Understanding Our Pandemic – Economy Predicament

The world’s number one problem today is that the world’s population is too large for its resource base. Some people have called this situation overshoot. The world economy is ripe for a major change, such as the current pandemic, to bring the situation into balance. The change doesn’t necessarily come from the coronavirus itself. Instead, it is likely to come from the whole chain reaction that has been started by the coronavirus and the response of governments around the world to the coronavirus.

Let me explain more about what is happening.

[1] The world economy is reaching Limits to Growth, as described in the book with a similar title.

One way of seeing the predicament we are in is the modeling of resource consumption and population growth described in the 1972 book, The Limits to Growth, by Donella Meadows et al. Its base scenario seems to suggest that the world will reach limits about now. Chart 1 shows the base forecast from that book, together with a line I added giving my impression of where the economy really was in 2019, relative to resource availability.

Figure 1. Base scenario from 1972 Limits to Growth, printed using today’s graphics by Charles Hall and John Day in “Revisiting Limits to Growth After Peak Oil,” with dotted line added corresponding to where the world economy seems to be in 2019.

In 2019, the world economy seemed to be very close to starting a downhill trajectory. Now, it appears to me that we have reached the turning point and are on our way down. The pandemic is the catalyst for this change to a downward trend. It certainly is not the whole cause of the change. If the underlying dynamics had not been in place, the impact of the virus would likely have been much less.

The 1972 model leaves out two important parts of the economy that probably make the downhill trajectory steeper than shown in Figure 1. First, the model leaves out debt and, in fact, the whole financial system. After the 2008 crisis, many people strongly suspected that the financial system would play an important role as we reach the limits of a finite world because debt defaults are likely to disturb the worldwide financial system.

The model also leaves out humans’ continual battle with pathogens. The problem with pathogens becomes greater as world population becomes denser, facilitating transmission. The problem also becomes greater as a larger share of the population becomes more susceptible, either because they are elderly or because they have underlying health conditions that have been hidden by an increasingly complex and expensive medical system.

As a result, we cannot really believe the part of Figure 1 that is after 2020. The future downslopes of population, industrial production per capita, and food per capita all seem likely to be steeper than shown on the chart because both the debt and pathogen problems are likely to increase the speed at which the economy declines.

[2] It is far more than the population that has overshot limits.

The issue isn’t simply that there are too many people relative to resources. The world seems to have

  • Too many shopping malls and stores
  • Too many businesses of all kinds, with many not very profitable for their owners
  • Governments with too extensive programs, which taxpayers cannot really afford
  • Too much debt
  • An unaffordable amount of pension promises
  • Too low interest rates
  • Too many people with low wages or no wages at all
  • Too expensive a healthcare system
  • Too expensive an educational system

The world economy needs to shrink back in many ways at once, simultaneously, to manage within its resource limits. It is not clear how much of an economy (or multiple smaller economies) will be left after this shrinkage occurs.

[3] The economy is in many ways like the human body. In physics terms, both are dissipative structures. They are both self-organizing systems powered by energy (food for humans; a mixture of energy products including oil, coal, natural gas, burned biomass and electricity for the economy).

The human body will try to fix minor problems. For example, if someone’s hand is cut, blood will tend to clot to prevent too much blood loss, and skin will tend to grow to substitute for the missing skin. Similarly, if businesses in an area disappear because of a tornado, the prior owners will either tend to rebuild them or new businesses will tend to come in to replace them, as long as adequate resources are available.

In both systems, there is a point beyond which problems cannot be fixed, however. We know that many people die in car accidents if injuries are too serious, for example. Similarly, the world economy may “collapse” if conditions deviate too far from what is necessary for economic growth to continue. In fact, at this point, the world economy may be so close to the edge with respect to resources, particularly energy resources, that even a minor pandemic could push the world economy into a permanent cycle of contraction.

[4] World governments are in a poor position to fix the current resource and pandemic crisis.

In our networked economy, too low a resource base relative to population manifests itself in a strange way: It appears as an affordability crisis that leads to very low prices for oil. It also appears as terribly low prices for many other commodities, including copper, lithium, coal and even wholesale electricity. These low prices occur because too large a share of the population cannot afford finished goods, such as cars and homes, made with these commodities. Recent shutdowns have suddenly increased the number of people with low income or no income, pushing commodity prices even lower.

