Why it (sort of) makes sense for the US to impose tariffs

Nearly everyone wonders, “Why is Donald Trump crazy enough to impose tariffs on imports from other countries? How could this possibly make sense?”

As long as the world economy is growing rapidly, it makes sense for countries to cooperate with each other. With the use of cooperation, scarce resources can become part of supply lines that allow the production of complex goods, such as computers, requiring materials from around the world. The downsides of cooperation include:

(a) The use of more oil to transport goods around the world;

(b) The more rapid exhaustion of resources of all kinds around the world; and

(c) Growing wage disparity as workers from high-wage countries compete more directly with workers from low-wages countries.

These issues can be tolerated as long as the world economy is growing fast enough. As the saying goes, “A rising tide lifts all boats.”

In this post, I will explain what is going wrong and how Donald Trump’s actions fit in with the situation we are facing. Strangely enough, there is a physics aspect to what is happening, even though it is likely that Donald Trump and the voters who elected him would probably not recognize this. In fact, the world economy seems to be on the cusp of a shrinking-back event, with or without the tariffs. Adding tariffs is an indirect way of allowing the US to obtain a better position in the new, shrunken economy, if this is really possible.

The upcoming shrinking-back event is the result of too little energy consumption in relation to total world population. Most researchers have completely missed the possibility that energy limits could manifest themselves as excessive wage disparity. In fact, they have tended to assume that energy limits would manifest themselves as high energy prices, especially for oil.

The world’s networked economy doesn’t work in the simple way that most researchers have assumed. Too much wage disparity tends to lead to low energy prices, rather than high, because of increasing affordability issues. The result is energy prices that are too low for producers, rather than too high for consumers. Producers (such as OPEC nations) willingly cut back on production in an attempt to get prices back up. The resulting shortage can be expected to more closely resemble financial collapse than high prices and a need for rationing. Trump’s tariffs may provide the US a better position, if the world economy should partially collapse.

Let me try to explain some pieces of this story.

1. Energy is needed to power the world economy. This fact has been missed by politicians and most economists. 

Economist Steven Keen recently developed a graphical explanation of the role energy plays in the world economy. In his graphic, he shows that workers need food (an energy product) just as machines need some sort of energy product to operate. In Steve Keen’s words, “Labor without energy is a corpse: capital without energy is a sculpture.”

Figure 1. Graphic by Steven Keen, depicting the role of energy in the economy. Energy in the form of food is necessary for human labor, just as energy (in one of its many forms) is needed for physical transformations that make the activities underlying GDP possible. These physical transformations necessarily lead to both the desired products and multiple types of waste.

In fact, there is a physics reason why energy consumption is needed in the economy. Energy “dissipation” is needed for the physical actions underlying GDP. For example, transportation requires a physical movement of people or objects. This can only happen with the use of energy. Even the use of heat or of electricity requires energy dissipation.

2. China’s huge growth in energy consumption since it joined the World Trade Organization (WTO) in December 2001 is truly amazing. It has changed the world order in a few years.

China’s energy consumption ramped up very quickly after joining the WTO in late 2001. At the same time, the energy consumption of the US and the EU stagnated, as manufacturing moved to China and other Emerging Markets.

Figure 2. Energy Consumption for the United States, China, and European Union, based on data from BP’s 2018 Statistical Review of World Energy.

As the shift in energy consumption occurred, jobs shifted elsewhere. Also, the competition with China and other low-wage countries tended to hold down wages of workers whose jobs could be shifted overseas. When we look at labor force participation rates for the US, we see that these seem to have turned down about the same time that China joined the WTO. This suggests that workers started leaving the workforce about the time competition with China ramped up.

Figure 3. US Labor Force Participation Rate, in chart prepared by the Federal Reserve of St. Louis.

3. China is now facing a problem with Peak Coal. Its level of coal production is barely sustainable because of depletion and low coal prices. 

Figure 4. China energy production by fuel, based on BP Statistical Review of World Energy 2018 data. “Other Ren” means Other Renewables. This includes wind, solar and other renewables, such as wood burned for fuel.

If China is to manufacture goods and services for the world economy as well as its own people, it needs a growing supply of cheap-to-produce energy. China’s largest source of energy is coal. China’s coal production hit a peak in 2013 and has been on a bumpy plateau, or falling, since. The problem has been a combination of (a) a higher cost of coal production, because existing mines are depleting, combined with (b) coal prices that do not rise high enough to make production from these mines profitable.

Of course, if coal prices were to rise higher, China would have a different, but equally serious problem: The cost of finished goods created for the world marketplace would be quite a bit higher, making it difficult to export them profitably. If customers’ wages rose at the same time coal prices rose, there would be no problem. The problem could be described in some sense as growing mining inefficiency because of coal depletion. Unfortunately, the world economy does not reward a shift toward inefficiency.

