Introduction to the “World’s Fragile Economic Condition”

I will be giving a presentation to a group of casualty actuaries on September 17 called “The World’s Fragile Economic Condition.” I plan to write up the presentation in two posts, one covering the first three of the six sections of the presentation, and the second one covering the second three sections, so that it is easier to read online.

I am putting up a link now to the presentation, to allow those who want to look at the presentation now, a chance to do so.

The World’s Fragile Economic Condition

This presentation pulls together quite a few things I have been talking about. It also adds a new model of how our self-organizing economy works.

This is the outline of what I discuss in the presentation:

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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560 Responses to Introduction to the “World’s Fragile Economic Condition”

  1. Yes, correct, but you can’t fight entropy fully, that’s sheer madness 24/365 job.

    We both probably know the typical examples from our immediate neighborhood, pushed into extremes to illustrate the point, on one hand you got the control freak guys spending daily several hours (after day job) painting the wood, cleaning the drive way and roof; while on the other end of the spectrum there are also inhabited houses with waist high untended gardens and small trees sprouting from the roof, walls cracking from subsurface water damaged and what have you.

    But still, both these guys are living there nevertheless, but obviously each preoccupied with very different mindset, the first one is a control freak and equity jockeying in the house obsessed maniac. While the other one inside the decrepit house is not necessarily just a lazy bum on the maintenance side of things but perhaps enjoys different activity like swimming in tons of books or perhaps watching spiders on the wall and signing all day..

    • Artleads says:

      Thanks for the thoughts. I’m talking from my own experience, which somehow conflates your two scenarios. Cleaning the driveway and cutting the weeds is what my wife thinks should be done. I lean more toward the overgrowth side of the spectrum. But I’m trained to restore paintings, and that involves minutiae you couldn’t believe. Spouse sees the obvious things; I see minutiae. I love mess, wildness, ruggedness at the very same time that I love detail. My advice to the world: If want to be godly, make sure no paint from the window mullions gets on the glass, and make sure to scrape it off if it does. You can have a mess between the edges in a paint job, but the edges must be razor sharp. Screen edges with some tape if necessary. This is actually a form of magic that I practice. We need to embrace contradictions. 🙂

  2. Lastcall says:

    Just sitting in the cqr-park of one of NZ’s bigger shopping centres. It is amazing what is trundling past me. What a bonanza of products we are enjoying at this here peak of everything. Of course the people I am seeing have access to the circus and so can enjoy its pleasures. The ones that can’t are largely invisible. And so everyone looks up the ladder, cause looking down ain’t pretty!

  3. Fast Eddy says:

    The Hamstrung Fed

    The Fed is raising interest rates late in the economic cycle. The problem is that inflationary pressures have finally reached a critical mass where they have rendered the Fed’s monetary policy ineffective. The Fed cannot fight inflation and prevent financial asset bubbles from deflating at the same time.

  4. Fast Eddy says:

    Throughout the speech the Tesla chief appeared jittery and would look off into the distance, often leaving sentences unfinished and sweating before having to remove his jacket.

    • Fast Eddy says:

      Can’t find the video…. strange…

      Elon farts and he gets press….

      • Yorchichan says:

        • I can think of a lot better use for the resources used in the rocket than to send a private citizen into deep space.

          Of course, the space solar folks would like someone (Elon Musk etc.) to develop cheap, reusable rockets, so that solar panels can be sent into space, for 24/7 electric generation.

          Just as the Internet needs video game players to be paying part of its cost, if it is to be viable for others to use, space travel needs some other source of funding, if it is to be possibly used for sending solar panels up to create electricity in space. Wealthy individuals seem to be where some of today’s wealth is hidden. So, in a sense, tapping their desire for fame/adventure, can be a source of funding for someone’s hope regarding what our next energy solution might be.

          • That’s very realistic comment, indeed, large part of Elon’s investors looked at him as theirs #3-4 rodeo opportunity within their already very successful gambling life, Microsoft-Apple-Google- and so on..

  5. Fast Eddy says:

    Tech billionaire Elon Musk has had a big week, and it’s only Tuesday.

    In a bizarre speech, delivered to a crowd gathered beside his commercial space ship, known as BFR, Musk warned his guests that Earth needed to become a “multi-planet civilisation”, and we need to do it right now.

    “There could be some natural event or some man-made event that ends civilization as we know it, and ends life as we know it,?” Musk rambled into a microphone.

    Throughout the speech the Tesla chief appeared jittery and would look off into the distance, often leaving sentences unfinished and sweating before having to remove his jacket.

    Elon knows…. of course he knows…. he was tapped to be the front man for hopium….

    What I am wondering is …. does he know specifics… does he know how close we are to the abyss?

    He is not handling the pressure well….

  6. Fast Eddy says:

    Alhambra: China Central Bankers Are Desperate… “Like 2015 Desperate”

    The powerful central bank doesn’t appear all that powerful, rather judging by what’s really going on in all facets of China money central bankers in 2018 once again appear to be desperate. Like 2015 desperate. Because of their models, this isn’t actually different.

    • PBOC liabilities, Bank reserves growing ~14% since ~Q2/2013, that’s less than 3% per yr or ~4-5% for the leg since 2016. Well, that’s certainly not the end of the world or unmanageable problem these days of fully entrenched freak economics..

  7. Fast Eddy says:

    Then of course there will be the real professional gangs….. the ones with training … who have been travelling the world experiencing interesting cultures — and killing women and children — for fun!

    Don’t forget to whistle…..

  8. Fast Eddy says:

    Meanwhile… over in DelusiSTAN…. Steve continues with his madness….

      • Fast Eddy says:

        Whatever it takes… means WHATEVER it takes.

        And so far…. it is working…. it is staving off the PLUNGE into the depths of hell….

        Oh and btw — if you happen to be a Re Ta r ded More on dimwit fo.ol who believes in a slow or staircase like descent….

        Then why do the CBs call their teams tasked with propping up the markets and global economy …. ‘Plunge Protection Teams’

        If you had more than half a brain … I’d suggest you think about that …. and you might have an epiphany….

        But that would be expecting far too much…..

        • Chrome Mags says:

          If there is no collapse then it’s slow or in some instances like 08 a staircase decline. That’s simple observation. You can put lipstick on it with conspiracy theories, but that’s what’s happening. Sometimes the smartest information is actual reality. Try it sometime, Re tard.

        • Chrome Mags says:

          Ok, so let’s say the plunge protection team isn’t just a conspiracy theory, but reality. All your posts indicate it works. You’ve copiously and repeatedly validated its need. Those plunge team members have job security. It’s probably designed to reduce volatility. That’s good. What’s wrong with that?

          If a ship had a small hole in the hull, would we blame the people that plugged the hole? No. So what’s the difference with plunge protection? None. Maybe you’re just too hooked into the idea of collapse, so the plunge team is a threat to your fantasy of an instant coffee type collapsing society. As we can see, it doesn’t take a genius to see BAU is still going regardless of whether some countries and individuals are doing better or worse. I’m typing on a computer, hooked up to an internet supported by lots of machines powered by lots of energy, so it must still be working. I can go down to the gas station and fill up with fuel anytime I want, cause its open 24/7. That’s BAU. It might slowly degrade or maybe even hit hiccups that can be deemed stair steps down, but it all keeps going, at least so far. I know the basic premise on this site is at some point there will be a cataclysmic short term collapse, but that’s not what’s happening. Collapse is always down the road, because the people that can keep going do, and the one’s that fall off go live with friends or relatives and get low paying jobs. It’s more adjustable than anyone thought. It’s flexible like rubber, not brittle like hard plastic.

          And name calling is not going to change my mind or the reality of the situation which indicates things are still moving forward. Your opinion has no greater value than anyone else’s.

          • Chrome Mags says:

            Why oh why is FE allowed to post a trillion times while I can’t even get one post on here without awaiting moderation?

            • Chrome Mags says:

              Why was that latest short post of mine allowed but not the previous one? I’m not writing anything bad and certainly not anything like FE posts, so is that because FE is a moderator? Should I change my tune to the idea of an instant coffee type collapse?

            • Chrome Mags says:

              I want all five posts of mine in response to FE posted, please, now.

            • I think it is because you keep using words that send posts into moderation. “Conspiracy” is one of them.

            • Pintada says:

              Because FE is Gails alter-ego. They are the same person.

            • Fast Eddy says:

              Now that would a frightening reality….

              Actually … as we know … Fast Eddy is a creation … kinda like the universe is a creation … nobody knows how he came about … but he does exist… and he is always evolving….

              We do not know the how – but we know the why — Fast Eddy exists to pick up the trash that washes up on FW… and incinerate it – thereby preventing FW (which represents pure genius) from degrading into a worthless pile of dog sh it.

              The Core and The Fortress must be protected from the DelusiSTANIs. The Core and The Fortress will be protected. Whatever it takes… means whatever it takes.

              Now f789 off and slither back under your rock

          • Fast Eddy says:

            I am starting a Plunge Protection Team fan club – I am the president – I am the biggest fan.

            Because it is all that stands between us and the bottom of the ocean.

            You do know that eventually plugging holes and pumping the bilge in a ship … will eventually fail… and then guess what happens… it starts with a p…..

            You really have to be very thick indeed not to comprehend what will happen when the CBs fail…

            Think 2008 all over again — but this time without any tools to stop the plunge.

            If you cannot understand that then congratulations – you qualify for a free bus pass — you also get to park here


        • There are even better graphs showing all the “national” + tax heavens PPTs at work since 2008 as they in clearly demonstrable fashion indicate how they propped up the system in aggregate. Basically, each providing a stimuli wave and passing the baton to the next one in line.. This has been shown here numerous times already.. it includes the FED, ECB, BoE, the Asian central banks as well as the various key tax heaven/recycling spots of the world..

          So, I’m not sure what your problem is, if we zoom out and focus on the situation since ~1970s and the prosperity per capita (+few other measures) we are definitively in some sort of managed stagnation and slow stair case collapse already..