If resources were more plentiful and very inexpensive to produce, as they were 50 or 70 years ago, wages of workers could be much higher, relative to the cost of resources. Factory workers would be able to afford to buy vehicles, for example, and thus help keep the demand for automobiles up. If we look more deeply into this, we find that energy resources of many kinds (fossil fuel energy, nuclear energy, burned biomass and other renewable energy) must be extraordinarily cheap and abundant to keep the system growing. Without “surplus energy” from many sources, which grows with population, the whole system tends to collapse.

World governments cannot print resources. What they can print is debt. Debt can be viewed as a promise of future goods and services, whether or not it is reasonable to believe that these future goods and services will actually materialize, given resource constraints.

We are finding that using shutdowns to solve COVID-19 problems causes a huge amount of economic damage. The cost of mitigating this damage seems to be unreasonably high. For example, in the United States, antibody studies suggest that roughly 5% of the population has been infected with COVID-19. The total number of deaths associated with this 5% infection level is perhaps 100,000, assuming that reported deaths to date (about 80,000) need to be increased somewhat, to match the approximately 5% of the population that has, knowingly or unknowingly, already experienced the infection.

If we estimate that the mean number of years of life lost is 13 years per person, then the total years of life lost would be about 1,300,000. If we estimate that the US treasury needed to borrow $3 trillion dollars to mitigate this damage, the cost per year of life lost is $3 trillion divided by 1.3 million, or $2.3 million per year of life lost. This amount is utterly absurd.

This approach is clearly not something the United States can scale up, as the share of the population affected by COVID-19 relentlessly rises from 5% to something like 70% or 80%, in the absence of a vaccine. We have no choice but to use a different approach.

[5] COVID-19 would have the least impact on the world economy if people could pay little attention to the pandemic and just “let it run.” Of course, even without mitigation attempts, COVID-19 might bring the world economy down, given the distressed level of today’s economy and the shutdowns experienced to date.

Shutting down an economy has a huge adverse impact on that economy because quite a few workers who are in good health are no longer able to make goods and services. As a result, they have no wages, so their “demand” goes way down. If the economy was already having an affordability crisis for goods made with commodities, shutting down the economy tends to greatly add to the affordability crisis. Prices of commodities tend to fall even lower than they were before the crisis.

Back in 1957-1958, the Asian pandemic, which also started in China, hit the world. The number of deaths was up in the range of the current pandemic, relative to population. The estimated worldwide death rate was 0.67%.  This is not too dissimilar from a death rate of 0.61% for COVID-19, which can be calculated using my estimate above (100,000 deaths relative to 5% of the US population of 33o million).

Virtually nothing was shut down in the US for the 1957-58 pandemic. When doctors or nurses became sick themselves, wards were simply closed. Would-be patients were told to stay at home and take aspirin, unless a severe case developed. With this approach, the US still faced a short recession, but the economy was soon growing again. Populations seemed to reach herd immunity quite quickly.

If the world could somehow have adopted a similar approach this time, there still would have been some adverse impact on the economy. A small percentage of the population would have died. Some businesses might have needed to be closed for a short time when too many workers were out sick. But the huge burden of job loss by a substantial share of the economy could have been avoided. The economy would have had at least a small chance of rebounding quickly.

[6] The virus that causes COVID-19 looks a great deal like a laboratory cross between SARS and HIV, making the likelihood of a quick vaccine low.

In fact, Professor Luc Montagnier, co-discoverer of the AIDS virus and winner of a Nobel Prize in Medicine, claims that the new coronavirus is the result of an attempt to manufacture a vaccine against the AIDS virus. He believes that the accidental release of this virus is what is causing today’s pandemic.

If COVID-19 were simply another influenza virus, similar to many we have seen, then getting a vaccine that would work passably well would be a relatively easy exercise. At least one of the vaccine trials that have been started could be reasonably expected to work, and a solution would not be far away.