4. With Peak Coal occurring in China, it makes little sense for the United States, the European Union and others to depend as heavily on China as in the past.

The economy of every country today is built on debt. If the world economy is growing, this debt pile can rise higher and higher. If interest rates can be brought ever lower, this also helps the pile of debt rise higher and higher.

China’s economy also uses increasing debt to sustain its economic growth. If the economy of China should slow down or start shrinking because of energy limits, debt defaults could start overwhelming the system. Uprisings from laid-off workers might become difficult to quell. The situation could easily spiral out of control.

Economies around the world depend on China for many manufactured goods. In fact, for many minerals, China’s usage amounts to over half of the world’s consumption. This arrangement doesn’t really make sense because (a) China cannot really be depended on for the long term because of coal depletion, (b) jobs that pay well in Advanced Economies are being lost to China and other Emerging Markets, and (c) the level of concentration of manufacturing in China puts the world system at risk if China has any kind of adverse shift in its economy.

5. The whole idea of buying fuels from other countries only works as long as there is enough to go around. 

Many people are of the opinion that if there is not enough fuel of a particular kind, fuel prices will rise, and the market will continue to operate normally. There are at least two reasons why this doesn’t make sense:

Reason #1. The issue underlying rising costs of fossil fuels is nearly always depletion. For example, with coal mines, the coal closest to the surface in the thickest seams is extracted first. As this is depleted, deeper coal in thinner seams can also be extracted, but the cost tends to be higher. When depletion takes place, it is nearly always possible to extract more of the given fuel if some combination of more human labor and more technology (powered by energy) is used. Of course, adding labor and/or technology leads to a higher cost of production. 

But the prices of commodities are not determined based on the cost of production; prices are determined in the marketplace. They reflect the quantity of finished goods and services made with these commodities, that consumers (in the aggregate) can afford. Extracting coal or another fuel in what is essentially a less efficient manner doesn’t add to what consumers can afford. The combination of flat prices and higher costs leads to unprofitable producers–precisely China’s problem. Producers tend to cut back on production.

We can see that higher energy prices don’t lead to higher wages by looking at what happened when oil prices rose a few years ago in the US. We see that higher oil prices led to lower average wages because of recession.

Figure 5. Average wages in 2017$ compared to Brent oil price, also in 2017$. Oil prices in 2017 dollars are from BP Statistical Review of World Energy 2018. Average wages are total wages based on BEA data adjusted by the GDP price deflator, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Reason #2. If we look back at the timing of Peak Coal in the UK and in Germany, it looks very much as if depleting coal supply was one of the causes of both World War I and World War II. Governments know that energy supplies are required to operate their economies. If they cannot get enough energy products internally or through trade, they will fight other countries for access to supplies.

Figure 6. Image by author.

Economists, sitting in their ivory towers, have not stopped to think through the obvious. Their standard supply and demand curve does not work for energy because an adequate supply of cheap energy is needed for both the demand for goods and services (coming from wages workers earn) and the supply of goods and services. Once affordability becomes a problem, because too many people have low wages, the prices of fuels stop rising. It is the fact that prices don’t rise high enough that causes the “peaking” of oil, natural gas, and coal production. Extraction stops, even though there seem to be plenty of resources still available with current technology.

6. A major energy issue today is the fact that China and India have run through their own energy supplies and now need to import energy from outside their countries to supplement domestic supplies.

As shown in Figure 4 (above), China’s coal production stopped rising in 2013, keeping the total amount of energy it produces close to flat. To compensate for this shortfall, China has started to import oil, coal and natural gas. The difference between the thick black line and the top of the “stack” of types of energy produced in China (in Figure 7 below) represents the quantity of fuel that it has needed to import. Clearly, this quantity has been increasing.

Figure 7. China energy production by fuel plus its total energy consumption, based on BP 2018 Statistical Review of World Energy data.

India’s coal supply is not yet decreasing, but it is running into a similar problem. It needs to import more and more energy products from abroad, as its energy consumption (thick black line) rises above its energy production “stack.”

Figure 8. India’s total energy consumption compared to its energy production by type, based on BP 2018 Statistical Review of World Energy. “Other Ren” includes wind, solar, and other commercially traded renewable types of renewable energy, such as geothermal.

7. Worldwide, there is a growing need for imported fuels of many kinds.

Figure 9 shows the imports needed for five major areas of the world. In this analysis, the European Union is treated as a single unit. Thus, in this analysis, the imports it receives are only those from outside the European Union, taken as a whole.

Figure 9. Required energy imports for five major areas of the world, based on the difference of energy consumption and energy production shown in BP’s 2018 Statistical Review of World Energy.

We can see from Figure 9 that the European Union and Japan have been major importers of fuels for a very long time. India and China have only in recent years become energy importers. At the same time, the US is becoming more and more energy sufficient with its own fuel production.

Figure 10 shows the ratio of imported energy to total energy consumption for these five areas.

