Rethinking Renewable Mandates

Powering the world’s economy with wind, water and solar, and perhaps a little wood sounds like a good idea until a person looks at the details. The economy can use small amounts of wind, water and solar, but adding these types of energy in large quantities is not necessarily beneficial to the system.

While a change to renewables may, in theory, help save world ecosystems, it will also tend to make the electric grid increasingly unstable. To prevent grid failure, electrical systems will need to pay substantial subsidies to fossil fuel and nuclear electricity providers that can offer backup generation when intermittent generation is not available. Modelers have tended to overlook these difficulties. As a result, the models they provide offer an unrealistically favorable view of the benefit (energy payback) of wind and solar.

If the approach of mandating wind, water, and solar were carried far enough, it might have the unfortunate effect of saving the world’s ecosystem by wiping out most of the people living within the ecosystem. It is almost certain that this was not the intended impact when legislators initially passed the mandates.

[1] History suggests that in the past, wind and water never provided a very large percentage of total energy supply.

Figure 1. Annual energy consumption per person (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Tony Wrigley, Cambridge University.

Figure 1 shows that before and during the Industrial Revolution, wind and water energy provided 1% to 3% of total energy consumption.

For an energy source to work well, it needs to be able to produce an adequate “return” for the effort that is put into gathering it and putting it to use. Wind and water seemed to produce an adequate return for a few specialized tasks that could be done intermittently and that didn’t require heat energy.

When I visited Holland a few years ago, I saw windmills from the 17th and 18th centuries. These windmills pumped water out of low areas in Holland, when needed. A family would live inside each windmill. The family would regulate the level of pumping desired by adding or removing cloths over the blades of the windmill. To earn much of their income, they would also till a nearby plot of land.

This overall arrangement seems to have provided adequate income for the family. We might conclude, from the inability of wind and water energy to spread farther than 1% -3% of total energy consumption, that the energy return from the windmills was not very high. It was adequate for the arrangement I described, but it didn’t provide enough extra energy to encourage greatly expanded use of the devices.

[2] At the time of the Industrial Revolution, coal worked vastly better for most tasks of the economy than did wind or water.

Economic historian Tony Wrigley, in his book Energy and the English Industrial Revolution, discusses the differences between an organic economy (one whose energy sources are human labor, energy from draft animals such as oxen and horses, and wind and water energy) and an energy-rich economy (one that also has the benefit of coal and perhaps other energy sources). Wrigley notes the following benefits of a coal-based energy-rich economy during the period shown in Figure 1:

  • Deforestation could be reduced. Before coal was added, there was huge demand for wood for heating homes and businesses, cooking food, and for making charcoal, with which metals could be smelted. When coal became available, it was inexpensive enough that it reduced the use of wood, benefiting the environment.
  • The quantity of metals and tools was greatly increased using coal. As long as the source of heat for making metals was charcoal from trees, the total quantity of metals that could be produced was capped at a very low level.
  • Roads to mines were greatly improved, to accommodate coal movement. These better roads benefitted the rest of the economy as well.
  • Farming became a much more productive endeavor. The crop yield from cereal crops, net of the amount fed to draft animals, nearly tripled between 1600 and 1800.
  • The Malthusian limit on population could be avoided. England’s population grew from 4.2 million to 16.7 million between 1600 and 1850. Without the addition of coal to make the economy energy-rich, the population would have been capped by the low food output from the organic economy.

[3] Today’s wind, water, and solar are not part of what Wrigley called the organic economy. Instead, they are utterly dependent on the fossil fuel system.

The name renewables reflects the fact that wind turbines, solar panels, and hydroelectric dams do not burn fossil fuels in their capture of energy from the environment.

Modern hydroelectric dams are constructed with concrete and steel. They are built and repaired using fossil fuels. Wind turbines and solar panels use somewhat different materials, but these too are available only thanks to the use of fossil fuels. If we have difficulty with the fossil fuel system, we will not be able to maintain and repair any of these devices or the electricity transmission system used for distributing the energy that they capture.

[4] With the 7.7 billion people in the world today, adequate energy supplies are an absolute requirement if we do not want population to fall to a very low level. 

There is a myth that the world can get along without fossil fuels. Wrigley writes that in a purely organic economy, the vast majority of roads were deeply rutted dirt roads that could not be traversed by wheeled vehicles. This made overland transport very difficult. Canals were used to provide water transport at that time, but we have virtually no canals available today that would serve the same purpose.

It is true that buildings for homes and businesses can be built with wood, but such buildings tend to burn down frequently. Buildings of stone or brick can also be used. But with only the use of human and animal labor, and having few roads that would accommodate wheeled carts, brick or stone homes tend to be very labor-intensive. So, except for the very wealthy, most homes will be made of wood or of other locally available materials such as sod.