  9. The overall system seems to self regulate into huge demand destruction, the individual trends such as the prosperity reversing trend, rising ECoE, demographic slump, rising debts as an temporary fixing attempt to counter it all, commingle together as if the (energy vs, pop) causation is of lesser importance after-all, simply the resulting reality looks like freezing over event near the horizon..

    That’s why peakers were not exactly correct in the past, similarly debt only over focused people missed the overall picture..

    • Those are very good posts. I especially liked the first one.

      If we are short of people in the right demographic, it is hard to sell very many goods. Once a person’s home is full of furniture, wall art, and the other things that go in a house, it is hard to buy any more, unless something wears out. Perhaps a new clothes washer, now and then, now that the new ones are so fragile. And a few fixes to a house, because of water damage or something similar. I can see that keeping demand up is going to be a big problem.

      • Artleads says:

        Actually there’s an inexhaustible amount of work to do maintaining houses (I’m finding). Entropy happens so quickly in a house that there is no day that there isn’t something to fix. No money in it, unfortunately.

    • DJ says:

      So, soon 65-74 years olds and 75+ will be the only growing segments?

      The former is generally healthy and should be working. I suppose the latter has to be mostly dead.

      If not for urbanisation, but mostly immigration, we wouldn’t need to build new houses.

      Cutting homebuilding and healthcare down to 10-20% would be real deGrowth.

      • I guess there will be few baby steps to be taken before the real degrowth visible everywhere kicks in.. Most notably abandonment, which has been up to this point chiefly (and wrongly) connected only with the “rust belt” and various “periphery” struggling effects.

        Abandonment + above described demographics shift might be compensated for a while by immigration wave, especially in large metropolitan areas. But in the regions it’s rather apparent today, e.g. in France, Spain and Italy.. overcrowded hospitals and elderly care units vs. rising unsold stock of no longer occupied apartments and houses..

        • xabier says:

          Migrants are very useful at this stage of decline. I went to lay a wreath at the regimental memorial to the unit my great-grandfather served with in WW1, now in a very ‘deprived’ and somewhat violent part of London.

          At the top of the hill, semi-detached 1930’s houses for £1.2m (peak bubble) ; at the bottom, Migrant World: they tolerate very poor conditions indeed, and do all the dreary jobs for minimum wage.

          It was poignant, as in 1914 it had been a pleasant suburb – many of the buildings still survive – and before that a resort for the rich merchants of London and the aristocracy in the 18th century.

          Looking at the street, and then up to the second and third storeys showed two worlds, two stages of civilization, and almost total population/race replacement.

          And yet, although they do the jobs and maintain basic consumption levels, the immigrants obviously add to the total burden on infrastructure, and the over-crowding is intolerable even for someone used to London.

          • Countries need someone to do work very cheaply, if there are really not enough resources to go around. This is why low-paid immigrants seem to be helpful.

            • Artleads says:

              There are billions of students who could do this (cheap) work…and still learn more than they’re learning now. That could help in places where migrants come from too, and would help to keep them where they are (which might be economically beneficial in its own right).

            • The migrants come from countries with a surplus of would-be workers. I doubt that the students would be all that helpful. What is missing is the leveraging impact of fossil fuels, to help with their efforts. It is hard to make up for that with more would-be workers.

            • Artleads says:

              Coal, furious food growing, creating little habitats with a frill or two, tourism? But I’m sure you can see the pitfall that I’m hazy about. (BTW, someone here might have posted the video I saw with the president of Ghana and Francois Macron together on some sort of panel. The former was passionately advocating for different relationships with the west and that would keep people in Africa to build that continent instead of migrating elsewhere).

    • It sounds like China is having problems. With its coal production reaching limits, and imports generally being more expensive than its self-produced coal, the economy can’t really continue to grow. And the country has demographic issues as well, thanks to the one child policy.

  10. Davidin100millionbilliontrillionzillionyears says:

    Japanese billionaire Yusaku Maezawa invited the SpaceX CEO along on his flight to the moon.
    “Maybe we’ll both be on it,” Elon Musk said.
    Musk talked about how Maezawa’s “very significant amount of money” to go to the Moon has “done a lot to restore my faith in humanity.”

    yes, Elon, go go go!

    • Fast Eddy says:

      Yes… and no …. making a martyr of Musk…. would be mentally exhausting….

      • Kowalainen says:

        Just clone the musketeer beforehand, but with a slight end intended flaw in the DNA omittting coding for the vocal cords and tongue.

        Oops, a “bug” in the program. How sad regression testing didn’t find that one out before pressing the “print” button.


  11. Nehemiah says:

    Very interesting graph. Life expectancy has skyrocketed in parallel with CO2, a proxy for fossil fuel consumption. Cause and effect or coincidence?

    • Nehemiah says:

      The graph is at 46:13 if the link does not furnish the correct location.

    • Chrome Mags says:

      Surplus energy is why not only population increased so much but also life expectancy. CO2 is merely a by-product of the energy being released from fossil fuels. People simply expel CO2 with other unneeded gasses when breathing, that’s why plant life is so important because they use CO2 and expel oxygen. So there is no connection between increases in CO2 and life expectancy, at least not for people. They could see if it helps plant life to live longer. That may prove an interesting study.

    • Davidin100millionbilliontrillionzillionyears says:

      “Cause and effect or coincidence?”

      obvious answer: cause and effect…

      to be clear, not that the rise in C O 2 caused the increased life expectancy…

      but the surplus energy from burning FF has increased the “health and wealth” of the average person…

      almost too obvious to say…

      let’s keep that C O 2 rising!

      burn more coal!

      • Fast Eddy says:

        Interesting…. does this mean I should open the fire door on the Rayburn and allow some of the black smoke to circulate through the house….. for good health….

  12. Chrome Mags says:

    What they’re saying about the trade war at China’s ‘Davos’

    “China is growing concerned that the US motivation is now trying to keep China down and contain it,” said Timothy Stratford, a managing partner at law firm Covington & Burling in Beijing. “I expect that we’re going to have a deadlock for some time.”

    “The trade frictions don’t have a huge direct impact on China’s economy, but they may impact people’s expectations,” said Liu Shijin, a Chinese government adviser and member of the monetary policy committee at the People’s Bank of China.

    US companies operating in China say the waves of tariffs are already hurting their business. Casualties also include American chipmaker Qualcomm (QCOM), whose $44 billion deal to buy Dutch rival NXP Semiconductors (NXPI) was blocked by Chinese regulators in July.

    “We’ve seen a heating up of the US economy,” said Helen Zhu, head of China equities at investment manager Blackrock. “If tariffs were to go to 25% later this year on $200 billion of imports, that would work into inflationary pressure and damage the US consumer.”

    It’s deadlocked. Nothing is going to change this situation for now. Stay tuned folks.

    • Chrome Mags says:

      ‘China hits back at Trump with tariffs on $60bn of US goods’

      “It comes after the US slapped duties on $200bn of Chinese imports on Monday, escalating its trade war with Beijing. China will target American goods such as liquefied natural gas, which are produced in states loyal to the US president. However, in a tweet Mr Trump warned Beijing against seeking to influence the upcoming US midterm elections.
      “There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!” he said.

      Getting interesting, huh?

    • Davidin100millionbilliontrillionzillionyears says:

      “The main grumble is that the scheme has led to congestion on the periphery of the zone and that there aren’t enough parking spaces.”

      so they banned cars only from the central zone of the city…

      moving the “downtown” traffic congestion further out…

      where the city dwellers are driving so many cars that there aren’t enough parking spaces…

      The Guardian has provided us with a fine example of a misleading headline…

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  14. Kanghi says:

    Is 4000 years old customer complaint a sign of local resource depletion?

  15. Harry McGibbs says:

    “Interest rates could be stuck near rock-bottom levels for years to come as economists fear the economic cycle is already turning, with the recent global growth spurt showing signs of losing momentum.

    “Ten years on from the financial crisis and growth may now be coming to an end, leaving the world’s central bankers short of ammunition, should they need to prop up their economies once again.

    “Higher oil prices, rising US interest rates and the trade war have all combined to sap growth, indicating rates might need to be cut once more, according to economists.

    ““Global growth has shifted to a lower gear,” said economists at BNP Paribas.”

  16. Harry McGibbs says:

    “The next US bear market is likely to be caused by a spike in 10-year Treasury yields and would risk setting off a $10 trillion crash in US household assets… “When the next recession comes, it is going to be deeper and last longer than in the past. We don’t have any strategy to deal with it,” Feldstein, a former chairman of the White House Council of Economic Advisers, said, adding that the heads of the economy lack emergency tools to recover in the event of a severe recession.”

    • Harry McGibbs says:

      ““Covenant-lite” deals are booming among leveraged loans, a sort of subprime debt often employed in corporate acquisitions. So far in 2018, they have constituted an estimated 34 per cent of all issuance by dollar value. That’s the largest share in at least a couple decades, with the exception of 2017. The lack of caution has coincided with the ascendance of Donald Trump to the presidency.”

      • Harry McGibbs says:

        “The average pay for Wall Street employees, when adjusted for inflation, jumped 13% last year to the highest level since the 2008 financial crisis and the third highest on record, according to a report released Monday. The average salary, including bonuses, for New York City–based securities-industry employees rose 13% to $422,500, the Office of the New York State Comptroller said.”

        • Fast Eddy says:

          The el ders…. certainly take care of their own….

          Now here’s a thought….

          Back in the day … in Canada …. if your surname was not Smith or Jones or similar….. it was VERY difficult to get anything but common labour jobs… and even then there was extreme nepotism…. forget about a management position….

          Is that because the Smith’s and Jones’ were smarter and/or harder workers than those with names such as Russo or Palamarchuk….

          Of course not…..

          The British took care of their own too….

          • xabier says:

            That was the old British working class ‘closed shop’: fathers introduced their sons to their firms to secure their first job. Sons of skilled men became apprentices, sons of labourers…. shovelled dirt. I’ve heard that it still applies in the big VW plant in Northern Spain; no family no job.

      • It is easier to add more debt, if the deals are “covenant-lite.” It is almost as good as lowering interest rates, in terms of making more eligible for loans. Liar loans.