Unfortunately, SARS and HIV are fairly different from influenza viruses. We have never found a vaccine for either one. If a person has had SARS once, and is later exposed to a slightly mutated version of SARS, the symptoms of the second infection seem to be worse than the first. This characteristic interferes with finding a suitable vaccine. We don’t know whether the virus causing COVID-19 will have a similar characteristic.

We know that scientists from a number of countries have been working on so-called “gain of function” experiments with viruses. These very risky experiments are aimed at making viruses either more virulent, or more transmissible, or both. In fact, experiments were going on in Wuhan, in two different laboratories, with viruses that seem to be not too different from the virus causing COVID-19.

We don’t know for certain whether there was an accident that caused the release of one of these gain of function viruses in Wuhan. We do know, however, that China has been doing a lot of cover-up activity to deter others from finding out what actually happened in Wuhan.

We also know that Dr. Fauci, a well-known COVID-19 advisor, had his hand in this Chinese research activity. Fauci’s organization, the National Institute for Allergy and Infectious Diseases, provided partial funding for the gain of function experiments on bat coronaviruses in Wuhan. While the intent of the experiments seems to have been for the good of mankind, it would seem that Dr. Fauci’s judgment erred in the direction of allowing too much risk for the world’s population.

[7] We are probably kidding ourselves about ever being able to contain the virus that causes COVID-19. 

We are gradually learning that the virus causing COVID-19 is easily spread, even by people who do not show any symptoms of the disease. The virus can spread long distances through the air. Tests to see if people are ill tend to produce a lot of false negatives; because of this, it is close to impossible to know whether a particular person has the illness or not.

China is finding that it cannot really contain the virus that causes COVID-19. A recent South China Morning Post article indicates that roughly 14 million people are to be tested in the Wuhan area in the next ten days to try to control a new outbreak of the virus.

It is becoming clear, as well, that even within China, the lockdowns have had a very negative impact on the economy. The Wall Street Journal reports, China Economic Data Indicate V-Shaped Recovery Is Unlikely. Supply chains were broken; wholesale commodity prices (excluding food) have tended to fall. Joblessness is increasingly a problem.

[8] If we look at deaths per million by country, it is difficult to see that lockdowns are very helpful in reducing the spread of disease. Masks seem to be more beneficial.

If we compare death rates for mask-wearing East Asian countries to death rates elsewhere, we see that death rates in mask-wearing East Asian countries are dramatically lower.

Figure 2. Death rates per million population of selected countries with long-term exposure to the virus causing COVID-19, based on Johns Hopkins death data as of May 11, 2020.

Looking at the chart, a person almost wonders whether lockdowns are a response to requests from citizens to “do something” in response to an already evident surge in cases. The countries known for their severe lockdowns are at the top of the chart, not the bottom.

In fact, a preprint academic paper by Thomas Meunier is titled, “Full lockdown policies in Western Europe countries have no evident impacts on the COVID-19 epidemic.” The abstract says, “Comparing the trajectory of the epidemic before and after the lockdown, we find no evidence of any discontinuity in the growth rate, doubling time, or reproduction number trends.  .  . We also show that neighboring countries applying less restrictive social distancing measures (as opposed to police-enforced home containment) experience a very similar time evolution of the epidemic.”

It appears to me that lockdowns have been popular with governments around the world for a whole host of reasons that have little to do with the spread of COVID-19:

  • Lockdowns give an excuse for closing borders to visitors and goods from outside. This was a direction in which many countries were already headed, in an attempt to raise the wages of local workers.
  • Lockdowns can be used to hide the fact that factories need to be closed because of breaks in supply lines elsewhere in the world.
  • Many countries have been faced with governmental protests because of low wages compared to the prices of basic services. Lockdowns tend to keep protesters inside.
  • Lockdowns give the appearance of protecting the elderly. Since there are many elderly voters, politicians need to court these voters.

[9] A person wonders whether Dr. Fauci and members of the World Health Organization are influenced by the wishes of vaccine and big pharmaceutical companies.

The recommendation to try to “flatten the curve” is, in part, an attempt to give vaccine and pharmaceutical makers more time to work on their products. Is this really the best recommendation? Perhaps I am being overly suspicious, but we recently have been dealing with an opioid epidemic which was encouraged by manufacturers of Oxycontin and other opioids. We don’t need another similar experience, this time sponsored by vaccine and other pharmaceutical makers.

