We often hear the statement, “When oil supply is lower, oil prices will rise because of scarcity.” Now, we are getting to see firsthand whether oil prices really do rise, as oil supplies become more scarce.
Figure 1. Figure from the OPEC Monthly Oil Market Report for August 2019 showing world and OPEC oil production by month.
Figure 1 shows that world oil supply hit a peak in November 2018 and has declined since then, mostly because of a decline in OPEC’s production. So, total oil production seems to be down for about eight months, relative to the peak in November 2018.
Despite this big cutback by OPEC in its oil production, prices have not responded as OPEC had hoped:
Figure 2. Average monthly spot Brent Oil prices, based on EIA data.
In fact, as I write this, Brent oil price is currently quoted as $60.48, which is back in the range of December 2018 and January 2019 low prices. Also, reducing production doesn’t seem to be reducing inventories. Figure 3 suggests that they are now higher than they were before the reduction in oil supply took place.
Figure 3. Figure from the OPEC Monthly Oil Market Report for August 2019 showing OECD commercial oil stocks.
Why aren’t oil prices rising and oil inventories falling, if oil production has fallen?
The basic issue is that the economy is very much interconnected under the laws of physics, because energy is required for every activity that is considered part of GDP. Energy is required for any kind of heat or any kind of movement. Energy is even required for electricity. Without energy from the sun, food can’t grow; without supplemental energy of some kind (such as using electricity to heat an electric stove or burning animal dung or sticks), it becomes impossible to cook food or smelt metals.
One strange phenomenon that arises from the interconnected nature of the economy is the fact that the prices of all energy products (including those not listed on Figure 4) tend to move together.
Figure 4. Comparison of changes in oil prices with changes in other energy prices, based on time series of historical energy prices shown in BP’s 2019 Statistical Review of World Energy. The prices in this chart are not inflation-adjusted.
This strange phenomenon arises because energy products are well-buried within every part of the world economy. A person’s job requires energy consumption. The tasks that governments do, such as building roads and schools, require energy consumption. Both transporting and cooking food require the use of energy products. Refrigerating food requires energy products. These energy uses, as well as many other everyday hidden uses of energy, aren’t things that we can easily cut back on.
Consumers often think, “I will drive less, and that will cut back on my energy consumption.” Unfortunately, in the whole scheme of things, whether or not individuals cut back on their optional use of gasoline doesn’t get the world economy very far. Gasoline accounts for about 26% of world oil consumption, or about 8.7% of total energy consumption, based on the most recent BP energy data. Cutting back on the optional use of gasoline would not reduce total consumption very much. If it were possible to reduce gasoline consumption by 10% by voluntary cutbacks, it would still reduce world energy consumption by less than 1%.
The strange pattern of the price changes shown on Figure 4 indicates that there is something affecting energy prices of many kinds, simultaneously. I would describe this as “affordability.” It has to do with how affordable finished goods and services are to the population in general, much more than it does scarcity. (Economists call this affordability issue “demand.”) If finished goods and services are affordable to a large number of consumers, as they were in 2008 and in 2012 and 2013, prices will be bid up to very high levels (Figure 4). If finished goods and services aren’t very affordable, a drop-off in prices, such as that experienced in November and December of 2018 (Figure 2), is likely to occur.
When OPEC decided to cut back its production of oil in response to the low prices in late 2018, this cutback in oil production didn’t help the affordability of finished goods and services. In fact, this cutback probably made the worldwide total quantity of affordable finished goods and services a little lower. This happened because, with the cutback in oil production, the governments of OPEC countries were able to collect less tax revenue on the smaller quantity of oil that the countries were selling. In fact, this smaller quantity of oil wasn’t even being sold at a higher price.
With lower revenue, governments of OPEC countries are being forced to cut back on funding of new projects such as roads and schools. These projects will use fewer energy products, and the would-be workers will have less money to spend on goods made with energy products. Thus, these cutbacks help to lower the world’s “demand” for oil and other energy products and thus help lower the price of oil.
The fact that the economy is interconnected in this strange way makes shifting prices upward much more difficult than if scarcity were the primary issue. In effect, the whole stack of energy prices in Figure 4 must somehow be made to rise. This is difficult to do because it is the lack of wages of the many poor people around the world that is holding back “demand” for energy products. If, somehow, higher wages could be sprinkled on the many poor workers of the world, including those in India and Africa, then oil (and other energy) prices would tend to rise. With higher wages, these poor people would be able to afford items such as nice homes, cars, and air conditioning, pulling world food and energy demand upward.
One difficulty with rising oil (and other energy) prices: They don’t translate into rising wages.
Rising oil prices tend to cause recessions and layoffs. We can see this from historical data. Average wages, considering layoffs, tend to fall rather than rise during times of spiking oil prices. In fact, the chart seems to suggest that the big increases in average wages tend to occur when oil prices are under $40 per barrel. A growing supply of cheap energy thus seems to be the magic ingredient that shifts wages upward.
Figure 5. Average wages in 2017 US$ compared to Brent oil price, also in 2017 US$. Oil prices are from BP’s 2018 Statistical Review of World Energy. 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.
Because of this difficulty with spiking energy prices, high energy prices tend not to last for very long. One issue is that regulators quickly raise short-term interest rates to solve what they perceive as “the problem of rising food and energy prices.” Once recession sets in (gray bars in Figure 6), regulators find that they need to lower interest rates and raise the level of debt to stimulate the economy again. With lower interest rates and more debt, major purchases (such as homes, cars, and factories) become more affordable, because purchases bought on credit have lower monthly payments. With greater affordability, food and energy prices again rise, to again encourage more production.
Figure 6. Three-month and ten-year interest rates through July 2019, in chart by Federal Reserve of St. Louis.
So we end up with an endless seesaw of energy and food prices. In fact, the peaks have tended to fall lower and lower since 2008, as can be seen in Figure 7, showing monthly average prices.
Figure 7. Monthly average Brent Oil prices since January 2000, based on data of the US Energy Information Administration.
Monthly average peaks started at $132.72 in July 2008. More recently, peaks have fallen as follows:
- Peak of $125.25 for the month of March 2012
- Peak of $109.54 for May 2014.
- Low month average price of $30.70 in January 2016.
- Most recent average peak was $81.03, for the month of October 2018.
From this pattern of falling peaks, we can see that the stimulus being used recently (which includes Quantitative Easing in some parts of the world) has become less and less effective at stimulating demand for food and energy products.
It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.
Oil prices can be a problem in two different directions: (a) Too high for consumers or (b) Too low for producers.
From the Point of View of the Consumer. Many people have had the “Ah Ha” moment, in which they have figured out that high oil prices are a problem from the point of view of consumers. In part, they have deduced that these high oil prices may mean that we are “running out” of cheap-to-extract oil. Processes are becoming more complex, and as a result, consumers need to pay more to cover the higher cost of extracting and refining the oil.
But there is a related issue: Higher oil prices are likely to cause recession. If oil prices rise, the prices of many different types of goods and services (such as food, goods transported by truck or airplane, and vacation travel) rise at the same time. Wages don’t rise as quickly, in part because it is the true energy content (measured in Btus, barrels of oil equivalent, or something similar) that the economy requires. If the economy needs to dedicate a larger share of its resources to producing energy products, this is an issue that is akin to growing inefficiency. There are fewer resources remaining (such as human labor, metals, fresh water, and energy products) for investment that might provide goods such as new homes, cars, clothes and air conditioning.
With fewer resources to use, the economy reacts by shrinking back. I think of the situation as being akin to the way a chemist might “make a smaller batch,” if the quantity of one necessary reagent is low. An adequate supply of energy products is what makes the economy operate as it does; if buying an adequate amount of energy products becomes too expensive for consumers, a cutback in the buying of discretionary goods is forced on the economy (Figure 8). Lowering interest rates tends to make the debt repayment portion on new purchases lower, helping to alleviate the squeeze.
Figure 8. Chart made by author in 2010, to illustrate a talk called Peak Oil: Looking for the Wrong Symptoms.
From the Point of View of the Oil Producer. There are oil producers of many kinds, including:
- Tight oil producers from shale operations,
- Heavy oil producers in places such as Canada and Venezuela,
- Producers of oil from deep water such as Brazil and Angola, and
- Middle Eastern oil exporting countries that seem to have a very low direct cost of oil production.
Strange as it may seem, Middle Eastern oil exporting countries are among the most vulnerable to problems associated with continued low oil prices. The reason why these countries are so vulnerable is because their entire economies are oriented toward oil and gas production. They often have large populations with inadequate income unless the government provides them with handouts or with programs that provide jobs. If these governments need to cut back too much, there is a real danger that the governments will be overthrown. In fact, the population may break down into warring factions. Oil production may stop because of internal disorder.
It is because of issues such as these that the OPEC countries have cut back on oil production, in the hope that prices would rise to more acceptable levels for their countries. Fiscal Breakeven prices, relating to the level of oil prices that are needed so that each government can collect sufficient taxes for its budget, are published from time to time.
Figure 9. Chart published by the Arab Petroleum Investments Corporation (APICORP) giving Fiscal Breakeven Prices estimated to be needed for 2013.
Now that oil prices have been low since late 2014, Middle Eastern countries won’t admit to the true level of oil prices that are needed to operate their countries in the way that they have in the past. Their populations have been rising faster than their oil production, so it is hard to believe that the oil prices that the countries truly need, if they do not cut back on programs, are any lower than the amounts shown in Figure 9. At about $60 per barrel, the current Brent Oil price is clearly far too low for the major oil producers of the Middle East.
Shale and heavy oil producers are often less vulnerable than Middle Eastern producers, because the entities funding their operations (that is, buyers of shares of stock and providers of debt) believe that “of course” oil prices will rise in the future because of scarcity. Because of this, they are willing to provide additional funding, even when a recent owner has gone bankrupt from low prices. Middle Eastern oil producers have less of this benefit. If the money isn’t available for major programs, they are forced to cut back. Growing debt is unlikely to cover more than a portion of the shortfall.
There are other producers in the energy price “stack” in Figure 4 that are vulnerable to collapse or bad outcomes from continued low energy prices. One example is coal producers in China. China seems to be experiencing Peak Coal because of continued low coal prices; while new mines have been opened, they do not act to increase the total quantity produced, because so many mines needed to be closed because they were losing money at current low prices.
Figure 10. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.
If the world economy is hoping for China’s increasing demand to pull the world economy forward in the future, it is likely kidding itself. China cannot expect imports to make up for its lack of growth in coal production. China’s lack of adequate energy supplies likely underlies the tariff issue that we hear so much about. There is a need to pull back production of goods from China, if China doesn’t really have the energy resources to continue in the role it has been playing.
The big question is how high oil prices will be in the future
The contention of the IEA and many others is that energy prices can rise arbitrarily high. For example, the IEA showed the figure I have numbered Figure 11 in its World Energy Outlook 2015 .
Figure 11. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much non-OPEC oil can be produced at various price levels.
The big groupings in Figure 11 are
- Conventional Crude (such as from the Middle East and perhaps deep water like Brazil),
- Tight Oil from Shale, and
- Extra Heavy Oil and Bitumen (such as from Canada and Venezuela).
Evidently, in 2015, the IEA believed that $300 per barrel oil prices were not too high to show as a possibility on a chart. With $300 per barrel oil, there would certainly be enough oil. At such a high price, it might be possible to move the city of Paris, France, out of the way and extract the tight oil from shale underneath it!
Unfortunately, in the real world, prices cannot rise this high. Market prices are set by the laws of physics. The economic limit we reach is a price limit that pushes the economy back into recession. We have seen in Figure 7 that this price limit seems to be dropping lower and lower, over time. In fact, I am one of the coauthors of an article published in the journal Energy called, An Oil Production Forecast for China Considering Economic Limits. This 2016 article makes the point that the economic limit we are reaching is a limit on how high oil prices can rise. I am the lead author of Section 2, which discusses this issue at length. If prices cannot rise high enough, the vast majority of the oil that seems to be available based on published reserve amounts and geological surveys cannot really be extracted.
Whether there are ways to raise oil and other energy prices higher than they are now remains to be seen.
Why don’t standard models forecast low oil prices in the future?
Economists have put together a simple model of how the economy works. In their model, there are always substitutes. The only thing that goes wrong seems to be that prices rise, if there isn’t enough supply. These rising prices encourage greater supply and substitution. The type of chart a person typically sees is a Supply and Demand curve as shown in Figure 12.
Figure 12. Supply and Demand model from Wikipedia.
Attribution: SilverStar at English Wikipedia CC BY 2.5 (http://creativecommons.org/licenses/by/2.5)], via Wikimedia Commons
They have never considered a situation where energy products are deeply buried within essentially all goods and services that are made. If there isn’t enough supply, a “smaller batch” of the world economy is made. We think of this as recession, but it can take on other forms as well:
- Depression
- Wars
- Epidemics
- Defaulting debts; falling prices of assets
- Failing governments and intergovernmental organizations
- Collapse of the central government of the Soviet Union in 1991
- UK’s decision to leave the European Union
- Increasing conflict between political parties and between countries
- A reduction in globalization
- Ultimately, the collapse of a civilization
Economists have not understood the connection between physics and the economy. There is a need for a sufficient quantity of affordable energy products every moment of every day. In fact, we seem to need a vastly increased quantity of inexpensive-to-produce energy supplies right now if we are to fix the world economy’s problems from an energy point of view. The “lower interest rates and more debt” way of hiding problems seems to be reaching an end point. If nothing else, interest rates today are close to as low as they can go.
Is the economy approaching a singularity?
In physics and math, a singularity is a point at which a function takes an infinite value. We end up with a situation that seemingly cannot exist. It is like dividing the number 1 by the number 0. No matter how many times that the number 0 is added together, it will never equal 1.
The economy seems to be reaching an equally strange situation. It is not a situation where we are running out of oil; it is a situation of too much wage disparity, and this wage disparity makes the prices of many commodities too low for producers of these commodities. For example, farmers cannot afford to pay their mortgages. And prices for all fossil fuels and many metals are too low for companies extracting these materials to make an adequate profit for reinvestment and taxes. The problem is not simply low oil prices.
This situation of excessive wage disparity is related to globalization, with many workers around the world earning very low wages, so that they cannot afford goods such as homes and cars. It is related to the increased use of robots substituting for manual labor. It is also related to wage disparity within countries as jobs become increasingly specialized.
As this situation plays out, energy prices fall when common sense would seem to suggest that they should rise. In fact, the problem of falling prices extends to more commodities than fossil fuels and food; it extends to minerals of many kinds, including copper and aluminum.
In such a situation of falling commodity prices, we can expect many related problems. For example, governments of countries that depend on the revenue of these exports may fail, leading to Balkanization of these countries in some cases. A wide range of debt defaults can be expected, leading to failing financial institutions that need to be bailed out. Rapidly changing relativities among currencies are likely to put markets for derivatives at the risk of failing. Needless to say, stock markets are likely to be adversely affected. So-called renewables will quickly fail because they are currently dependent on fossil fuels for repairs and the electric grid. In fact, it is hard to see any aspect of the world economy that can continue unaffected.
How does what appears to be an approaching calamity play out?
Perhaps it is fortunate that we don’t really know. Collapses of early economies seemed to take many years, typically over 20 years. Today, the world economy depends on global supply chains and the electric grid. The financial system is also very important. It is hard to believe that the overall system can stay together for many years, but perhaps, in parts of the world, it can. We just don’t know.
Given how connected the economy seems to be, and how widespread the problems seem to be at the singularity we are reaching, it almost appears that there is a plan behind what is happening. From what we can observe, there seems to be some literal higher power behind all of the energy flows that we observe in the universe. This literal higher power seems to have put into place all of the laws of physics. This literal higher power seems to also be behind all of the self-organizing elements within the universe, including humans, ecosystems and economies. I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.
Gail, regarding your speculation about a higher power, in the last paragraph of this article: Look into the work of Tom Campbell: lifelong professional physicist, mathematician and – most productively – a gifted mystic (or shaman, if you prefer; fruitful combination!). It seems to me that Tom’s ‘Big TOE’ – his comprehensive Theory Of Everything – will prove to be a major advance in our understanding of the basic nature of reality, a key contribution, in fact. And yes, it does start from the postulation of a Larger Consciousness System, the LCS, as the originator of our entire reality, including the laws of physics as its – carefully-tweaked – operating system and basic rule-set. I surmise that, when viewed from the perspective of hindsight, this will be regarded as another Galileo/Copernicus/Kepler/Brahe moment in the history of science; literally that revolutionary, in the current paradigm-shift ferment that’s right now going on in theoretical physics; and deeply pertinent to the global upheavals now happening in the ecologico-politico-economic field:
https://www.my-big-toe.com
I looked at this a bit tonight. I will need to listen to some of his lectures or do a little more looking at it when I am more awake.
Thanks Rhisiart: I took a little time to view his slide show.
1. It doesn’t help that in slide 3 he misspells “matter” and cannot tell the difference between “bottom up” and “bottoms up” (perhaps he was thinking of a virtual pub). Also, they are some of the worst prepared slides I have ever seen. Virtually unreadable, insanely repetitious, and dense with jargon. A slide full of 8pt type doesn’t really work.
2. Presentation aside, what of content? I am a former student of Paul Dirac with a PhD in quantum mechanics from Cambridge, so do have some understanding of this subject. My take is that his “TOE” is almost pure drivel. He even gets something as simple as the double slit experiment completely wrong. Taking about 30 slides to “explain” what Cramer’s “Transactional Interpretation” polished off in five lines of mathematics.
Feel free to disagree (vehemently if you wish; QM allows that), but colour me unimpressed.
Catch up as you can, Robert. But don’t delay: the materialism/idealism pendulum is swinging again. Good luck! 🙂
Thank you for your evaluation Robert! I appreciate your willingness to honestly evaluate material.
