that the Long Emergency we are experiencing will end up in total collapse rather than the much sought after recovery…. is due to the end of cheap oil …
They would ‘get it’
And ‘getting it’ would mean all hope would be eviscerated — and that would lead to much wailing and sobbing … and global despair….
And that would bring down BAU very quickly indeed —- because when confidence in the system goes… the system goes…
There is a reason why the el ders instruct the MSM to fabricate nonsense like renewable energy and EVs and gggg http://www…..
A very good reason. It helps to take our minds off the negatives giving us goals to achieve… that create the illusion that humans have a future on the planet…
True, but you’d be playing into the scenario where they have to despair. You could avoid that by asking Van Kent’s question (or something like it): Do you believe infinite growth is possible? Let them figure out what growth means. If they believe it is, you leave them be. Nothing happening there. But if they believe it can’t, and you can help them figure out why (as I’m not well equipped to do) then they would be better prepared for what remains of their lives.
The ability to understand systems theory is a true marker of intelligence. Those who cannot inevitably short cut their thinking to something sloppy – like conspiracy theories or scapegoating one particular social class or nation.
So here we are in this truly dismal place. The intelligent people have failed.
What you have to understand is that the el ders think of us as cattle — they even refer to us as that… goyim = cattle…. duuuumb beasts….
Which most humans are — beasts to be farmed — to support our masters….
They would see no reason to inform us of anything… just as a farmer would not feel any need to explain to his barnyard animals the workings of the farm.
We get fairy tales — and lies — aimed at keeping us complacent… nothing more
Hi Gail. Nice one. I have more or less reached the same conclusion, not too surprising considering that I am physicist, and also thought about the implications for the future: https://giseco.org/2017/05/26/death-by-gdp.
Right, but I don’t think my conclusions say anything about climate change.
I figured out several years ago that humans are adapted to eating at least some cooked food in our diet. If we ate only raw food, like other primates, we would need much bigger teeth, jaws, and digestive system. We would also need to spend much of our day chewing. The fact that we eat some cooked food has allowed our brain to be bigger, and allowed us to have much more time for making tools. At this point, we cannot get along without some supplemental energy–actually, quite a bit, given our current population.
Also, the story that wind and solar will save us is complete nonsense. It does not scale up. The installation cost on the grid is not included in the figures you read about. It is way too expensive, when the cost of mitigating intermittency is included. With the trillions of dollars we have spent, it should amount to more than 1% of world energy production.
We have absolutely no way of substituting alternatives for fossil fuels, regardless of what you read. Our quantity of energy would go to close to zero. The biofuels and waste category includes a lot of traditional fuels, such as wood and animal dung burned for fuel. We don’t have enough of these for all of us to use them. They are also very polluting.
Sadly I see no escape from the straight-line conclusion that reducing GDP results in ruining people’s lives, impoverishing them, and causing death and chaos in the developing world. I think one has to be willing to accept that measures of this kind on a large scale amount to starvation. So the problem with their success will inevitably be that the population will refuse to allow it. I think straightforward warfare is a more honest, and direct, solution. I am aware this may seem crass, but I think it is important to be as sober as possible when discussing the subject so as not to suffer either denial or naive optimism.
Replacement of oil by alternative sources
While oil has many other important uses (lubrication, plastics, roadways, roofing) this section considers only its use as an energy source. The CMO is a powerful means of understanding the difficulty of replacing oil energy by other sources. SRI International chemist Ripudaman Malhotra, working with Crane and colleague Ed Kinderman, used it to describe the looming energy crisis in sobering terms.[13] Malhotra illustrates the problem of producing one CMO energy that we currently derive from oil each year from five different alternative sources. Installing capacity to produce 1 CMO per year requires long and significant development.
Allowing fifty years to develop the requisite capacity, 1 CMO of energy per year could be produced by any one of these developments:
4 Three Gorges Dams,[14] developed each year for 50 years, or
52 nuclear power plants,[15] developed each year for 50 years, or
104 coal-fired power plants,[16] developed each year for 50 years, or
32,850 wind turbines,[17][18] developed each year for 50 years, or
91,250,000 rooftop solar photovoltaic panels[19] developed each year for 50 years
The world consumes approximately 3 CMO annually from all sources. The table [10] shows the small contribution from alternative energies in 2006.
http://en.wikipedia.org/wiki/Cubic_mile_of_oil
“To provide most of our power through renewables would take hundreds of times the amount of rare earth metals that we are mining today,” according to Thomas Graedel at the Yale School of Forestry & Environmental Studies. So renewable energy resources like windmills and solar PV can not ever replace fossil fuels, there’s not enough of many essential minerals to scale this technology up. http://energyskeptic.com/2014/high-tech-cannot-last-rare-earth-metals/
Henrik — meet Fast Eddy… he is not a physicist….
BUT…. he is…. the World Champion.