The temptation of researchers is to choose solutions that would be best from the point of their own business interests. If a researcher gets much of his funding from vaccine and big pharmaceutical interests, the temptation will be to “push” solutions that are beneficial to these interests. In some cases, researchers are able to patent approaches, even when the research is paid for by governmental grants. In this case they can directly benefit from a new vaccine or drug.

When potential solutions are discussed by Dr. Fauci and the World Health Organization, no one brings up improving people’s immunity so that they can better fight off the novel coronavirus. Few bring up masks. Instead, we keep being warned about “opening up too soon.” In a way, this sounds like, “Please leave us lots of customers who might be willing to pay a high price for our vaccine.”

[10] One way the combination of (a) the activity of the virus and (b) our responses to the virus may play out is as a slow-motion, controlled demolition of the world economy. 

I think of what we are experiencing as being somewhat similar to a toggle bolt going around and around, moving down a screw. As the toggle bolt moves around, I picture it as being similar to the virus and our responses to the viruses hitting different parts of the world economy.

Figure 3. Image of how the author sees COVID-19 as being able to hit the economy multiple times, in multiple ways, as its impact keeps impacting different parts of the world.

If we look back, the virus and reactions to the virus first hit China. China’s recovery is moving slowly, in part because of reduced demand from outside of China now that the virus is hitting other parts of the world. In fact, additional layoffs occurred after Chinese shutdowns ended, because it then became clear that some employers needed to permanently scale back operations to meet the new lower demand for their product.

Commodity prices, including oil prices, are now depressed because of low demand around the world. These low prices can be expected to gradually lead to closures of wells and mines extracting these commodities. Processing centers will also close, making these commodities less available even if demand temporarily rises.

As one country is hit by illnesses and/or shutdowns, we can expect supply lines for manufacturing around the world to be disrupted. This will lead to yet more business closures, some of them permanent. Debt defaults tend to happen as businesses close and layoffs occur.

With all of the layoffs, governments will find that their tax collections are lower. The resulting governmental funding issues can be expected to lead to new rounds of layoffs.

Natural disasters such as hurricanes, tornadoes, floods, earthquakes and forest fires can be expected to continue to happen. Social distancing requirements, inadequate tax revenue and broken supply lines will make mitigation of all of these disasters more difficult. Electrical lines that fall down may stay down permanently; bridges that are damaged may never be repaired.

Initially, rich countries can be expected to try to help as many laid-off workers as possible with loans and temporary stipends. But, after a few months, even with this approach, many individual citizens and businesses will likely not be able to pay their rent. Default rates on home mortgages and auto loans can be expected to rise for a similar reason.

We can expect to see round after round of business failures and layoffs of employees. Financial systems will become more and more stressed. Pensions are likely to default. Death rates will rise, in part from epidemics of various kinds and in part from growing problems with starvation. In fact, in some poor countries, lower-income citizens are already having difficulty being able to afford adequate food. Eventually we can expect collapsing governments (similar to the collapse of the central government of the Soviet Union) and overthrown governments.

Longer-term, after this demolition ends, there may be some surviving pieces of economies. These new economies will be much smaller and less dependent upon each other, however. Currencies are likely to be less interchangeable. The remaining people will need to learn to make do with many fewer goods than are available today. It will be a very different world.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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3,868 Responses to Understanding Our Pandemic – Economy Predicament

  1. Yoshua says:

    The End

    Lets embrace koombaya since we are a species.

    • Dennis L. says:

      Alas, it was written about breaking up with a woman, always a woman.

      Dennis L.

      • Duncan Idaho says:

        Apocalypse Now Opening Scene—
        Not about a woman.

        • Dennis L. says:

          Duncan,

          Generally I try and follow things back a bit, I well recall the movie you reference, that damn war was my college years with much turmoil; at Madison it perhaps culminated with blowing up Math Research on the UW campus. With still great emotion I remember my patients at the VA returning from Nam missing various parts, painful.