Figure 10. Percentage of energy imported in 2017 in Japan, India, the EU, China, and the US. Imports calculated as the difference between Total Energy Consumption and Total Energy Production based on data from BP 2018 Statistical Review of World Energy. The European Union is treated as a single unit. Thus, energy imports are those from outside the EU.

The US is clearly in a better position than other countries/groups shown, with a smaller share of energy imported in Figure 10 and a declining trend in imported energy in Figure 9. Japan, the EU and India are all subject to substantial risk if available imports should fall.

8. The ramp up of “clean energy” to date has proven to be a major disappointment. The quantities added are far below what the IEA believes is needed.

Partial confirmation of this statement can be seen by observing the tiny orange “Other Ren” bands on Figures 4, 7, and 8 for China and India, which include wind, solar, and other non-hydroelectric renewables. China is the largest user of wind and solar in the world, yet its use of these devices provides only a tiny portion of its total energy consumption.

We have known since the 1950s that fossil fuel supply would eventually become a problem. Academics, with their focus on making models, have been able to come up with hypotheses regarding what might act as substitutes. But these models tend to miss a lot of things, including the following:

  • Adverse events, such as Fukushima for nuclear.
  • The need for electricity storage and extra long distance transmission lines, as wind and solar usage are ramped up. The cost-benefit analysis is much less favorable with these added.
  • Issues that affect only some installations, such as workarounds to keep long-distance transmission lines from starting fires in dry areas, or the high cost of underground transmission lines.
  • The best sites are taken early.

It is not until the actual experience arrives that we see how these substitutes are working in practice. If we think back, the nuclear promise of producing electricity that was hoped to be “too cheap to meter” hasn’t really panned out. In fact, many Advanced Economies are cutting back on their use of nuclear.

With respect to “renewables,” (including hydroelectric, wind, solar, and others) the amount of new generation added each year seems to have hit a plateau. It may be that the additional need for storage and transmission lines are already slowing the growth of renewables.

Figure 11. IEA Renewable Net Capacity Additions as of May 2019. Source: Chart from India Times.

The IEA has started pointing out that far more energy investment is needed if sustainable development goals are to be met–about 300 GW per year, instead of the current 177 per year in additions, on average, between 2018 and 2030.

9. Donald Trump and his advisors have sensed that the current economic system is not working because of too much wage disparity. If the economic system is destined to break in one way or another, Trump can influence which way the break will occur by the imposition of tariffs.

Trump and his advisors no doubt recognize the importance of a cheap, available energy supply. They also realize that energy is an important enough factor of production to fight over. Furthermore, many past wars have been resource wars. Tariffs are, in some sense, a step toward a resource war.

One of the immediate problems at hand is too much wage disparity. Strange as it may seem, excessive wage disparity can be a sign of inadequate energy supply because in a networked economy, high prices of commodities and low wages of workers are almost “mirror images” of each other. High commodity prices tend to cut off consumption of commodities (such as oil or coal) by prices of finished goods that are too high for consumers.

Excessive wage disparity works in reverse: It sends prices of commodities (such as coal and oil) too low, cutting off production because prices fall too low for producers of these commodities. Production falls because producers cannot make a profit. When wage disparity is very high, a large share of workers have very low wages, leaving them unable to purchase more than a small amount of high-priced goods (such as cars and homes) made with commodities. It is this low “demand” that holds down commodity prices.

Figure 10 shows that wide income disparities were issues both at the time of the Great Depression and in recent years. Commodity prices have been relatively low each of these times. The problems didn’t look like shortages; they looked like gluts because of issues related to lack of affordability.

Figure 12. U. S. Income Shares of Top 1% and Top 0.1%, Wikipedia exhibit by Piketty and Saez.

The US has raised tariffs in the past. One time was immediately before the US Civil War. Tariffs were again raised in 1922 and 1930, when wage disparities were at a high level.

Unfortunately, there is a significant chance that major parts of the world economy will start collapsing, with or without Trump’s tariffs and the trade war, because energy supplies worldwide are not growing sufficiently. In fact, some of these energy supplies are purposely being removed by producers, such as Saudi Arabia, because prices are too low.

By putting tariffs on some goods, Trump is providing a substitute for the missing high oil prices needed to slow the growth of globalization, if the issue of ever-increasing wage disparity is to be solved. The tariffs tend to raise the value of the US dollar relative to other currencies, making the cost of commodities (including fossil fuels) cheaper for US consumers than for other consumers around the world. The tariffs tend to encourage new investment in US production of many types, at the same time that they make investment in other countries, such as China, less appealing.

All of these changes indirectly give the US an advantage if there should be a partial collapse of the world economy. With the benefit of the tariffs, perhaps the partial collapse would leave some combination of countries, including the US and Canada, mostly unaffected. There might be other groups remaining as well. Weak economies, such as Venezuela, Cuba, and Haiti, would likely be pushed aside. Even Europe and Japan would likely have major problems.