Wrigley’s analysis shows that before coal was added to the economy, human labor productivity was very low. If, today, we were to try to operate the world economy using only human labor, draft animals, and wind and water energy, we likely could not grow food for very many people. World population in 1650 was only about 550 million, or about 7% of today’s population. It would not be possible to provide for the basic needs of today’s population with an organic economy as described by Wrigley.

(Note that organic here has a different meaning than in “organic agriculture.” Today’s organic agriculture is also powered by fossil fuel energy. Organic agriculture brings soil amendments by truck, irrigates land and makes “organic sprays” for fruit, all using fossil fuels.)

[5] Wind, water and solar only provided about 11% of the world’s total energy consumption for the year 2018. Trying to ramp up the 11% production to come anywhere close to 100% of total energy consumption seems like an impossible task.

Figure 2. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

Let’s look at what it would take to ramp up the current renewables percentage from 11% to 100%. The average growth rate over the past five years of the combined group that might be considered renewable (Hydro + Biomass etc + Wind&Solar) has been 5.8%. Maintaining such a high growth rate in the future is likely to be difficult because new locations for hydroelectric dams are hard to find and because biomass supply is limited. Let’s suppose that despite these difficulties, this 5.8% growth rate can be maintained going forward.

To increase the quantity from 2018’s low level of renewable supply to the 2018 total energy supply at a 5.8% growth rate would take 39 years. If population grows between 2018 and 2057, even more energy supply would likely be required. Based on this analysis, increasing the use of renewables from a 11% base to close to a 100% level does not look like an approach that has any reasonable chance of fixing our energy problems in a timeframe shorter than “generations.”

The situation is not quite as bad if we look at the task of producing an amount of electricity equal to the world’s current total electricity generation with renewables (Hydro + Biomass etc + Wind&Solar); renewables in this case provided 26% of the world’s electricity supply in 2018.

Figure 3. World electricity production by type, based on data from 2019 BP Statistical Review of World Energy.

The catch with replacing electricity (Figure 3) but not energy supplies is the fact that electricity is only a portion of the world’s energy supply. Different calculations give different percentages, with electricity varying between 19% and 43% of total energy consumption.1 Either way, substituting wind, water and solar in electricity production alone does not seem to be sufficient to make the desired reduction in carbon emissions.

[6] A major drawback of wind and solar energy is its variability from hour-to-hour, day-to-day, and season-to-season. Water energy has season-to-season variability as well, with spring or wet seasons providing the most electricity.

Back when modelers first looked at the variability of electricity produced by wind, solar and water, they hoped that as an increasing quantity of these electricity sources were added, the variability would tend to offset. This happens a little, but not nearly as much as one would like. Instead, the variability becomes an increasing problem as more is added to the electric grid.

When an area first adds a small percentage of wind and/or solar electricity to the electric grid (perhaps 10%), the electrical system’s usual operating reserves are able to handle the variability. These were put in place to handle small fluctuations in supply or demand, such as a major coal plant needing to be taken off line for repairs, or a major industrial client reducing its demand.

But once the quantity of wind and/or solar increases materially, different strategies are needed. At times, production of wind and/or solar may need to be curtailed, to prevent overburdening the electric grid. Batteries are likely to be needed to help ease the abrupt transition that occurs when the sun goes down at the end of the day while electricity demand is still high. These same batteries can also help ease abrupt transitions in wind supply during wind storms.

Apart from brief intermittencies, there is an even more serious problem with seasonal fluctuations in supply that do not match up with seasonal fluctuations in demand. For example, in winter, electricity from solar panels is likely to be low. This may not be a problem in a warm country, but if a country is cold and using electricity for heat, it could be a major issue.

The only real way of handling seasonal intermittencies is by having fossil fuel or nuclear plants available for backup. (Battery backup does not seem to be feasible for such huge quantities for such long periods.) These back-up plants cannot sit idle all year to provide these services. They need trained staff who are willing and able to work all year. Unfortunately, the pricing system does not provide enough funds to adequately compensate these backup systems for those times when their services are not specifically required by the grid. Somehow, they need to be paid for the service of standing by, to offset the inevitable seasonal variability of wind, solar and water.

[7] The pricing system for electricity tends to produce rates that are too low for those electricity providers offering backup services to the electric grid.

As a little background, the economy is a self-organizing system that operates through the laws of physics. Under normal conditions (without mandates or subsidies) it sends signals through prices and profitability regarding which types of energy supply will “work” in the economy and which kinds will simply produce too much distortion or create problems for the system.