          The song was earlier than the movie of 1979, “The End” was the last track recorded by the doors in 1966 and released in 1967 and according to Jim Morrison:

          “[E]very time I hear that song, it means something else to me. I really don’t know what I was trying to say. It just started out as a simple goodbye song … Probably just to a girl, but I could see how it could be goodbye to a kind of childhood. I really don’t know. I think it’s sufficiently complex and universal in its imagery that it could be almost anything you want it to be.”

          The best known track was “Light My Fire.” It was the time of State Street adjacent to and part of a great liberal University.

          Life has never been easy.

          Dennis L.

      • Covidinamonthorayearoradecade says:

        I’m thinking about breaking up with Mother Earth…

        she is very unreliable, almost on a daily basis…

        her moods change like the weather…

        she also has way too many children…

        doesn’t she know money doesn’t grow on trees?

        perhaps I can do better…

        ooh, Venus sounds quite alluring… I hear she’s hot…

    • Duncan Idaho says:

      1967– one of the all time music years.
      It is still part of my permeant neural pathways.

      • Covidinamonthorayearoradecade says:

        just a weak buildup to 1970-1975…

        when 1970 came, and 16 track recording became widely available, the megamazing sounds of outrageous rock gods flowed down as if from Olympian heights…

        unlike the 1960s, many listeners didn’t even need drugs to be mesmerized by that music… 😉

      • Tim Groves says:

        1967? Wasn’t that the year before you went to Woodstock and got hooked on root beer?

        • Duncan Idaho says:

          Naw–
          I was living collectively in Big Sur during that time.
          Passed on Woodstock.
          Did attend the Big Sur Folk Festival:
          https://en.wikipedia.org/wiki/Big_Sur_Folk_Festival

          • Tim Groves says:

            I was born a bit too late to really enjoy live rocking in the sixties. I did do some camping at Reading and Knebworth in the seventies, but at least for me seeing Dylan, the Stones and Led Zep firing up the crowds didn’t make up for getting drenched, running out of beer, and having to wait ages to use the communal lavvies.

            One of my all-time favorite artists went to Woodstock, though, and penned the words:

            We were so close there was no room
            We bled inside each other’s wounds
            We all had caught the same disease
            And we all sang the songs of peace

            Somehow, Dick Cheney has made a cameo appearance in this video.

  2. Yoshua says:

    Adam and Eve walked naked, dumb and happy in Paradise. S atan offered them to taste the fruit of knowledge.

    Since that day humans have tried to used their intellect to try to create a paradise for them selves.

    • Yoshua says:

      Not a single boring day after that.
      S atan

      • Yoshua says:

        S atan reads the Bible backwards.

        The universe is made of energy. We are obviously not running out of energy, we are just running out ideas.

        • beidawei says:

          If backmassed Satanic messages are bad, then wouldn’t reading the Bible backwards be good?

          • Covidinamonthorayearoradecade says:

            Amen. people God’s with be Jeezus Lord the of grace The

            … beginning the In

            those ancient Heebrew superstitouss texts make no sense when read forward anyway…

            all to peace…

            • beidawei says:

              You *are* reading those superstitious Hebrew texts right to left, aren’t you?

              Th lphbt s hrd t mstr;
              Rdng bck t frnt’s dsstr.
              Nlss h’s rd th clssfds,
              whr trth, bbrvtd, hds,
              th wld-b rdr f th Bbl,
              prsntd wth th txt, s lbl
              t trn nd rn wth shrks nd hwls-
              th hbrw Scrptrs hv n vwls!

        • doomphd says:

          there are a few fusion energy solutions out there, being ignored or perhaps improperly pitched. either way, too much money is being thrown at dead ends because of politics and bad physics assumptions. now, the clock’s runnning out. just my dos centavos.

          • Tim Groves says:

            I think the owners want to get the global human population down to 500 million before they go there. Even if plastic straws were banned, eight or ten billion people all tapping into fusion power would create the mother of all environmental burdens.

    • beidawei says:

      I vaguely recall seeing a cartoon entitled “Why Adam and Eve could not have been Chinese.” It showed the apple still on the tree while Adam and Eve barbecued the snake.

      • Covidinamonthorayearoradecade says:

        did Adam and Eve have bellybuttons?