Would you like an auto-graph?
https://now-here-this.timeout.com/wp-content/uploads/2013/04/judah-friedlander-world-champion-credit-phil-provencio-.jpg
The Casino is temporarily shut down for the Ho!I days
he Securities and Exchange Commission suspended trading Tuesday of The Crypto Company until January 3, citing “concerns regarding the accuracy and adequacy of information” about compensation paid to promote the firm and plans for insider sales.
The Crytpo Company describes itself as a business that “offers a portfolio of digital assets, technologies, and consulting services to the blockchain and cryptocurrency markets” with plans for a “rollout of a full scale, high frequency cryptocurrency trading floor.”
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SMARTASSET.COM
Shares of The Crypto Company (CRCW) have surged nearly 160% in the past five days, more than 1,800% in the past month and 17,000% in the past three months, as investors and traders have bid up the price of bitcoin (XBT) higher and higher.
That stunning rise has lifted the company’s market value to more than $11 billion. To put that in perspective, that’s higher than the market value of well-known brand name companies like Macy’s (M), The New York Times (NYT) and Under Armour (UAA).
http://money.cnn.com/2017/12/19/investing/bitcoin-crytpocurrencies-sec-bubble/index.html
These tokens called currency are dependent on the currencies issued by the states. They can not exist without them. And it seems that they are mostly used not for the real world buy/sell transactions, but for the speculative purposes, i.e. finding the highest price in the pyramid scheme after which they fall to zero, as they are not backed by the real needs of the people.
Pingback: The Depression of the 1930s Was an Energy Crisis — Our Finite World – Freelance Suman D.
Thanks for the new article
Thank you, Gail, for another interesting article.
Here is a gift for all the Tesla haters…
UPS reserves 125 Tesla semi-trucks, largest public pre-order yet
Nick Carey
Tesla’s new electric semi truck is unveiled during a presentation
(Reuters) – United Parcel Service Inc (UPS.N) said on Tuesday it is buying 125 Tesla Inc (TSLA.O) all-electric semi-trucks, the largest known order for the big rig so far, as the package delivery company expands its fleet of alternative-fuel vehicles.
Tesla is trying to convince the trucking community it can build an affordable electric big rig with the range and cargo capacity to compete with relatively low-cost, time-tested diesel trucks. This is the largest public order of the big rig so far, Tesla said
http://mobile.reuters.com/article/amp/idUSKBN1ED1QM
Seems we will have w Xmass after all for years to come!
UPS is just trying to look green. These Tesla trucks would make up like .1% of their fleet. I worked for ups for years and they’ve been doing this crap for awhile now.
I’ll bet my life — that they never take delivery.
So you’re betting Tesla goes bankrupt by then or the collapse happens first? Cus UPS isn’t going anywhere.
There’s one other option – Tesla never makes a single semi … because it is one thing to claim it is a viable vehicle … but another to find out that almost the entire payload capacity … is taken up by a massive battery pack…
These fake orders are just spin from these companies to make them appear green….
Watch for Tesla to announce that tie-up with Boeing to create the first electric powered commercial aircraft — Emirates will then announce it has committed to an entire fleet of these jets….
I just had a great idea! I want to start a company just to make fun of these guys. I’m going to call it “Bigly Rigly” and it’ll be an 18 wheeler rig where the entire 52′ bed is filled with battery packs except about enough room for a single case of beer. Then I’ll put out a news release a few weeks after incorporating proclaiming that I’ve managed to secure 2 million orders and I’ll be taking preorders with a $5000 non refundable deposit. Omg I’m gonna make so much $$$
Or perhaps you just haul around ultra-high value cargo…. let’s say you have space for a carton of the most valuable gem stones…. say 100 million dollars worth in each shipment …. (and a case of beer)….
DeBeers would be your first big customer.
Now this is starting to make sense!
I’ve got it! We’ll have a Bitcoin safe deposit box and we’ll drive people’s coins around all day! I’m going to contact Anheuser Busch to see if we can get them in somehow.
That’s an even BETTER idea! When BC goes to 1 million dollars per coin this becomes viable.
One truck – one Bitcoin!
Of better still — make sure the semi has internet connectivity (easily done) and it doesn’t even have to haul any coins…. it just has to have access to the BC trading account and technically it is hauling nothing physical since the cargo is in the cloud.
Therefore the range could be increased because all cargo space could be used for more batteries.
No beer, no dice. The 18 wheeler is going to be autonomously driven, of course, however we’ll pay a security guard in beer to sit in the cab and listen to Phil Collins.
Virtual signalling for a virtual truck – seems appropriate
I dont think anyone hates Tesla…
I personally don’t…. I just think it’s a joke.