If legislators mandate that intermittent wind and solar will be allowed to “go first,” this mandate is by itself a substantial subsidy. Allowing wind and solar to go first tends to send prices too low for other producers because it tends to reduce prices below what those producers with high fixed costs require.2

If energy officials decide to add wind and solar to the electric grid when the grid does not really need these supplies, this action will also tend to push other suppliers off the grid through low rates. Nuclear power plants, which have already been built and are adding zero CO2 to the atmosphere, are particularly at risk because of the low rates. The Ohio legislature recently passed a $1.1 billion bailout for two nuclear power plants because of this issue.

If a mandate produces a market distortion, it is quite possible (in fact, likely) that the distortion will get worse and worse, as more wind and solar is added to the grid. With more mandated (inefficient) electricity, customers will find themselves needing to subsidize essentially all electricity providers if they want to continue to have electricity.

The physics-based economic system without mandates and subsidies provides incentives to efficient electricity providers and disincentives to inefficient electricity suppliers. But once legislators start tinkering with the system, they are likely to find a system dominated by very inefficient production. As the costs of handling intermittency explode and the pricing system gets increasingly distorted, customers are likely to become more and more unhappy.

[8] Modelers of how the system might work did not understand how a system with significant wind and solar would work. Instead, they modeled the most benign initial situation, in which the operating reserves would handle variability, and curtailment of supply would not be an issue. 

Various modelers attempted to figure out whether the return from wind and solar would be adequate, to justify all of the costs of supporting it. Their models were very simple: Energy Out compared to Energy In, over the lifetime of a device. Or, they would calculate Energy Payback Periods. But the situation they modeled did not correspond well to the real world. They tended to model a situation that was close to the best possible situation, one in which variability, batteries and backup electricity providers were not considerations. Thus, these models tended to give a far too optimistic estimates of the expected benefit of intermittent wind and solar devices.

Furthermore, another type of model, the Levelized Cost of Electricity model, also provides distorted results because it does not consider the subsidies needed for backup providers if the system is to work. The modelers likely also leave out the need for backup batteries.

In the engineering world, I am told that computer models of expected costs and income are not considered to be nearly enough. Real-world tests of proposed new designs are first tested on a small scale and then at progressively larger scales, to see whether they will work in practice. The idea of pushing “renewables” sounded so good that no one thought about the idea of testing the plan before it was put into practice.

Unfortunately, the real-world tests that Germany and other countries have tried have shown that intermittent renewables are a very expensive way to produce electricity when all costs are considered. Neighboring countries become unhappy when excess electricity is simply dumped on the grid. Total CO2 emissions don’t necessarily go down either.

[9] Long distance transmission lines are part of the problem, not part of the solution. 

Early models suggested that long-distance transmission lines might be used to smooth out variability, but this has not worked well in practice. This happens partly because wind conditions tend to be similar over wide areas, and partly because a broad East-West mixture is needed to even-out the rapid ramp-down problem in the evening, when families are still cooking dinner and the sun goes down.

Also, long distance transmission lines tend to take many years to permit and install, partly because many landowners do not want them crossing their property. In some cases, the lines need to be buried underground. Reports indicate that an underground 230 kV line costs 10 to 15 times what a comparable overhead line costs. The life expectancy of underground cables seems to be shorter, as well.

Once long-distance transmission lines are in place, maintenance is very fossil fuel dependent. If storms are in the area, repairs are often needed. If roads are not available in the area, helicopters may need to be used to help make the repairs.

An issue that most people are not aware of is the fact that above ground long-distance transmission lines often cause fires, especially when they pass through hot, dry areas. The Northern California utility PG&E filed for bankruptcy because of fires caused by its transmission lines. Furthermore, at least one of Venezuela’s major outages seems to have been related to sparks from transmission lines from its largest hydroelectric plant causing fires. These fire costs should also be part of any analysis of whether a transition to renewables makes sense, in terms of either cost or energy returns.

[10] If wind turbines and solar panels are truly providing a major net benefit to the economy, they should not need subsidies, even the subsidy of going first.

To make wind and solar electricity producers able to compete with other electricity providers without the subsidy of going first, these providers need a substantial amount of battery backup. For example, wind turbines and solar panels might be required to provide enough backup batteries (perhaps 8 to 12 hours’ worth) so that they can compete with other grid members, without the subsidy of going first. If it really makes sense to use such intermittent energy, these providers should be able to still make a profit even with battery usage. They should also be able to pay taxes on the income they receive, to pay for the government services that they are receiving and hopefully pay some extra taxes to help out the rest of the system.

In Item [2] above, I mentioned that when coal mines were added in England, roads to the mines were substantially improved, befitting the economy as a whole. A true source of energy (one whose investment cost is not too high relative to its output) is supposed to be generating “surplus energy” that assists the economy as a whole. We can observe an impact of this type in the improved roads that benefited England’s economy as a whole. Any so-called energy provider that cannot even pay its own fair share of taxes acts more like a leech, sucking energy and resources from others, than a provider of surplus energy to the rest of the economy.