Conclusion

Most observers have missed the point that excessive wage and wealth disparity can be a sign of serious energy problems, just as high prices can be a sign of short supply. They have also missed the point that coal supply is very important, just as oil supply is very important.

In the real world, when there is not enough to go around, wars are a definite possibility. A trade war is a somewhat reduced version of a war. Trump and his advisors, whether or not they understand the real situation, seem to be trying to guide the US to as good an outcome as possible, in the current situation of excessive wage disparity.

The underlying issue is likely the Limits to Growth problem modeled in the 1972 book, The Limits to Growth, by Donella Meadows, et al.

Figure 13. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil,” with dotted line added corresponding to where I see the world economy to be in 2019.

As resources become depleted, it becomes increasingly difficult to maintain economic growth. Industrial output per capita (for example, the number of new cars or number of smartphones per 1000 people) starts falling. The 1972 computer simulations did not consider wages or prices, only physical quantities of various items.

Now, as we can see how the limits are playing out in the real world, it appears that the most prominent manifestation of the world’s low resource problem is excessive wage disparity–an issue most people have never considered as being related to shortages of resource supplies. Few people have stopped to think that goods made with energy products are equally unaffordable whether the problem is prices being too high, or wages of most people being too low.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,341 Responses to Why it (sort of) makes sense for the US to impose tariffs

  1. John Doyle says:

    this unholy muddle over energy misinformation is partly cleared up by Gail, which is good. Here in Australia we [apparently] are supposed to have the cheapest natural gas supplies but the total[?] production is being exported and somehow we now pay a high price for our domestic consumption [4x the price in the USA]. I don’t know whether it is political incompetence or wilful dealing that is behind this discrepancy. Any thoughts?

    • This is completely normal in today’s world though..
      For example, large part of Europe is subsidizing German intermittent ‘renewables’ through elevated domestic energy pricing (curiously as exporters with industries already paid for), prices which are set by mandarins on trading parlors and more likely in the backstage in the Brussels nexus, global bankers – CBs, not mentioning domestic oligarchs having hand in the pot as well and so on.

      Not meant this to be disrespectful but your Australian case simply shows similar signs of yet another example of forced vassalage imposed by guys just playing in the bigger league of their own.

    • The gas that is currently being extracted is high-cost-to-extract gas. Shipping it as LNG adds further to the high costs. If cheap-to-extract gas had been available, Australia would have extracted it.

      US gets natural gas two ways:
      (1) As a (mostly unwanted) byproduct of oil production.
      (2) By drilling for natural gas, specifically.

      The only way the United States gets by with the current low prices is through the low prices through the unwanted byproduct route. The natural gas only producers have very poor debt ratings. One report I read said that they could not expect any improvement in their bond ratings until prices rise. All of the talk about exporting US natural gas seems to me to be an effort to try to get natural gas prices up higher. The crazy way of pricing other types of electricity when intermittent wind and solar are added to the grid contribute to natural gas’s chronic low-priced problems in the US.

      Prices that are too low for producers are chronic around the world, because buyers cannot afford high-priced energy products. Australia is dealing with its own version of this.

      If I were Australia, I would stick with electricity from coal.

  2. Lastcall says:

    https://www.zerohedge.com/news/2019-05-20/xi-sends-trump-message-rare-earth-export-ban-coming
    Would an interruption like this interfere with the new green utopia of 5G, EV, and spook the Tech bubble supporting the stock market?
    I see Tesla is struggling, and I have always seen its demise as a ‘The Empe.ror has no Clothes’ moment for the ‘tech will solve it /save us’ myth.
    Lets face it, we are well into cutting the nose to spite the face territory.

    • Tsubion says:

      At what point do governments and central banks stop propping up the blatant attempts at hopium such as Tesla? Would Space X be next?

      What about Jeff bezos’s hopium projects? What about china’s goals? Will there be an uprising in China possibly after a downturn to kick the one party to the kerb? And will it really make any difference in the end if things are winding down anyway?

      https://phys.org/news/2019-04-alternatives-ease-demand-scarce-rare-earth.html

      Rare earth minerals may not be as vital if things were able to continue to the point where materials science moves on to pastures new.

      But all these proposals take time (decades) and continuous breakthroughs under stable conditions where labs and flow of funds are generous.

      The whole world is working on better batteries, solid state batteries, cheap mass produced graphene and other wonder materials, genetic engineering that wipes out disease and continues to improve food production even in the worst environments, new methods of desalination and on and on.

      Population would be relatively easy to manage with continuing improvements in quality of life. The problem is the banking system which was set up specifically to parasitically suck all wealth to the top of the pyramid. It’s designed that way. It could be designed a different way that favors the general public and not the top 0.01%.

      So either that happens or the elite continue to get away with building a breakaway civilisation. Which again, probably breaks down because of economies of scale breaking down.