    • I see 10-year interest rates are above 3.0%, but it is hard to see how they will stay there. As Feldstein says, they are likely to crash the economy.

    • A few comments: It is the price of natural gas, just as it is the price of oil, that is important.

      The pipeline fight in Ukraine was about giving Ukraine artificially low natural gas prices.

      LNG gas tends to be a whole lot higher in price than pipeline natural gas, because the transit costs of LNG are very high, depending upon distance. This is why pipelines are helpful.

      I didn’t get a chance to listen to the whole video, but what I did listen to was good.

    • Follow-up, Bulgaria seemed recently changed its position again.
      However, the original sweet deal (dropped on US/EU pressure 4yrs ago) of becoming hub for entire South Stream (Greece, Italy, Balkans) obviously can’t be renewed now, as the Turkish Stream is almost finished.

  17. Fast Eddy says:

    Russia to Israel: ‘You are to blame for downing of Il-20 and death of crew’

    • So, it seem the first option was correct, they cunningly hid behind the Russian plane to position their jets closer to the firing range..

      However, the bottom line remains the same, despite the aroused rhetoric, Russia won’t go against Israel, because the gov-oligarch (+upper middle class) interlinks are just too strong..

      Separate issue is how strong and lasting is the overall support for state of Israel from TPTB and various delegated lesser powers in this wider area. I’ve not noticed massive campaign to relocate and diversify out of there yet, so the support is likely still hard solid. However, the history might rhyme again eventually in the future and TPTB throwing “their own” under the bus again, but that’s certainly not on the agenda for the next few steps in the game.

      • Fast Eddy says:

        Question: would anyone shed a tear if Putin rained 1000 nuclear missiles onto Israel…. and at the same time… Trump ‘drained the swamp’ (including the monsters – Clinton, Obama, etc… – and the parasites who control them)

        Israel is most definitely is the category of ‘does not matter’….

        Remember Jesus Christ! Remember Jesus Christ! (and Seth Rich)

  18. Fast Eddy says:

    Lee Rigby killing: two British Muslim converts convicted of murder

    After unanimous verdicts against Michael Adebolajo and Michael Adebowale, PM vows to defeat ideology of violence

    So … the PM is going to stop our bombing of the Middle East????????

    We are pulling our support for Al Nusra in Syria?

    We’ll stop the false flag chemical weapon bombs?

    Of course we won’t and shouldn’t — but what we must stop doing …. is whining and bitching when someone has the temerity to chop off a head or two with a machete…

    Actually – what we should do is show that person some respect…. he didn’t lie down like a beaten dog and absorb more kicks

  19. Fast Eddy says:

    A Russian military Il-20 aircraft with 14 service members on board went off the radars during an attack by four Israeli jets on Syria’s Latakia province, the Russian Defense Ministry said.

    Air traffic controllers at the Khmeimim Air Base “lost contact” with the aircraft on Monday evening, during the attack of Israeli F-16 fighters on Latakia, said the MOD. The plane was 35 kilometers off the coast of Syria when it vanished.

    • The article is kind of messed up, what they likely wanted to say is that Syrian antiaircraft and antimissile units pummeled the sky in the vector of air to ground attacking Israeli jets. And in this fashion accidentally downed the Russian IL18/20 recon plane..

      And in case it indeed played out otherwise, like Israelis on purpose shooting down airborne Russian plane with ~20 technician on board, doesn’t mean much, because Russian side won’t retaliate (in kind or meaningfully) anyway at such instance..

      What a joke situation: former global colonial master, nowadays decrepit lesser regional power UK is nowadays not even able produce credible spy opera. US lost their proxy jihadists again. Turkey managed to negotiate ceasefire around their encircled jihadists. Iran gained a little bit in training their specops, intel and on the ground power. Russia did the most heavy lifting with limited gain, as the future of the EU bound natgas pipeline sourced from the ME-Gulfies still remains somewhat open question.

      • Kowalainen says:

        Once the Russian natgas pipeline to China is finished, the situation will probably change.

        Brace yourself for a sequel to the mostly finished war in Syria.

  20. milan says:

    wow at the 21:39 mark there is a very interesting segment about the price and affordability problem.
    essentially where Poland is concerned switching from Russian gas to American/Qutar gas has resulted in the price of American liqufied gas works against it. It was 80 percent more expensive than Russian gas in 2017. AND THATS JUST THE PRODUCTION COST!!!! CUSTOMERS PAY ALMOST 200 PERCENT MORE!
    WOW 21:56 MARK and then the news about Serbia and why America took such a big interest there.

    This is truly vital and important information WOW

    • I din’t get that far in the video, but I could see that that was the likely direction the video was headed. The US keeps trying to export natural gas to Europe as LNG, but the shipping costs are exorbitantly high. Its sales price has to be awfully high in Europe, to make exporting LNG economic. It can’t compete directly with pipeline gas.

      The purpose of the exports is an attempt to drive up the price of US LNG. of course, that will not be popular in the US either. At a higher price, more coal would be sold instead.

      • Fast Eddy says:

        Funny how Europeans are good with attacking Russia …. when all Russia wants to do is sell them cheap gas….

        • Kowalainen says:

          It’s smoke and mirrors to please the US, while irritating the Russian bear as little as possible

          It’s all fun and games – still.

  21. milan says:

    a great documentary about power and pipelines.

    • Tureky: cheap gas & abundant workforce, plus sitting on EU’s border..
      So, after a while of knocking their economy and exchange rate a bit, the MNCs will again flock there and relocate more factories out there. Hello even higher unemployment rate in France, Benelux, Italy, Spain, ..

  22. Davidin100millionbilliontrillionzillionyears says:

    SpaceX’s first private passenger is Japanese fashion magnate Maezawa…

    “A former drummer in a punk band, billionaire Maezawa will take a trip around the moon aboard its forthcoming Big Falcon Rocket spaceship, taking the race to commercialize space travel to new heights.”

    “While the BFR has not been built yet, Musk has said he wants the rocket to be ready for an unpiloted trip to Mars in 2022, with a crewed flight in 2024, though his ambitious production targets have been known to slip.”

    • Fast Eddy says:

      I am hoping his journey … ends… like this…. I really am

      • Mark says:

        You know why there are no showers on the space shuttle?
        The astronauts wash up on shore!

        • Nope, they shave their hairy armpits girly style before the mission, then they apply frivolous dosage of antiperspirant gel, and occasionally wipe themselves with wet paper towels, rinse and repeat..

          Only Galaxies space fairing capable creatures don’t have to undertake such humiliating procedures, since their giant space ships have the proper showers..

  23. Remember we wrote this article

    Did Katrina hide the real peak in world oil production?

    Now, 11 years later, I have done this analysis:

    What happened to crude oil production after the first peak in 2005?

    • Fast Eddy says:

      This is all rather meaningless…

      If oil rises to $200 per barrel…. much of the red turns green…

      If it rises to $500 …. we will have so much oil we won’t know what to do with it…

      That is why the financial side of things is the key… how high can the price go without imploding the global economy

    • It seems like higher oil prices encourage more production from some countries. If prices could rise endlessly, there would likely be no problem.

    • Davidin100millionbilliontrillionzillionyears says:

      Assuming that the balancing act between declining and growing countries continues (from Mexico through to Canada) the whole system will peak when the US shale oil peaks (in the Permian) as a result of geology or other factors and/or lack of finance in the next credit crunch and when Iraq peaks due to social unrest or other military confrontation in the oil producing Basra region. There are added risks from continuing disruptions in Nigeria and Libya, steeper declines in Venezuela and the impact of sanctions on Iran.”

      so the peak is near…

      which is kind of cool…

      I thought I might have lived through the peak years ago…

      but now I can (hopefully) live through the “final” peak…

  24. Fast Eddy says:

    Blood and Oil


    Mexico’s drug cartels are moving into the gasoline industry — infiltrating the national oil company, selling stolen fuel on the black market and engaging in open war with the military. Can the country’s new populist president find a way to contain the chaos?

  25. Fast Eddy says:

    Systematic “Petro-Plunder,” as we’ve come to call it, eats into Mexico’s energy sector.
    By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
    In the early hours of Wednesday, September 12, a massive leak of highly flammable liquefied petroleum gas (LPG) escaped into the quiet air of Villa Frontera, a suburb on the northern edge of Mexico’s fourth largest city, Puebla. Authorities evacuated thousands of local residents. The apparent cause of the leak was a botched pipeline tap by one of Mexico’s notorious gangs of oil thieves, or huachicoleros (pronounced “watchy-coh-leh-rohs”), who are terrorizing communities, draining national coffers, and threatening the viability of Mexico’s already debilitated energy sector.

    The gas leak in Villa Frontera is the latest sign that the huachicoleros are diversifying their activities, having discovered a lucrative new niche to exploit: the theft of LPG. The number of gas line taps registered by authorities nationwide increased from five in 2012 to 61 in 2017. This year is set to be another bumper year, with 36 new taps discovered in the first five months.

    The theft of LPG — which includes propane and butane — and its illegal distribution to Mexican households is generating estimated losses of 1.1 billion pesos ($58 million) per month, as well as prompting gas companies to stop distributing along certain routes, reports the business magazine, Manufactura. Most of the costs are being borne by Mexico’s state-owned oil giant, Pemex, which is already buckling under the combined weight of shrinking output, rising losses, and growing debt.

    The theft of gas tankers is also rising. “In the past the huachicoleros would just tap pipelines; now they’re stealing tanker trucks and making them their own,” said César Garza, the executive president of the Mexican Association of LPG Distributors (Amexgas).

    • Fast Eddy says:

      In 2017, 10,363 illegal pipeline taps were found, compared with less than 700 in 2010. In other words, an average of 28 new pipeline taps were found each and every day last year. The growth shows no signs of stopping. In the first two months of 2018, 2,274 illegal taps were found — 38% more than during the same period of 2017 and 352% more than in the first two months of 2014.

      Bleeding the suffering Beast….

  26. Fast Eddy says:

    You know what really REALLY p isses me off?