I went back and re-read this article of yours. It’s now 12 years old!
http://theoildrum.com/node/2984
It really feels like the tariffs could the the start of the collapse of the monetary system, which by and large I think still “works”.
Gold gaining now could also be a sign the someone is starting to move fiat money. Whether it will keep the value or not I’m not sure, but if you have lots of $$$ why not allocate some in gold?
Thanks for the article!
The article you mention is called, “Economic Impact of Peak Oil Part 3: What’s Ahead?”
This was written back when I first started thinking about the potential impact of limited oil supply, and didn’t realize how tightly linked it would be to other energy supply. It is also before the Great Recession.
Regarding investments, I have tended to say diversification is a good idea. Gold coins might be part of this diversification. The farther a person gets from the real thing (shares of stock, or ETFs), the less likely that they will be helpful when needed.
Gail, engineers need a target if they are tasked with solving a problem. We have discussed what the target should be for years. Worth restating?
BTW, unexpected behavior from social and economic systems was one of the main results from Urban Dynamics, the study that eventually led to the LTG model.
I am afraid I have never looked at Urban Dynamics. Is there a book about it?
https://www.amazon.com/Urban-Dynamics-Jay-W-Forrester/dp/1883823390
You might be able to get it through interlibrary loan.
Thanks!
https://en.wikipedia.org/wiki/Jay_Wright_Forrester#Counterintuitive_Behavior_of_Social_Systems
Counterintuitive Behavior of Social Systems is a 1971 paper by Jay Wright Forrester. In it, Forrester argues that the use of computerized system models to inform social policy is far superior to simple debate, both in generating insight into the root causes of problems and in understanding the likely effects of proposed solutions.
Description
Forrester characterizes normal debate and discussion as being dominated by inexact mental models:
The mental model is fuzzy. It is incomplete. It is imprecisely stated. Furthermore, within one individual, a mental model changes with time and even during the flow of a single conversation. The human mind assembles a few relationships to fit the context of a discussion. As the subject shifts so does the model. When only a single topic is being discussed, each participant in a conversation employs a different mental model to interpret the subject. Fundamental assumptions differ but are never brought into the open. Goals are different and are left unstated. It is little wonder that compromise takes so long. And it is not surprising that consensus leads to laws and programs that fail in their objectives or produce new difficulties greater than those that have been relieved.
^^^^^^
It strikes me that the price of oil staying low is counterintuitive. I wonder if a dynamic model would show low prices?
We have two sides in this contest–the producers and the consumers. Some of the time, the balance is tipping toward the consumers; some of the time, the balance is tipping toward the producers. Whenever the price gets too high, the Powers that Be raise interest rates, squashing demand, and sending oil prices lower. This, by itself, determines that prices will never rise too high.
The library is radical democracy.
I wont comment further.
LTG derivative models are already running at supercomputer installations predicting likely outcomes of economic and governing policies.
“Supercomputing has the potential to be the underlying layer to support solutions for many of the world’s most pressing contemporary challenges: global privacy and identity issues, stalemates in medical research, and sustainable supply-chain logistics, to name a few.
As we move from the conclusions of the first Council to the goals of the second, we will build upon what has already been achieved to advance a human-centric vision of the future of computing. After all, it’s not only computers that will soon go exascale: humanity will, too.“
https://www.weforum.org/agenda/2019/02/supercomputing-could-solve-many-of-the-world-s-problems-and-create-many-more/
There you have it. It is time to go exascale and floor this mofo and keep going until the end of this century and beyond.
The consumerism is dead, long live the consumerism. Let’s put all the capital science, engineering to get rid of this brutalist BAU and stop financing the ultimate perpetrators in mainland China.
https://media.nature.com/w800/magazine-assets/d41586-018-06610-y/d41586-018-06610-y_16109962.png
“supercomputer”
You don’t need supercomputers to run system dynamic models. The original work was done on computers with substantially less number-crunching capacity than a typical smartphone.
The main problem is how well does the model correlate with the real world? A long time ago Dr. Peter Vajk went through the code for the model that generated the graphs for LTG. He found that the model had completely unexplained “fudge factors” in it.
Vajk’s work was to see how the outputs would change given inexpensive energy from space. He reported on this work in a book, “Doomsday has been Canceled.” https://www.amazon.com/Doomsday-been-cancelled-Peter-Vajk/dp/0915238241
I don’t understand the psychology involved, but there is a great deal of hostility toward any ideas that might provide an alternative to the conclusions of LTG. It seems to be widespread that humans get emotionally attached to doomer ideas. We certainly have seen a lot of that here.
I agree.
The point of supercomputer is to allow real-time simulation and policy making.
Faster computation results in more effective policy making ahead of other (nations).
That’s the raison d’être.
Original LTG model included “unlimited energy” as one of the ‘runs’, the conclusion was the same, with collapse due to something else going wrong ‘pollution’ from memory. I reread LTG a couple of months ago. I suggest others do the same before trying to call Meadows et al, incorrect.
The Limits to Growth authors have made it clear in their talks, perhaps more than in the book itself, that the shape of the curve after collapse starts to hit cannot be relied upon, because that is something they did not understand and is not built into the model.
This limitation is especially important in a model that doesn’t include debt or a financial system.
Does population decline signify a reduction in well-being? It is doubtful, since most industrial nations without a positive net immigration has a shrinking population. For example, the population of Japan will be back to the levels in the 1950’s by the year 2100.
https://www.theatlas.com/i/atlas_rJ_eR8MxQ.png
Is that a bad thing as resource constraints hits? I would definitely conclude it is a good thing to ensure the prosperity of the children as the resources dwindle. And it will also naturally re-balance the population pyramid into a flatter pole-like shape instead of the two pyramids of madness.
Continuing the trend of growth by consumption and population is surely a way to dystopia in which the interpretation of the LTG model is completely different.
Again, let’s read the words of Isaac Asimov:
https://www.azquotes.com/picture-quotes/quote-democracy-cannot-survive-overpopulation-human-dignity-cannot-survive-it-convenience-isaac-asimov-78-50-16.jpg
But they didnt include space colonization or uploading!
No, those were utterly beyond the imagination of the people who worked on LTG. In fact, people who got into LTG, for example, those at a conference I was at in 1976, seemed to be utterly hung up on doom and were actively hostile to anyone one who said there might be ways out.
One of the authors, Behrens I think, moved out into the woods and waited for the food riots to start.
I should add that either space colonization or uploading may cause a population crash on earth. I have speculated about uploading in the fictional “clinic seed.” I suspect that if uploading becomes possible at all, the entire population will do it. However, I had to leave 1% of the population out of the uploaded state just to have characters for the other chapters of the story.
It is one way for the race to go biologically extinct. If you want to read it,
http://www.terasemjournals.org/GNJournal/GN0202/henson1.html
Didnt they run a dozen scenarios where only about half ended in doom?
But since they stayed on the planet all ended growth.
I looked back at the book, which is available free online.
http://www.donellameadows.org/wp-content/userfiles/Limits-to-Growth-digital-scan-version.pdf
There are 10 different models. The models only go to 2100. It is clear in all of them that resources will keep running down, so that at some point, they will have to crash. But a few of them don’t crash before 2100. Two of them are clearly on the way to crashing in 2100, and another two are considered “Stabilized.” If a person looks at the resource lines in each of these Stabilized models, they also are crashing, so it is clear that they are not stabilized for long. So I would say that none is a truly sustainable state.
This is what the book says in the captions of each of these models that crash after 2100.
Figure 45 WORLD MODEL WITH STABILIZED POPULATION AND CAPITAL
Figure 46 STABILIZED WORLD MODEL I
I think the assumption of births equal to deaths each year is absurd. Can you imagine allocating a number of births to every country in Africa based on the number expected to die, for example? Industrial capital equal to capital depreciation means that a large share of resources must go into replacing what has depreciated, bringing down resources. I think all of these things are wishful thinking, “Technological policies include resource recycling, pollution control devices, increased lifetime of all forms of capital, and methods to restore eroded and infertile soil.”
Figure 47 STABILIZED WORLD MODEL II
While this model doesn’t crash before 2100, it is clear that resources are rapidly dropping, so it will crash. At least the population estimates are a bit less unreasonable.
Figure 48 WORLD MODEL WITH STABILIZING POLICIES INTRODUCED IN THE YEAR 2000
So the system is well on the way to crashing. Resources are hugely depleted by 2100.
Ecofascism is not a new idea.
” included “unlimited energy””
It has been a long time, but I don’t think the LTG model had an energy input. Perhaps they used unlimited resources without any provisions to reduce pollution.
Of course, with unlimited cheap energy, we could quit burning fossil fuels and even pull CO2 out of the air.
Why would we want to pull CO2 out of the air?
Let me guess….to keep some idle people busy?
Palease don’t say for CC
“Reversing combustion”
Making gasoline, diesel, jet fuel, plastics. Probably diamond structural elements. We don’t know how to do this well yet, but when we are able to do that it may cause climate problems by reducing the CO2 too far.
Given the close tie between energy consumption and growth, I consider falling production, falling or stable prices and rising inventories a clear recession indicator.
A person might think so.
Well it’s obvious that the financial and tech economies are the not-so-clandestine attempts to work around the constraints of energy supply and demand. I expect a market rally on Monday.. just because.. why not? Tech will save us, the bourse will save us, economic redefinition schemes will save us, etc etc. So China nor Trump will affect the 200-day moving averages of techno-optimism, progress, and growth
Lol, yep, a fantasy camp.
Entropy is a cold bitch
Cold: but everyone and everything is, somehow, drawn towards her……..
Entropy is the ultimate peace, just go with the flow you will be assimilated.
Do you even know the definition of entropy, energy, temperature and how it is defined?
It is simply a measure of how many joules(energy) needed for a temperature increase. Different materials need different amounts of energy for a corresponding increase in its temperature.
There exists high entropy alloys which require an unusually large amount of energy for increasing its temperature. It is an active field of research.
https://en.m.wikipedia.org/wiki/High_entropy_alloys
So high entropy alloys are apparently a b*tch?
🙂
Interesting! I have never run into these before.
definition of entropy
1.
PHYSICS
a thermodynamic quantity representing the unavailability of a system’s thermal energy for conversion into mechanical work, often interpreted as the degree of disorder or randomness in the system.
“the second law of thermodynamics says that entropy always increases with time”
2.
lack of order or predictability; gradual decline into disorder.
Cutting and pasting stuff from Wikipedia does not constitute understanding. You must have a clear knowledge of the units, multiplication and division.
Just as Gail explains that multiplication is a form of compact addition, division is a form of subtraction. The same holds true for units in thermodynamics.
Entropy in its simplest form is a measure of a material resistance to temperature increase per energy unit supplied, since the unit for entropy is is in Joule(energy) per Kelvin(temperature) J/K.
It is similar to the Ohm relation, dividing the voltage by the current gives a measure of resistance. U/I
It is of course ripe for esoteric explanations, just like quantum physics and relativity theory have given rise to all sorts of jank science.
I can recommend the series from Sky Scholar created by the scientist behind the theory and application of modern microwave MRI scanners
i understand it perfectly well
I cut it from wiki for reasons of simplicity, because that is the basic definition of entropy, no point in me rewriting it using a different set of words to arrive at the same meaning.
left in a pot or cup—your tea will grow cold, not hot, untill additional units of energy are added to the original volume of tea.
Left untended, (ie no energy input) your house will crumble to dust, as will your car. And yourself of course. Maybe I’ve missed something, but I can’t see what difference word-embroidery will bring to that.
You are confusing thermodynamic processes with other kinds of processes in the real world. Just because something is underpinned by thermodynamics does not make it analogous with all processes.
For example: You and I are genetically programmed to crumble with age. It has nothing to do with thermodynamics.
Trees are eternal, it is forest fires, disease and man made chainsaws that brings them down.
“The Senator was one of the oldest and biggest bald cypress trees in the world with an estimated age of 3,500 years.”
http://www.oldest.org/nature/trees/
The moon and earth is billions of years old, when do they crumble to space dust and disperse in the cosmic wind?
Now; does not entropy care about trees and planets in the solar system?
http://www.oldest.org/nature/trees/
It never fails to amuse me when I read into a web site and find an old friend, Tom Harlan, listed.
China is not going to blink. Their stances on hong kong and Iran signal that. This is the new normal. The USA will blink in 2020 with a new pres and beg for some more slave labor goods
with a president way more crazy than trump just in a different way. Or maybe a nice war? Wait until wall street gets full into their shorts and in bear mode. Luring folks in to catch falling knives. They have talents there and its time to use them as the upside is a bit over the horizon..
“…way more crazy than trump…”
Is that even plausible?
https://www.salon.com/2019/08/24/trump-considering-slashing-medicare-and-social-security-after-1-5-trillion-tax-cut-for-the-rich_partner/
“After exploding the federal budget deficit with over a trillion dollars in tax cuts for the rich and massive corporations, President Donald Trump is reportedly considering using his possible second term in the White House to slash Medicare and Social Security — the final part of a two-step plan progressives have been warning about since before the GOP tax bill passed Congress in 2017.”
“Sen. John Barrasso (R-Wyo.) told the Times that his party has discussed cutting Medicare and Social Security with Trump and said the president has expressed openness to the idea. “We’ve brought it up with President Trump, who has talked about it being a second-term project,” said Barrasso.”
“The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt,” said the National Committee to Preserve Social Security and Medicare. “Now we know how they’ll pay for those tax cuts, by cutting Social Security and Medicare.”
I suppose none of this matters if we actually do have a complete collapse followed by mayhem and whatever comes after that, but since predictions of collapse keep slipping into the future well beyond earlier predictions, we may not want to commit anymore abuse to ourselves than has already occurred by the huge tax cuts outlined above.
But many Americans seem to feel that sacrificing their own well being for a minor percentage at the top is their patriotic duty, and if that is the case then by all means the US should re-elect Trump. Go for it, but don’t whine when retirement is much harsher than expected because everyone was warned.
Retirement appears to becoming harsher, returns of 7-8 percent assumed in pensions are no longer available, SS is cash flow negative and is really a very good deal for almost everyone except the young paying into the system. As Gail states, it is a pay as you go system which requires a growing population, the simple example is assume your children have to provide for you in your retirement, how much can they afford? A constant influx of workers means more workers per retiree. The problem is us, we want more than our resources can afford or our direct descendants can afford to provide.
Many politicians have stated publicly the main budget issues are the entitlements. Defense spending probably has as many spin offs of good ideas as any program and could well be an excellent investment. Doubt that? Well, the internet is a direct result of defense programs if I understand correctly. Modern jets are the most efficient way to travel, the jetliner is a direct descendant of the B-47 and B-52 programs the swept wing of which was a direct descendant of German Defense programs in jet aircraft. Think of jet transportation as being ecologically friendly, trains are not efficient which is why they require government subsidies all over the world.
So this post should be good for some discussion.
Dennis L.
Don’t agree with the latter points/paragraphs.
Jet fuel burns the higher quality fossil product distillates, also the implied idea that air travel is the most/more efficient and stands on its own legs economic-wise is preposterous. As airports build up is usually connected to massive public subsidies and jet travel companies are known perennial debt junkies if not worse (scams).. Recently free money/credit subsidized jet travel eats into long distance fast railway passenger occupancy (economic book) that’s obvious.
On the other hand surface urban/suburban public transport (notably trams/trolleys) is the most efficient mode of transportation, single coach (of many in series) takes ~1,5-3kW of peak power per passenger given spec nominal occupancy. Now in real world with mean/avg lower occupancy that still translates into ~ <<20kW of power per passenger, which is a fraction of today's private car fleet. True, big fast trains tend to consume a bit more but not by much, on the other hand the infrastructure is massive upfront investment.
Now to your point of more distant travel-transport options. Fast rail comes in many flavors as there are various ~160-200-250-300+ km/h route designs and traction systems available. Every region and country deals with slightly different topography and urbanism, so to force on every problem the fastest option makes no sense.
Is that a magic solution, nope, it runs on spare parts and upkeep as any human made contraption and infrastructure.
https://www.youtube.com/watch?v=bR4Pou2NHv4
Latest reiteration of Shinkanzen : “Alfa-X” with 22m long nose – high speed train for deployment across Japan. Somewhat more unique project is the 500+ km/h Maglev – magnetic levitation train and track under construction..
It is awesome, an true exercise in technology, industrial prowess, speed, and grandeur. Samurai style.
We are indeed watching the future of transportation for the industrial civilization.
What are we waiting for? Let’s crank up the nukes, concrete and steel factories to 11.
https://www.theprch.com/this-vs-that/fuel-efficiency-planes-vs-train-bus-car/
W, I am not an expert and really have nothing intelligent to add but an interesting exercise might be to compare the cost of a plane ticket to a train ticket to a bus ticket between two cities. As of this post, Chicago to Minneapolis flight is about $110, train train $75 and eight hours travel time per schedule, bus about $35. This would agree with the web site regarding bus being the most economical way to travel in US.
Chicago to Seattle air about $160, train $147, bus $238 which is a long ride on the dog. Amtrak gets some government subsidy, air probably very little(a guess only) as airport landing fees should cover costs of airport along with leasing shop space, etc.
Light rail in the cities is nice but very slow if the walk to and from stations is included, I tried it and it was about an hour from Grand Avenue in St. Paul to the UM campus, there is generally about a ten minute wait for the train on average. It is very nice but I have witnessed a purse snatching by a group of youths of lone, unaccompanied women. No one offered to help her, everyone looked away, I did move close to her, still three against one, poor odds. Transit police on every car would raise costs considerably or dental bills to repair missing, damage teeth would also increase the cost of the ride.
Dennis L.
Yes, the situation in the US is exceptionally skewed towards “subsidized” air travel. I tried to explain some of the reasons above. Realistically, Amtrak slow service performance is something even ClubMed/ME or Russia abandoned decades ago..
Interestingly enough, I found out that even Japan still runs in parallel trans national bus service to this day, not sure why, it could be because there is % of pop which can not afford high speed train tickets in 2nd class or for some other backup considerations. It would be nice to know the the overall share of ridership for both, most likely the train wins by a high margin.