In my opinion, it is time to eliminate renewable energy mandates. There will be some instances where renewable energy will make sense, but this will be obvious to everyone involved. For example, an island with its electricity generation from oil may want to use some wind or solar generation to try to reduce its total costs. This cost saving occurs because of the high price of oil as fuel to make electricity.

Regulators, in locations where substantial wind and/or solar has already been installed, need to be aware of the likely need to provide subsidies to backup providers, in order to keep the electrical system operating. Otherwise, the grid will likely fail from lack of adequate backup electricity supply.

Intermittent electricity, because of its tendency to drive other providers to bankruptcy, will tend to make the grid fail more quickly than it would otherwise. The big danger ahead seems to be bankruptcy of electricity providers and of fossil fuel producers, rather than running out of a fuel such as oil or natural gas. For this reason, I see little reason for the belief by many that electricity will “last longer” than oil. It is a question of which group is most affected by bankruptcies first.

I do not see any real reason to use subsidies to encourage the use of electric cars. The problem we have today with oil prices is that they are too low for oil producers. If we want to keep oil production from collapsing, we need to keep oil demand up. We do this by encouraging the production of cars that are as inexpensive as possible. Generally, this will mean producing cars that operate using petroleum products.

(I recognize that my view is the opposite one from what many Peak Oilers have. But I see the limit ahead as being one of too low prices for producers, rather than too high prices for consumers. The CO2 issue tends to disappear as parts of the system collapse.)


[1] BP bases its count on the equivalent fossil fuel energy needed to create the electricity; IEA counts the heat energy of the resulting electrical output. Using BP’s way of counting electricity, electricity worldwide amounts to 43% of total energy consumption. Using the International Energy Agency’s approach to counting electricity, electricity worldwide amounts to only about 19% of world energy consumption.

[2] In some locations, “utility pricing” is used. In these cases, pricing is set in a way needed to provide a fair return to all providers. With utility pricing, intermittent renewables would not be expected to cause low prices for backup producers.

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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1,461 Responses to Rethinking Renewable Mandates

  1. Harry McGibbs says:

    I have not seen such widespread pessimism in the on-line press vis-à-vis the health of the global economy since I started keeping close tabs on it around the time oil prices crashed in 2014/5.

    I think we have to hope that the Fed cuts aggressively this autumn and the trade war mellows significantly or we are in trouble. We may be in trouble regardless. There are a lot of articles saying more or less the same thing; this being a typical one:

    “Another day, another round of bad news highlighting the risk that the global economy is headed for a serious downturn.”

    • Harry McGibbs says:

      “Five big economies are at risk of recession. It won’t take much to push them over the edge… Germany, Britain, Italy, Brazil and Mexico each rank among the world’s largest 20 economies. Singapore and Hong Kong, which are smaller but still serve as vital hubs for finance and trade, are also suffering.”

      • Harry McGibbs says:

        “During the global financial crisis, I regularly called a close friend in NYC to comment on then-daily economic events that were shocking. Bear Stearns went bankrupt; Lehman went bankrupt; the economy shed 600,000 jobs per month. While the build-up to the crisis was amazingly slow, once the bottom dropped, it dropped hard.

        “That event stands in stark contrast to the last 12 to 18 months when there’s been a continual grinding lower in the global economic data, primarily centered in the manufacturing sector.”

        • Harry McGibbs says:

          “…events this month signal that the problems facing the world economy are more complex and intractable than the immediate reaction to President Trump’s trade war de-escalation might suggest. A tactical retreat here and there won’t solve the deeper problems hanging over the world economy.

          “Once chaos has been unleashed into the global economic system, it can be hard to reel back in.”

          • Chrome Mags says:

            “Global Economic Trouble Is Brewing, and the Trade War Is Only Part of It”

            Momentum always begins with a nudge, and Trump’s forced trade war has generated enough negative momentum to initiate the early stages of a global recession. It was a veneer thin recovery anyway, so why did he risk a trade war? There’s an old saying, “If it ain’t broken, don’t try and fix it.”

            I remember a friend of mine didn’t quite like the sound of his car’s engine, so he started tinkering with it and later that day it was so out of tune he couldn’t even drive it. He gave up and had it towed to a shop to fix it at a very high cost. That’s Trump – he tinkered with the world economy and now it’s going out of sync.

            • Or perhaps Trump’s tinkering is simply a symptom of an underlying illness in the world economy. If this same kind of thing (flight to tariffs) hadn’t happened when resources were constrained, many times before, your view would be easier to believe.

    • The WSJ has an article up called, The Earnings Outlook for S&P 500 Companies Looks Bleak.