    When I am forced to sit and listen to a fukkking MORE on liberals… spew on in a mocking tone about how ‘yes right and CNN is fake news’ says Trump … chuckle chuckle chuckle…. (a very slight chuckle… that exudes superiority)

    And if I suggest that Trump is right then I am out of my mind … so I say nothing….

    So instead I have to make due with fantasizing about how I would like to take a baseball bat…. and beat and smash all liberals…. with home run blows…. beat them to within an inch of their lives… then for good measure take that last inch from them….

    • Fast Eddy says:

      I think I will hunt DelusiSTANIS today …. for fun.

    • Greg Machala says:

      The news media is largely to blame for bastardizing the words liberal and conservative. They portray one (or the other) as correct and the other as flawed in some way. This forces people to take sides and choose their preferred media outlets. This ignites conflict where none is needed. In the real world some things are best applied liberally and others applied more conservatively. Why can’t the news be fact based only and void of opinions of right and wrong?

      We at OFW should be wiser and not fall into the liberal vs conservative trap. Just like we should not fall into the Democrat vs Republican trap.

  27. Chrome Mags says:

    As a follow up to discussions prior to Florence hitting the Carolina’s and the effect they may have on nuclear power plants is this somewhat disturbing article.

    Inaccessible” North Carolina Nuclear Plant Declares “Unusual Event” During Storm-Driven “Hot Shutdown”

    “Duke Energy’s Brunswick nuclear plant, about 30 miles south of Wilmington, has declared a state of emergency as the 1,200-acre complex remains cut off by flood waters and and is inaccessible to outside personnel.”

    “The Nuclear Regulatory Commission is being tight-lipped about an “unusual event” which occurred at the Brunswick Nuclear Plant last Saturday which forced a “hot shutdown” of both the plant’s Generation IV-type reactors 1 and 2. The NRC classified the emergency as an “unusual event” but provided little to no details on the situation. Additionally, the NRC reports that weather conditions from Tropical Storm Florence are currently preventing workers from accessing the plant.

    “A hazardous event has resulted in on site conditions sufficient to prohibit the plant staff from accessing the site via personal vehicles due to flooding of local roads by Tropical Storm Florence.”
    The current rector mode is showing as “hot shutdown” and more rain is on the way. River waters in the area are expected to rise as much as 20 feet in the coming days. Not to mention, local dams in the area may be to capacity. Brunswick is equipped with emergency backup diesel generators to operate essential equipment if the facility lost off-site power from the grid. Ledford said that the reactors never lost power and the generators never had to be activated.”

  28. Third World person says:

    here is dick Cheney accepted that he kill Innocent Iraqi people
    so why greatest country on planet has not hanged this guy

    • Third World person says:

      haha plus this our next gen social media youth

    • Are you teasing – trolling us?

      That guy, either as the great implementing official or perhaps even sitting on TPTB planning bench have in fact provided the US and many western peoplez with ~30yrs extra of somewhat comfy life existence.. It was genial strategy and timing indeed, as around ~2001 China was still in it’s pre (last) hockey stick stage, and Russia was barely picking up from the floor, Europe nudged of the rails, ..

      Yes there are megatons of corpses and oceans of blood spilled behind him.

      Well, as they say the Devil in the end have to be paid his due, and it will be likely the Seneca Cliff rapid down slope of action packed horrors when it comes to it eventually. But that’s not for today yet..

      • Fast Eddy says:

        Cheney = Hero

      • Kowalainen says:

        Not until we ha e burned through the final gigatons of natgas, coal and oil will the final showdown be due.

        Not until all the wasteful flares of the industrial civilization have been cranked shut and closed for good.

        Not until the elites stand there by themselves surrounded with billions of crushed human hopes and dreams, littering their corpses into the sprawling dystopia of the final days of industrial civilization, with dystopia creeping closer to home will the nukes fly.

        But this joint will be kept rolling until the end of this century. From there on it will be all machine and little flesh and blood.

        Yes, it will not be robots doing the final job on mankind. It will be of our own doing.

        • The catch is that the price has to rise high enough to get the final gigatons out. So the final gigatons may come a lot sooner than most think. They may already be here. I don’t think that machines can do much of anything without a lot of humans. They don’t make more little machines.

          • Kowalainen says:

            Once the excessive flares of mankind have been properly shut, the existing resources will be getting a well-derserved time for rest and recuperation.

            It will be cheaper to produce with less extractive and thermodynamic pressures applied.

            Gail, could you do some research into how the price of FF’s will be affected if the extractive pressures eases off?

            For example, less drilling, pumping, refining and flooding efforts required to sustain a smaller production and what that would do to prices. Where are the biggest costs in terms of capital and energy usage in the system.

            • No, I am afraid the remaining fuels will not be cheaper.

              One of the big issues is “Distance to market.” There is a lot of coal in remote locations: in Northern Alaska; in western Montana; under the North Sea; some in western Texas. The North Sea coal has extraction issues; the other types need to be shipped long distances overland. The shipment of this coal overland adds huge costs. Most of the transport today is done with diesel powered trains. To make transport possible in the future, more train routes would need to be added. In theory, this could be made electric, rather than diesel, but I believe this actually raises total costs. It certainly makes the system harder to maintain, because the electricity source is subject to frequent outages, due to blown down power lines and other impacts.

              Natural gas has a similar problem. We have known about a large amount of natural gas for a long time, but it has been “shut in.” The basic problem has been that (extraction costs) + (shipping costs) have been higher than (market price). An example of this is the US’s desire to send LNG to Europe. The catch is that the shipping costs are so high, Europe can’t afford the LNG at that price. I cannot imagine that China and India can get along long on high priced LNG, shipped long distances. Pipeline gas tends to be a great deal more affordable, but even this becomes too expensive, if the distances are great.

              The problem with oil is that the governments of oil exporters need to remain standing. This can only happen if they receive adequate tax revenue on their exports. This is a two-part problem: (1) the quantity needs to be high enough, and (2) the price needs to be high enough, so that there is a wide enough “gap” between (the selling price per barrel) and (the extraction cost per barrel), that a high tax rate per barrel can effectively be charged.

              An additional issues is that for all three, there are fixed costs, such as the need to maintain education programs for engineers in these fields, and the need to maintain pipelines and refineries. These continue, regardless of the quantity extracted. This further adds to the cost per barrel.

            • Low demand = collapsing prices

              Low production = soaring per-barrel cost of production because of fixed costs

              Low demand tends to make the system collapse, because prices fall at the same time that the per-barrel cost of production rises. Low demand makes the system collapse.

              Adding a much larger share of elderly to the system can made demand fall, by the way. They don’t consume enough.

            • Kowalainen says:

              Could you provide some insight in the cost of production of compared with the rate of production then?

              It is obvious that producing more physical quantities have a higher cost than producing less, specially in a situation where a lot of the existing infrastructure and resources have to be used for water separation, purification from contaminants due to the excessive rate of production.

              Reducing the rate of production will quite likely enhance the recoverability, quality, since the poorest quality of the resources will be left untapped and together act as a consequence for a decrease of the cost of production.

              I think that is quite obvious since petroleum, coal and natgas production is a physical process and not a matter of information processing such as the financial system which can be meddled with to produce the desired outcome.

            • Fast Eddy says:

              Please turn the IQ filter back on….

            • Kowalainen says:

              Thanks for the reply,

              Well, that might be the case. I would like to have a break down of the drivers to the cost of production. And how the production rate pressure affects the cost of production.

              Of course a lesser consumption will focus the existing production onto the resources of higher quality, lower cost of production, etc.

              For example the mostly shut-in Venezuelan low-quality heavy oil production. It is doubtful if it ever will be of any use anymore when coal and natgas is increasingly shifted in.

              It does not matter how hard the conventional oil is being flooded. Once the water cut ratio reaches a certain point, the well will inevitably be shut-in due to increasing production cost. Other wells with less water cut will continue producing. But if the rate of production decreases, lesser amounts of existing wells and water flooding will be needed, as well as the capital required to sustain a high ratio of production.

              This of course applies to all stage of the process. Once the extractive pressures reaches a certain point it will either be abandoned or the rate of production will be reduced to balance out the cost of removing contaminants, etc.

              Also; the affordability has to be defined to whom it applies. Are we talking about third world inhabitants, then it is already too expensive.

              As the resources deplete and the stair case collapse proceeds, the oil will still be affordable for the upper class since the wealth disparity will start to resemble that if a third world country.

    • Fast Eddy says:

      We need more Dicks and Donalds…. to counter the Koombaya-ists who would lead us to peace… and an outcome that has us licking cow dung off the boots of Russians and Chinese masters.

      Wake up – you either fight for the limited resources — or you end up in the gutter

  29. bogwood says:

    (Digression) I was turned down for a psilocybin study (after reading Pollan’s book). Not depressed enough on the screening psych test! How could that be? I am a regular reader of OFW. The same day there was a stoic quote about the irregular cracks in a loaf of bread, though unintended by the baker, give the loaf beauty and character. That may explain it. The cracks in the economy are interesting, performance art, generate the “pass the popcorn attitude”. So they suggested finding another study, or maybe take the test again. If you’re not depressed you don’t understand the situation. A challenge.

  30. Harry McGibbs says:

    “China will not be content to only play defense in an escalating trade war with the United States, a widely read Chinese tabloid warned, as President Donald Trump was expected to announce new tariffs on $200 billion in Chinese goods as early as Monday. Beijing may also decline to participate in proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs…”

  31. Harry McGibbs says:

    Naughty hands in the cookie-jar again:

    “Ten years after Lehman Brothers collapsed, high-octane products like those which led to the destruction of the American banking giant are making a comeback… Those linked to this effort have included former bosses from failed bank Northern Rock, Adam Applegarth, and Lesley Sewell. Guy Batchelor, former senior vice president at Lehman’s european mortgage division…

    “Some 80pc of the junk-rated, or below investment grade loans, are regarded as having light touch conditions, more than triple the level seen in 2006-2007, according to Moody’s. Meanwhile experts have warned that the financial sector remains “brittle”.”