In terms of light rail, the train must arrive very frequently, lets say each 3-5minutes on major arteries, otherwise it makes less/no sense. Usually “big” cities run a network of at least few hundred miles of light rail, plus buses (plus subway).. US used to have it too, but “efficient capitalists” removed it between and especially after WWII..
I agree that looking at the cost of tickets and the time involved is the way to look at things. Another consideration is whether the timetables are dependable. For long-distance trains in the US, they definitely are not.
In the US, the train system is mostly a freight system; in Europe, the train system is mostly a passenger system (partly because gauges of track on not constant throughout Europe. Passengers can get out and change trains, but freight cannot).
In the US, trains are used for transporting heavy bulky things, like coal, long distances. Light parts are often carried by air. I am sure that companies have studied which method or combination of methods is most appropriate for the particular substance being transferred.
Heartily agreed! For most travel on land, rail is the best way to do it. It is city centre to city centre, so no need to spend an hour getting from Denver to its white elephant airport and then waiting 2 hours to board. You arrive at the station 10 minutes before departure and hop on the train (as I have done many times in the UK and Europe). Speed, as you say, depends on topography and other local factors, but a fast train beats an aeroplane anywhere up to 600 or 800 km. Further than that, well, you can work much more comfortably on the train.
For travel over rugged terrain, or over the ocean, we had the answer 90 years ago and forgot it: buoyant flight. A jetliner expends 60% of its fuel just to stay in the air, LZ127, Graf Zeppelin, stayed in the air for free. If you think in terms of energy per passenger kilometre, the Hindenburg was five times as efficient as the A380, and did not need an enormous infrastructure. A cargo airship would be as efficient as a lorry, and again with essentially zero infrastructure.
Also, as a bonus, you can power an airship with ethanol and a steam engine. Or of course with Blau Gas, the fuel that flew the Graf Zeppelin around the world in 1929.
Agreed.
Even in Japan and it’s tectonic active and hilly surface the Shinkansen zooms through the landscape constantly going into and out of tunnels, that must have been a massive undertaking in terms of capital per meter of tracks. But it didn’t deter them from concluding the obvious benefits from going city center to city center by high speed rail.
Air travel is one big exercise in inconvenience and humiliation. Fsck domestic flights. Yes, put down em’ rails and crank up those locos to 11 powered by nukes, (coal) and hydro. Once you experience Shinkansen you know what’s up. Chilling out on the Nozomi, a cold Asahi in your hand, watching the amazing Mt Fuji’s scenery to the right as the Japanese nukes accelerate the train from Tokyo towards the direction of Osaka, Kyoto and Okayama. Comparing that to the jank of domestic flights, well, there is no real comparison.
Indeed, save the kerosene for long haul flights and let the interstate abomination of highway network decompose back into nature. Or simply just rework them into quad rail tracks. Heavy gauge bidirectional tracks for commercial and local transportation, and bidirectional high speed rail for city center to city center passenger service. While at it, put in high speed fibre optic networking gear combining old school transport with high-tech information sharing networks.
The only dem candidate I would vote for Is Tulsi Gabbard. Since she is anti war she has no chance in the dem party. She is a vet and is strong honest and courageous. Instead of a candidate like that we get choice of a swamp creature and or nut cases with competing offers of free stuff. Plus the politically correct BS that characterizes anyone with a different viewpoint as a racist homophobe. True believers in tolerance don’t call people despicable names casually. I don’t trust people that do that. Dirty pool. That behavior works against the trust and tolerance we so badly need in the USA and the world. Then that PC is applied to the worlds largest military… Power hungry dirty pool playing entitled intolerant world police. Uh count me out. When the dems become ends justify the means party? Illegal fisa warrants? law doesn’t matter , constitution doesn’t matter only thing matters is hate for trump or anyone else that doesn’t buy into there beliefs 100%. Yea that’s way more crazy than trump. Like 10x. I dont like trump. Pretty sad that he is the best choice. Want my vote? Get Tulsi in. Someone who can heal our country not divide it. Heck bring Obama back. Compared to the dog and pony show now he wasn’t half bad.
Despite some obvious leanings to this trajectory before hand I’m afraid the US simply caught some sort of very nasty infectious bug just after WWII – not only mine working theory is the upper echelons got tainted with all these imported naz#is, while Russians used them too but merely as technicians for a while, in the US they eventually metastasized the entire political apparatus, incl. think tanks and major advisory bodies, media, as proteges of the elites etc.
It’s weird and sad because I encountered wonderful down to Earth people in the more slow moving “backwater” parts of the US..
Yes Tulsi like positive energy characters will emerge and eventually help turn the country around for the better, but it will be likely on very different footing by then, i.e. perhaps post industrial / fossil fuel reality / even perhaps post nuclear war exchange situation..
Sorry this topic is probably more suitable for Gails previous article. Bernie Sanders 17.3 trillion Green New deal plan. Is the .3 worth typing? A mere 300 billion. So a massive $ printing and now everyone can work for the green new deal. YAY! If you feel this plan has a bugaboo or two you are a hater. I heard a interview with a senator last night that called the plan “visionary” and any critique of it “elitist”. Ah the “ist” card. Fascist racist and elitist. Is there any way we could just silence debate with a word that could just denote all the ists. How about thought crime ist? TCist for short.
Bernie Sanders
“We need a president who will face down the greed of fossil fuel executives and the billionaire class who stand in the way of climate action. I welcome their hatred.”
Who is the real hater? Were going to need a quadrillionaire class to hate very soon. Infinity and beyond on a finite planet. Oh well I suppose its less crazy than printing infinite money and creating weapon systems.
The sanctimonious socialists pushing a green pseudo-solution are every bit as tiresome as their opposites on the right.
Political discourse in 2019 is a tale told by an idiot, full of sound and fury, signifying nothing…
Nice quote, we need to step back and see the crazy.
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Lawrence Summers is talking about demand problem and zero interest doesn’t help rising demand. So
1. Global competition is pushing down wages
2. People consume mostly with debt
The problem now again must be peak debt. Consumers are indebted so they can’t consume more and zero interest doesn’t help the problem anymore.
What do you think about this?
MOAR helicopters. Dont be a hater.
Helicopter Money….
https://m.youtube.com/watch?v=d_vJACHf9xU
That should make the Rabble happy….don’t forget another “Tax Cut”, got to keep everyone happy!😜
One option is to shut down the tax havens and try to adjust the global competition. If very oligopolized (which are using tax havens) global market economy could be adjusted more like fair market economy that would affect wages and better demand without constant rising debt .
Now small and middle sized companies can’t compete with oligopolies because they don’t have the capability to use tax havens and in this unfair competition they are alive because of zero interests (zombiefirms).
Add #2 Yep, was it not just linked on previous page that ~80% of newly manuf cars are sold on lease/credit. That sums up the situation fully. Frivolous opulent lifestyles, surfing on the debt tsunami..
There is only one, albeit ~temporary solution, and that’s complete “post crash” realignment of the society onto some sort of authoritarian – command style rule. It will be attempted both by “socialist” as well as “fascist” leaning factions, e.g. the demographic change practically ensures the US will get a socialist into gov sooner or later. What’s the plutocrats to do then? Carve out at least few “dissenting” states out of it, hence one of the key vectors in balkanization going forward.
What is the difference between communism and capitalism when there is not enough around? The reason why capitalism is more successful is that it provides at least to some people a possibility to win enough. In capitalism, you take part in a lottery that provides such possibility, while in communism, there is no such hope that you can win something. If you have more, this is immediately confiscated and redistributed in communism. That way no one has enough in communism.
Hm, perhaps one day you might surprisingly experience “enough” when the public transport services still run in some capacity post crash while regions of NA largely not endowed with that thanks to proper lineage of capitalism will be already at that point in “suburban cannibalism” phase..
Since its not centrally planned. People will adapt with what is most optimal at the moment. So cannibalizing old industrial areas would be the order of the day.
The perfect example of total crash was Romania during Nicolae Ceaușescu: the energy crisis from rising population and falling oil production made Ceaușescu destroy villages and move people to the towns. It did not help. The system collapsed anyway.
“Collapsed” means in case of Romania means that the population started to decline, which allowed Romania to continue its existence.
which confirms that whether sane or insane, politicians have no more idea of what to do than we normal people
If that was not apparent enough I simply alluded to the fact virtually no solid case of “communism” or “capitalism” existed to make such bold evaluations as MG suggested, it was always a mixed system on some continuum of options.
For example today’s form capitalism in the US means ~near socialism for the folk employed in the wider mil-industrial complex (as long as the overprint piggy bank works). Similarly in different guard, trade unions are still somewhat powerful in certain parts of W Europe, while crushed in CEE and Eastern Europe.
I agree, we have mixed systems, EU is also a lot so called socialist.
As regards the trade unions, their proposal are simply dependent on reality: if they propose a too high wage increase, the production is moved to another area or country, or it can be completely stopped due to bankruptcy of a given company.
I notice that the economic growth and the manufacture of automobiles has been coming from Eastern Europe. This would suggest that trade unions are not good for economic growth. They make the price of manufactured goods too expensive.
It depends, luxury brands (could) share with their employees adequately, while more volume production oriented brands have the apparent model of more assembly line robots vs. ever cheap(er) labor treadmill competition. So for example in Czech/Slovak/Polish/Hungarian car assembly lines for various global brands the staff is increasingly imported from one or two levels poorer countries like Ukraine, I guess there must be similar trend in Romania and Turkey etc.
There is also the factor “Jope R” mentioned bellow, that old global megacorps can reach to very cheap (well free) financing, which in turn means total leverage: against labor, against local gov, against anything..
Fair competition needs impartial empire judges, that’s impossible to achieve in a skewed world of tax heavens and accumulated speculative capital (+ overall control knowhow) for past several centuries. The only “successful” antidote for that was the way of nurturing “national champions” ala Germany/SKorea/Japan, but that was connected to huge debts anyway in the end as well. While gullible-naive CEErs sold everything to pirates for pennies, perhaps only Slovenia, Poland and Hungary retained some level of autonomy in their economy, Baltics and E Germany depopulated massively (no future for young).
“While gullible-naive CEErs sold everything to pirates for pennies, perhaps only Slovenia, Poland and Hungary retained some level of autonomy in their economy, Baltics and E Germany depopulated massively (no future for young).”
The statement above says nothing about the reality. You are terribly undereducated.
If there is enough workforce and suitable location for logistics, then we can create some production for some markets. Without the imported workers, the car industry in Slovakia does not have enough workforce. The same is valid for Germany – at some point, when the costs must be kept down and the production must continue, the declining population must be offset by the imported population.
Slovenia is too small, not well positioned with only one nuclear power plant and dependent on coal. Poland does not have nucelar power and is dependent on harder to get coal, too. The population of Hungary is falling down since 80s, due to its origin and language it is a small nation somewhat isolated in the middle of the Europe.
Moreover, Slovakia or Czech republic have a lots of common with other Slavic nations – so there is no problem for Ukrainians or Serbs to be attracted to these Central European energy centers.
Your views sometimes lack complexity.
It’s simply fact that temporarily imported Ukrainian worker for car manuf plant in CEE is at present cheaper than a robot. Also it is true that Poland-Hungary and say Slovenia repatriates to western (co-)owners way less profit on domiciled production in comparison to idiots in CZ/SK/.. In other words some countries are keen to be robbed blindly more than others.
Sorry, I won’t rewrite the article into even more understandable form to you. it’s simply fact that temporarily imported Ukrainian worker for car manuf plant in CEE is at present cheaper than a robot. Also it is true that Poland-Hungary and say Slovenia allows through taxation to repatriate to western (co-)owners-investors way less profit on domiciled production in comparison to i#iots in CZ/SK/.. In other words some countries are keen to be robbed blindly more than others.
Dear worldofhanumanotg,
probably the Sun is heating your head: if a country has got lower taxes, these taxes are lower for all – the domestic population and the foreign investors alike.
Dont you understand it? If you discriminate, then you have problems on other levels…
Sorry, you are continuously presenting arguments from another dimension frankly.. something like kinder garden “free” market economy ideology-theology seminars, pls. don’t take it personally..
It’s plain obvious fact to all that tax structure is in fact very different across the table as big foreign MNCs have corp structure which prioritize and moves-siphons added value away from local taxation into tax heavens. Similarly their initial entrance on the market, e.g. as discussed previously in CEE(EU) and wider Eastern Europe or other Asian/SAmerican context, means they arm twist (and bribe) the local govs to provide wide reaching investment incentives such as delayed taxation, cheap land and other provided conditional infrastructure demands, often also demand tweaks to existing labor and enviro laws, etc. etc. Compare contrast to hawk eye approach on domestic mid and smaller sized domestic biz.
Oh my god.. that’s surreal.. level of non comprehension of the real world situation.
I must be an idiot. Who knows? Who cares?
so bartertown in mad max 3? Roger that
Hint:
Capitalism is when a profit is taken from the difference of user value and exchange value–
The person does not do any of the making of the product.
Arose in the City States in Italy in the 14th Century.
A new concept.
Foolishness. Look at any “communist” country and there are haves and a bunch of have nots just like here in the socialist for the rich and capitalism for the poor USA.
Once it is looked at with a critical eye we are mutant form of facisism.
A saying almost as old as the Soviet Union:
“Under capitalism, man exploits man. Under communism, it is the other way round.”
LOL!
The Sun is leaving us here in Northern Hemisphere: we are going to use rising amounts of fossil fuels to overcome the cold. On the other hand, we do not have to fight against most of other species (plants and animals), as the cold (the lack of the energy from the Sun that shines for all species) takes control over them.
But what about the vitamin D?
https://news.curtin.edu.au/stories/australians-deficient-sunshine-vitamin/
https://healthsciences.curtin.edu.au/wp-content/uploads/sites/6/2017/06/vitdADULTS-by-state-002.jpg
Vitamin D deficiency in winter by state and territory, 2011- 2012. (Source: Australian Health Survey: Biomedical results for nutrients.)
Definitely, the too low prices for the energy producers is the problem for the countries that require huge imports for the survival of their populations.
The problem is usually more serious than it looks at first sight, e.g. the exports/imports of Venezuela look like o.k., but when you add the fact that the state subsidizes energy prices for the domestic population, the fall of energy exports is in reality even deeper energy deficit.
If a leader doesn’t want to be overthrown, he needs to maintain subsidies of local production. In effect, a government is not collecting the high tax rate it gets on the portion going to local citizens. The high taxes are only on exported oil. This is a rebate that oil exporters have tended to give, since they began exporting. Now the size of the subsidy sometimes exceeds the would-be tax rebate, so the size of the subsidy needs to be reduced, causing hardship for local citizens.
This all reminds me at the ETP-Modell… prices go down… thats it… boom…..
In my blog i have two articles in german, whereby the sildes are in english:
– https://limitstogrowth.de/2018/07/19/warum-folgt-der-oelpreis-nicht-dem-etp-modell/
– https://limitstogrowth.de/2018/05/24/etp-modell-nr-2-ein-anderer-und-einfacherer-ansatz-der-modellierung/
Slides:
– http://limitstogrowth.de/wp-content/uploads/2018/05/2018-05-23_etp_thermal_equilibrium.pdf
– https://limitstogrowth.de/wp-content/uploads/2018/07/2018-07-14_etp-modell-price_explanation_v1_0_3.pdf
It’s guest post from a physics guy that is concerned with related stuff. He tried to follow the Hills Groups Calculation (ETP-Modell) an came out with the same conclusions.
The second slide-set tried to fit oil-market prices to the suggested “upper price boundary” that the ETP-Model forecasts.
Interesting stuff!
Wow, haven’t seen that here for a while….Shortie still plugging along with his posts at PO website along with other instant Doomers…Quite entertaining. As I wrote if the Hill Group is only half right 😂 we are in deep poopoo.
PS Gail doesn’t like the ETP the last time she commented on it.
Well, when it’s over we may as well go out listening to a good time…
Sugar Ray
https://m.youtube.com/watch?v=xmLv8rfunPo
Nothing we can do..the hand is in control
Thanks! I especially liked the thermal equilibrium slide PDF.
I am not quite as sure of the “hog cycle” view of price adjustment. Fitting to too short a piece has problems.
Hi Gail,
for me that whole thing is still a bit opaque, since the math stuff exceeds my level of math- udn physics competence – but I meet Bernd Warm in person – and he is a kind, smart and interesting guy. I trust his expertise in this regard.
In addition to what the ETP-Model might say or not – your explanation and that what the ETP describes match – from my perspective – together.. in the dynamics and in regard to the possible timing.
May coal and gas support us and subsidize the oil production for some more years to come. Then “other consequences” are to terrible to engange into…
Best,
H.C.
No, it is the EROI of the overall system that counts, not individual products, such as oil. All of the prices become too low at the same time. Oil is simply the most internationally traded of the fuels.
If we try to replace coal with a lower EROI energy production system, we have a huge problem.
Subsidizing wind and solar tend to reduce prices for the electrical system, bringing it down sooner. Letting wind and solar go first is a huge subsidy in itself. This is a different problem than their EROI problem.
Hi HC. My math is, I think, up to the task. The second slide set ends in June 2018, so we have 14 months of prediction to test against reality. And it fails, dismally.
Almost any technique can “predict” the past with neat curves, including predictions based on the motion of the planets. But only a technique with a solid grounding in physics can predict the future. The ETP model is based not on physics but on economics, and the economics of a very unfree market system at that. So of course it fails.
The price of oil has two main components: the cost of production and the “use value” of consumption: that is, the amount of useful work it can do. A longer commute, for example, is definitely not “useful work”, so should have minimal effect on the oil price. A more efficient way of producing, say, textiles does represent an increase in useful work, and will therefore cause an increase in the use of oil (Jevons’ Paradox again) and an increase in price.