This order will NEVER be fulfilled.
https://www.wired.com/story/canceling-your-model-3-deposit-dont-count-on-a-timely-refund/
1913 was a huge year and it was the peak in UK coal production that kicked it all off. This is when the pound sterling began to give way to the US dollar as a reserve currency. This was also just before the Fed was created, the US went off the gold standard (mostly) and then WWI broke out.
Very well put.
Yes it does seem like a classic fight over resources (coal) that is the root cause of the Great Depression and two world wars. However, we were lucky to have discovered oil to supplement (and in some cases replace) coal. Then, natural gas was added. Then, nuclear too. Nuclear is not cheap though like coal, oil and natural gas.
Now, we are reaching or passing peak oil, coal and natural gas now on a global scale. If we do not discover more dense and cheap sources of energy, industrial civilization will collapse. Globally, simultaneously and quickly. We have so far to fall.
We only have “so far to fall” if you believe our current level of cultural and societal evolution is a good thing. And I for one do not. Everything we’ve done is backwards and out of balance, harmful to the planet, biosphere, and all life here.
“This problem happened in the 1930s and is happening again today. The problem is an affordability problem, but it is sometimes referred to as “low demand.” Workers with inadequate wages cannot afford to buy the goods made by the economy.”
Exactly so. The problem of explaining this is made much more difficult by the fact that available wage data still insists on aggregating all wages (as in figure 11) including the huge share that goes to the top 20% and even the top 1%, which makes it seem that wages are rising relative to inflation, (again figure 11) whereas given the wage stagnation and unemployment for at least the bottom 50%, any rise in energy prices leads to decreased demand because this group continues to struggle even at very low levels of inflation. We’re back to that excellent pie chart you used to publish in Oil Drum that showed energy, housing (and interest expense) and disposable income, and how an increase in energy cost causes a general economic downturn because of less disposable income in a consumer driven economy, because housing and fixed interest costs cannot be postponed. The attempt to increase demand by lowering energy prices, as you have also pointed out, pushes the sale price of energy below cost of discovery, and discourages investment. We really are getting close to the cliff, aren’t we? Another great post, Gail!
Thanks! I wonder if you are thinking of the bottom of this image:
Yes that is the one. I misremembered the slices but it sure tells the tale, still!
There are other versions around as well.
Fascinating post, Gail. Lots to consider. Energy seems to be the root/foundation of everything. It’s really too bad far more analysts (especially economists) don’t take it into account. Thanks for sharing.
You are welcome. The story is terribly basic. If the world had this much trouble with peak coal in UK, no wonder world peak oil is a huge worry.
The General Theory of Economics
1. Find cheap energy commodities
2. Develop transportation to those commodities, and develop energy services for those commodities. To make the energy available for labour, for the production of goods and services.
3. Find ways of producing the biggest amount of goods and services, with the available energy. Develop efficiency and productivity of the economy, after maximizing the available cheap energy
When cheap energy is not available, an economic contraction will happen. Sooner or later. But it will happen.
Because the larger economy is built without a way of backtracking to simpler less energy consuming structures. Either the larger economy will collapse in to a state that uses as much energy as is actually available. Which at the moment could be energy level of ‘zero’. Or it will develop in to islands of autonomous economic regions that are living with the available energy at their use, but are cut off from the larger economy. Which at the moment is unclear, if that is at all possible, because food, spare parts, commodities and rare earth minerals come from the larger global economy.
Problems ahead
1. All cheap energy commodities are already pass their peak at the moment. There is no Plan B.
2. This forces the global economy to restructure. Everything you think you know, will be different. Sooner or later.
3. All transitioning periods take time. To learn skills. To build appropriate infrastructure.
4. But WE don’t have time. The gap is too large between in how much energy we have now, and what we are going to have available for us in the future (possibility of zero).
5. Facing these options, we are making the only thing we can do. Ignoring and denying there is a problem in the first place, and therefore making the coming Seneca collapse even worse.
You are right, I am afraid. I guess the one thing I would mention is that we humans cannot get along with an energy consumption of zero (in addition to the food available by hunter-gathering or farming). We need to cook at least part of our food. This requires supplemental energy of some sort. It is plant food that especially benefits from cooking. If it is not cooked, plant food tends to take literally half the day to chew, and the nutrition is not as good as with cooked food. Being able to cook part of our food seems to be a major thing that allowed us to evolve differently from other animals. Our brains could be bigger, and our chewing and digestive apparatus smaller. We also had more time (not chewing) available to develop tools. We have no way to evolve backward. There are many other reasons why we need energy now, including heat for people who live in cold parts of the world and transportation.
Elon Musk Calls Transit Expert ‘An Idiot’ and Says Public Transport ‘Sucks’
“Critics pounced on Musk’s description of shared transit as an unpleasant safety risk, arguing that Musk’s views were elitist, and that his vision of individualized transit is a pipe dream.”
http://fortune.com/2017/12/16/elon-musk-public-transport/
I think Musk himself is starting to crack. I think Musk already knows Tesla is finished and its only a matter of time before it fails. And as anyone knows, when someone’s pushed to the limit of his ability to handle mental hardship, he has trouble maintaining his composure. Musk clearly looks like he’s getting to that point.