    • Greg Machala says:

      “High-octane products like those which led to the destruction of the American banking giant are making a comeback” – Because there is nothing else left to invest in. There is not enough cheap energy left for real tangible growth. All that is left is to extend-and-pretend with imaginary profits. Maybe diminishing returns does apply to our economic system after all.

  32. philsharris says:

    Terrific presentation!
    Good luck with the rest and the delivery!

    I listened to Prof Steve Keen yesterday – his history of economic thought including the Physiocrats, who got it right – and later theories is well worth the listening even if I leave his math to him. He and you cover the same ground with very similar results.
    SK: “The Role of Energy in Production. Explaining “Solow Residual” as energy’s contribution to output”

    very best
    Phil Harris

    • I need to leave to give the presentation in a few minutes.

      • The presentation went OK. I realized (again) that there is a lot of material to try to pack into 50 minutes, trying to bring people from 0 knowledge up to where they need to be. I think that audience mostly caught on to the idea.

        There wasn’t really much/any time at the end for questions. Someone asked one brief question, but lunch became available, and people were interested in that. Several people did talk to me at lunch about questions, and I left after lunch.

        The way it was set up, the other speakers didn’t get questions either. The talks tended to go the entire time available. It would have helped if there was really a moderator. I was just directed to notice the time on the computer monitor, and to stop speaking when the time was up.

        I will be giving a slightly different version of the talk to a group of life and annuity actuaries next week in Bermuda. I expect that they will be more concerned about the interest rate aspects of what is happening. This group was more concerned about hurricanes, auto accidents, and workers’s compensation accident frequencies. I am certain that some of them found the topic difficult to relate to.

  33. MG says:

    “Within 20 years, oil use will have long since peaked, renewables and natural gas will account for about half of energy supply and the cost of keeping the lights on will plummet. But that still won’t be enough to meet climate goals, according to a forecast from energy and maritime services company DNV GL Group AS.”

    “Peak oil is near, while renewable use is set to soar”

    What a happy future… Not yet now, but later…

    • Future scenarios are always based on far more oil, coal and gas than will really be available. Makes for scary results.

    • Greg Machala says:

      This is funny: “Peak oil is near, while renewable use is set to soar”!!!!! Except that “renewables” can’t soar without fossil fuels to build them. 🙁

    • Fast Eddy says:

      Bloomberg is considered a very serious MSM.

      Bloomberg publishes this rot.

      Bloomberg regularly publishes stories promoting man-made GGG WWWWWW.

      Think about it.

  34. Karl W Hubbard says:

    Too many variables to make sense of it all. I agree that it all boils down to energy. Future stock market returns are determined by the viability of future companies which depend on energy. Fiat money, fractional reserve lending and creation of debt have supercharged effects of having had a one in a human existence motherload of cheap energy, combined with a confluence of other fortunate events, like an earlier younger demographic, cheap resources, formerly efficient health care that is now more costly as technology in health care does not create “efficiency.” MRI means diagnoses made earlier, costs more to treat as patient survival into non -productive years increases, more technicians to repair and run the machines. True, they get paid, and secondary spin-off of taxes being paid by these technicians, designers and builders of all this wondrous technology, but the costs of government borrowing to pay these health care bills (borrowing) to treat elderly people in the last 6 months of their lives is the Chinese equivalent of building ghost cities. (Sorry to be so blunt as I am a retired physician who just calls it as I see it.) Kind of the same way as fracking. Lots of light grade oil which is useless as it has to be blended with heavier grades to get the useful diesel and auto gas-which is why so much is exported-we can’t use it all. Lots of money being “invested” in this Ponzi scheme- probably stripped from pension funds and plowed into ETFs by money managers who have to stay in the game by chasing for yield/return by buying these stocks).

    I have been rethinking the energy supply for a family in the future. Assuming he has had the foresight to acquire some land upon which to be self-sufficient with low tech farming, his energy supply has the best chance of being met with solar. Joel Skousen ( I do not agree with much of what he says especially with strategic relocation) in a podcast last week on Reluctant Preppers had an update about a German company making solar panels with an integrated conversion of sunlight harvested from the panels directly to the house AC or DC inverter. (not available in US yet) No diversion first to the batteries, which are what I consider truly the weak link.

    Although solar panel sales/installation has dropped off recently, and required government subsidies and some are financially in trouble, it still seems to me that if the battery dependency step could be drastically reduced, then solar panels with the new technology could be the new “gold,” in that an ounce of gold represents the sum total of all the past energy inputs to mine, transport, refine, mint and deliver that gold coin to you as opposed to stocks whose values are perceived based on the assumption that these companies will be able to get cost-effective future energy supply.
    Solar panels exposed to the sun degrade with time, and so are not quite as “eternal” as gold but may be the next best thing.

    In other words, stock up on panels with the auto-inverter capability when they come to the US. When the panels lose their efficiency after ten years, you just grab another batch in storage. I am unaware of any degradation of panels in storage, unlike Gasoline or diesel, and it is easier to store solar panels as back up rather than a 1000 gallon tank of Propane (which is filled to 80% for 800 gallons.) It won’t last that long and you are depending on the ability to drive, purchase, and/or transport a refill or another tank when it runs out. At least when you buy solar, all the energy inputs in its manufacturing have already been expended.

    • Fast Eddy says:

      Here’s the thing….

      I have a closet full of high powered rifles… shot guns… and too many bullets and shells to count….

      And at the top of my To Do List post BAU is ‘watch for smoke from chimneys … lights (solar…) … and old men tilling organic gardens’

      Next on the list is ‘choose a hidden position with a good line of site — then shoot the old men dead… and take whatever I want’

      Then move on to the next target…

      Solar is a bad idea…. it’s like covering yourself in beef drippings… and running into a pack of wild dogs….

      • xabier says:

        The main survival strategy of villagers in the past was to run away from the village when trouble came calling, not to sit there waiting to be picked off and raped, enslaved, etc.

        It also seems that in England at least villages were deliberately sited away from any main roads, again to minimise exposure to danger. ‘Is it worth slogging up that nasty muddy path to see what’s in those hovels? Nah, we’ll get drunk in this roadside tavern instead….’

        Another survival strategy for villagers was to have as many children as possible, so you had something to trade for your own life as a ‘tax’ payment to marauders, who might prefer to take some children every year rather than burn down the whole village. It was called ‘harvesting’, and the Russians and Caucasians suffered that for hundreds of years.

        I just don’t know where the fantasy of a solar-powered doomstead ever came from. Solar panels + women and children for sale, maybe…….

        I’ve been talking with a Kurdish friend about this, and she assures me that the value set on the life of a girl in such traditional cultures is 0. Not just inferior, but worthless. Just domestic servants, units in the marriage trade, and as hostages to seal alliances and peace treaties between tribes, to compensate for the deaths of male warriors.

        But in themselves, worthless. So the tribal elders were happy to trade their kids.

        That’s a true solar-budget economy.

        • Fast Eddy says:

          Oh come on xabier…. this time is going to be different….

          Here – take a look at the future…. just imagine this scenario — but with solar panels!!!!

          This is a go.d utopia….

        • Artleads says:

          So we must face reality, We have to live as we do now, however that is to be achieved, or face a life that is not worth living (in the unlikely event that even that would be possible). In terms of simplicity and cost, the best source of energy for that will be coal…with a little oil and methane on the side. (Just based on what I’m learning here, and as it conforms with aesthetics.) Of course, people might prefer to be inflexible or indulge their normalcy bias. “It can’t work.” “We can’t make profit from that.” “Coal is evil.” “The banks will collapse.” But I wouldn’t be surprise if, other than for normalcy bias and zero imagination, it COULD work. it probably would have to and could work with the same institutions we have now, and they would just need gentle nudging in a better direction.

          There’s a branch of H&M clothing chain at the mall. They say they’ll take donated clothes and repurpose them as their brand. I enter, full of enthusiasm for this innovative idea, and ask whether the donated clothes must be perfect or if the store could repair slight flaws. The teller screwed up her face and said no in a way that made feel ashamed, like a dog that had just been kicked. My spouse, who egged me on to go speak to the teller disagreed that I should have told the teller, “Sorry to bother you.” “Maybe this is her first job.” But from what I gather here, maybe she isn’t paid enough. She certainly isn’t trained enough. So what seems like a good idea for business isn’t backed up by quality training and support of staff. You could repeat the scenario throughout the entire business world. I count it as bad and ignorant behavior, and not as some force of nature that says we have come to the end and there’s nothing possible to do about it.

      • Tim Groves says:

        the costs of government borrowing to pay these health care bills (borrowing) to treat elderly people in the last 6 months of their lives is the Chinese equivalent of building ghost cities

        That’s a very good observation Karl, and nicely put.

        Whether spare solar panels are worth investing in depends on the extent of the economic collapse that we are going to experience. If you find yourself in a place subject to marauding hordes and there are a lot more of them than you, then nothing’s going to save you unless you have the good fortune to be adopted as a member of the tribe. But if you find yourself in a place where 1930s style depression or post-Soviet collapse pertains with no fundamental breakdown of society, those panels might pay dividends.

        I don’t have a crystal ball, and I don’t have sufficient data to make any confident forecasts, but my imagination tells me that both scenarios are very possible futures. The idea that the whole world will go down together is a version of the domino theory in my opinion. When globalism unravels, a lot of countries are going to become failed states very quickly. Once the state next door becomes a failed state, the problems of that state are going to spill over into your state, putting extra pressure on its already unsound fundamentals.

        • John Doyle says:

          Tim, they don’t borrow the money. Who has that sort of money anyway? No, they create it by lawful provisioning. It “magically” appears at the instant the regulation comes into being. China does it as well. as it too is monetary sovereign.

          • Money, however it appears, is only a temporary placeholder for goods and services.

            This is why I don’t dwell on it. It is the actual goods and services that have to get back to Box 1.

            Adding debt (or printing more money) adds more placeholders for goods and services. Ultimately, to keep the system going, Box 1 individuals have to trade in their placeholders for real goods and services to get the true value from them.