But that doesn’t seem to be happening. Production is getting more demanding of energy, not less, which implies a decrease in oil prices (the same oil makes fewer widgets, so the cost per widget must be reduced).
But we have knows all this since 1776; the “progress” in economic theory is mostly driven by a refusal to accept the laws of nature and an attempt to replace them with fairy tales.
Meanwhile, Greta continues her voyage to the New World in a seriously zero-emissions carbon- neutral boat.
https://www.visitcopenhagen.com/sites/default/files/asp/visitcopenhagen/Visit-sites/1080×1080/Royal-Historic/viking_ship_museum_002_martin_heiberg_hjortso.jpg
🙂 That’s not the boat!!
It isn’t? How about that, Tim not being honest…I’m shocked, I’ll tell you SHOCKED!
Greta best get with it….we are way past the threshold of cutting back and now looking at geo-engineering to save out butts….LOL
Geoengineering: ‘Plan B’ for the planet
https://m.phys.org/news/2019-08-geoengineering-planet.html
That has opened the door to a host of geoengineering schemes, and an under-the-radar set of global industry guidelines, currently in review, which could help mainstream them.
Here is a menu of “Plan B” geoengineering solutions, and their potential drawbacks:
https://m.youtube.com/watch?v=gYClO7OBbo8
I’m adding a beach umbrella and sun screen to my survival pack….along with Twinkies,they last basically forever
No, that’s Leif Erikson about to make landfall in Vinland. Photo by Josh Gates. You know, I really admire Greta for making this voyage. It shows up all the rich and important climate goons why fly around in their private jets while telling the rest of us to eat roots and termites.
One of them denounced her for using a ship whose manufacture was rather carbon intensive. Typical pig ignorance of the tribe: the carbon created by its manufacture is “sunk cost”, and should have no bearing on present decisions about its use.
the beef hard tack that powered the oarsmen was not carbon neutral. just being picky. they made up for the carbon expended when they got to England.
Hey, of course beef is carbon neutral. The carbon in the beef comes from the cow; the carbon in the cow comes from the grass; the carbon in the grass comes from the air, sequestered by photosynthesis. It’s a closed cycle, the Carbon Cycle.
On the condition it spends on the same grass only few days per year (and only say 1-2days in hotter CulbMed/ME climate), which is exactly NOT what has been made since domestication.. hence the resulting enviro-depletion..
the Vikings cut down their forest to make grassland for their cows. in the process, they lost/impacted a CO2 sink, like they’re doing for Macdonalds’ hamburgers in the Amazon Basin today.
Agreed. The deforestation is an ecological “capital” cost, but the subsequent agriculture was carbon neutral. The answer is to replace the trees on land with less arable potential. Mediaeval England did that (the “New Forest”), and so did Germany. Edo Japan did the same, and restored the archipelago to about 75% forest, where it remains to this day.
But we don’t do that anymore; the loss of carbon sequestration is an “externality” and so somebody else’s problem. Because today we know the price of everything, and the value of nothing. Sorry for again exposing my pessimism.
And on arrival, the Vikings (the power-unit) could replicate themselves within entirely biological limits – as we in Britain know all too well!
Naturally, she has made it herself!
Yey! In an effort to out-virtue-signal his rivals for the Democratic nomination, Bernie has promised 100% electricity from renewable energy and 20 million new green jobs by 2030 and achieve “full decarbonization” by 2050! What’s not to like?
Bernie’s speech apparently upset coal magnate David Koch so much that he’s died, leaving a US$48 billion estate. I wonder if I’m in line for a modest slice of that legacy?
Democratic presidential hopeful Bernie Sanders on Thursday unveiled a $16.3 trillion climate change strategy on a tour of northern California that included meeting families displaced by deadly wildfires and a rally in the state capital Sacramento.
The plan would “launch a decade of the Green New Deal”, a 10-year federal “mobilization” that would factor climate change into every policy action from immigration to foreign policy while promising to create 20 million jobs in the process.
The U.S. would generate 100% of its electricity from renewable energy by 2030 and achieve “full decarbonization” by 2050, according to the plan.
“We are going to invest massively in wind, solar and other sustainable energies,” Sanders told a cheering crowd that had braved near triple digit temperatures to see him in a downtown Sacramento park.
Addressing about 5,000 people inside and outside the park, Sanders accused fossil fuel companies of being willing to destroy the planet for short-term profits.
“We cannot turn our backs on this crisis,” Sanders said. “We have got to lead the entire world in a new energy direction.”
His plan outlines dozens of policies to aggressively move the United States off fossil fuels in the electricity, transportation and building sectors.
https://www.reuters.com/article/us-usa-election-sanders-climate-idUSKCN1VC15L
I want UBI and carbon free (guilt free) energy. And a date with Ariana Grande. Any candidate that cant deliver wont get my precious vote or a like on facebook. I’m not fooling around. Serious business. No facebook likes.
Millionaire Sanders held his rally in one of the larger homeless camps in Sacramento, of course only after the homeless had been forcibly evicted. He then promised to create 20 million jobs, which would be filled by 20 million immigrants being paid starvation wages, to enrich him and his fellow millionaires even more. And larded his speech with “green” virtue signalling which will please rich liberals and grind the native working poor down even further.
And this man is a socialist?
So the added cost of green energy equates to something more than 20million salaries?
If they are decent salaries befitting skilled renewable energy workers that sounds like a lot of overhead.
I’m feeling a bit tense. I think collapse is about 2 years away.
My date is based on numerology..
02/22/2022 at 2:22 ….it’s based on the laws of the Universe
π÷¥√£{~∆≥¶×¥=
https://m.youtube.com/watch?v=2KnC7w3o7xA
Easy Peasy
“tense” can be quite similar to excited…
we live in exciting times…
collapse is happening now in some of the peripheral countries…
it could reach us any day or week or month ahead…
exciting!
All the combat vets I know really don’t care for exciting. They all say boring is underrated. Not that we have a choice. Enjoy every day. Enjoy your loved ones Enjoy having ready access to food and energy. Collapse for the USA hopefully means we just have to live in squalor like the third world. If your an optimist. Seeing the polarity and hate that exists on both sides and fanaticism in the beliefs that are the basis for those beliefs I am not so sure if I am an optimist. Both sides participating in class differentiation one in the side of ownership and nationalism the other one the side of supposed social justice. Both thinly veiled arguments for continued consumption. I believe the focus should be that we are all neighbors. We are all just doing our best. People wont take responsibility for our situation. No one caused this situation but all of us. Their is no enemy.
That bond is hard to find and I am not sure of its strength even when it exists. Polarity is not a good way to go into collapse. Our cultural addiction to creating a enemy against which aggression can be directed rather than taking responsibility for our situation and constructive actions is not a valid operating principle. It has worked for a bit but it will ultimately accelerate collapse timeline and sincerly hinder any feeble attempts we can make to deal with constructively and appropriately.
👍🏽
Collapse is only inevitable if you guys continue being busy reproducing like cockroaches.
Why don’t you just stop the sect mentality of the glory of reproducing and raising children. It’s enough now. We don’t need more useless eaters perpetrating the horrors of BAU.
https://www.azquotes.com/picture-quotes/quote-democracy-cannot-survive-overpopulation-human-dignity-cannot-survive-it-convenience-isaac-asimov-78-50-16.jpg
trouble is—
it always seems a good idea at the time
Just learn to say no. Even if it’s might have consequences for the relation. It really works, trust me. 😉
http://mmstudies.com/scholars/wp-content/uploads/sites/6/2017/02/1024484-300×300.png
lolololol
have you ever tried to say no to a determined female?
Try it–and I guarantee she will go off and find someone who doesn’t say no
I am too fond of my face to risk cutting my nose off.
Well, there isn’t a lack of woman on planet earth. You have to learn that there is no need to accept the first of which you happen to stumble across on your way through life, and then oblige to every expression and horror of BAU that comes bundled with your partner.
https://i.pinimg.com/originals/96/8c/c0/968cc0aa5acf1002bfd2ad253ecc60d9.jpg
i shall tell her that
she will appreciate the stumbled over bit
Truth hurts, darling, truth hurts.
https://childinsider.com/wp-content/uploads/2018/06/cry-baby2.jpg
ah—but that is but a brief passing phase
the beauty of it all is when they all grow up smarter than you.
And grandkids even smarter
Then you can sit back with a smug expression and say—yup—there’s something of me there, but somehow more than that, as you watch them fly.
Sorry–but that’s human nature. (and all because I couldn’t say no at the time)
Nothing wrong with kids. Just not too many of them. 🙂
They only appear smarter than you because you grow humbler with age and more aware of your own limitations… Oh, well, now that I think about it… 😉
Plus that the signaling inside the brain grows slower with age. The CPU loses a few megahertz per year. But the wiring is still mostly intact and is pretty useful when your kids and grandkids come for your advice, right?
It is a tragedy with our short lifespan. Once age sets in and mind becomes more calm, kind, compassionate, then it is about to kick the bucket. Well, it is true except for the rascal which happens to be my dad.
Or even if the US, Europe, Russia and Japan, stop, the rest of the world doesn’t stop. And rising longevity in the less developed parts of the world to add to population growth as well. Population rises and rises.
https://gailtheactuary.files.wordpress.com/2019/08/world-population-2019-un-estimates.png
Yes, it is unfortunate. But down it will come, that thing is for sure.
“I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.” –Gail
you remind me of the last-minute revelation in one of Rod Serling’s Twilight Zone episodes: “but professor, ‘To Serve Man’– it’s a cookbook!”
great post. i just have a dark view of the plan.
Understandable! But, personally, I find all my senses heightened by the tension, and the enjoyment of life hugely increased.
And my intellectual satisfaction in understanding what is happening.
‘Enjoy the shining hour of sun’…….
As for ‘prepping’: one must of course make plans for self-help, it’s only sensible: but they can only be limited in efficacy in a declining and fragmenting system: so I take a hint from General Alexander in WW2, who after setting a big offensive in motion, went off watercolour painting by a river to chill out.
‘How can you possibly relax?!’ he was asked. ‘Well, I’ve planned for months, used the very best intelligence we have, given all the necessary orders, and it’s for my commanders to do their bit now. We’ll see in a few hours how it’s all going.’
A balance and sanity that often seems lacking these days.
Amen, Xabier. Que sera sera.
Helmut von Moltke did the same at the opening of the Franco Prussian war. He delegated almost everything to his subordinate commanders, and spent most of the time reading a novel.
Well, collapse is a process, not a firm point, although people might remember sequential thresholds when looking back in sort of rear view mirror at this. For example this particular year and month I lost the job; from this and this date the gov food vouchers for our family where good only for a one week in a month; around that time the electricity went down for continuous two weeks for the first time. And so on..
GOVs at least among IC hubs have planning and resources for reaction (and mitigation) to “disaster events” – mind you essentially to protect themselves – so, there will be various “organized” attempts to circle the wagons and make the public live with the limited supplies and fracturing JITs workarounds..
Lets say from the time there is something like “temporary closure” of banks, there could be even few more years of industrially harvested food in selected “lucky” countries, but obviously no frivolous car driving to office jobs and “energy soaked” leisure activities anymore for the many etc. After that it won’t be pretty.. 2-3yrs, 15yrs, who knows, it will be very regionally fragmented..
ooops obviously: gov vouchers were good for a limited time..
Remember Pearl Harbor.
Dec. 6,1941 with sunrise on the white sand beaches.
Then Dec. 7 and it was bombs and bullets that came in with the dawn.
and incoming warnings preceding that Dec6-7 date, hence a process…
There were many warnings of the attack on Hawaii. My favourite was written by Morgan Robertson and called “Beyond the Spectrum”. Published in 1914, by the way. Of course, in 1914 Japan had perhaps the best trained and equipped navy in the Pacific, which had proved itself at the battle of Tsushima.
Another irony of history. The commander of the attack force, Nagumo Chuichi, lost the Pacific War in thirty minutes, when he refused to launch the planned third wave attack, in spite of the repeated urgings of his subordinates. That attack would have destroyed most of the harbour installations, and rendered the base essentially inoperable for a year or more.
“When you strike at a king, you must kill him” (Ralph Waldo Emerson)
wars are full of ironies
if Hitler hadn’t declared war 4 years too early, then thrown out/killed the very people who would have built his ultimate superweapon
He would have achieved world domination
LOL. That’s the doomster buzz. Not panic. That’s too intense. Two years out is just perfect.
Just to remember to move the flag as you go.
How long has it been since the original two years out discussion on this blog? 5 years? six? I forget.
Well, collapses sort of sneak upon you in the background while you sleep and dream..
For example, one hundred yrs+ ago it would not had been very realistic prediction that future of ~2019 will consists of several key cities within the UK under Muslim mayor.. , don’t you think. Similarly, who would have thought that to get quality replacement bearing you have to order now from Turkey (ok apart from Japan)..
woe spoke to soon we did
Trump ‘hereby orders’ US companies to leave China after attacking Fed chair
Donald Trump ordered US companies to leave China on Friday after launching another blistering attack on Federal Reserve chairman Jerome Powell, asking “who is our bigger enemy, Jay Powell or [China’s] Chairman Xi?”
Moments after Federal Reserve chairman, Jerome Powell, warned the US central bank was facing a “new challenge” as it deals with the Trump administration’s seesaw trade policies and ongoing dispute with China, Trump went on a Twitter rampage calling for a US boycott.
https://www.msn.com/en-ca/news/newspolitics/trump-hereby-orders-us-companies-to-leave-china-after-attacking-fed-chair/ar-AAGettC?ocid=spartandhp
I see that the Dow Jones recorded a change of -623.34 today. Nasdaq was down even more on a percentage basis, -3.00%. WTI is shown as $53.97.
Trade tensions are given as the reason why.
As a Canadian, I find all this mildly amusing and terrifying at the same time!
The rest of the world is the beneficiary of this trade war. China has devalued the Yuan to make up for Trump’s tariffs, which means Chinese goods are cheaper in Canadian Dollars than they were before.
@ Jan,
As a Canadian, I find all this mildly amusing and terrifying at the same time!
O’ what I wouldn’t give to be a fly on the wall listening in on the conversations in the boardrooms of these American companies? Just imagine?
Jan, as a Canadian, you’d better tell your Prime Minister to buy Greenland before the Yankees get their grubby hands on it just like they got Alaska.
A consequence of the 1867 purchase that seems to have been written out of history is the disastrous effect it had on the native population of the Arctic. Before then there was an informal agreement among the arctic powers (Russia, Denmark, Canada, …) that there would be no obstacles placed to the movement of the largely migratory tribes. The US repudiated that agreement, hoping to open Alaska to colonisation.
Do not, not, not let them get their grubby paws on Greenland.
Trade war with the fed? Will the Fed threaten to stop buying treasury bonds like China? 🙂
🙂 🙂 :)This is becoming surreal.
“Most of the talk about renewable energy is aimed at electricity production. However, most of the energy we need is heat, which solar panels and wind turbines cannot produce efficiently. To power industrial processes like the making of chemicals, the smelting of metals or the production of microchips, we need a renewable source of thermal energy. Direct use of solar energy can be the solution, and it creates the possibility to produce renewable energy plants using only renewable energy plants, paving the way for a truly sustainable industrial civilization”.
https://www.lowtechmagazine.com/2011/07/solar-powered-factories.html
We need to replace the current hi tech technology with low tech. Agroecology instead of industrial agriculture. We already know how to replace everything without using fossils.
Agree, the methods of agroecology or rejuvenation agriculture, no till and so on have been greatly explored in recent years and decades to stunning success. However, this is labor intensive, albeit not in ancient drudgery but more constant oversight and planning sense, the people have to live there, and currently there are more people in the cities and suburbs than available land. Moreover all these practices work so spectacularly thanks to still available offsite grain inputs, which would diminish substantially otherwise. So the ideal desired ratio of people living on the land without or way smaller such support (cheating) is somewhat hazy concept, but likely way smaller than assumed even by the informed-well meaning pessimists.
But not in the quantity needed for today’s population!
TODAY’S POPULATION….. that’s where any “fix” starts.
https://www.resilience.org/stories/2019-08-21/small-farms-dont-produce-most-the-of-the-worlds-food-but-they-could-produce-all/
Not the quantity needed for today’s obese population.
A peasant wife going out with her children to collect fallen deadwood for fires, and hot-burning furze for her bread oven, was a perfect and 100% renewable energy system: the trees and the furze on the (communal) heath renewed themselves, the peasants also renewed themselves, generation by generation.
Anything else is sheer fossil-fuel induced fantasy.
“Agroecology”? A fancy name for a very old idea:
“Go to the ant, thou sluggard, consider her ways, and be wise” (Proverbs vi:6)
The ants have been practicing agriculture and animal husbandry, sustainably, for over 50 million years. Their practice has no externalities: it cannot have, because it all happens inside the anthill. That is the main reason it is 100% sustainable. But humans are foolish.
Yes, as I tried to bring to focus elsewhere, the number of ant hills vs environment is always in some ~balance ratio, while the tour de force of contemporary humanoid terraforming drive is completely nuts both in scale and pace..
it is not a problem of resources, but of organization. Our society is structured in a certain way and radically change causes resistance which then results in conflicts. Only crises lead us to change.
Organization requires energy, and energy is part of resources.
Crises can lead to change or collapse. Sometimes change can be good, but there is also a chance it will be bad.
Negative interest rates are coming and they are downright terrifying
https://news.yahoo.com/negative-interest-rates-japan-germany-france-150324580.html;_ylt=AwrC0F9qS2BdRj4AQQ.ZmolQ;_ylu=X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzcg–
YahooNEWS
Negative interest rates are coming and they are downright terrifying
Andy Serwer with Max Zahn
Yahoo Finance August 23, 2019, 11:03 AM EDT
What if I said I wanted to borrow $100 from you and pay you back $99 five years later? Would you do it?
Hell no!
And yet this is exactly what’s happening right now in the banking systems of Japan, Germany, France, and other European countries.