Tesla’s are public transportation… 🙂
You certainly don’t get the redundancy with public transit. You get big concentrations of people, and big local needs for energy. If something goes wrong, it likely goes very wrong.
Little typo. You say, “Very clearly, the first thing that went wrong was the peaking of UK coal production in 2013. Even before 2013, ”
I think you meant “1913”
Good point! I fixed it.
George Orwell in the The Road to Wigan Pier gives a good description of the conditions of the coal miners. Your description is very similar to his detailed portrait.
That book is a must read for anyone who believes we will be mining coal post BAU….
Pingback: The Depression of the 1930s Was an Energy Crisis – Enjeux énergies et environnement
I’ll offer an anecdote which gives first hand confirmation of coal depletion, but which can certainly be extrapolated to any resource.
Back around 1956 I went on a school trip to a local colliery – Betteshanger, Kent, England. It was a fairly old mine and, by 1956, the main shaft was one mile deep, with one coal seam extending five miles under the English Channel. We only went about half way down and saw how difficult it was becoming to extract remaining coal at that level. By now the mine is closed I think.
I’ll check back if I have anything significantly wrong from memory, but it was an experience that’s impossible to forget, especially the working conditions. Because of the heat the miners worked nearly naked, except for boots, underpants, belts and helmets. But it’s very sad that nearly all coal mining ended in Britain in such brutal fashion under Thatcher, because this destroyed the tight-knit, mutually supportive communities which had developed over the previous couple of centuries, i.e. since the start of the Industrial Revolution.
Dave Summers (Heading Out) who used to write for The Oil Drum came from a family of coal miners, and was himself a coal miner at one time. He would offer comments about coal mining. He decided to make a real effort to attend the university, to get away from the need to be a lifelong coal miner. He ended up in engineering (coal mine engineering). He was very pro-coal.
All the Kent coal mines are gone, most of them before Margaret thatcher. It was the dash for gas that killed most of the mines.
The coal mines will come back.
The Great Depression 1929-1940 Economic Growth 1% GDP
2006-2017 Economic Growth 1.5% GDP
https://en.wikipedia.org/wiki/Great_Depression
http://www.history.com/topics/great-depression
https://tradingeconomics.com/united-states/gdp-growth-annual
As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
https://imgur.com/a/cz9ln
Oil Shortage Feared by 2020 as Discoveries Fall to Record Low – Wall Street Journal
https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000
Peak Oil Vindicated by the IEA
Thanks. Nice to see a new article and the take on of a familiar subject. Just wanted to throw in something I haven’t seen discussed. It feels as if there is a glut of of young educated people from middle class backgrounds, for whom tradition work opportunities are absent. They’re good for something, but what?
Right now, it seems to be “Driving for Uber.” Of course, if a person compares what the drivers are paid with what they are making, less their expenses, they find that they are often making less than minimum wage. But it helps self-respect, and it helps cash flow, as the car is depreciating.
I am afraid the job of the future is agriculture, with a lot of hand labor. Or telling people’s fortunes, and hoping that they will be willing to pay you for it. Education in most areas is not worth a whole lot, in large part because the energy return of the whole system is too low.
Job of the future..”Mental Health Professional”
I have one brother. He is a psychiatrist, working for the state of Minnesota. He says most of his clientele are addicts of one sort or another.
Judging by the experience of my Gypsy cousins, the best customers for Tarot readings are anxious middle-class business owners, and their wives.
Crises are rather good in the fortune-telling world!
It keeps the family afloat as their own business goes up and down (swimming pools).
You mean to say your gypsies work?
Gypsies are always ‘busy’…… 🙂
Swimming pool business is, of course, highly seasonal.
Grub hub is similar. They pickup food and deliver, even from restaurants that don’t have delivery service. But the person has to work like they’re on amphetamines and they put lots of wear and tear on a vehicle.
Gardening.
Slaves.
Same difference. No one realizes how hard it is to grow your own food until you give it a go. Even with fossil fuel inputs, I wager 99% can’t do it.
I would suspect 99% of people think that it would be possible to tear up the front lawn … and start growing food … enough to feed a family of 4 with plenty to spare…
Just plant some seeds that magically appear from out of nowhere — and turn on the faucet that will magically work even though the electricity is permanently off…
Yep – there are going to be some very shocked people when reality confronts them.
And 70% doesn’t even have a lawn.
Totally. I hear all the time “oh if that happens I’ll just go live off the land.” And I’m thinking to myself, yep you’re pretty brilliant dude. I just tell people now something like “hey don’t forget the pocket knife,” as it’s a total waste of time debating people.