      Analysts’ latest revisions show the S&P 500 faces a 3.15% contraction [Emphasis added] in third-quarter earnings from a year earlier, according to FactSet. And for the fourth quarter, the S&P 500 is now on track to increase profits by less than 4%, down from the nearly 10% growth rate analysts expected at the beginning of the year.


      Tariffs aren’t the only factor to blame for the weaker outlooks. Second-quarter profit margins across all S&P 500 sectors are down from a year earlier, according to FactSet. Rising labor and commodity costs, as well as a strong dollar, have helped to dent profits.

    • Xabier says:

      Thanks again Sir Harry, I hope your watch is not getting you down: better to be a vigilant and informed observer than just vaguely worrying I suppose!

      • Harry McGibbs says:

        Bless you, Xabier, for checking in. I am in excellent spirits. Just as the tree-bound monkey likes to keep eyes on the approaching snake, so it is my preference to keep tabs on the economic drama as it unfolds.

        And of course trying to make sense of it all through the prism of Gail’s insights is an intellectually stimulating and very enjoyable hobby. I am not losing sleep.

        I trust life is treating you kindly and your secret chorizo larder is well stocked?

        • Xabier says:

          Acquisition programme accelerating, Sir Harry: preparing for siege is quite entertaining in its purposefulness – only the thought of an Iberico chorizo dearth makes one’s blood run cold.

    • Mark says:

      Here in Merica, we phrase things differently. Like “Thanks for piss-ing in my cornflakes Harry” 😉

  2. Harry McGibbs says:

    “When assumptions about how the world works are shattered, a global downturn is often the result. The world learned in the early 1970s that the era of cheap oil was over, in the early 1980s that countries could default, and a decade ago that American mortgages and global banks aren’t safe.

    “Today, a similar rethink of globalization is under way. From Washington to Buenos Aires, nations’ mutually reinforcing commitment to open markets is disintegrating.”

    • Harry McGibbs says:

      “What should worry risk managers is that we are in unchartered territory. According to Sven Henrich, founder and lead market strategist for NorthmanTrader, “We’ve never faced a recession with so much debt and so little Fed ammunition available.” I agree with him that “With negative rates still in effect in many places, there’s no playbook for this. Historical data will be of little use.””

      • Harry McGibbs says:

        “The recession alarm bell ringing in U.S. government bond markets sent investors rushing once more to haven assets, pushing the world’s stockpile of negative-yielding bonds to another record. The market value of the Bloomberg Barclays Global Negative Yielding Debt Index closed at $16 trillion Wednesday…”

      • Robert Firth says:

        “So much debt!” LOL: not as much debt as Septimus Severus, Philip le Bel, or Louis XVI racked up. And we know how well that ended.

        A few home truths. Sovereign debt is never repaid; it is rolled over until it can roll no more, and then it is repudiated. Fiat money has no intrinsic value; it is accepted on faith until that faith has been betrayed too often. Even land is not a safe haven because you can’t take it with you while escaping the revenuers.

        The only safe store of value is what it has been for 4000 years: gold. That is where we are now, and the economists and their forecasts are men and bits of paper, whirled by the cold wind.

        • Except that gold can’t buy what isn’t available in the marketplace. Perhaps you can buy used furniture with gold. Everyone will have more of similar things that they don’t want or need any more. But if there is not enough food to go around, I doubt that gold can put the supply chains in place to provide much food. Also, I expect gold coins will go quite quickly when buying food. Perhaps they will work for the first month, but how about the second and third month? (Or maybe you are like quite a few peak oilers, hoping for a quick die-off of competitors for food.)

          • Robert Firth says:

            Thank you, Gail, for an excellent point. Say’s law says that the market offer comes first, and creates its own demand. But there is also experience that demand, when backed by hard currency, can create supply. The Silk Road was largely driven by demand, backed by the silver mines of Spain.

            And growing up in Africa I saw supply lines created by the traders, backed again by silver (Maria Theresa thalers, as it happens), and for some two hundred years this had supported trade across the Middle East and much of Africa. So perhaps if there is gold, traders will appear who will barter for that gold, because they will have confidence that the same gold will be accepted at the other end of the supply line. Traders paid in yuan, however, will have difficulty buying US farm produce.

            As for me, I have enough saved to feed me for well beyond my probable life span, thanks to 20 years of following Samuel Smiles’ advice. At present in Euro on deposit on Singapore, but that’s a free port, so I could convert it all to gold with one email.

            I don’t hope for a quick die off, but that is up to Nature, not me. However, I do believe that, rather soon, buyers with coin will be given preference over buyers with pieces of paper. Did not exactly that happen in prerevolutionary France?

            • Xabier says:

              Things can get topsy-turvy, certainly.