Negative interest rates — where the lender gets paid back less than they’ve loaned — now add up to 30%, (and counting), of the global tradable bond universe, according to JPMorgan (JPM). You may have seen for instance that Germany just sold the first negative yielding 30-year bond issue.
In case you’re wondering, yes, this is crazy.
“It’s really unusual and really distorting the global financial system,” says Torsten Slok, chief economist at Deutsche Bank Securities (DB). “I spend all my time talking about it
Worse, negative rates are being normalized by economists, bankers, and commentators.
Worst, I have a funny feeling this will end badly. Negative interest rates have all the hallmarks of serious trouble for the financial markets; an anomaly growing in scale which seemingly came out of nowhere that is under-recognized, poorly understood and dismissed as not consequential. (Flashing red lights here.
What would happen if rates go negative in the U.S.? Who knows. Allianz Chief Economic Adviser Mohamed El-Erian, for one, says he would sound the alarm if treasury yields dip into negative territory. “If we do I’m going to be really worried because negative yields in the U.S., the world’s biggest financial market, will break things,” he told Yahoo Finance
Break things!? Like this home run by Cabarra against my poor Boston Red Sox!
Ouch
https://m.youtube.com/watch?v=q_9_nDtLnMM
Yes, negative rates are the new normal…Trump has already stated he’s looking to cut Social Security and Medicare in his next term of office. Take that you working stiffs!!
U
I heard that investors put their money where they get the best return. So they look at all the possibilities and the best they see is to only lose a little bit. This is the experts putting their money where their mouth is . They must figure that what’s coming is down so they shoot to go down as little as possible “terrifing”??? Is this not plain as day???
Trumpster with the red button is kinda terrifying but negative interest is just plain old market.
“I heard that investors put their money where they get the best return.”
Once again, sound classical economics, but from a world long gone. We now have a situation where interest rates are zero, and inflation is zero. In such a world, the optimum strategy is to invest nothing, put your money into a reliable store of value, and squirrel it away offshore. When there is no realistic return that can balance the risk, the dominant strategy is zero risk. Which seems to be exactly the conclusion the Japanese people reached a few years ago.
Sweet mother of God – Today is a defining point going forward. This trade war was and now most definitely is not easy to win. Agreed or disagree on if this outcome is the correct one at least we now know the direction. May be not a bad either.
Ask yourselves how are we going to reindustrialize without massive debt and lower rates?
Does the economy implode from within as millions need to train and are laid off with global trade in the gutter?
More importantly ask yourselves if Gail is right – I think she is and I also believe we are going to wind up in the same place no matter what is done or not done.
At the end of the day sooner or maybe 10 years tops it is going to come down to resources and strength – violent strength.
Personally I see the crash in front of us and I sincerely believe it is going to be steep.
Oil is going to crater and no one is going to be employed to buy it.
Things don’t look very good, do they?
I think there is now only one viable economic strategy: the one followed by Germany after the Weimar Republic had bankrupted the country. Look up “Rentenmark”.
So, demonetise the dollar, let its value fall to zero, wiping out the debt, and then issue a “Rententhaler” as the new currency. Do pretty much what Germany did: back its value with real wealth owned by the government, such as national parks, national monuments, public infrastructure, Hillary’s emails, … whatever works.
Then abolish all entitlements and replace them with a guaranteed minimum income, for anyone who is willing to work. After all, even seniors can dictate audiobooks for the blind; even schoolkids can clean up litter from the public realm. As long as the value of the work equals the value of the income, there need be no debt. Finally, kill the health insurance companies, have a single catastrophic health insurance scheme, and let cheap and routine health care be paid for out of pocket. If Cuba can do it at 5% of the current cost, the US can probably do it at 10%.
I can imagine a real possibility of creating a new currency and wiping out the existing US$. I am doubtful that this new currency would collect very much in real value in taxes, however. It would likely not be able to provide sufficient revenue to provide anything like a guaranteed minimum income. In fact, nearly all current jobs would simultaneously disappear. Networked electricity cannot be depended on for long. If many citizens are left without funds to pay for electricity, we can expect electricity from the grid will fail very quickly, if it hasn’t by the time the new currency comes out.
It seems like shortly after the new currency comes out, there would be a substantial chance of the US central government failing. Or programs might be given back to the states. They might each make their own currency, for example. Or individual cities might create their own currencies. Convertibility would be very iffy.
which fits my thinking on it
all currency can only remain viable if it is underpinned by its energy equivalent, which, as I see it, means that it must be inputting at a constantly increasing rate, because money is only ever a token of energy exchange.
If the USA dollar was superseded by another currency form, that too would require equivalent energy to underpin its value.
But of course the problem would be exacerbated by energy depletion, while economists would insist that is was some kind of ‘currency’ problem.
If central government allowed regional currencies, then the next immediate step would have to be regional government—quickly followed by secession.
Central govt would not have the means to hold the nation together without the necessary energy to do so. (force of arms?)
That would bring on civil war almost immediately—which I think is highly likely anyway, driven by a mixture of economic denialism and jesus mania. (someone/thing would have to be blamed for it all.)
“I can imagine a real possibility ”
Being an engineer, I think in terms of technology, not finance. If it is an engineering possibility to build Hoover Dam, then chances are it will be done.
The current trouble is that the future is more uncertain than it ever has been. I see no way to avoid the singularity and all that implies including humans no longer being in charge. But *when* is uncertain. Ray Kurtzweil thinks the mid-2040s. If that were certain, we could relax because there is enough fossil fuel to get us there.
But it is far from certain.
And the consequences of being wrong are really serious.
What is the rewards of singularity and consequences of being wrong?
” rewards of singularity”
Near godlike capability. This was discussed in great detail on the Extropian mailing list in the early 1990s.
” and consequences of being wrong?”
They range up to extinction. On the other hand, it may be possible for people to transcend flesh (upload) which could amount to biological extinction without anyone dying.
The long-range future of humanity looks seriously weird. What concerns me more is how things play out in the relatively short term as we run out of fossil fuels. If humanity does not implement an energy solution we are in for some very rough times.
The only way I have found to write about this is to cast it as fiction. Some of this (from ten years ago) is up on the net. Some has never been posted.
You can’t have that many Gods before they start competing.
“they start competing.”
It’s been considered, no conclusion. Being caught between waring AIs would not be good for you.
Gail, thank you, as so often, for a most thoughtful, informative, and challenging reply. please allow me to respond.
First, I don’t worry about taxes. Today, most taxes support a transfer of wealth, typically from the politically weak to the politically powerful. i see taxes in a new economy as a balancing process: if your work doesn’t pay enough, you get a (small) subsidy; if it pays more than you need, you pay a (small) tax. Since almost everyone now has an incentive to work more profitably (and there are perhaps training and apprenticeship schemes to facilitate that), the taxes should be sustainable.
Electricity is another issue, that with your indulgence I shall overlook.
And yes, many local currencies may well evolve. But why should they be accepted? For the same reason Scottish banknotes were accepted in the nineteenth century: because, though not officially legal tender, they were backed 100% by gold.
As for the failure of the US, and the collapse of the General Government: bring it on! Power corrupts; and absolute power corrupts absolutely.
Your post seems consonant with Nicole Foss’s long-running prediction of deflationary spiral.
Thanks for pointing this out. I haven’t been following what she has been saying very closely.
I got curious about that word; consonant, so looked it up. I think you meant consistent.
con·so·nant: a basic speech sound in which the breath is at least partly obstructed and which can be combined with a vowel to form a syllable.
con·sist·ent: compatible or in agreement with something.
Oh my goodness! Were you Common Core educated?
With a bit more curiosity, you might have looked further and discovered that consonant” is also used as an adjective meaning in agreement or harmony with.
For example: “the findings are consonant with other research”
Synonyms of consonant (with) include: in agreement with, agreeing with, consistent with, in accordance with, accordant with, consilient with, in harmony with, compatible with, congruous with, in tune with, reconcilable with
An interesting question is why are consonants called consonants.
A consonant is a sound made using a vocal gesture involving interruption or other controlled actions performed by the so-called “articulators” such as the tongue, teeth (jaw), or lips on an air column emerging from the human vocal tract. By contrast, vowel sounds are produced when the air column is merely shaped by the chamber it is passing through, not manipulated by articulators. As an illustration, try saying “a bottle of beer” without moving your tongue, teeth or lips and you’ll get the general idea.
Accordingly, I would guess that consonants are called consonants because each the production of consonant is consonant with a specific set of positions and movements of the articulators.
Whoops: Jumbled sentence alert! A thousand apologies!
Accordingly, I would guess that consonants are called consonants because the production of each consonant is consonant with a specific set of positions and movements of the articulators.
Language is mankind’s pivotal expression of our difference from other species. To what extent does the difference between finding meaning in the stops of the air vs the so called vowels in between (tonal) define us?
Our English word “consonant” comes from Latin “con sonare”, meaning “to sound together”. Tim’s is therefore the primary use of the word; it was coopted by the linguists.
A central idea of this blog, explained with simple words, thanks!
OECD organizes a meeting on “systemic collapse”, uh uh…
http://www.oecd.org/naec/averting-systemic-collapse/?fbclid=IwAR1ErdBAmOkHP_aIMQm9YuwW759GNjgdJB0lMxGhf5SADBO0LyvSWqXaiAk
Wow! I didn’t expect this. The excuse is “10 years after The meeting is in Paris. I see Steve Keen, the economist from Australia, is a major speaker. Also Jean-Marc Jancovici, who is the author of the Manicore.com website, among other things. Wipipedia says he is a French engineering consultant, energy and climate expert. He is a consultant, professor, conference speaker, writer, and independent columnist. He is co-founder and associate at the Carbone 4 consultancy firm, and the founding president of the think-tank, The Shift Project.
I’m french, and I first discovered these ideas about energy, economy and finite ressources with his conferences on youtube. He’s very good at explaining all these concepts to a very large audience. He also prefaced the new french edition of “Limits to Growth”. Just like you, he’s very skeptical about “renewables”, unlike you he believes reducing co2 emissions is an emergency
I think his proposal to store off peak energy by pumping water up for gravity potential interesting. IMO he sees some of whats coming. Heck i certainly don’t have a crystal ball. I don’t think he quite gets it though. He proposes that the price of oil effects economies independent of policies but doesn’t seem to believe (as I do) that the energy entering IS the economy. IMO. I wish it was as simple as just curbing consumption being the righteous path and continuing consumption being a path of dictatorship and fascism.
“I am not sure that the judgement of history will be very kind with all of us that refuse the voluntary cure to prevent – if it is still possible – such an outcome, which bears a very simple name: a raise of the taxes. Between a progressive “deconsumption” of hydrocarbons, which is of course full of inconvenients, and a dictatorship (that incidentally generally brings a much faster “deconsumption” !) resulting from a strong destabilisation of the economy, it is not sure that our descendants will forgive us to have given them the latter because we refused the first ! “
he clearly explains that the available volume of energy is the economy
https://mrmondialisation.org/jean-marc-jancovici-on-ne-peut-plus-eviter-la-totalite-des-claques-interview/
This interview is really very good. It was from earlier in 2019, so it is quite recent.
He is very clear in explaining why wind and solar are not replacements for other types of energy. It is a combination of the many things, including way too much metal use needed and the huge storage requirements if the intermittency is to be overcome.
He points out that policymakers don’t want to bother citizens in general, by requiring them to cut back in energy usage or in population. Instead, all of the cutbacks are moved over to the areas of the engineers. That way not many people are bothered by the proposed changes.
He talks about how ridiculous CO2 sequestration is. As an engineer, he knows better than I do about the specifics involved. I have not tried to write about this because a person needs the specifics. But I have known since the first talk I heard by an engineer about the problems involved with CO2 sequestration that the whole concept is just plain ridiculous. Many Oil Drum articles pointed in exactly the same direction.
“I think his proposal to store off peak energy by pumping water up for gravity potential interesting.”
It’s more than interesting: it works. Duke energy has been doing it since 1975.
It is possible to do storage for off peak energy by pumping water up but it doesn’t work well for storing seasonal intermittencies. Our big problem is storing energy from summer to winter. This approach is for little peaks, not big ones. We need a huge fossil fuel backup system, which is paid adequately for its services.
Ten years later is a nice excuse. Yup no need to panic just looking at the past. Id be more optimistic if the topic was BAU extend and pretend, effective strategies. Nevertheless it is certainly a interesting development. We will see if there is any content… You could use a Paris vacation Gail?
They do have videos available to link to. I might look at them.
I haven’t met either of the speakers I mentioned in person.
Yep, we posted some of his subtitled videos (presentations) over the years here..
But there were “some issues” with him like still sticking to the -klimate- angle of the conventional story etc. But in his case it seemed more like a necessary step in order to speak about the depletion and possible demand destruction dynamics..
He also talks about gov crash mandates (and their timing) to alleviate the situation.
It is not clear to me that Jancovici understands that the economy cannot really shrink back. There are too many financial systems affected. It would be like trying to go backward with my Leonardo Sticks model. It just doesn’t work.
It is also not clear to me that Jancovici understands the fact that prices tend to fall too low for energy producers, and this pulls the economies of oil and other commodity exporters down. They don’t collapse immediately, but with a lag.
He comes to the fields with an engineering background. The engineering background paints a clearer picture of what precisely goes wrong with a solution such as carbon sequestration. But it tends to miss the financial aspects.
I have not read enough of Jancovici’s work to know for certain that he does not understand these things. I am sure that the conveners of the OECD conference would like a speaker who thinks that there is no problem with the economy shrinking back.
Yes, it’s puzzling, because at times he is evidently capable of using some sort of whole system dynamics approach and reasoning. Although, it could be self restrain – censorship not to go there where you lead..
Frankly, if adviser people of his caliber could extend the quasi BAU after next GFC for decade or two, it’s perhaps a worthwhile effort, albeit doomed to mid-term/longer term failure..
Several people here, at Surplus, and few other places, seem to guesstimate (~know) the general direction how to transition forward, but that’s politically and socially not possible to advocate for today. And even during next GFC when larger pop segment gets wind of the problem to smaller degree it would be still out of question to offer such radical downscale or rather high complex industrialism abandonment on purpose.
https://m.youtube.com/watch?v=CTUsFm0BAu8
Ten Years After – I’d Love to Change the World
Everywhere is freaks and hairies
Dykes and fairies, tell me where is sanity
Tax the rich, feed the poor
‘Til there are no rich no more?
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
Population keeps on breeding
Nation bleeding, still more feeding economy
Life is funny, skies are sunny
Bees make honey, who needs money, Monopoly
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
World pollution, there’s no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
Perhaps the mysterious “they” can fix the problems.
Perhaps “they” can!
They can put a man on the moon
They can make soap out of people
And food out of wood
They can build machines that do the jobs of
Billions of human beings
They can feed the entire world
They can go zero to fifty in
Three point nine seconds
They can grow oranges in the desert
And tomatoes underwater
They can predict or affect the weather
Sometimes
They can create a disease
And then claim it’s the cure
They can build superconductors
That will permanently alter
The way they live forever
They can make a coffee I like without caffeine
They can blow themselves up or away
Or the sun to explode
They by King Missile
https://youtu.be/l5a3oo2vmQA
Hello Sven, perfect song with foresight.
I see that the album “I’d Love to Change the World” was on an album released in 1971.
Khazzoom–Brookes postulate! Maybe is time to see if this postulate is confirmed or not with this new green growth strategy! and if as many others believe green growth is just an oximoron!
https://en.wikipedia.org/wiki/Khazzoom%E2%80%93Brookes_postulate “that improvements in energy efficiency lead to ever and ever-greater levels of energy usage” I may be reaching my self belief supporting conclusions but wouldn’t this mean that as resource extraction costs rise consumption decreases regardless of price? If so from a financial standpoint shouldn’t OPEC not limit supply but establish a price for oil that covers the cost of oil extraction including societal costs if factors other than supply are bigger drivers of price? How does this effect ideas about free markets as a physical reality based philosophy?
“Wouldn’t this mean that as resource extraction costs rise consumption decreases regardless of price?”
This is related to the converse issue I mentioned in an earlier comment. I said, “Growing inefficiency in producing energy products (i.e. higher inflation-adjusted prices) would lead to less use of energy products.”
This all depends on higher costs being able to be passed on a higher prices. The economy doesn’t really allow higher prices of energy products for very long. It makes the economy shrink back in recession. Or it readjusts relativities among the currencies, with a similar affect for the currencies losing out.
Regarding your question, ” If so from a financial standpoint shouldn’t OPEC not limit supply but establish a price for oil that covers the cost of oil extraction including societal costs if factors other than supply are bigger drivers of price?”
Prices aren’t set by OPEC. They are set by the laws of physics. OPEC is a price taker. Commodity markets are very strange. Prices bounce all over based on supply and demand.
Back when I was a kid, that was called “Jevons’ Paradox”, and it was formulated by William Stanley Jevons in 1865. But why do real research? Plagiarism is so much easier.
I don’t remember hearing about the Khazzoom–Brookes postulate. Wikipedia says,
Clearly the converse would likely also happen: Growing inefficiency in producing energy products (i.e. higher inflation-adjusted prices) would lead to less use of energy products. This would tend to push the economy downward, because the economy requires energy consumption. High costs of energy products tend to cut off consumption. This is a big reason why a transition to a higher-cost energy system doesn’t work, without rising debt and lower interest rates.
Coming back to the original postulate, that of increased efficiency acting to increase use, a lot of different factors would seem to come into play. For example, going from cathode ray tubes to flat screen monitors for televisions produced a huge savings in energy. But pretty much everyone in the US who wanted a television already had one, by the time this transition took place, so I doubt that the efficiency change increased consumption, except to the extent that the lower electricity consumption left consumers with more income that could be spent elsewhere.
A big issue on, say, an electric car being in some sense more efficient than a car with an internal combustion engine actually producing fuel savings has to do with how the whole system operates, including charging stations and financing the cost of these vehicles.