      If the world could function with a minimum level of everything then that would help. I have used the cheapest chinese smartphone for years and not needed an upgrade in that time. If social status did not exist in human culture – problem solved. But it does. And so does fractional reserve banking and piling on debt to the sky in a tower of babel until the foundations crumble and we hear much waliling and gnashing of teeth.

      I sense that we are close now to a turning point. It may be possible to break up resource management and manufacturing into regions. A kind of winding down to soften the blow. But again, this is like trying to peddle backwards on a bicycle.

      By the way… tech has always saved our bacon and allowed us to continue this escapade for thousands of years. I don’t understand why so many here have such a revulsion to this concept. Are you all luddites and technophobes? Do you not enjoy using your laptop? Or a shovel? Or a cooker? Or a pair of glasses? Or trousers?

      I really don’t understand.

      • Greater technology seems to lead to greater wage disparity, including more people replaced by machines. From an overall systems point of view, it tends to bring the system down. In fact, we seem to already be struggling with this issue.

        • Tsubion says:

          Oh absolutely! The system is breaking apart at the seams. I can’t keep up with tech. I don’t know how anyone can. We’re moving closer to the dystopian reality outlined in novels a hundred years ago.

          Very young people have not experienced the world that we grew up in where we had time to think or get bored. I mean there was tv but it was limited. Now babies have a smartphone shoved in their hands from day one, games consoles, laptops etc. They very rarely get time away from screens and can’t wait to get back to them as soon as possible. Studies show that brains don’t develop fully with all the screen time.

          I honestly think the machines are being trained to replace most humans. The useless eaters will be discarded and die out.

      • Successful marriage of technology progress and human society would eventually produce social structures resembling of UBI, however it did not happen. So people are either still too imprinted with the atavistic animal social order-pecking genetic drive force or the technology progress due to the resource extraction treadmill was merely a short bumpy road, now likely near its conclusion. By the way the early social critics-communist theorist scholars meant it when they categorically stated their utopia must firstly take place in the most advanced hubs of the IC.. not on periphery..

        Again, it did not happen, at best in the richest parts of the world we got only the perverted caste based quasi UBI, for example if you soldier on for ~two decades as pro warrior, politician, sport entertainer, or foster mother for immigrants you can retire youngish and then pursue whatever to your liking and interests next..

        • DJ says:

          If you with UBI mean money för nothing we have had it for 50 years.

          But it will never be more than scraps. And soon you wont be able to live on scraps.

          • Tsubion says:

            I think it was on a video someone posted here where a speaker explained how food or energy could suddenly be ten times more expensive.

            That would certainly put a dent in the lives of the bottom 90%.

            America has a huge welfare state and hands out food stamps to people with jobs.

            I see a lot more homeless people crapping on the streets in the future. Hope there’s enough Fentanyl to go around.

            • Except you are describing the problem in the same backward way as everyone else.

              Energy consumption is buried in everything you pay for–your internet service, your taxes, your car payments, you name it. It is also a big part of the ability of your employer to give you a job.

              Without enough energy, jobs tend to disappear, especially good paying jobs. It isn’t the fact that the prices of food and energy prices rise; it is the fact that you have virtually nothing to spend on anything, whether it is internet service, or food, or car payments.

              Prices of virtually everything actually fall too low, driving many companies out of business. Or fixed costs become to great as businesses need to shrink. There will be a few people with high paying jobs who still are able to buy everything. This will make other people very unhappy. It is the wage disparity problem that brings down the economy.

            • Tsubion says:

              It was the speaker who said that.

              I kind of understand your version of things even though most of us are not used to thinking that way.

    • There are a whole lot of weak points in the system, aren’t there?

  3. Tim says:

    Donald Trump has filed bankruptcy 6 times, and stuck bond/stock holders for almost 1.5 billion dollars. In the process, he got very wealthy. He’s a con artist, and I don’t need his business advice.
    He cheats on his wives, and makes me sick with his gigantic ego and narcissism. He may be $$ rich, but he’s morally bankrupt in my opinion.

    • Lastcall says:

      Whom of all the Presidents’ isn’t a w.a.r criminal/morally bankrupt?
      Isn’t it a prerequisite?

    • Duncan Idaho says:

      “After all, it’s just physics – maybe there’s a merciful butterfly somewhere that is just about now flapping its wings.”
      Trump is in a class by himself—- but we may need a psychopathic 6 times bankrupt scammer as president– seems like the perfect position.
      Late stage capitalism was never going to be fun.

    • Tsubion says:

      So what?

      He’s just a puppet. Like all presidents of corporations.

      The central bankers are the biggest frauds and con artists of all time. But I don’t hear you whining about them.

      Obama bombed people, Bill and Hillary bombed people, the Bushes bombed people. All with tax payer money. Blood on hands. All for resources and central banks.

      But I don’t hear you whining about them.