        • Tim Groves says:

          Everyone has a belly button, David.

          It happens because when God creates each batch of babies from gingerbread flour and clay, He bakes them in a special oven until they are just right and then, before handing them over to the Stork for delivery, He checks each newly baked baby in turn by poking it’s belly with His finger and says, “You’re done!… You’re done!… You’re done!…”

          • Covidinamonthorayearoradecade says:

            thanks T G!

            good to know…

            and I had thought Godd and S atan and angels and deemons and Adam and Eve were all the mere inventions of the minds of superstitouss unknowledgeable ancient men…

            has fayke news been around for thousands of years?

            who knew?

            • beidawei says:

              It’s the other way around, actually. “Simulation Theory” is true, and the real world turns out to be the one with angels and, uh, uglier angels. Gives a whole new meaning to “God mode,” doesn’t it?

      • Robert Firth says:

        Read the Genesis text very carefully. You will discover that the only character who always told the truth was the serpent. His name is Ophion, and the unfallen world was ruled by him and Eurynome, before Chronos (“time”) dethroned them, and created entropy.

    • el mar says:

      my top favorit

  3. avocado says:

    In the last 6-7 weeks, Sweden’s new cases are stabilized in the 500/day average. Deaths have also clearly stabilized. I suppose they can go on with the rules they currently have, and remain confident that the health system won’t be overwhelmed. And Sweden’s GDP only contracted 0,3%, against 3,8% in the Eurozone in the first quarter (but we should compare it rather to its Scandinavian neighbors, which are similar in almost everything). Sadly, Volvo’s and Saab’s exports are expected to fall

    • If Sweden’s GDP only contracted 0.3%, it is doing quite well, in the whole scheme of things. Simply having a lot of people out sick will tend to reduce GDP.

    • neil says:

      Saab exports fell somewhat earlier, the company having gone bust in the financial crisis.

  4. Name says:

    Classy photo:

    • Covidinamonthorayearoradecade says:

      even as high rise buildings are becoming increasingly uneconomical, they are still being built…

      think Easter Island…

      though:

      https://en.wikipedia.org/wiki/Jeddah_Tower

      “There was steady progress but in January 2018 building owner JEC halted structural concrete work with the tower about one-third completed…”

      “JEC has said they plan to restart construction in 2020.”

      ha ha… one third complete… and never will be restarted…

    • Tip: if you want a photo to show up, make certain that the URL is on separate line from other text. (I fixed this one for you.)

      A different thing to fix (for others) is the need to look and see if the file name ends in PNG or JPG. If it ends in something else, such as the size at which the file is displayed, just erase the part that comes after the PNG or JPG, it you want it to show up correctly.

  5. Fast Eddy says:

    I bet if you hooked a monitor up to your brain …. then looked at this …. the fear neurons would fire wildly….

    That would be the Beast inside you panicking….. (and getting ready…)

  6. psile says:

    Everything that’s munted about the U.S. economy in two graphs:

    M2 Money Supply (M2)

    Velocity of Money Supply (M2)

    • Covidinamonthorayearoradecade says:

      it’s interesting that the velocity of money, after plunging during the 2008/2009 financial crisis, has been moving steadily down since then…

      it’s another sign that the economy is going to continue to self-organize, this time by resetting at a lower level…

      it’s not the end of the world…

      • Fast Eddy says:

      • john Eardley says:

        What happened in 1995/6 to turn the velocity down and accelerate the money supply?

        • Tim Groves says:

          I am not an economist, nor even a gynecologist, but might it have had something to do with the establishment of NAFTA, which went into effect on January 1, 1994?

          In the second 1992 Presidential Debate, Ross Perot argued:

          We have got to stop sending jobs overseas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor, … have no health care—that’s the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.

          … when [Mexico’s] jobs come up from a dollar an hour to six dollars an hour, and ours go down to six dollars an hour, and then it’s leveled again. But in the meantime, you’ve wrecked the country with these kinds of deals.

          • Robert Firth says:

            Tim, I think you make a good point. Labour arbitrage ia a good way to ruin a country. It creates a need for debt to make ends meet, and debt tends to reduct the velocity of money, because debt repayments are not paid on, so the amount of money that will be paid on is slowly diminished. And it is now close to zero, because the consumer base has no real income and the government handouts are mostly going to debt service. People are eating their children’s and grandchildren’s prosperity, but alas have no other choice.