              I have cited earlier a true tale from the Peninsular War: rich British officers were bored eating meat and more meat from slaughtered oxen, and desperate to eat fresh bread and anything not ox, so one of them hailed a passing Spaniard who had bread and other provisions on his mule.

              The officer proffered a gold coin which was worth far in excess, obviously, of the value of all his load.

              The farmer thought a while, and turned it down:

              ‘Sorry friend, but that gold won’t buy food for my family. Go with God’.

              Being honourable, the officer let him go on (the common soldiers would probably have murdered him, a big problem at the time which was cured by summary execution).

            • I think that they would very much prefer traders with something of true usefulness, such as rice or apples, to traders with gold coins.

            • kesar0 says:

              Barter – sooner than later – will become standard model of trade. My advice: store long lasting goods in this order – food, medicine/drugs, fuel (coal, diesel, gasoline), stimulants (alkohol, cigarettes, etc.) – in safe location and you will be reach man, when the sit hits the fan.
              Just my two cents. It is my plan for the mid-term future.
              best, kesar

          • adonis says:

            it just depends if there is a viable plan in place by the powers that be that will be driven by gold and it does not matter what anyone desires about a quick die-off so they can survive at the end of the day we all know that a less populated earth will have a better chance of surviving to see another 100 years.

          • Volvo740 says:

            maybe white rice, or cans of chicken soup is the new currency?

        • It's different this time around....NO says:

          Not as much as Septimus Severus!??
          Pardon, sorry but the Roman Empire did not have the ability to run account deficits like Uncle Sam. Now, there were debts, for sure, but nothing like we have today. The society back then did not have the technology (computers) or concepts (Fractional currency, fiat money, or accounting methods). Actually, the one practice the Emperors put was debasement of the coinage, confiscation of property, or as in the case of Marcus Aurelius, the sale of Imperial properties. For the most part, the Ancient world was an agricultural solar society. Remember reading the Emperor Trajan expanded the borders to include Dacia for it’s rich precious metal resources. Later on, after they were exploited, it was abandoned to the barbarian hoards
          There was a good supply of gold and silver after Constantine adopted Christianity and ordered Pagan temples and shines to be stripped of their silver and gold to be minted into coin.
          He even created the denomination that was the standard for centuries there after in the Mediterranean world named the “Solidus”, 1/72 to the Roman pound. That was too later chipped away in debasement by later Byzantine Emperors. As Winston Churchill pointed out…”Money Melts”.

          • Xabier says:

            One of the Byzantine emperors in the late 11th century also had to raid the temples for gold and silver during a crisis (to pay troops and pay political bribes I think) only they were of course Christian by then. Handy that Christians still liked a little bling with their worship….

            • It's different this time around....NO says:

              In regard to Septimus Severus his final advice to his son’s was to enrich the soldiers and despise everyone else!
              His one son, the nortorius Caracalla, murder his own brother, Geta, in the arms of their mother, Julia Donna while in a truce meeting to divide the Empire! Later in his sole reign, he was hard pressed for monies after doubling the pay of the army and introduced a new denomination that was to be a double denarius, which only had the silver content of 1 1/2!
              It was shown with a radiate crown instead of a Laurel wreath on his portrait.
              To raise more funds he granted citizenship to all provincials, thus taxing them as such, raising more funds!

          • Robert Firth says:

            The emperors issued the equivalent of “fiat” money by minting coins of base metal and pretending they were precious. The denarius ended up with about 5% silver, a 95% devaluation. But Constantine and others went even further: they refused to accept their own coins in payment of taxes, but demanded payment in bullion. This was the infamous “chrysarguron”.

            Only one ruler in modern times has done anything like that: Franklin Delano Roosevelt, who in 1933 had Congress decree that the very gold coins it had ordered minted as late as 1927 (designed by Augustus Saint Gaudens), were no longer legal tender. And which were then stolen. They say that Satan was the first Whig, but FDR runs him a close second.

            • It's different this time....No says:

              No, it was not on par with “Fiat ” money at all. You are correct in regard to the debasement of the denarius , actually after the reign of Gordian III circa 249AD, it was rarely minted and the double denarius…known as the Antoninanus was the main denomination. During the crisis reign of Gallienus it dropped to finesse from 35% to less than 5%, a silver wash. During this period the State broke up in three parts, the Gallic provinces under a ruler named Postumos, the Eastern provinces under the care of the Palymra rule of Queen Zenobia and her young son. Gallienus boasted that he could very well do without silk from the East, so suppose it cut off trade somewhat. The army decided enough was enough and elected two capable emperors in succession Claudius Gothicus and Aurelian both Illyrian
              and set things right under one rule after various campaigns.