This Khazzoom–Brookes postulate looks like an energy-specific variation of the more-than-a-century-older Jevon’s paradox. At least, that’s what a layman like me could make out from the description.
That’s it Fox News confirms it!
https://www.foxnews.com/auto/gas-prices-2-fall
Gas prices could drop under $2 this fall, here’s where
The average price for a gallon of gas has dropped 15 cents in the past five weeks, and AAA is predicting them to fall even farther this fall, thanks to lower crude oil costs, a reduction in demand and a shift to less expensive winter blend fuels.
The organization expects the national average to hit $2.40 in the coming weeks, 20 cents less than the current price. Some southern and southeastern states may even see prices below $2.00, barring a major hurricane striking the region
According to AAA’s price tracker, the cheapest gas in the country right now is in Louisiana, where a gallon goes for $2.22 on average..
All is well with the world, , gas at the pump and food at Super Walmart …perfect
https://m.youtube.com/watch?v=VKYY8DxVZHE
I agree that prices could fall under $2 per gallon for gasoline this fall. This should be a worrying sign, not good news!
There was a shocking and unprecedented shortage on the supermarket shelves this week when we shopped. Some people discourage talking to deniers about what is happening, but I wonder? I’ve been talking with my spouse, who has long been reluctant to believe what I’m saying. But at the the supermarket, SHE was pointing out how the situation reflects the times. So people will get it if you take every opportunity–but don’t push–to make the point. If you can call it that, it seems very positive to me.
It is hard to keep up with the drama:
“Stocks opened lower on Friday after China said it will slap new tariffs on U.S. goods… China will implement new tariffs on another $75 billion worth of U.S. goods, including autos. The tariffs will range between 5% and 10% and will be implemented in two batches on Sept. 1 and Dec. 15.
“This is the latest escalation in the trade war that has been going on since last year…”
https://www.cnbc.com/2019/08/23/us-stocks-wall-street-monitors-speech-from-fed-chair-jerome-powell.html
“The White House is reportedly discussing a variety of options to try to juice U.S. economic growth ahead of the 2020 election, including a rotation of Federal Reserve governors that would make it easier to check the power of Chairman Jerome Powell.”
https://www.cnbc.com/2019/08/23/white-house-is-reportedly-weighing-fed-rotation-to-curb-powells-power.html
If we are “lucky” we here will witness the bubble bursting in slow motionl
A preview…
https://m.youtube.com/watch?v=fR9cJsGorU0
Afterwards there will be a fireworks show
https://m.youtube.com/watch?v=ZF1THyLOnxQ
Aren’t we lucky! To live here now in magic times…what a privilege!
a “smaller batch” of the world economy is made
That is a great line.
I have used the smaller batch analogy in several posts. The earliest one I remember is this one, from February 2011.
https://ourfiniteworld.com/2011/02/02/how-is-an-oil-shortage-like-a-missing-cup-of-flou/
This was only a few months after I started writing originals of my posts on OurFiniteWorld.com again, instead of on TheOilDrum.com.
I agree with what you write. A lot of work and thinking. The oil affordability problem seems to be different from country to country. The quantitative easing in response to the financial crisis (which was caused by the 2008 oil price shock) has created an asset bubble which also made housing unaffordable in countries like Australia. Immigration of rich Chinese has made this situation worse. A 1950s charmer in our suburb is now snatched up by them for a cool A$ 2 million, driving the locals out of Sydney to smaller towns with commuting times of 2 hours.
Interesting also the relationship between income inequality and energy consumption.
The events in Hong Kong brought me to look into the inequality problem and I found this 2015 report on China:
Capital accumulation, private property, and inequality in China, 1978-2015
https://voxeu.org/article/capital-accumulation-private-property-and-inequality-china-1978-2015
In relation to Fig 11 I did this analysis a couple of years ago:
19/8/2016
Oil reserves and resources as function of oil price
http://crudeoilpeak.info/oil-reserves-and-resources-as-function-of-oil-price
18/10/2015
Saudi Arabia’s fiscal break-even oil price to be around $US 100 mark for the foreseeable future
http://crudeoilpeak.info/saudi-arabias-fiscal-break-even-oil-price-to-be-around-us-100-mark-for-the-foreseeable-future
This fiscal break even oil price changes all the time.The IMF article IV consultation reports usually update these calculations. The volumes of oil which can be sold at that price are also important
Most interesting right now is Iran.
At current oil prices the emergency budget threshold are exports of 720 kb/d.
Iran’s Crude Oil Exports: What Minimum Is Enough to Stay Afloat?
https://www.atlanticcouncil.org/blogs/iransource/iran-s-crude-oil-exports-what-minimum-is-enough-to-stay-afloat
Platts reports Iranian crude exports 450 kb/d in July. US government spin has it much lower:
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/082019-iranian-oil-exports-fell-below-100000-b-d-in-july-us
So we can expect some action in the Strait of Hormuz soon. If some sort of military confrontation were to happen there, oil prices will certainly go very high, depending on the type and length of disruptions. But as you are saying, this would induce a recession at a time when there are so many other problems like Brexit.
On China’s coal:
China’s coal users, importers shifting away from Australian suppliers
14/4/2019
https://www.afr.com/world/asia/china-s-coal-users-importers-shifting-away-from-australian-suppliers-20190410-p51czk
I suspect sanctions and trade wars cover up some real supply/demand issues.
The points you raised are never discussed in the mainstream media. Our governments are too busy trying to grow the economy, at all cost. I doubt they have the system dynamics skills to analyse, let alone understand what is going on. They have surrounded themselves with hire-and-fire departmental directors who sing from the song sheet of their Ministers uneducated in physics. That’s why they can’t produce realistic assessments.
2/5/2019
Australian fuel security review ignores peak oil in China 2015 (part3)
http://crudeoilpeak.info/australian-fuel-security-review-ignores-peak-oil-in-china-2015-part-3
30/4/2019
Australian fuel security review ignores peak oil in China 2015 (part2)
http://crudeoilpeak.info/australian-fuel-security-review-ignores-peak-oil-in-china-2015-part-2
29/4/2019
Australian fuel security review ignores peak oil in China 2015 (part1)
http://crudeoilpeak.info/australian-fuel-security-review-ignores-peak-oil-in-china-2015-part-1
I looked at the Piketty article on the growth of income inequality in China in recent year. I thought it was very interesting. It fit with my perceptions as well, when I visited there. I even had an opportunity to visit a wealthy family in their home, on my visit.
According to the article,
It will take me a little time to look at your other links as well.
I found a Guardian article that talks about why China is finding excuses not to import Australian coal.
Australia’s coal bonanza at risk as Chinese import ‘ban’ spreads
My guess is that China desperately needs the internal price of coal to stay high enough to cover the higher costs of the new coal by rail system. The only way it can do this is by finding excuses to cut off Australian coal imports because coal by ship is likely cheaper than coal by rail. China needs the jobs for the people of China. It needs a positive return on its big investment in an extended rail system.
At the risk of sounding coy, maybe its time to entertain Jeff Bezos plan and get off this dinky little planet, with its fast depleting resources. Solar power is unlimited in space. And the near earth asteroids that can provide humanity with all of the minerals it needs for centuries to come. If the richest men in the world take this idea seriously, maybe the rest of us should too.
Maybe Jeff could start out building a space taxi that could take an astronaut to the Space Station. The only way we can get them up there now is to pay Russia $80 milion for a seat on their rocket.
Oh yeah. We’re going 250,000 miles to the Moon when we can’t send a man 350 miles to the Space Station. While we’re dreaming, how about we trip on out to Mars…..only 30 or 40 million miles. Go Jeff Go.
The Space Corps motto – We can only go up from here!!
Today’s models replace yesterday’s fairy tales. The main difference is that people believe today’s models, no matter how absurd, while they could see that yesterday’s fairy tales were not to be taken literally.
On the same theme: “We seem to have exhausted the resources of Central Asia. Time to climb aboard our intercontinental rats and colonise Europe.” The Black Death ruling council, ca 1344.
If there really are superior beings, intellects vast and cool and unsympathetic, watching our Island Earth, I hope they blast our spaceships out of the ether. One planetary corpse is enough.
In the beginning, mankind was given dominion over the earth and all of its resources (including oil). He was commanded to nurture, manage and develop this large but finite planet.
He was granted freedom to choose without any interference. It was a test. A limited test, for a limited period of time. Each drop of oil or lump of coal was a grain of sand in an hourglass. The peak of exploitation of energy resources is also the marker for peak civilization. We are all part of the test. What kind of paradise did we create?
Look on the bright side, Theophilus, after the bottleneck and you survive, in 6 months time you’ll could very well be running the planet….or should I say your little piece of it!
https://m.youtube.com/watch?v=do_pHzBwN8M
A new chapter of the Bible…can’t wait
The kind that likes putting lipstick on a pig…
Pingback: Debunking ‘Lower Oil Supply Will Raise Prices’ - Deflation Market
“A report from the Confederation of British Industry (CBI) has found that retail sales volumes and orders both fell at their sharpest rate since December 2008 in the year to August. Companies in the retail sector are also expecting further trouble in the months ahead, with industry sentiment falling to its lowest levels in more than a decade.”
https://www.cityam.com/retailers-forecasting-trouble-ahead-as-sales-plunge-at-fastest-rate-since-financial-crisis/
“Germany had a black Christmas in 2008. Three months after the collapse of Lehman Brothers, triggering the global financial crisis, the Bundesbank warned Germans to prepare for the worst… A decade on, there is a whiff of deja vu in Germany…”
https://www.irishtimes.com/business/economy/germany-s-golden-economic-run-of-the-merkel-era-may-be-at-an-end-1.3993855
“Italy’s president has given the country’s main political parties four more days to negotiate the formation of an alternative government… Sergio Mattarella said on Thursday night that the crisis must be “resolved quickly” and that without a solid majority the only other option would be new elections.”
https://www.theguardian.com/world/2019/aug/22/italian-president-meets-party-leaders-to-explore-coalition-options
“Eurozone central bankers had worried that an economic slowdown hitting the bloc would drag on, as they prepared the ground for a new package of stimulus measures, according to minutes of their July meeting published Thursday. In a pessimistic reading of the outlook for the single currency zone, the bankers noted that “there was now an increased likelihood that the economic slowdown…”
https://www.ibtimes.com/eurozone-bankers-warn-more-protracted-slowdown-2816667
When the likelihood of recession hits 100%, we won’t hear more about an increased likelihood of recession.
The Eurozone represents the part of Europe with the least energy resources. It is hard to see how it can do well, if many countries of the world are doing poorly.
“…the Swedish krona has weakened from 10.12 per euro to 10.85, in turn its weakest since 2009…”
https://www.investorschronicle.co.uk/comment/2019/08/22/scandinavian-woes-deepen/
“The world’s second biggest economy, which is slowing, is past a point where it cannot ignore its enormous debt anymore, according to an analyst…
““China is very much past the tipping point where the debt simply no longer can be ignored. The cost of servicing the debt … simply distracts from almost everything else…””
https://www.cnbc.com/2019/08/23/chinas-debt-levels-amid-its-slowing-economy.html
“China’s currency the renminbi has fallen to its lowest level against the dollar in 11 years in a move likely to anger US President Donald Trump, who earlier this month accused Beijing of currency manipulation…
“The trade war has hurt China’s currency, which has in turn affected other emerging market currencies.”
https://www.cityam.com/chinese-renminbi-falls-to-lowest-versus-dollar-since-2008-as-trade-war-bites/
” Hong Kong’s rolling political turmoil could prove a tipping point for the world economy, Harvard University economist Carmen Reinhart said.
“Noting an incidence of shocks that have rattled global growth, including the intensifying United States-China trade war, Professor Reinhart cited Hong Kong as among her main concerns.”
https://www.straitstimes.com/business/economy/harvard-economist-carmen-reinhart-warns-hong-kong-could-trigger-world-recession
“Japanese manufacturing activity shrank for a fourth straight month in August as export orders fell at a sharper pace, a preliminary business survey yesterday showed…”
https://www.straitstimes.com/business/economy/japan-manufacturing-shrinks-for-4th-straight-month-in-august
That newspaper is starting to sound like it needs renaming as the Dire Straits Times.
Lol. ‘Money for Nothing’ sounds about right as the financial credo for 2019.
The question the CNBC article raises, “Will the demand for new debt be there?” if more credit is available.” I suppose, if there are not workers wanting new high-priced condo homes, the demand for debt from builders will fall. Also, auto companies will need less debt, it they are building fewer autos.
“Also, auto companies will need less debt, it they are building fewer autos.”
Gail, that is good classical economics, but alas we don’t live in that world any more. The big US automakers have not made their money selling boxes for years. They make the money on the auto loans, which provide a predictable income stream, at least until the borrowers default.
But fewer boxes means fewer loans, and a rapidly shrinking income stream. If that stream shrinks faster than the companies can cut costs, which I suspect is indeed the case, they will need to take on more debt, not less. Not being a modern monetary theorist, I would call that a death spiral.
The big automakers do have a lot of fixed costs.
I don’t know all of the details regarding how this works in practice. At one point there were articles about Tesla not being in a position to finance all of the autos it was selling. The company making the loans must somehow have a reasonable balance sheet itself.
“Rajiv Kumar says India is facing such an economic downturn for the first time in 70 years, a liquidity crisis wherein lenders have stopped funding businesses, resulting in a situation where they have to survive on cash… “Niti Aayog Vice-Chairman Rajiv Kumar has said the ongoing financial crisis in India is “unprecedented”…
https://www.businesstoday.in/current/slowdown-blues/current-economic-slowdown-unprecedented-niti-aayog-rajiv-kumar/story/374696.html
“With India’s auto sales declining for the ninth straight month in July, more automotive manufacturers are laying off workers and temporarily halting production to keep costs in check, according to sources and documents seen by Reuters. Japanese carmaker Toyota Motor and South Korea’s Hyundai Motor are the latest in a string of companies to halt production at plants to combat slumping sales…”
https://www.reuters.com/article/us-india-autos-jobs/auto-companies-in-india-cut-more-jobs-halt-production-to-tackle-slowdown-idUSKCN1VC1G8
As reported by the FT and elsewhere, motor sales in India, recently seen as an important growth market for global manufacturers and their components suppliers, were down circa 30% in July.
30%.
A significant number.
Recently I read a report that sales of personal use vehicle in the UK (possibly also much of Europe) were now something like a form of Lease finance Credit in 80% of “sales”.
So the market buoyancy, such as it is, is entirely predicated on credit for things that will not retain any asset value whether because they will wear out or be damaged in use and considered to be beyond economic repair (favoured by manufacturers needing to shift credit funded boxes) or because they will be mandated out of the economy – likely before their manufacturing cost has been recouped via the service they provide – by political diktat related to proposals to immediately reduce CO2.
That the cost of the establishing an alternative infrastructure is likely to challenge the markets and the tax system and incur increased CO2 emissions for several decades even under the most optimistic number crunching – entirely negating the claimed purpose of the exercise – seems to be a point of discussion that is perpetually and resolutely avoided.
One has to wonder why, although I suppose the answer is obvious to anyone with a nominal grasp of logical thinking.
A person has to wonder. Taking perfectly good vehicles out of services has a cost involved. A person wonders how those companies leasing the vehicles will fare. Perhaps the government will change the rules and fix the mess.
It is hard to imagine the infrastructure for charging all of the vehicles will be put in, in time for the proposed changes. Also, people cannot be forced to buy cars that they cannot really afford. What do they use for down payments, after leasing in the past, for example?
Manufacturers seek to shift boxes. To do that they(may) need a reputation for good or even extreme longevity of life for their product but in reality they might wish for the shortest life possible unless they can make a large profit in service/spare parts.
Thus modern cars, for various reasons, may become difficult to repair even if expensive to manufacture. Planned obsolescence.
If you can make a “safe” car that is safe mainly because the slightest bump can be used as an excuse to quote a repair cost that is well beyond the value of the vehicle in even of damage.
In the UK even minor collisions can result in car being written off. An occupant ponly has to claim that their neck hurts (seeking compensation payouts via insurance) and the rescue services will chop the roof off the vehicle to extract them, thus clearly making the vehicle beyond (legal) economic repair in most cases
The consumers look for deals that require little or no down payment and attempt to extend the life of the deal over multiple years.
If boxes are shifting slowly such deals will be available. At least they keep the numbers up and defer the lack of profits to a later point in the cycle.
Plus the retailers hope that the used market picks up the slack a few years down the line.
The problem seems to be that there is only one period of slack with which to operate.
Over a 5 year (or less) cycle it may be a viable option. Over 10+ years the results seem to be less certain.
Any relatively high value personal “desire rather than need” purchase may be questionable. And short lived as an article of utility.
This GDP is improved – but nothing else.
Think about women’s clothes! A new style is needed every season, to encourage women to throw out the old ones, and buy new ones.
Liquidity crises are a huge problem. Here, the statement is made that lenders have stopped funding businesses. I can’t imagine loans are easy to get for citizens, either.
“Growth is sputtering all over the world. Germany and the U.K. have both reported that their economies shrank in the second quarter, and signs of a slowdown are apparent in lots of other places. But as central bankers gather in Jackson Hole, Wyoming, and government leaders in Biarritz, France, to discuss what to do, it seems worth pointing out how slow growth already was in most rich countries even before the recent bad news…
“We aren’t really back in the Middle Ages. But per-capita GDP growth in wealthy countries does seem to have slowed to a much slower pace than in the 20th century, and possibly at any time since the dawn of the Industrial Revolution. Add to this the fact that population isn’t growing much in these countries, and in some cases is actually shrinking, and you have at least part of the explanation for why interest rates are so low and politics so weird these days. The growth that we’ve gotten used to over the past two centuries or so just hasn’t been there lately.”
https://www.bloomberg.com/opinion/articles/2019-08-22/economic-growth-rates-look-almost-medieval
“…the global economy may be at risk of returning to the rut it tumbled into after the financial crisis of 2007-2009.