            If the economy is growing rapidly enough, the debt (and interest on debt) doesn’t keep adding up, because more goods and services are being added to replace the placeholders. But if the economy is not growing rapidly, the added placeholders keep increasing, because there is little offset in true goods and services. The debt portion needs more and more interest paid on it. They slower-growing countries get cut out of imports by the fact that their currency drops too much relative to the US$, making imported goods very expensive. (Think of Venezuela.)

            The governments of these countries are subject to collapse. Or if they are big countries, they may decide to fight a war, because the war gives an excuse to borrow more money, and use that debt to hire soldiers. With the added debt, and an excuse for employment, they may be able to gain access some cheap resources. With the cheap resources, they may be able to truly make goods and services that can be sold in the world marketplace.

            • John Doyle says:

              That’s all fine Gail. But the money still gets created as I describe. Central bankers all know it as they have all said so. The main thing I am pointing out is that Taxes do not fund a sovereign government. Not 1 cent.

            • Taxes determine who has the ability to spend. Taxes take spending power away from those paying the taxes. Somehow, they help shape how the stock of goods and services gets divided up.

              Countries that try to go the all debt/money creation route end up in Venezuela’s condition.

            • Fast Eddy says:

              John…. you are Lost in Space….

              Everyone wants free money – I do get it…. we all get it….. it’s like being a dog — you do no work — you lay around most of the day —- you hunt and kill nothing ….

              Yet you get fed and a pat on the head.

              It has a certain appeal

            • Fast Eddy says:

              John reminds me of Steve at SRSrocco Report…. Steve believes gold and silver will save those who own them — and there is no convincing him otherwise… because he is a RE Tard.

          • Lots more placeholders for goods and services. Whether we use the term “borrow” is irrelevant.

          • Fast Eddy says:

            Who needs oil when we can just print more money and give it to everyone …. and we can all Live Large!

            Gimme gimme gimme!!!

        • Greg Machala says:

          I agree with the domino theory. If you consider that most of what keeps us alive is artificially produced; there isn’t much to fall back on.

            • Let’s cross our fingers that nothing too bad happens this time. There is definitely a probability greater than 0 of a major problem. It becomes virtually impossible to overcome this issue.

            • Fast Eddy says:

              It would be interesting to sit back and watch a spent fuel pond burn out of control….

              That would wake up the Re TARDS who think 4000 of them burning sky high…. would not be an extinction event.

            • Interesting, this could be nice “collapse sequence” milestone or threshold from zoomed out macro view. However, all preponderance of evidence is still there that should the need arise, the US should be capable of launching ad hoc rescue operation if needed be..

              For example, swarms of Chinooks (or similar) can easily transport there make shift pilots structure risen above water featuring emergency turbine generators powered on natgas etc..

              So, such large scale operation is not necessary at the moment, or the gov decay – insanity – indifference threshold has been reached already (unlikely).

    • The situation at hand is so complex that any advice – strategy can apply only locally-regionally and for limited time. As discussed on the previous page, we don’t even know how much further could be the infrastructure hollowed without braking an artery (or as body eaten from within), the situation would likely vary profoundly per Swiss vs US vs China vs SouthAfrica-Rhodesia/Zimbabwe, as each example is on very different legacy infrastructure upkeep schedule.. some of these countries decaying hard for ~20-40yrs already, obviously inside the still favorable overall global stagnation – slow growth environment. And even beyond that, should undergo serious stage of collapse, yes some of them would be likely subject to specific sequencing of global JITs disorder, providing relative breathing space for another time delay..

      We can’t even be certain what the next economic cycle downturn brings about, mild or severe recession, stagflation, hyperinflation, monetary reset, or just another managed bouncy plateau (paperable over with few dozen$ trillions) till some physically limiting energy threshold finally strikes. Most likely occurring in oil and natgas, many predict around ~2025-35. Or is the techno-utopian cavalry going to arrive in the last minute (at least somewhere) kicking the can again..

      Sorry, I’ve been lurking into the resource limit/overshoot doom scene for almost two decades (and there are obviously twice or thrice more senior veterans to myself out there), so honestly looking around the real or pretended resiliency of the system, incl. boldness of TPTB (and stupidity of masses) to propose, implement, and absorb completely hairbrain bailout and prop up schemes on every level again and again has been just astounding. The taxation concept at this point has been openly debunked as not the primary vehicle of the economy, it’s just guiding score card at best, and usually abused hard by major global “gravity vortex” players in the continuum game, and those are chiefly of the financial, military or industrial output pedigree..

      There must be limit to all of it, .. , but not necessarily at the next turn.

    • Putting the panels on the grid is a bad idea. If you want a panel or two of your own, put in storage, fine, just don’t expect too much of it. It won’t keep the economy going. It won’t seep roads paved, or the electric system operating. It might recharge your toothbrush or your cell phone or your computer, as long as they are still operating. But it won’t operate mines to produce more batteries and ship them to you. And it won’t produce more of these devices.

  35. Fast Eddy says:

    Rejoice… rejoice…. the electricity has come back on …..

    At some point…it won’t….


    Give thanks and prayers… to The Lump of Coal.

    • Fast Eddy says:

      What shall I do first…. hmmmm….

      A glass of iced water…..

      And then….

      Fire up the coffee machine and a double espresso!!!

      Ah…. BAU…. my eternal mistress…..

  36. SEETO, Wayne (WG) says:

    What happens if/when nuclear fusion finally becomes a viable energy source? The fuel source is virtually unlimited. If energy no longer becomes the limiting factor, what resource becomes the limiting factor to growth/GDP? Why isn’t every available resource on earth allocated to making nuclear fusion work? Surely the return on investment is astronomical and would be the most rational allocation of all available resources in an energy constrained global economy?

    Gail Tverberg posted: “I will be giving a presentation to a group of casualty actuaries on September 17 called “The World’s Fragile Economic Condition.” I plan to write up the presentation in two posts, one covering the first three of the six sections of the presentation, and t”

    • We need more than electricity; we need it now.

    • DJ says:

      Lie Big’s law of minimum.

      • Kowalainen says:

        Well, not quite. With enough energy at hand, electrical energy specific, synthetic petroleum products, and others, can be manufactured.

        The problem is that fusion power always is 20 years away. It is like the leftists image of utopia. There is always a new obstacle to overcome on the road to hell paved with good intentions.

    • Fast Eddy says:

      Wayne … el Re Tardo….

    • Country Joe says:

      All the energy we have now is fusion energy. Sunshine is the only income we’ve got. Fossil fuels are fusion energy stored thru photosynthesis. Hydro power is from
      water that is carried up and dropped in the mountains by fusion powered weather systems. Wind power is air that moves from heating by Sunshine. Life on Earth is fusion powered chemical reaction. We are one with the Sun.
      Earth ran on current solar income for billions of years until the last couple of hundred years when we’ve had this blip of stored solar from millions of years of photosynthesis.
      That blip will be over soon and Earth will go back to living on current solar income.
      This debt stuff is some fantasy of the white shirt and tie crowd. Income is what we exist on. How ever much income we have is how much life we have. We’ve got a wonderful fusion generator sitting safely out there about 93 million miles away. Reliable, with no NIMBY problems. This FF energy blip has got the humanoid mass all out of proportion but I think that is soon to be corrected. Probably rodents have a chance.

      • You are right. At some point, it does look like the earth gets back to its solar income. And, it does look like the human share of the total has to drop a whole lot.

        • Kowalainen says:

          Yep, and as the earth spins around the sun for eons ahead, the process likely starts anew, with a slightly different mammal at the helm of petroleum production.

          Hold no hope because the eternal recurrence is a real thing once you see past the smoke and mirrors of Einsteinian “Big Bang” dogma wrapped in the jargon of science.

          Only enlightenment of mankind is our only salvation shutting down the process once and for all.

          • Actually, humans seem to differ from other animals through their controlled use of fire. This allows them to cook some of their food. With cooking, nutrients are more available. Less energy needs to go into building a large jaw, teeth, and gut. Instead, it can go into making a bigger, better functioning brain. We have now evolved to needing at least some cooked food. Also, fire is a great tool for driving animals out from where they are hiding, making it easier to catch them. It also keeps humans warm in cold climates.

            Another mammal is not going to take over, without having some special energy source that sets them apart from other animals.

            • Kowalainen says:

              It is exactly what i meant.

              If the conditions on earth a few billions of years into future resemble what we have today, most likely a mammal will develop, similar to humans, and will again strike fossil fuels.

              Or it could evolve into a completely different scenario with more preferable conditions that require even larger brains for survival.

              Perhaps mankind arrived a bit too early in earths ever cooling climate through the eons.

    • doomphd says:


      a business plan has been submitted for $500M proof-of-concepts and demonstration power plant.

  37. Davidin100millionbilliontrillionzillionyears says:

    thanks for the new article about energy…

    I just want to point out something about the Outline:

    other than 1. Introduction and 6. Conclusions:

    3 of the other 4 sections are about energy…



    because energy is primary…

    energy precedes money and debt and finance…

    energy is the foundation…

    it is a crumbling surplus of net energy that will bring down the house…

    • theblondbeast says:

      Yes. The debt angle is a game played against savers. It is about who gets to consume now…and who won’t be able to later…because we are running out.

      But I think production can still increase – with enough printed money! But the concept of savings must go.

  38. Fast Eddy says:

    Thanks for the new article

  39. says:

    Thank you for this Gail.

    Fortunately there are no limits to growth…

    • Davidin100millionbilliontrillionzillionyears says:

      wow, I love that sarc!

      oh, wait, are you serious?

      • says:

        In a way I am also serious – please see the link for details.

      • theblondbeast says:

        It’s a metaphor. He speaks of internal and spiritual growth, also of cycles. Keeping in mind that “growth” is a relative terms given entropy – it only refers to part of a system – I suppose this is legitimate. But the author is not using the word growth the way we are using growth.

    • Fast Eddy says:

      The only thing that there is no limit to …. is your STU-PIDITY.

      F789 off.

      This is your one and final warning ….