          • Fast Eddy says:

            This is what happens when unions become too powerful…. the jobs get offshored… free trade deals get announced…

            Otherwise we’d end up paying $200 for a plastic waste bin.

            • Robert Firth says:

              Fast Eddy, I agree about the unions, having lived through the havoc they wrought in Britain. But corporations that get too big are also a problem. That includes the US education, health care, and insurance cartels, which rip people off blind. It also, and especially, includes the defence contractors. The Department of Defense spent $200 million on Ada compilers. When working for UK MoD, I wrote a compiler for their tame language (Coral 66) in six months, working half time. A big help was using no “compiler construction” tools whatsoever.

            • Fast Eddy says:

              Yes the corporations are generally no better – and usually worse.. but they ultimately have more power and they devise work-arounds

    • Oops, I think that I messed this up for you. I removed the part that follows .png, and the file doesn’t appear. There seem to be more tricks than I know regarding fixing charts to show without having to click on them.

      This is another US M2 Money Supply Chart that especially shows the recent period. You can see that recent money supply is way, way up. The earlier years aren’t too interesting, except that some are flatter than others.

      This is a chart of the percentage change in the M2 money supply, compared to a year ago. The chart starts much earlier (1959) but only goes up to 2017. I could have tried to include the recent period, but the percentage change would have been so large as to dwarf all prior periods. A person can see that generally, M2 falls before recessions. As more borrowing is done to get the economy out of recessions, M2 rises, because the new debt creates new money. To the extent that the quantity of M2 is rising, there is no need for the velocity of M2 to rise; to some extent they do the same thing.

      This is a chart of the velocity of M2, from 1959 to 2020. We can see that for many years, the velocity of M2 seemed to stay in the 1.7 to 1.8 range. Then after 1991 (and the collapse of the Soviet Union, and the huge problems of countries in its sphere of influence), the velocity of M2 increased dramatically. By about 1996, a maximum velocity had been reached. The velocity has been falling ever since.

      Perhaps the reason that the money velocity has been falling is because the US has increasingly been trying to grow the economy with ever-lower interest rates and ever more debt. This debt is not really being used by companies planning to increase their production of widgets. It is being used to run up asset prices, instead. This is not a productive use of all of this extra debt.

      • psile says:

        .…the reason that the money velocity has been falling is because the US has increasingly been trying to grow the economy with ever-lower interest rates and ever more debt. This debt is not really being used by companies planning to increase their production of widgets. It is being used to run up asset prices, instead.

        A.k.a. A Potemkin economy.

      • Robert Firth says:

        Thank you, Gail. I think the underlying reason for all this is that the US economy is almost totally corrupt. Every big organisation tries to cheat the hapless consumer as much as possible. But what one steals is then not available to buy goods and services from another, so yes, velocity falls. The answer is a free market with open competition, but that requires reform no Congress would dare to undertake, because they need money from the big corporations to pay the equally greedy mass media for air time.

        Which leads me to the reluctant conclusion that the only way forward is to demonetise the US dollar and simply erase the phantom wealth these organisations have accumulated.

  7. Kim says:

    New interview with Art Berman (George Gammon show).

    • Art: Oil prices can only go up from here. This tells you where you should be investing.

      Interviewer: Oil prices are one of the few things that the Fed can’t manipulate. (I don’t really believe this. The presence of absence of QE has made a huge difference in oil price, IMO.)

  8. Aaron Wissner did a Zoom interview of me, which he called, “Will the Financial System Collapse?”

    He put it up on You Tube. This is a link:

    • Rodster says:

      I tried watching and could only make it thru 8 mins. The interviewer is polite but not very engaging. And that’s a 2 hr plus interview.

      • Different people like different things. I think this interview is for an audience of people with an interest in sustainability and not a lot of other background.

        I will be doing a different interview this next week with someone who reads OFW on a regular basis.

      • The second half of the interview gets into some sort of frightening things. Aaron wanted to go slowly to that point.