“Worse, solutions seem far from obvious. Central banks can’t just slash interest rates. Rates are already ultra-low. And even if they did, the central banks would risk robbing themselves of the ammunition they would need later to fight a recession. What’s more, high government debts make it politically problematic to cut taxes or pour money into new bridges, roads and other public works projects.”
https://www.apnews.com/6ba54ba727174eb79ba9b289637798e5
“…the wheels are spinning in reverse for the world’s manufacturing economies. As multinational companies scramble to mitigate the effects of trade tariffs by reorganising supply chains and onshoring production, Emerging Markets need to find a new source of demand. If they fail to adapt, global growth will grind to a halt…
“Lowering interest rates relieves some of the immediate pressure on EMs by reducing the rates on dollar-denominated debt. This sugar rush buys EMs time to develop new sources of demand for the manufacturing industries. But the strategy is fraught with risk, and if it fails we can expect major headwinds for global growth…
“Investors should not put faith in the idea that Fed can stop the unravelling of global growth, regardless of the statements coming out of Jackson Hole on Friday.”
https://www.ft.com/content/3abf6586-c4ab-11e9-a8e9-296ca66511c9
Those are really nice charts for a few countries in the Medieval article. We use sight of how unusual high per capita economic growth really is.
Thank you Gail for the new article.
Remember a friend of mine in the Pizza restaurants business claimed his fundamentals was ratios and percentages. If they were out of wzck, one could loose ones shirtr!
SAW THIS AND THOUGHT to Share…
ihttps://www.marketwatch.com/story/that-near17-trillion-pile-of-negative-yielding-global-debt-its-a-cash-cow-for-some-bond-investors-2019-08-22?siteid=yhoof2&yptr=yahoo
iBuyinb nto the near–$17 trillion heap of global bonds with negative yields might sound like a losing proposition. But for some investors — those who predicted correctly that bond prices this year would climb amid worries about sluggish global growth — negative yields actually have been a cash cow.
“There is a big misunderstanding about negative-yielding debt,” said James Bianco, founder of Bianco Research, in an interview with MarketWatch. “Owners of these bonds have been seeing huge price increases
With bond prices moving in the opposite direction of yields, the sharp yield decline this summer, as the U.S.-China trade war has raged and American recession fears have bubbled up, has put significant price gains on the table.
Take Austria’s 100-year bond, which has seen its yield to maturity plunge to below 1% in recent weeks.
The European country set a record two years ago when it borrowed €3.5 billion for a century in the international bond markets at a yield to maturity of 2.1%, according to the Financial Times. But this chart shows the yield to maturity shrinking to just 0.71% as of Aug. 20, as demand (and the security’s price) has climbed
As a result, investors in Austria’s century bond at par, or 100 cents on the euro, roughly two years ago at issuance, could have sold in August when the price briefly soared above 200 cents, for a more than 100% return.
The flip side to this “upside-down, anything is possible” world of negative-yielding bonds that fetch “astronomical prices,” according to Bianco, is that bonds are only required to be repaid at par by the issuer when they mature. “When you’re paying more above par than the sum of all coupons, that is how you get to negative yields,” he said. “At some point that will blow up, but it hasn’t yet.”
The culprit? Demand for government debt that’s been climbing along with expectations that weakening eurozone economies would eventually force the European Central Bank to restart its asset-buying program to bolster the bloc’s economies.
I posted a link to an article recently that claimed, “Negative yielding bonds are for trading, not for holding to maturity.” Buying them is basically done as a bet that interest rates will fall into more negative territory, so that asset prices will rise. The longer the bond, the more leverage this effect has. Your article is an example of this.
Of course, if interest rates head toward zero (in other words, rise), we get precisely the opposite effect.
A contracting economy doesn’t really work, as far as I can see. The bonds are in some sense a bet about how the economy will contract over time. I expect that there will be a fast turning point at some time, after which the contraction will be more of a cliff.
I was hoping that the elites had some plan but putting their faith in renewable energy just proves how misinformed they are so it looks like a fast eddie challenge kind of world will be soon upon us . will anyone survive
Reluctantly, I’ve got to agree wholeheartedly with this comment.
But there is no way I’m going to share it with my friends or relatives.
If they believed me, it would put a huge damper on their carefree outlook on life.
And if they didn’t, they would mark me down as a doomsday cult member and warn their kids not to drink any Kool-Aid I might serve them.
thanks for the new article Gail I think that now that we have reached Peak Oil on November 2018
the collapse of the worlds financial system will be upon us soon
I think you are right about November 2018 being the peak month. It seems quite possible that the year 2018 will have higher oil consumption than 2019.
I wonder why this “higher” power allowed us to industrialize and uglify much of the earth in the 1st place before ensuing we pull back?
according to Buddhism there is no higher power there is only change so the changes we have made to the earth are no big deal in time there will be balance again
I agree that the changes we humans have made on earth are no big deal, from the point of the earth and its ecosystems. The earth will again adapt. It is made to change and adapt.
Industrialization allows more energy dissipation and more population growth. It is strange, I agree.
Gail, there is a strong push towards UBI (universal basic income) and MMT (modern monetary theory) being implemented. This would immediately raise the wage of workers. How do you think this would then impact your theories on energy vs wages?
Thanks for another great post.
First of all, I am doubtful that the strong push toward UBI and MMT will really be implemented. The countries that need more income are especially the very poor countries, like India, Pakistan, Bangladesh, and sub-Sahara Africa. These countries are not in a position to do much of anything, I don’t think. Also, Saudi Arabia and other oil producing countries really need more money for its citizens. For Saudi Arabia, it would (perhaps?) make more sense to devalue its currency relative to the US. dollar than to start with UBI.
Advanced nations seem to be the ones interested in UBI and MMT. It seems like using these approaches very much will end up changing currency relativities–the greater the debt, the farther the currency falls.
what if there were to be a robin hood moment? that is some unknown political who will do the unthinkable by taking control of the worlds money supply and due to socialism will embark on a process of wealth confiscation the likes of which the world has never seen and then embark upon a far reaching redistribution program through the implementation of a social credit system similar to the China model. All it would take really is to implant your tax number in your hand and voila problem solved but only for a short period of time.
Isn’t this something the Zionists would crave for and indeed would want under a coming false king of Jerusalem?
We know through many examples that even distribution of wealth doesn’t really work. As the people in Cuba say, “They pretend to pay us, and we pretend to work.” There is not sufficient “buy in” to wanting to work hard, if everyone gets paid the same amount, regardless. If everyone gets the same amount, perhaps it sort of looks like it fixes the problem, but for a temporary time. But Russia made it work for a time, and Cuba has as well.
One thing that the even distribution of assets/income did in Cuba (and also Russia) is encourage a very low birth rates. Neither country used much debt (perhaps related to the fact that there is not much hope of growth under this approach). There was no way of building more homes, other than perhaps sweat equity (build one room at a time, as a person manages to save up resources). Without more homes, and with the expectation of a certain level of standard of living, there is no room to add more citizens. So families hold back on their numbers of children. Population grows very slowly compared to other countries.
Yes good points. It is really the countries that don’t make up the main reserve currencies that need to do it. But if they do, their currencies will go into the toilet.
Brazil and Argentina are two nations that could do with an economic boost. Can you imagine what would happen to their currencies and bonds if they suddenly announced they were starting MMT programmes?!
“The Brazilian Central Bank began auctioning, on Wednesday, August 21, US$200 (R$800) million dollars from its currency reserves to stabilize the increasingly volatile exchange rate. This type of operation had not taken place since February 2009, when the global economic crisis reached its peak due to the collapse of subprime lending in the U.S. housing market.”
https://riotimesonline.com/brazil-news/brazil/brazils-central-bank-sells-dollar-reserves-for-the-first-time-in-ten-years/
“Argentina will not allow a chaotic fall in the peso and will use its dollar reserves to bolster the currency against political uncertainty that has swept the country since the Aug. 11 primary election, Treasury Minister Hernan Lacunza said on Wednesday… “We will not allow an irrational run on the currency…”
https://en.mercopress.com/2019/08/22/argentina-will-support-the-peso-with-international-reserves
Good examples!
Gail, I think the last word on UBI and MMT was written exactly one hundred years ago:
** In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.” **
From “the Gods of the Copybook Headings”, by Rudyard Kipling:
http://www.kiplingsociety.co.uk › poems_copybook
Oh boy, an invitation to be philosophical….
A complex system can arise from a few simple principles. Jeremy England’s work https://www.quantamagazine.org/first-support-for-a-physics-theory-of-life-20170726/ suggests how the laws of physics (particularly the 2nd Law of thermodynamics) and chemistry can give rise to life and how it functions. I believe that evolutionary theory (of life) on earth might eventually be subsumed under the fundamental theories of physics.
Whether there is a higher power behind the universe we may never know. For now the physics and observations suggest that a universe can arise spontaneously from the void and we are just are a flash of life in a vast universe that might be one of many. I kind of like the idea that there is no higher power behind it all, because it suggests that we might be free to make our own choices and determine our own destiny.
Except that maybe we are not. As Gail (and others) have highlighted, our collective actions appear to be broadly driven and constrained the energy available to us in the environment. That is the hidden hand? Some of the biggest questions of our lives now are how much (fossil) energy is still available to us to burn, and whether we are free and able to make a collective choice to burn far less of it, or burn it over a far longer period of time. Right now we appear to be acting as if we not have any collective choice in this regard. We are burning everything we can dig up, and now it seems, every tree still standing.
If we slide down the backside of Hubbert’s curve to the stone age, it will be hard to argue from a human race perspective that there is any teleological direction or hidden hand to the universe. If we somehow escape this fossil energy decline through the ‘singularity” or some other technological breakthrough, it might suggest a teleological direction but we will probably come to regret what might be a post human future.
We know that the lifetime of dissipative structures is finite. Thus, we cannot expect our economy to last forever, no matter how conscientious we are in trying to preserve it. We will run into a bottleneck, one way or another.
Today, researchers have computers, and with these computers, it is easy to make models. Jeremey England at least understands the constraints he is working under. Most of the researchers don’t. They tend to create models of how they think some aspect of the world should work. Their work probably should be considered today’s version of Fairy Tales, but because it comes out of a computer, people assume it has validity.
I think the models of how humans can save the earth are pretty much of the Fairy Tale variety. Even if we can fix one aspect of our problem (say, cheap energy products), we still have many other aspects of our problems, including rising population, not enough fresh water, declining fish population, deforestation, and continually changing climate. We can’t fix all of the other problems, even if we can fix one problem.
Gail, I agree that all these problems are interlinked, but there is one that stands out:
Not enough fresh water => too many people drinking it
Declining fish population => too many people fishing
Deforestation=> too many people demanding firewood, arable land, …
That is near the heart of our predicament: we are no longer a species, subject to natural predators, checks and balances: we are a cancer. And I have no hope that there is any solution other than collapse. Especially when I hear spokesmen for major international organisations say things like “by 20xx, India will need twice as much water”, or “by 20xx, Africa will need twice as much food”. In other words, let us work hard to make the problem twice as bad as it is now.
To paraphrase what Woody Allen said about getting old; overpopulation, it has nothing going for it.
I broadly agree with whoever wrote the words on the Georgia Guidestones .
The first guideline reads:
Maintain humanity under 500,000,000 in perpetual balance with nature.
Tim, many people have studied this issue, and most of them have reached the same conclusion. I did the research almost 20 years ago (won’t bore you with the methodology), and came up with the same answer. What is the maximum sustainable population with enough surplus to maintain a humane civilisation? My answer: 600 million.
I agree but would pick 100 million.
The Georgia Guidestones were erected on March 22, 1980. This was not too long after the 1972 book “The Limits to Growth” was published. It is about the time William Catton’s book “Overshoot” was published (October 1980).
If we look at UN Total Fertility per Mother data, we find that the average number of births per woman as dropping in developed countries about this time. In the US, the Births per Woman dropped as follows:
1955 -1960 3.58 births per mother
1960-1965 3.23
1965-1970 2.54
1970-1975 2.03
1975-1980 1.77
Better birth control was developed near the beginning of this period. Also, there must have been information being publicized that having too many babies was not good.
Given what Paul Craig Roberts speaks about in this important essay next to your above essay well you Gail Tverberg should have been employed as an advisor to Mr. Trump and why your not is telling is it not? Wow, just wow! The ignorance and idiocy of it all is staggering?
One consequence of Washington’s universal economic ignorance is that the financial media has concocted the story that “Trump’s tariffs” are not only driving Americans into recession but also the entire world. Somehow tariffs on Apple computers and iPhones, Nike footwear, and Levi jeans are sending the world into recession or worse. This is an extraordinary economic conclusion, but the capacity for thought has pretty much disappeared in the United States.
In the financial media the question is: Will the Trump tariffs cause a US/world recession that costs Trump his reelection? This is a very stupid question. The US has been in a recession for two or more decades as its manufacturing/industrial/engineering capability has been transferred abroad. The US recession has been very good for the Asian part of the world. Indeed, China owes its faster than expected rise as a world power to the transfer of American jobs, capital, technology, and business know-how to China simply in order that US shareholders could receive capital gains and US executives could receive bonus pay for producing them by lowering labor costs.
Apparently, neoliberal economists, an oxymoron, cannot comprehend that if US corporations produce the goods and services that they market to Americans offshore, it is the offshore locations that benefit from the economic activity.
Offshore production started in earnest with the Soviet collapse as India and China opened their economies to the West. Globalism means that US corporations can make more money by abandoning their American work force. But what is true for the individual company is not true for the aggregate. Why? The answer is that when many corporations move their production for US markets offshore, Americans, unemployed or employed in lower paying jobs, lose the power to purchase the offshored goods.
I have reported for years that US jobs are no longer middle class jobs. The jobs have been declining for years in terms of value-added and pay. With this decline, aggregate demand declines. We have proof of this in the fact that for years US corporations have been using their profits not for investment in new plant and equipment, but to buy back their own shares. Any economist worthy of the name should instantly recognize that when corporations repurchase their shares rather than invest, they see no demand for increased output. Therefore, they loot their corporations for bonuses, decapitalizing the companies in the process. There is perfect knowledge that this is what is going on, and it is totally inconsistent with a growing economy.
https://www.paulcraigroberts.org/2019/08/21/what-globalism-did-was-to-transfer-the-us-economy-to-china/
China could give the world a growing supply of cheap coal energy. It also had low wages and many hard-working citizens. All the hoopla about climate change gave a perfect excuse for transferring manufacturing to China. If manufacturing wasn’t within the walls of your own country, the CO2 didn’t count toward official calculations. There certainly was no tax on imported CO2. Of course, sending manufacturing to China sent CO2 through the roof. The trend line shows where CO2 emissions seemed to be headed, before China joined the World Trade Organization.
https://gailtheactuary.files.wordpress.com/2019/04/world-co2-emissions-with-1990-2001-trend-line.png
Sending the production to China had a multiplier effect on its economy. With the help of growing debt, it could greatly ramp up the energy consumption of the Chinese people as well.
I’m afraid it’s a bit more nuanced situation, simply “the Washington” is a mere subset or host entity for the perennial globally operating CB cartel. Occasionally, against the plan not completely “trustworthy lackey” gets into the gov-political office and these tensions bubble on the surface, e.g. Trump’s soft yet publicly done attacks on the FED..
The de-industrialization of the US was carefully executed activity for several past decades as the high tech sphere (aerospace, military, semiconductors) of the mil-industrial complex got and kept the highest priority and inflow of funds and talent (often sourced from abroad). However, such imbalances of overall deteriorating economy and few selected islands of skill can’t last forever, eventually it all blends and falls apart, we are probably very near this threshold, e.g. US not able anymore to produce reliable passenger jet, long term allies-vassals (Gulfies) already hedging for the post US world situation etc..
Could you expand on this? It doesn’t appear to add any value to the discussion. Indeed, such a proposal could render all discussion on energy flows pointless. What have you observed that suggests some higher power, whatever that means, is controlling the universe (ultimately, everything is energy flows in some form or another)? Is it possible to hypothesise about what causes energy prices to rise or fall when some other power is controlling all of this?
The laws of physics are what is important. These are what determine prices and how the economy self-organizes and grows. They determine how evolution works.
I am suggesting that someone/something created these laws of physics that underlie the way the Universe works. If you don’t like the explanation, come up with a different one of your own. Perhaps, “A big bang caused the laws of physics,” or something like that.
Gail, you are welcome to my explanation. Let us begin by supposing that many well documented phenomena do not lie, and that the universe is indeed designed. So who or what designed it?
We can suppose a Designer, but this has a problem: the Designer must be more complex than the thing designed, just as a watchmaker is more complex than a watch (Thank you, William Paley and Richard Dawkins). But, by the same argument, the Designer must have been designed by a Super Designer, and he/she/it then demands a Super Duper Designer, and so on in an infinite regress.
Let’s take a step back. The (very) early universe was designed, and by something more complex. What do we know that is more complex than the early universe? Why, of course, the later universe. That closes the system: somebody up there ahead of us is using advanced action to “fix” the parameters just after the Big Bang. The laws of physics are time symmetric, so advanced causality is just as feasible as retarded causality. It’s just that, except on the very small scale of Wheeler’s “delayed choice” experiment, we don’t know how to do it. (For the experiment see Vincent Jacques, Science vol 315 pp 966 to 968)
Hope that helps. On the rather different question of a Designer who sits outside the universe, I agree with Carl Sagan: “The Cosmos is all that is, or ever was, or ever will be”. Yes, I am a Pantheist.
Well, that’s right; there could be many opinions on what “caused” physics, as our scientists have discovered it. However, you then went on to write, “I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.” So, having analysed the situation by relying on physics, you then speculate that, instead, there is some plan for how this unfolds. In this case, it doesn’t matter how much we try to analyse and understand how the situation might unfold, since that will not help us determine anything.