    • I looked through your post. You repeat what a lot of major organizations would like us to believe is possible. I don’t think that it really is.

      If we look back historically, energy consumption per capita has never really turned negative, except for very brief periods, right around major depressions or collapses.

      There is also no evidence that the world can have any reasonable success in getting the birth rate down materially, even with education programs for women. There was a recent article in the Economist claiming that in India, more education for women tended to have precisely the opposite effect–they were likely to stay at home and have more children.

      It takes energy for jobs for women, and for birth control for women. If people are to live in cities, it takes energy. Maintaining streets takes energy (and not just electricity, either.)

      We are in some sense becoming poorer and poorer, but the cost of developing needed energy resources keeps rising. This is what makes it increasingly difficult to keep the economy together. It self-organizes in a strange way that leads to bank failures, if there is not sufficient energy growth.

      • says:

        Thank you for your reply Gail,

        In my article I am in agreement with most of your comment – if you have a look at the section: ‘The Material Growth Trap’.

        “…energy consumption per capita has never really turned negative,”
        – agreed. I didn’t claim it ever has, but it will eventually when we run out of resources. There are however many indigenous peoples who maintain the same level of energy use, so on a community level there are – and have always been – small groups of people whose energy use did not increase much over time.

        “There is also no evidence that the world can have any reasonable success in getting the birth rate down”
        – agreed, that is what I alluded to.

        “If people are to live in cities, it takes energy. Maintaining streets takes energy (and not just electricity, either.) ”
        – agreed, I mentioned that too: that more urbanization means more modernization, industrialization and consumerism – and all of this means more energy use.

        Fully in agreement with your last paragraph.

        The title of my article refers to a different kind of growth: Internal Human Growth, i.e. non-material, intrinsic personal growth / personal development.

        Are you sure you read through my article carefully?

        • I think where we differ is on the existence of many indigenous people, who will continue as they have lived before.

          I think that the number who can continue as they live today is vanishingly small. Most hunter-gatherers today wear today’s clothing, bought from stores. Increasingly, families live in houses, and send their children to school, like everyone else. They use tools that they have been given, rather than made by themselves from wood or stone. The skills they learned as hunter-gatherers are being lost.

          I would agree that the families who truly live as hunter-gatherers will probably be able to continue as in the past, provided that some of the spill-over effect from the collapsing world economy doesn’t get to them. Examples might include pollution of various types, including mercury and lead. It could also include spreading disease problems and nuclear spent fuel pond problems.

          I don’t think that these few survivors would have the different kind of growth you are talking about. After all, they are just living as they did in the past.

          I can’t imagine how the rest of us would be able to change enough to be self-supporting on the world’s ever less accessible resources.

          I think where we differ is in our understanding of the necessary networks needed for any type of a sustainable lifestyle. At any given point in time, every economy, of every type, is made possible by a network of supporting businesses, laws, skills, and traditions that make a given way of life possible. We don’t really have a way to go backward, because we cannot recreate the networks that appeared previously. For example, if today’s medicine doesn’t work, we can’t go back to what was done 50 years ago, or 100 years ago, or 500 years ago. Likewise for the transportation of goods, and for the heating of homes. Even if we could put together stage coaches for long distance transport of people and mail, we would need to have all the “changes of horses” available at the appropriate places, for example.

          Once what we have is gone, it seems likely to me that the vast majority of us won’t be alive. We cannot adapt quickly enough. Talking about “Internal Human Growth, i.e. non-material, intrinsic personal growth / personal development” seems sort of beside the point.

          • says:

            I think we are not so far in disagreement as it may appear. I’m in general agreement with everything you say, but I think we often make the mistake of viewing everything from a First World perspective. I’m presently based in South America. There are many levels of development between 1st and 3rd world between the countries here and even within the same countries,, for example in Peru and Equador. While Argentina and Chile are more advance and Bolivia and Paraguay are underdeveloped. Nevertheless all these countries rely on fossil fuel and economic growth.

            That said, there are strong community networks and structures still in place in many of these places, to the extent that having to rely on each other more and having to return to some or other form of subsistence living wouldn’t be entirely foreign, or impossible, should energy become really scarce and economies stagnate / fail – after the initial turmoil things should settle.

            Whereas in 1st World developed nations people may have a much harder time in adjusting due to their much higher expectations, lack of reference points for a more traditional life and due to severed connections with the land as well as a sever lack of community spirit. The biggest challenge of all would be: being ‘happy’ with less, or rather, being content with less.

            Talking about “Internal Human Growth, i.e. non-material, intrinsic personal growth / personal development” (etc) aims at preparing people internally for external future events – and to help them also see the positive side(s). In other words – it could help us to view our probable future more pragmatically.

            Civilizations rise and fall – they all have a timeline. It could be useful to take a big picture view of all of this – and although it may not be for everyone, considering the metaphysical energy shifts involved could provide an alternative perspective and help with internal acceptance and understanding:

            • One of the things that tends to fall is central governments. Financial systems go with central governments, so they fall as well. So, we can have the kind of development that is possible without much in the way of government. It seems like this won’t be a whole lot.

          • says:

            PS: I have no doubt that there will be a great ‘reset’ and that a lot of people won’t make it… – I have no illusions about that, (although I prefer not to state it so explicitly) but I think people in some regions will cope better than people in other regions – except if climate change gets all of us first.

            • Fast Eddy says:

              I will assume you are unaware that there are 4000 spent fuel ponds…. that will burn out of control when the electricity goes off…

              Japan’s chief cabinet secretary called it “the devil’s scenario.” Two weeks after the 11 March 2011 earthquake and tsunami devastated the Fukushima Daiichi Nuclear Power Plant, causing three nuclear reactors to melt down and release radioactive plumes, officials were bracing for even worse. They feared that spent fuel stored in the reactor halls would catch fire and send radioactive smoke across a much wider swath of eastern Japan, including Tokyo.


              Containing radiation equivalent to 14,000 times the amount released in the atomic bomb attack on Hiroshima 68 years ago, more than 1,300 used fuel rod assemblies packed tightly together need to be removed from a building that is vulnerable to collapse, should another large earthquake hit the area.


        • Fast Eddy says:

          So you mean like Koombaya growth …. where we all throw off the material trappings of BAU (or are forced to) …. dress in loose fitting organic linen outfits….. hold hands…. and dance around the fire singing Imagine and We are the World…. congratulating each other on ‘personal development’

          And then the bad guys roll in with AK 47s’ blazing away…. chop up the men and old worn out women … and roast them on the fire…. and gnaw them to the bone…. then have their way with the younger gals…. (aka them brutally).

          Get the ear plugs ready…. because it’s time again for….. Joan!!!

          • Fast Eddy says:

            Let’s not forget the flowers…. Joan can always use them for a peace offering …. to the bad guys…


            Good thing for Joan is she is all bone and gristle now…. they may not even bother to roast her


          • I like Kumbaya, the song.

          • says:

            And then the bad guys roll in…

            Yeah, I’ve seen that movie too (The Road…). Learning to sing Kumbaya together around the campfire in advance for security and safety i.m.o beats not being able to function in a community environment when the time comes and you need to.

            • says:

              “So, we can have the kind of development that is possible without much in the way of government. It seems like this won’t be a whole lot.”

              Probably not, Gail – but local governments will probably form, I’m not sure that’s necessarily a bad thing. It’s impossible to know how it will all work out, but when the chips are down people do tend to self-organize. Most probably a lot of grass-roots movements that are already operating, but currently invisible will ‘spring up’ (although they are already quietly going about their business’).

            • Fast Eddy says:

              It will be … like magic!

              On a scale of 1-10 in terms of understanding what we are facing …. with 10 being enlightened…

              You are currently at -3.7

              My recommendation: you read all the archived articles and browse the comments…. before you post anything more of this utter nonsense….

              If after you do the above — you do not immediately hang your head in shame having realized the inanity of your posts — and adopt a new and improved username…..

              Then I suggest you visit the Peak Prosperity site and post this rubbish there…. they will welcome you …

              If you remain here…. well….


            • says:

              What we facing is human species-cide. Have you stopped driving your car/s yet? Are you part of any solutions or the problem? Why are you clogging all the threads – with DOOOOOOOOOOOOOOOOMMM???

            • Fast Eddy says:

              Solution? What’s that?

              I am driving my cars and trucks and flying on airplanes and throwing more coal in the Rayburn.

              It’s not a solution — but every bit helps

            • says:

              Yes, of course, no surprises there.

            • We need more demand. Fast Eddy is part of the solution.

            • says:

              What kind of demand Gail?

            • Demand comes from people who can afford to buy goods and services. The purchase of these goods and services (cars, homes, vacation travel, clothing, restaurant meals, college education, and everything else) require energy products in order to produce the goods and services. Thus, more demand, is what keeps the economy operating, by keeping the prices of commodities high enough so that extraction can take place. Our problem right now is that prices are not high enough for producers. Oil exporters will collapse from lack of tax revenue (high prices are needed to have high tax revenue). US oil producers will not be able to repay their debt debt with interest. Coal and natural gas prices also tend to be low, relative to what producers need.

              If everyone quits their jobs, and says, “The government will take care of me,” and because of this has very much less spending power, the whole system will collapse from low prices. For one thing, the government will not really collect the tax revenue to fund the system.

            • Fast Eddy says:

              You can also try whistling …. it will keep you safe…. these types will not see or hear you…. in fact it will make you invisible….



    • Kowalainen says:

      Yeah, no problemos adding more zeros behind the ones.

      Well, it certainly consumes some more memory in the computers systems that run the financial systems of this joint, but that hardly seem like a limiting factor with the current state of affairs with state of the art semiconductor manufacturing technologies.

  40. Patrick says:

    Thank you for your work on this. Very nice presentation.
    I would prefer not to use the statement “The miracles that added debt can produce”.
    It could lead to people believing that adding more debt is a good idea.
    The debt growing debt bubble is the underlying cause.
    While debt has some benefits, the massive global governmental debt is the tragedy that will eventually have tragic impacts on us all.
    Thanks again.