              As a matter of fact Aurelian “reformed” the coinage and brought about revolt in Rome
              “The workers of the mint in Rome had been engaged in adulterating the coinage and Felicissimus was held responsible and executed. An uprising of the mint workers followed; it is reported that 7,000 soldiers were killed during this revolt (Aurelius Victor xxxv 6; Historia Augusta, Aurelianus, xxxviii 2-4), although it would not be surprising if this were an exaggeration. It is possible that this uprising was somehow connected with the senatorial and equestrian classes, as Aurelian executed several senators.

              Aurelian struck a radiate aurelianianus of increased weight (84 to the Roman pound) and fineness (5% fine) that was tariffed at five notational[clarification needed] denarii (sometimes called “common denarii” or “denarii communes” by modern writers, although this phrase does not appear in any ancient text). The coin carried on the reverse the numerals XXI, or in Greek κα (both meaning 21 or 20:1
              Some scholars believe that this shows that the coin was equal to 20 sestertii[clarification needed] (or 5 denarii), but it is more likely that it was intended to guarantee that it contained 1/20 or 5% of silver, and was thus slightly better than many of the coins in circulation
              During this period most all Eastern provincial city coins ended and eventually the Government demanded payment in either in goods or services or actual silver or gold.

              That was under Diocletian , who again attempted a currency reform, caused hyperinflation and issued the first price controls in his famous futile attempt to stop it by listing every conceivable product, service and how much could be charged.
              There just was enough gold and silver to enact a tri metal system of exchange.

              Hyperinflation reared its ugly head many times thereafter.

              Could write a book, which there are a number, along with many scholarly articles.
              Oh well, looks like History is set to repeat itself again!

    • Clearly globalization has to reach a limit. People didn’t realize how soon it would come.

  3. Harry McGibbs says:

    “Deutsche Bank’s recently announced restructuring meant to correct its decadelong financial woes could ultimately make matters worse. Indeed, it could become even more of a threat to taxpayers, the financial system and the global economy…

    “Reducing capital to increase short-term returns for shareholders is grossly irresponsible. Deutsche Bank is essentially diverting its critical loss-absorbing capital buffer — that would otherwise be available as a source of strength to weather an economic downturn — to placate its angry shareholders.”

    • Harry McGibbs says:

      “A Danish bank has launched the world’s first negative interest rate mortgage – handing out loans to homeowners where the charge is minus 0.5% a year.

      “Negative interest rates effectively mean that a bank pays a borrower to take money off their hands, so they pay back less than they have been loaned.”

    • The title of this article is “Deutsche Bank Shows it Learned Nothing from the 2008 Crisis.”
      In fact, I think it did. The last paragraph says,

      Deutsche Bank’s latest plan proves, yet again, that privatizing gains and socializing losses at too-big-to-fail global banks is alive and well.

      This is the way it always works.

      • Robert Firth says:

        “This is the way it always works.”

        As so often, Gail, a short message that goes to the heart of the issue. Thank you again.

        I would differ only with the word “always”. That is not how it always worked, but rather only how it has worked since 1718, when John Law persuaded a bankrupt French government to issue the first fiat currency of modern times.

        It lasted until June 1720, but Law was a pioneer. Today’s corrupt bankers can spin out the scam for much, much longer.

        “History is indeed little more than the register of the crimes, follies, and misfortunes of mankind.” Edward Gibbon.

      • Xabier says:

        In a declining civilization, vested interests will always be served -and serve themselves -first. No surprise in that!

        Other policies could have been implemented in 2008, but, realistically, the rich were always going to be protected from real losses.

        At some point, however, it all spins out of their control. Somehow, that feels like it is in the air now…..

  4. Harry McGibbs says:

    China is seizing upon Trump’s vacillation on some tariffs and the weakness in the the stock markets he so values, to reassert themselves:

    “China on Thursday threatened retaliation if Washington steps up their war over trade and technology by going ahead with planned Sept. 1 tariff hikes on additional Chinese imports.

    “Beijing will take unspecified “necessary countermeasures,” the Cabinet said in a one-sentence statement.”

  5. Yoshua says:

    “ECB’s Rehn makes big promises. Says stimulus package in Sep may beat expectations. “When you’re working w/ financial markets, it’s often better to overshoot than undershoot,” Mr. Rehn said.”

    The European bank index dropped to that critical support line that has always led to an intervention…

  6. Volvo740 says:

    Lately I’ve really been enjoying interviews with Tim Garrett. Here are a couple:

    It seems like his views are really in line with yours Gail, and in his analysis he is comparing humanity with a heat engine, an organism, or a growing child at time. Usually with one foot in thermodynamics.

    Highly recommended!

    Here is a link to one of his papers on this topic as well:

    “In what we might call the economy, energy consumption sustains all of civilization’s existing internal circulations against a continuous dissipation of heat at rate d and a material decay at rate jd. Civilization radiates heat to space while we and our physical infrastructure fall apart.”