      But the Don has an irksome personality that rubs certain people the wrong way. And they go crazy over it.

      Gimme a break.

      • my his own admission, the don has more than an irksome personality.
        Having to settle $25m lawsuit before taking office is more than irksome.

        his behaviour is childlike, to be generous

        his intention, at best, is to loot the country while he can

        at worst to take power and become dictator with theocratic overlay with his jesusfreak buddies if the opportunity (economic collapse) presents itself.
        He openly supports extreme right wing behaviour (its all on video record.

        He is obviously in a state of mental deterioration. (more than most politicians)

        Pence sees his opportunity to take over and put god in the WH

        pompeo is waiting to be raptured

        • Tsubion says:

          You’ve bought into a lot of guardian and bbc propaganda just like most people on the left. It’s quite sad really. You’re all victims of a very clever mind job and you’ve all lost your minds and mope about like victims.

          Please, for your own sake, get over it and move on.

          I do agree about the religious aspect rising. Tens of millions of christian zionists in the US are also being played for the benefit of Israel and their middle east plans.

          Trump is just another compromised asset doing the bidding of these agencies. Try to understand how people like Trump and even Pompeo, Pence, and Bolton etc etc are just following orders. The conflict between left and right is a sham set up to fool people like you.

          There is only top and bottom. A hierachy. Look up and see where the money flows and who runs things and sets the rules. It ain’t Trump. Or Xi. Or Putin. They are 100% expendable if you are a central banker. Plenty more eager puppets where they come from.

          There is a narrative in play whether you choose to believe it or not. Secret societies run the world. Some of them want to rule the world. Some of them want to destroy it. Some of them are setting the scene for the Return of the King and rebuilding of the Temple if you get my drift.

          You can call them crazy but they’re certainly not slackers.

  4. richard b says:

    Any news medium you read or watch, any good blogs you read, all financial press; and worse still, the physical world you see around you, all just confirm one simple thing: there are really no solutions left; the collapse has already begun, and this is what it looks like in its early stages.

    What’s starting to amaze me is the speed at which this realisation is beginning to dawn on the average individual. Just 10 years ago very few people were willing to entertain notions of an impending collapse, or of man made climate change, and predictions of doom were brushed aside.

    Not so much anymore. The penny is dropping, but not yet the realisation that we can do nothing to prevent it. By the time that realisation dawns, I think we’re going to be in very deep trouble.

    At one time it looked like we could get to 2050 before things really went down the slope, but now everything looks much closer. It’s looking a lot to me that 2030 is the new 2050.

    This US election is quite fascinating. Few, if any, platforms of the candidates make much sense, or are not riddled with contradictions. It’s amazing that they seem quite unable to grok this, but again it could make sense if you accept that we are railing against the collapse, but still in denial of what is happening to us.

    • we all remain convinced that it will happen to someone else first, somehow leaving more for those left—or something like that

      but you are quite correct about the speed at which it is happening

      • Tsubion says:

        A game of musical chairs?

        A Game of Thrones?

        A game of Russian Roulette with blindfolds on?

        All bets are off?

        This is where things get interesting. Let the Games begin!

        • DJ says:

          It was said we can’t collapse next monday because we have to know who wins the throne game first.

          Now we know.

  5. Hydrogen made from water by electrolysis powered by wind, solar and cheap electricity would be practical for running heavy trucks on Hydrogen Highways. Maybe too little, too late.

    • doomphd says:

      Hydrogen won’t work, for lots of reasons. If you’re going to use electricity to make it, why not just use the electricity, instead? Hydrogen is also a difficult energy carrier, and is explosive. Ammonia (from nitrogen) would be less explosive, but it’s dangerous, as well. These ideas come up with energy resources in remote regions, like tropical seas for OTEC electrical production, needing an energy carrier to get the produced energy to markets.

      • Tsubion says:

        Exactly.

        Meanwhile… in La La Land…

        https://www.nextbigfuture.com/2019/05/tusimple-testing-self-driving-trucks-for-us-postal-service.html

        Note the discussion is all about refueling which is obviously not the issue. People tend to go off on tangents looking for problems where they don’t exist.

        Take all transportation. Most of it runs on oil. Chip away at the largest segment of vehicles by making them electric. Now you have a few sectors left that can make do with the remaining oil. Some shorter range commercial vehicles can be electrified next and so on.

        Mention evs and people tend to jump to the other extreme. How will Rio Tinto mining trucks and other heavy machinery run on batteries? How will airplanes be electric? etc etc instead of looking at the vast majority segment that is personal transportation.

        If things go as predicted… then we won’t have large commuter traffic problems anyway. Unemployed people tend to stay at home and walk places. They don’t buy stuff. And that shuts down more and more areas of industry as companies go bankrupt.

        Problem solved.