    • Dennis L. says:

      It is a very good picture of you.

      Dennis L.

    • Country Joe says:

      I listened to the entire interview.
      I had planned to write in “none of the above”, this Nov. as I did in 2016,
      but now I must in be a responsible grandparent and write in Gail Tverberg for President.
      It is always important to consider the final outcome, but first is –
      Always Do The Right Thing.
      Thanks Gail for all you do. There is just this one more thing.

  9. adonis says:

    just finished watching plandemic thank you tim best short movie on the covid19 i have seen it has proven to me just what is really going on genocide we all have a choice in life sink or swim. i advise all finite worlders to watch this movie it was posted on one of Tim Groves comments yesterday

    • Tim Groves says:

      It’s interesting that if you type “Plandemic” into Google, you will see the extent of the full-frontal attack on the movie and on Dr. Mikovits from all across the big pharma and corporate media matrix. They really really really don’t want members of the public watching this film and possibly starting to question the official line on COVID-19 and also on AIDS.

      I don’t know if she’s correct or not or if her motives are sound or sordid, but she is taking an awful lot of flack, and you don’t take flack unless you are over the target, or unless you disturb a nest of very angry hornets.

      • Fast Eddy says:

        it is my understanding that she is pointing the finger at Bill Gates/Big Pharma and suggesting they stand to make billions off of a vaccine.

        I’ve even had a epidemiologist suggest to me that this is the motive.

        The problem I have with this is that there is no way in hell the PTB would allow anyone to wreck their empire. Bill Gates would get a bullet in the back of the head if he dared.

        Whatever the story is it is NOT going to get leaked. This plan would carry the highest level of classified stamp…. nobody will say jack sh it… and if they did they’d immediately be attacked as being a nut job… and ruined… (can you imagine Ardern holding a press conference and exposing the CDP….)

        And they’d be sitting back in cattle class.

        What I suspect is that this vaccine thing is misdirection … it’s aimed at keeping everyone off the scent…

        The PR men are clever — they know that if they fill page after page with CT stories involving Mikovits… that the suspicious people are going to look at that and say — if the PTB are accusing her of being a CTist… then there must be a grain of truth to her story…

        The one thing I do believe is her assertion that this was made in a lab….

        End of the day all of this white noise serves to further confuse and scare the cattle … and confused and frightened cattle are obedient cattle…

  10. adonis says:

    i often hear about the legacy oil fields does anyone know how many barrels per day these legacy oil fields produce as the worlds total

    • I am afraid I don’t. The thing that often gets lost in the discussion is the fact that even legacy fields need constant new investment to maintain production. The higher the oil price, the greater the investment in expensive new technology that can be used.

      The amount of oil that can be extracted from a given reservoir is highly variable. According to Adventures in Energy:

      Primary recovery first relies on underground pressure to drive fluids to the surface. . . Primary recovery often taps only 10 percent of the oil in a deposit.

      Secondary recovery is the most widely applied enhanced recovery technique. Water that is produced and separated from the oil in the initial phase of drilling is injected back into the oil-bearing formation to bring more oil to the surface. In addition to boosting oil recovery, it also disposes of the wastewater, putting it back where it came from. This can bring an additional 20 percent of the oil in place to the surface.

      Enhanced recovery techniques are used to mobilize the remaining oil. There are three common approaches: thermal recovery, gas injection or chemical flooding. . . Enhanced recovery techniques are employed to bring as much as 60 percent of the reserve to the surface.

      As long as price can rise higher and higher, it looks like more and more of the oil in place can be extracted. But once price falls too low, extraction everywhere is likely to fall, almost simultaneously. Legacy doesn’t really matter a whole lot.

      • Adam says:

        I remember reading/listening to interviews with Matt Simmons in the mid 2000s, and one of his main points was the continued investment that was required in equipment of all types as the oil industry is capital intensive.

        He spoke of Saudi Arabia and their massive seawater injection and water-cuts, how much oil-stained brine was actually coming out of the wells which then had to be separated, more gear.

        He used one word “rust” with respect to the rigs, pipelines, valves, all of this stuff out in the elements needs constant maintenance, upgrades.

        We generally do not appreciate the scale of this industry.

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