    • Thanks for the tip!

      • Bob Lapsley says:

        You may already be familiar with Matthias Ruth. If not I think you might be interested.

        • I associate Ecological Economics with Robert Costanza and the idea that it is possible to be able to put a dollar value on the ecological services of, for example, the Gulf of Mexico. When the BP oil spill occurred, there estimates by related researchers that said that the gulf would never recover (or only over a very, very long period) and that the environmental cost would be astronomical. I refused to run these article on The Oil Drum when I was editor there.

          I hope that Matthias Ruth is better. The Biophysical Economists (the EROEI economists whom I have been loosely associated with, but disagree with) and the Ecological Economists have not gotten along well, for quite a long time. We shared a conference once in Vermont.

  7. GE Is New Target of Madoff Whistleblower
    Harry Markopolos releases report on GE’s accounting, claiming its cash situation is far worse than disclosed and GE needs to boost insurance reserves

    Harry Markopolos, who warned securities regulators about the Madoff investment scheme, is taking issue with how GE accounts for its long-term-care insurance holdings and for its Baker Hughes oil and gas business.



    GE shares tank more than 13% after Madoff whistleblower calls it a ‘bigger fraud than Enron’

    170 page download report with allegations is available at this link.

    The report is titled, “General Electric, a bigger fraud than Enron.”

  8. Denial says:

    No worries CNBC and Bloomberg both saying everything is ok panic is overblown! Everyone back in the boat!

    • If people weren’t on edge already, it would be easier to believe that everything is OK.

    • Harry McGibbs says:

      CNBC are talking about the US economy though:

      The Eurozone, Australia and NZ, the emerging markets + China, oil producing nations and most of the third world are telling a different story.

      • Harry McGibbs says:

        This article on CNN takes a more bearish tone:

        “…This is a very tricky environment for investors to navigate through. History suggests there is time to take advantage of future rallies to prepare for the next recession and raise cash before a major market downturn does unfold. But global economic data suggests a global recession may come a lot sooner than anyone anticipated.

        “And this reveals an uncomfortable truth: We’ve never faced a recession with so much debt and so little Fed ammunition available and with negative rates still in effect in many countries. There’s no playbook for this. Historic data may be of little predictive use.

        “A sudden end to the trade deal may be imperative — without it we don’t have much time before the next recession begins.”

      • Jan says:

        That is not the case, Germany is in a technical recession and people all over Europe are facing a backlash in lifestandards. Great Britain is more or less ungovernable, so is Italy and Spain, Germany needed half a year to form a government, Austria has an expert government, France only covers up problems with Macron. Belgium and the Netherlands could fall to pieces and Eastern Europe is on the authoritarian path.

        • when economic systems have a surplus of energy input, the government could be a troup of performing monkeys and most people wouldn’t be aware of the difference.

          Problems only arise, in any serious critical sense, when there is a period when energy is in short supply for a prolonged period of time.

          It is then that politicians run around like headless chickens because they do not know what to do about it than aforesaid monkeys would–or you and me for that matter.

          in the past fluctuating economic conditions have caused disruption (eg 1974 Arab oil embargo) but then the oil pump is reprimed and things get back to normal;

          this time it’s different.

          there’s no cheap surplus oil to reprime the pump with, and governments are fully aware of it—but ‘growth promise’ is all they know, so they keep repeating that with fingers crossed, while people sense that the system is screwed up.
          fracked oil will keep the system going, but fracked oil is produced at a net loss, Few can accept that.
          UK oil costs $53 bb to produce, but current market price is only $55–so that’s a dead loss.

          Europe (EU) is falling apart because it was created on the promise of infinite prosperity (as opposed to centuries of war)
          All our glorious leaders believed that–and almost everyone else. The lightbulb only flashed over my head about 5 years ago when I figured out what was wrong.
          (After all–why couldnt we all love one another?)

          Right now the masses are listening to petty fuh rers because, just like last time, there are no other leaders offering solutions.
          The last one sold the Germans a Ponzi scheme.
          This time will be no different

          View at

  9. denial says:

    Maybe so the last time feels like we are in 1930 all over again…. here is the last time we did tariffs

  10. It's different this time....No says:

    This is a classic from Ibon at Peak Oil News that I like to share with my fellow OFW readers

    “Considering what this site is about may I remind everyone that an extended global recession will result in demand destruction and scale back consumption and CO2 emissions a zillion times more effectively than your most enlightened international climate accord.”

    Exactly! Unfortunately, that isn’t the whole picture and I suppose there are many other spin offs that could be applied…like human suffering, international conflicts, government, financial, societal collapse, ECT, ECT …

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