        • the critical factor about oil, is that we get it relatively cheap because of the vast quantities we all use

          if usage dropped, till it was only used for specialised applications, then the cost would rise so much that no one would be able to afford it

          • Xabier says:

            Different to a wood, say, where the trees are still there if you decide to cut down only 5 a year instead of 50, and may even expand in area. They just carry on growing within the natural cycle – although proper management would still be necessary to get the best growth and extend the lives of the trees.

            Cut back too far in energy consumption, on the other hand, and the whole complex structure of extraction, processing and supply ceases to function economically, whether fossil fuels or hi-tech pseudo- ‘renewables’.

            Eventually, mankind if existing at all, must return to a biomass culture, bound by natural cycles.

            • Harry McGibbs says:

              Speaking of trees, this is a depressing vignette of life in the UK of 2019, Xabier:

              “Tens of thousands of trees planted to mitigate the environmental impact of the High Speed Rail 2 (HS2) route have died following the UK’s 2018 summer drought. More than one-third of saplings planted in 2017-18 had to be replaced a year later, bosses admitted, as they said putting in new plants was cheaper than keeping the old ones alive.”

              https://www.independent.co.uk/environment/hs2-trees-dead-drought-water-woodland-environment-a8925501.html

            • I wonder how many more times they will need to be replaced.

              Also, are the high speed-trains living up to their projected benefit? They seem like a big boondoggle to me. They depend on large number of people willing to pay pretty high prices to get from one place to another quickly. If people are poor, slow and cheap is a better option. I can’t imagine that high speed trains are easily repairable, either, without parts from around the world.

            • Tsubion says:

              Gail, exactly!

              My experience with high speed trains leads me to believe they are a huge waste of money, resources and time.

              They are always rolled out to great fanfare. But unless there are vast distances between hubs they can never really reach the advertised speeds. And if the routes include several stopping points then it’s even worse.

              The solution was to run a regular train without stops say once or twice a day and the rest of the day trains that stop at every station on route.

              Maybe in the US it would make sense with such huge distances but people got used to planes and that was that.

              The sheer scale of infrastructure remodelling that has to be done to scale mountains and valleys is mind boggling since the trains need to follow a relatively straight line.

              Barcelona ran into so many problems because they wanted the new line to run right into the city causing structural problems with local architecture. And all for what?

              The money would be better directed to building out new dc power lines where necessary and plenty of energy storage modules.

          • Tsubion says:

            Yes but the price of oil has not gone up. It has remianed in the goldilocks zone and will do so until something breaks.

            Gail has mentioned very often here how price does not behave as expected when you reach limits.

            Lets say you have a billion barrels of oil in reserves and most of that was going to be burned in vehicles. But now you’ve switched to electric. The remaining barrels of oil are still there ready to be used for all other purposes. Does the price go up? Or do we make sure that that oil is still affordable for the remaining uses. What’s the storage time for oil and how costly is it to store surplus?

            I don’t think the same rules apply equally for each separate industry. Semiconductors probably become unaffordable if custom made per use but other things not so much.

            Now if one of the pillars holding up all other activities were to crumble and couldn’t be quickly replaced….

  6. SuperTramp says:

    Don’t expect it to be felt by American Families!!!! Sure…..

    Most smartphones, tablet computers and other electronics are assembled in China. But Chinese manufacturers typically use U.S., Japanese or Taiwanese microchips and other components.
    The United States has squeezed Chinese companies by threatening to shut off supplies of those key components. The Trump administration issued an order last week that will curb or end Chinese telecom giant Huawei Technologies Ltd.’s access to American chips and to Alphabet’s GOOGL, +0.12% GOOG, -0.99% Google, which provides the Android operating system and services for Huawei smartphones.
    A similar export ban almost put the Chinese telecom firm ZTE Corp. 763, -5.73% out of business last year. The U.S. charged that the company had violated sanctions by selling equipment to Iran and North Korea. Eventually, ZTE escaped the export ban by agreeing to pay a $1 billion fine and to replace its management team.
    In Washington, members of the House Financial Services Committee pressed Mnuchin on Wednesday on the costs of the trade war with China. Mnuchin said he’d spoken to Walmart and other firms about how to limit the effect of higher tariffs on American consumers. “I don’t expect there will be significant costs on American families,” he said.

    This may just be the Black Swan event we’ve all been looking for!
    https://www.marketwatch.com/story/trade-standoff-between-us-china-may-be-settling-in-for-the-long-run-2019-05-22?siteid=yhoof2&yptr=yahoo

    • There are an awfully lot of interdependencies!

    • Tsubion says:

      Lets be honest here…

      If China wasn’t the cheapest source of near slave labor for the past twenty years would anyone really want to do business with them?

      It baffles me that America – Land of the Free blah blah – would want anything to do with the human rights violating totalitarian communist one party nightmare squatting on China like Jabba the Hutt. It makes zero sense. A match made in hell.

      Export manufacturing and jobs to your major rival. Yeah… that really makes sense in clown world. But you have less pollution under your noses and feel all proud about it. Yay! Winning!