So I don’t see how the ending statements are at all relevant to the pages of analysis that went before. Those pages made a lot of sense but some ethereal plan that can’t be understood would scupper all of that. And, of course, there is always the thorny question of some even higher power that has a plan for the higher power you mentioned, and so ad infinitum.
For the first time in human history all the people are living in a world with debt-economy’s. There isn’t a single country with a sound economy. Apparently other economic laws apply in such a large debt environment. Maybe there is no reverse possible before the whole thing implode. Such as in the vicinity of a black hole where normal natural laws also change.
What is not sound by using debt to circulate an ever increasing amount of goods and services?
Running out of money and having financial collapses is like arguing that we are running low on millimeters and that no new roads can be build because a lack of millimeters and inches. What is such a statement even suppose to mean?
The money required to circulate the tangible wealth in the economy will simply be created out of thin air as credit/debt isn’t that what Gail is trying to put forward?
The total money supply is thus a book keeping operation for the economy. It is an ancient method of keeping checks and balances. In a situation of resource constraints, however, the amount of goods and services is naturally reduced, or diluted, no matter how much new money is being printed.
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“The economy seems to be reaching an equally strange situation. It is not a situation where we are running out of oil; it is a situation of too much wage disparity, and this wage disparity makes the prices of many commodities too low for producers of these commodities.”
I think part of the wage disparity in the West is due to a shift from decent middle class wages in the 60’s/70’s to use of labor to the lowest wage people will take yet still remain working for the company long enough to substantiate their training period. In other words the workers are now really just cogs in the wheel. This shift has occurred due to a political feedback in which the wealthy support the conservatives and in return special lower taxes have become policy as well as other ways to help reduce companies outlay to workers.
We got an earshot of that when Mitt Romney spouted off about the very topic during his presidential bid and it was caught on video by a catering worker. That let the cat out of the bag that what I’m explaining above is accurate, particularly in regards to the philosophy that the rich now see it as their right to jilt the workers at every opportunity provided by the conservatives, and Mitt was talking to them at that event to let them know he would be in their corner.
IF, and that is an IF that is purely hypothetical because it doesn’t exist, but IF wealth was more equitably shared with workers the $40 a barrel inflection point could by higher, like 45 or even 50. But of course it isn’t and won’t be, but IF it was, it would buy us more time on the way down on this other side of the Seneca cliff.
I am not sure the wealth is really available to share. A self-organized system works strangely. Even if a decree went out that the maximum pay for the top person could only be 10 times that of the lowest paid worker, I think the flood of low-paid wealth would be more than the system could really handle.
One thing that has struck me is the fate of recycling plastic and other low-valued recycling. Recycling is marginal in terms of adequate return, even when oil prices are fairly high. When oil prices are around $60 per barrel for Brent, I cannot imagine that there is much benefit at all. China eliminated this recycling as of January 1, 2018. I believe that they eliminated even more later. No doubt many lost their (low paying) jobs in China, helping to destroy world demand for goods and services.
As this recycling has tried to shift elsewhere, it has brought lower pay to workers in other countries, such as India, who previously made their living collecting recyclables. The price per kilo or pound of recycled material has fallen dramatically. Where there is a market for a little recycled material, here is not for a lot of recycled material, especially when energy prices are low. So these other countries are trying to get rid of recycling low valued material now as well. It just doesn’t pay. I think that there are a lot of jobs that don’t really add much value now, especially with all of the subsidized renewables.
Also, as long as there are other countries where wage levels are much lower, it is hard to raise US wages for comparable jobs. If wages are raised, the prices of goods simply become too expensive to sell on the world market.
At least in Europe, some of this stuff is now reprocessed and added into road asphalt mix, the new surface has apparently gained several advantages it’s more silent and easy on the joints (jogging – walking – likely the same for suspension of cars).. Not sure how tiny or not could be this application in the grand scheme of things..
I hadn’t heard of that application of recycled material. I suppose one of the big questions would be, “How well does the new road material hold up under traffic?”
Kremlin said that the low oil price was caused by the Fed’s rate hikes and QT. The strong dollar and dollar shortage globally doesn’t of course help oil prices or the global economy…neither does tariffs and sanctions.
So…Rosneft will now switch from the dollar to the euro.
Not sure if this will do any good though…
https://mobile-reuters-com.cdn.ampproject.org/v/s/mobile.reuters.com/article/amp/idUSKCN1VB15J?amp_js_v=a2&_gsa=1&usqp=mq331AQEKAFwAQ%3D%3D#aoh=15664924283111&referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fwww.reuters.com%2Farticle%2Fus-russia-rosneft-tenders-euro-idUSKCN1VB15J
Thanks for the link. Yes, it could be theoretically interesting development, countries producing something of value (EU – consumer and industrial goods, tooling ; Russia delivering energy carriers + security shield) coming together finally. But I very much doubt such marriage could be achieved and sustained with the substandard material like Macron and Angela (and her incoming clone).. Finally the bottom line – that would imply the US has been completely written off into the future by the global CBs cartel, I doubt very much we are there yet, who knows..
We will see. Of course, the Euro isn’t necessarily doing all that well either now, with the problems the EU is having.
I think that the US raising interest rates is definitely part of the lower oil prices. Quantitative Tightening is likely part of it too, as well as the things these changes do to currency relativities.
The model economists have regarding how the economy operates (at least as I understand it) is too unrefined. Besides making a smaller batch, there is also the possibility of changing currency relativities. This affects how everything works out as well.
Sorry for cross posting it here from Surplus discussion, it’s an important reminder that Orlov made few years ago interesting combo of ZIRP->NIRP-> ? pathway explanation and prediction, summary here: http://cluborlov.blogspot.com/2019/08/going-negative.html
So far so good, however the next phase shift threshold, i.e. NIRP-> ? stage is likely going to crash into some sort of tangibles level again. I’d tend to speculate it could center on energy flows in the most optimistic scenario while more realistic seems a mere relapse into more primitive forms of social order where the guns people take over control.
Thanks for posting a link to Dmitry Orlov’s post. He has many good insights, and an interesting way of putting things.
I agree that for countries doing as poorly as most of Europe, there is no point to positive interest rates. The future is shrinking, whatever happens, so make the money supply gradually disappear.
I don’t think we know what brings about the final collapse. We seem to have a lot of candidates.
“it almost appears that there is a plan behind what is happening. From what we can observe, there seems to be some literal higher power behind all of the energy flows that we observe in the universe. This literal higher power seems to have put into place all of the laws of physics. This literal higher power seems to also be behind all of the self-organizing elements within the universe, including humans, ecosystems and economies. I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.”
I have a few good friends who are devout Jehovah’s Witness who truly believe that the Bible says that in the time of the end “critical times hard to deal with” would appear. It does appear that over the decades we have put ourselves in a “checkmate” position.
And as I have pointed out, the Book of Revelation (which many people seem to equate with end time prophesies, but they may also related to the fall of Rome) points out the collapse of Babylon in Chapter 18. The chapter talks about everything losing value, even slaves (the energy product of the day)(v. 13).
It is fascinating that the collapse described features gluts of unsold products as opposed to scarcity, suggesting that affordability is the issue.
Plus it is rapid:
“In one hour such great wealth has been brought to ruin.”
And irreversible:
“No worker of any trade will ever be found in you again”.
It must have happened many times in the history of civilization. Even with solely hand-labour one may over-produce – demand having been destroyed by famine, plague and war.
Exactly! It sounds a lot like the US Depression as well.
Today’s grotesque, planeticidal materialsm must end. Man must start with a fundamentally different and new understanding of his own origin and being. Otherwise nihilism will bring about the complete failure of this planet’s attempt to produce intelligence. The following is my effort to show how our existence is the very opposite of meaningless.
At the end of their massive tome, Gravitation (S.F.: W.H. Freeman & Co., 1970-71, p. 1208), astrophysicists Charles W. Misner, Kip S. Thorne and John Archibald Wheeler derive the concept of an ultimate Mind behind the physical universe as a “calculus of propositions,” a form of logic which considers all possibilities for a cosmos, and chooses for implementation the one(s) which will produce biological intelligence.
Misner, Thorne and Wheeler further suggest that the REASON for the vast size of universe is “Because only so can man be here!” (pp. 1216f.)
If, now, we understand the essence of “physical” nature as being in fact rooted in mind operating through morphic resonance as explained by Rupert Sheldrake (in Morphic Resonance: The Nature of Formative Causation); and if, further, we recognize the history of biology on our planet as the epistemlogical evolution (i.e., evolution as a learning process) of life culminating in the emergence of biological intelligence from basic physics; then it would seem that biology is actually a fractal reproduction of this cosmic logic — logic which MTW conceive of as a “calculus of propositions.”
Further yet, despite the fact that Wheeler himself rejected the entire notion of the paranormal, the abundant and overwhelming (non-Hollywood) evidence for it makes it clear that even intense human emotions (as in the experience of traumatic violence, etc.) can modify physical chemistry so as to “imprint” it with the memory of an event, thereby producing the phenomenon of “haunted” houses, etc., where psychically sensitive individuals can perceive that memory as “ghostly” visions or sounds.
In other words, this kind of “mnemonic” effect is of the same kind as, albeit much weaker than, the effect of the infinitely powerful cosmogonic logic which generates the universe.
As for memory itself: as many researchers have determined through rigorous experiments, brains (or cells, even bacterial) are not the same as the memories which they remember. This discovery is quite contrary to the common materialist dogma that nothing exists except what is “physical,” however defined. The ability of a brain to “tune into” a memory (e.g., a learned activity) seems to be widely distributed throughout all of the cerebrum, while each section, no matter how small, has that ability, just less strongly and clearly. In other words, this ability functions as if in a hologram. (Depending on the researcher or philosopher, the realm of memory may be called “transform space,” “hologramic mind,” or some other term.) And some, extrapolating this finding, consider the entire universe to be a hologram.
This is relevant not just to the concept of morphic resonance, but to what is popularly called “reincarnation.” For information, e.g., on how birthmarks and birth defects often correspond to the death wounds of a previously deceased personality, see Ian Stevenson, Where Reincarnation and Biology Intersect. It indicates that the interplay between a physical organism and a corresponding memory is not just a one-way street. Memory guides the growth and behavior of a similarly structured, later individual. One may feel confident in asserting that it determines the shape and behavior of the most basic physical particles: the reason all electrons have the same shape, mass and spin is because they are all “identical twins,” remembering one and the same memory.
And at the root of it all, though far from Christian or other theology, is the cosmogonic logic, or mind, which is popularly called God, and which in Old English pre-Christian Germanic peoples called wyrd (“fate”), the etymological ancestor of modern English “weird.” Moreover, its teleological direction is utterly opposed to the meaninglessness so fervently embraced by the materialists and nihilists now in power in the West.
As I keep saying, there seems to be a great deal more predetermination in the way the world operates than I would every had imagined. Everything self-organizes in a way that in some sense maximizes its dissipation of energy. Our ability to control this is very limited.
There are many things we don’t really understand. This is a rather strange You Tube video from 2014 in which Christine LaGarde (then managing director of the IMF) seems to use numerology to suggest that a change in policy in 2014 might allow with the hope that the past “seven miserable years” can be followed by “seven strong years.”
Yes, we must comply with the natural order. Our monkey brains aren’t suited for developing large scale civilizations because the inherent traits which makes a monkeys successful isn’t the same as which will make civilizations eternal. What is needed for mankind is implicit and emergent rules for its affairs which mimics those of nature, and by extension IS nature.
Heavy handed intervention by social engineering programs eventually ends in dystopia and suffering, which is evident throughout human history where dogmatism and confusion between equal opportunity and equality of outcome gets in the way of practical solutions and corrupts the civilization in which it depends upon. Concluding in perpetual war, suffering and untold misery.
Luckily this will inevitably happen with the introduction of artificial intelligence and large scale computer networks, where the problematic traits will be quickly dispatched with to the benefit of natural order. It is the most efficient method of information transmission, storage, raw material and energy exchange close to the theoretical limits of the Carnot Cycle and Information Theory.
Now we have the choice of complying with this process or face the consequences. Squashed like ants by the process we have created and still fail to understand.
https://youtu.be/8nt3edWLgIg
Thank you, Gail, one more wonderful piece, also including the hidden hand.
This may be the “Hidden Hand” that has deemed that several planetary/solar cycles, including the Grand Solar (the Eddy this time around) Minimum should play out at this time in history too. This of course will bring ruination to post industrial countries through biblical magnitude crop losses, plagues of locusts etc. We may be just beginning a civilisation-crushing 2000 year episode, if we’re lucky a 200 year Minimum like the Dalton.
Either way, we do all need to start ( immediately ) gardening and prepping generally !
Livescience says the following: Global Warming vs. Solar Cooling: The Showdown Begins in 2020.
There seem to be various write-ups of a recent analysis by Professor Valentina Zharkova, which seems to suggest a cooling period may be ahead.
https://electroverse.net/professor-valentina-zharkova-breaks-her-silence-and-confirms-super-grand-solar-minimum/
https://tallbloke.wordpress.com/2019/06/25/zharkova-uses-solar-planetary-theory-in-new-paper-predicting-earth-temperature-rise-to-2600-following-imminent-grand-solar-minimum/
The second link quotes directly from the conclusions section of the paper. It says (among other things):
So it is not clear that she is yet making a very specific prediction.
Thanks Gail for your comments and links to and about Prof Valentina Zarkova , they are much appreciated!
The Ice Age Farmer has a thought- provoking platform which I follow on YouTube ; he regularly details the worldwide crop failures occurring this year, which rarely hit the mainstream media. Olives in Italy for example —its interesting that the U.K. government has recently listed olive oil amongst common foods which may be rationed as a result of a no-deal Brexit!!!!
I’ve noticed that popular economists like Celente and Kaiser don’t pay much attention to the world’s food supply. I remember you Gail commenting some time ago that economists seem to be isolated from the practicalities of energy supply; in the same way they seem to be ignoring, given the changing climate at present, the looming failure of “modern “ industrialed farming to continue to service the world’s FOOD SUPPLY needs …when this particular just- in- time supply chain goes belly-up, governments can’t just print more food! Empires tend to fall when they run out of food…
PS I’m not an Economist or a scientist or an academic, just an older lay person concerned about her family, and how we should all be adapting, not sticking our heads in the sand!
If this latest Grand Solar Minimum finishes more quickly that its proposers expect, I suggest we call it the Fast Eddy Minimum. 🙂
John Allen “Jack” Eddy (March 25, 1931 – June 10, 2009) was an American astronomer who published professionally under the name John A. Eddy but much of the content referencing him can be found under his nickname Jack which he preferred to use. In 1976 Dr. Eddy published a landmark paper in Science titled “The Maunder Minimum”[2] where, using the Nineteenth Century works of Edward W. Maunder and Gustav Spörer, he identified a 70-year period from 1645 to 1715 as a time when solar activity all but stopped.
In making the case for the anomaly, he gathered and interpreted data from a wide variety of sources, including first-hand accounts from extant historical observations of the Sun going back to the telescopic observations of Galileo and other contemporary scientists of the 17th and early 18th centuries; from historical reports of the aurora borealis observed in past centuries in Europe and the New World; from visual observations of sunspots seen with the unaided eye at sunrise and sunset in dynastic records from the Orient; from existing descriptions of the eclipsed Sun; and from measurements of carbon-14 in dated tree-rings. In the last of these, which can be used as a proxy indicator of solar activity, he found evidence of other similar periods of solar quiescence in the distant past, the most recent an even longer 90-year span, from about 1460 until 1550, which he named the Spörer Minimum.
Both the Maunder and Spörer minima fell during the coldest parts of the Little Ice Age, which suggested a meaningful connection between the longer term behavior of the Sun and of the Earth’s mean surface temperature. In advancing the theory that the Sun is a variable star Eddy observed:[2] “It has long been thought that the Sun is a constant star of regular and repeatable behavior. Measurements of the radiative output, or solar constant, seem to justify the first assumption, and the record of periodicity in sunspot numbers is taken as evidence of the second. Both records, however, sample only the most recent history of the Sun.”
https://en.wikipedia.org/wiki/John_A._Eddy
The sun isn’t a gaseous nuclear reactor driven by temperature and compression. Gases does not gravitationally collapse thus exerting work on themselves. It’s a thermodynamic no-no and any such theories must be discarded since the contradict experiment.
The surface of the sun consists of metallic hydrogen with a clearly defined boundary. Transmutation and fusion reactions are due to the enormous currents which flows through its plasma atmosphere, creating a massive nuclear reactor driven by electric currents in its plasma atmosphere.
By the way, gases does not form radial waves:
https://sohowww.nascom.nasa.gov/bestofsoho/Helioseismology/large/mdi026.jpg
https://youtu.be/3bQ1zSfbExo
Great stuff, Gail, as always.
This looks like the big story today:
“The U.S. manufacturing PMI (purchasing managers index) was 49.9 in August, below the neutral 50.0 threshold for the first time since September 2009, according to IHS Markit.
“New orders received by manufacturers dropped the most in 10 years, while the data also showed export sales tanked to the lowest level since August 2009, the data show.”
https://www.cnbc.com/2019/08/22/manufacturing-sector-contracts-for-the-first-time-in-nearly-a-decade-according-to-ihs-markit.html
“The main part of the yield curve inverted once again on Thursday as the yield on the benchmark 10-year Treasury note traded under that of the 2-year note, the third time the recession indicator has been triggered since last Wednesday.”
https://www.cnbc.com/2019/08/22/us-bonds-treasury-yields-tick-higher-ahead-of-jackson-hole-symposium.html
There is also a story out U.S. created 500,000 fewer jobs since 2018 than previously reported, new figures show
Good grief!
The US population is growing at around 0.75% p/a, so that is almost flat on a per capita basis. Looks like even the US is being sucked into the global slowdown.
Unfortunately, right!
According to the representative from Markit (Moore):