    • Davidin100millionbilliontrillionzillionyears says:

      but adding more debt is a good idea…

      and the real “underlying cause” is the declining surplus energy contained in the resource extraction throughout the world…

      debt is easier to see and quantify…

      but it’s not the tragedy…

      though it might appear to be, if and when The Collapse arrives…

      • Fast Eddy says:

        ++++++++++++ Suh… can we have some more debt please!!!

        Oh btw – major snow storm here in Otago — and it’s just about spring…. WTF is going on? (where is that gggeeeebeee weeeebeee when you neeed it?)

        My power has been out all morning…. a small taste of the end of BAU…

        • Dan says:

          FE I thought you got a stove that burns coal day and night before winter.

          You should take a loan and get a propane generator as well.

          • Fast Eddy says:

            The coal powered machine does not make electricity sadly … otherwise I would invite Tesla to put a charging machine in my garage….

            Can’t be bothered with a generator…

  41. It is not that fragile.

    The fragile ones are the weaker countries, resource-based economies and others with no connection to today’s high technology.

    USA is doing great because of its high-tech industries, although it won’t benefit most people there.

    It is like the world’s economic gains are going to be monopolized by the top 0.5% – 1%, so they will do much better, although it won’t be consolation for those who will have shit life.

    The overfinancialization of everything will be able to kill any kind of financial crisis, and we can bail out the big ones, even Tesla, over and over again. The bigger is better, and they will buy out all the competition with borrowed money, almost zero interest, and leave nothing for everyone else but the overall economy will grow.

    • Davidin100millionbilliontrillionzillionyears says:

      “USA is doing great because of its high-tech industries…”

      to be clear, it’s because it has the energy resources to run their high-tech…

      “… but the overall economy will grow.”

      only IF the surplus energy grows…

      • Garth says:

        “USA is doing great because of its high-tech industries”

        It is also a fact that the USA gains from being the major world currency – this because commodities, and especially oil, have to be priced in USD. Look what happened when Saddam Hussein threatened to sell its oil in euros. It wasn’t long before George W Bush accused him of having WMD, and this not too long after Nine Eleven, and then his country was invaded. And oh dear – they found that he didn’t have WMD after all, even though Britain and Tony Blair had joined in the war against Iraq.

        I wonder how much the benefit of being the reserve currency gains the USA, I’m sure they otherwise wouldn’t really be quite so rich. As Dick Cheney used to say, deficits don’t matter, so he was able to spend spend spend on the military and his oil wars.

        • You have to also refocus on the core question, why the status of the reserve currency still shines over the world, and it’s not only TPTB’s machinations to blame. What is also essential is the global ~25% upper caste directly or indirectly saving and allocating within the nexus of USD instruments.

          And they have not moved away, even though since at least Q2/2018 the msm openly starts to pre warn of the looming economic cycle turning point. Actually, people are massively reallocating towards USD when abandoning EMs..

          I’m afraid we are still missing some pieces in this grand puzzle, like when “4th turnings”, and larger political-social realignments start to speak loudly into the equation. Basically, we might get intermezzo period of attempted lefty authoritarian rule in several major economies..

          And that would again prop up the USD and the overall legacy global fin system.

          • Garth says:

            “lefty authoritarian rule in several major economies”

            Why lefty, I wonder? In Europe it seems to be going the other way. I expect that the wearing of funny foreign hats will be made illegal by 2025.

            • Well, if traditionalist countries/regions such as Bavaria now score almost 40% of aggregate vote for self destructive cults of SocialDemocrat+Greens, go figure.. The situation in UK(Scotland), Italy, Spain.. although shaped by a bit different actors and path dependencies is similar..

              Therefore money from each country’s upper caste(& MNCs) will continue to flow towards the US, unless something very important brakes for good, e.g. imagine China+RUS+JAP+(Gulfies) launching different settlement for energy trade.. Well, but that is not going to happen, unless apart from political circles their non state sector “feels good” about it as well, and that in itself won’t happen unless visible street level chaos engulfs the US and or her naval/air forces are shamed heavily by some lesser power first.

          • Kowalainen says:

            People will be increasingly shifted out of the workforce of the productive and nonproductive sectors.

            UBI, PlayStation, p orn and drugs for the lesser of the plebeians.

            Then enters the ever decreasing privileges, ultimately ending in a bowl of potato’s, rice and some joules to burn for warmth. Finally a deurbanization where the still capable will be handed a piece of worthless land to tend as the wealth disparity starts to resemble third world countries.

        • Fast Eddy says:

          The US is doing ‘great’ because the corporate tax rate was slashed by 15% …. and the country is running up massive deficits covered by issuing more debt and pumping in more cash …. to make up the difference….

          Essentially monetizing debt on an epic scale…..

          Enjoy it while it lasts

    • Rosey says:

      “The overfinancialization of everything will be able to kill any kind of financial crisis, and we can bail out the big ones, even Tesla, over and over again. The bigger is better, and they will buy out all the competition with borrowed money, almost zero interest, and leave nothing for everyone else but the overall economy will grow.”

      What will we bail them out with? False promises about future cheap energy that won’t be there anymore?

  42. Rodster says:

    Page 47 seems to show both the high and low prices of oil closing in on each other i.e. ‘meeting in the middle’ in the timeline. It would seem that at some point when the price can’t go up or down it’s essentially “Game Over”.

    • Bingo! It’s a “box canyon”.

      • Chrome Mags says:

        The consumer’s price ceiling meets the seller’s floor price, and you’d think it’s over after that but what happens is those not able to stay in the game fall out and those that can remain in the game keep on going. It’s just like musical chairs. The trouble is society and infrastructure as a whole degrades over time as more people are sidelined into poverty or massive debt, and governments fail to keep up infrastructure like they once did. It’s a “box canyon” a DLC refers, but the box will just get incrementally smaller, and much smaller via stair step economic dislocations. This next economic downturn should be a doozy because 10 years has passed since the last stair step decline, saved only by fancy financing based wholly on civilizations equity and faith in currency. But that strategy is largely played out now, so the next step down will be like when you’re just about to fall asleep and you step off a curb in a dream only to be jolted into full, riveting wakefulness. The new reality will be shockingly disturbing as many people off the treadmill in a state of economic calamity.

        • Rodster says:

          “but what happens is those not able to stay in the game fall out and those that can remain in the game keep on going. It’s just like musical chairs.”

          Then under that scenario, everything contracts and it all collapses because those who fall out far outnumber those who stay in the game. And those that fall out are the ones needed to push the economy forward i.e. “consumption”. So if consumption collapses so does everything else. But it could take some time (years/decades) for all of this too play out. The bottom line is the high and low price ceiling meeting in the middle equals big trouble because that represents energy consumption which drives the global economy.

          • Chrome Mags says:

            “Then under that scenario, everything contracts and it all collapses because those who fall out far outnumber those who stay in the game.”

            Fall out is a relative term though, which we saw after the stair step down in the aftermath of 08, as many younger people went back to live with their parents. Also, many people pooled their rent money to live in a house or apartment in groups. They also took much lower paying jobs, and in some cases many of those jobs were part time. Most people don’t just disappear, they have a will to survive no matter how reduced their standard of living becomes. So far we’ve had all sorts of suggestions of full on collapse, but what has actually occurred is a slow degradation.

            A made for TV all at once, over night type collapse would in many ways be merciful. But reality is such that the trillions in infrastructure will support many stair steps down like 08. Probably half a dozen. You’ll see, it will be cruel to those that don’t understand the underlying cause because they will fight it every step of the way.

            • Fast Eddy says:

              There is no global stair step down…. absolutely not.

              Just because in come countries conditions for many are getting worse….

              Is irrelevant

              Because in other countries – particularly China – conditions have improved dramatically for hundreds of millions… which is offsetting the lost growth in other countries.

              The global economy has been stepping …. but up… not down… since 2008.

              Get your facts straight

              And a hearty welcome to third world living for the losers in this game of musical chairs

        • I thought about putting in a musical chairs illustration, but I didn’t have “room”.

    • The price is causing pain for both buyer and sellers at this point, and has been since at least 2013. The middle price causes pain both ways–it is sort of splitting the pain difference. There is a time lag before the effects of too low prices for oil exporters cause their governments to collapse. In the meantime, the sellers take on more debt, or issue more shares of stock, while telling the story that “of course” prices will rise, because demand “always rises.”

  43. Tim says:

    Very interesting presentation. Thank you Gail.

  44. John Doyle says:

    Very interesting and perceptive, Gail
    However my position re the economy contrasts with yours. Because you’re still in thrall to the mainstream your position as to how economics/ financials will affect the future is not correct.
    Read my Independent Australia article here. Just remember my side MMT is all based on the law. not on supposition. It is law that a monetary sovereign government can issue its currency unrestricted [except by resources]. Tax has little to do with it. There is no law that says tax is revenue for an MS government now that money is Fiat. It’s just supposition.


    It is very important you “get” this.

    • Fast Eddy says:

      John… John …. John…. you sink deeper into the swamp of delusion….

      I am still waiting for the NZ Govt to announce that they are going to pay me not to work…. means tested of course… as in … I will be paid 90% of what I was already earning while working…. inflation adjusted…

      How wonderful to retire at 53! So much better to just receive the cheque in the post every month rather than have to scratch and claw for every dollar….

      I want me…. MM… A!!!

    • Davidin100millionbilliontrillionzillionyears says:

      John… John… John…

      there is no law that allows any country to “issue” its energy…

      energy is not “Fiat”…

      It is very important you “get” this.

    • Harry McGibbs says:

      A state’s money has value because it has credibility due to the economic output that underpins it. A state will find sufficient willing holders of its liabilities if they see value in sharing in that economic output. If it can’t then it will experience a currency crisis and painful inflation. It could go bankrupt and need bailing out. Printing money is not the secret to effortless wealth.

  45. Rodster says:

    Gail, here’s a real good article that ties in with this.

    “Why Growth Can’t Be Green, New data proves you can support capitalism or the environment—but it’s hard to do both.”

Comments are closed.