      Now China is being made to look like a bunch of chumps. They had it coming. Manufacturing can be set up anywhere relatively quickly. Look at the Tesla factory. Yeah, how did that work out for you Elon?

      Many voices say Africa is the future of the world. I know they mean that Africa will be next in the development schedule once the chains are removed. But I’m seeing a different interpretation unfolding. One that involves machetes. Lots of machetes…

      https://www.machetespecialists.com/buying-guide/best-machetes/

  7. Harry McGibbs says:

    “Enforcing whatever the two countries [China and the US] agree to with respect to Intellectual Property Right protections was always going to be the most difficult part of the trade negotiations. There are no easy ways to accomplish this goal without substantially changing behavior, but the U.S. seems to have chosen a path that is unlikely to work…

    “…the negotiators on both sides are truly between a rock and a hard place.”

    https://www.forbes.com/sites/jackperkowski/2019/05/23/the-u-s-china-trade-war-enters-uncharted-waters/#44da4c20122f

    • Harry McGibbs says:

      “Panasonic has joined the growing list of companies to sever ties with Huawei by announcing that it will stop supplying some components to the Chinese technology conglomerate after a US ban over security concerns. The decision by the Japanese firm on Thursday sent Asia Pacific shares falling again…”

      https://www.theguardian.com/technology/2019/may/23/huawei-markets-slide-as-panasonic-joins-list-of-firms-cut-ties

      • Harry McGibbs says:

        “Recent trade war escalation showed how sensitive to adverse events Chinese companies are… debt in China has enormously grown and we are concerned that over time China may not be able to deal with it, which will result in an extreme downturn. Such a situation will strongly affect the whole world because China’s share in global GDP is significant.”

        https://seekingalpha.com/article/4265826-china-crushed-debt

        • Harry McGibbs says:

          “The world’s second-largest economy was already slowing before the US-China trade conflict erupted. DW explores how different sectors of the Chinese economy are affected, and how tariffs could exacerbate the slump.”

          https://www.dw.com/en/chinas-slowdown-how-its-being-felt-across-the-country/g-48818080

          • This starts out with saying China’s private passenger auto sales for the first 4 months are down by 21% compared to a year ago. This is utterly amazing, and terrible. Also:

            A major upheaval is underway in China’s peer-to-peer (P2P) finance sector after numerous cases of fraud and negligence. Thousands of platforms have gone bust or just disappeared, leaving investors nursing heavy losses. A government crackdown on lenders means millions of Chinese consumers now have no alternative credit line.

            and

            Gavekal Dragonomics recently showed large state-funded industrial firms cut about 2.8 million jobs in 2018. Although the private sector has seen strong employment growth in recent years, surveys by job agencies suggest hiring is falling.

            and

            The accuracy of official Chinese goverment statistics has been questioned for years. According to the Brookings Institute, China’s gross domestic product (GDP) is some 12% smaller than officially claimed. Researchers believe growth between 2008 and 2016 was on average 1.7% lower. If extrapolated to 2018, China’s official 6.6% GDP figure would be more like than 5.8%.

  8. Harry McGibbs says:

    “Japanese manufacturing activity swung back into contraction in May as export orders fell at the fastest pace in four months, highlighting why policy makers and investors remain anxious about the growing economic impact of a bruising Sino-U.S. trade war…”

    https://www.reuters.com/article/us-japan-economy-pmi/japan-may-flash-pmi-snaps-back-into-contraction-as-sino-us-trade-war-escalates-idUSKCN1ST02B

  9. Harry McGibbs says:

    “The Icelandic krona is continuing its slide against a basket of currencies midweek as the bankruptcy of a budget airline has triggered a recession, prompting the central bank to spring into action. The latest financial crisis comes roughly a decade since the island nation was on the brink of insolvency following the collapse of several major banks that contributed to the global catastrophe.”

    https://www.earnforex.com/news/2019/05/22/icelandic-krona-crashes-as-wow-air-bankruptcy-triggers-recession/

  10. Harry McGibbs says:

    “Based on working with banks and bank regulators for three decades, what keeps me up at night now? 19 consecutive quarters of rising household debt! American households now hold mortgage, auto loan, student, and credit card debt of $13.7 trillion which is $1 trillion above the 2008 peak.

    “This level of indebtedness is the equivalent of about 68% GDP as opposed to an equivalent of 86% in 2008. Yet, we are so indebted at every level, that is, municipal, national level, corporate, commercial real estate, and at a household level. The more money banks lend especially at this late stage in the credit cycle, the more they increase their operational risk exposure. They let go of their underwriting standards, and they ignore controls.”

    https://www.forbes.com/sites/mayrarodriguezvalladares/2019/05/22/the-weakening-of-big-bank-regulations-under-trump-is-the-seed-for-the-next-financial-crisis/#105344174f4c

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