COVID-19 and the economy: Where do we go from here?

The COVID-19 story keeps developing. At first, everyone listened to epidemiologists telling us that a great deal of social distancing, and even the closing down of economies, would be helpful. After trying these things, we ended up with a huge number of people out of work and protests everywhere. We discovered the models that were provided were not very predictive. We are also finding that a V-shaped recovery is not possible.

Now, we need to figure out what actions to take next. How vigorously should we be fighting COVID-19? The story is more complex than most people understand. These are some of the issues I see:

[1] The share of COVID-19 cases that can be expected to end in death seems to be much lower than most people expect.

Most people assume that the ratios of deaths to cases by age group, computed using reported cases, such as those included in the Johns Hopkins Database, give a good indication of the chance of death a person faces if a person catches COVID-19. In fact, the cases reported to this database are far from representative of all cases; they tend to be the more severe cases. Cases with no symptoms, or only very slight symptoms, tend to be missed. The result is that ratios calculated directly from this database make people think their risk of death is far higher than it really is.

The US Center for Disease Control has published Planning Scenarios, based on information available on April 29, 2020.* Using this information, the CDC’s best estimate of the number of future deaths per 1000 cases with symptoms is as follows:

Ages 0 – 49    0.5 deaths per 1000 cases with symptoms

Ages 50-64    2.0 deaths per 1000 cases with symptoms

Ages 65+       13.0 deaths per 1000 cases with symptoms

The CDC’s best estimate is that 35% of cases have no symptoms at all. Thus, if we were to include these cases without symptoms in the chart above, the chart would become:

Ages 0-49   0.5 deaths per 1,538 cases (including those without symptoms), or 0.3 deaths per 1000 cases with or without symptoms

Ages 50-64  1.3 deaths per 1000 cases with or without symptoms

Ages 65+    8.5 deaths per 1000 cases with or without symptoms

A recent study of blood samples from 23 different parts of the world came to a similarly low estimate of the number of deaths per 1000 COVID-19 infections. It reported that among people who are less than 70 years old, the number of deaths per 1000 ranged from 0.0 to 2.3 per 1000, with a median of 0.4 deaths per 1000.

The same paper remarks,

COVID-19 seems to affect predominantly the frail, the disadvantaged, and the marginalized – as shown by high rates of infectious burden in nursing homes, homeless shelters, prisons, meat processing plants, and the strong racial/ethnic inequalities against minorities in terms of the cumulative death risk.

[2] There seem to be things we can do ourselves to reduce our personal chance of serious illness or death.

General good health is protective against getting a bad case of COVID-19. Thus, anything that we can do in terms of a good diet and exercise is likely helpful. Staying inside for weeks on end in the hope of preventing exposure to COVID-19 is probably not helpful.

Continued exposure to huge amounts of disinfectants and hand sanitizers is likely not to be helpful either. Our bodies depend on healthy microbiomes, and products such as these adversely affect our microbiomes. They kill good and bad bacteria alike and may leave harmful residues. It is easy to scale back our personal use of these products.

There are recent indications that vitamin D is likely to be protective in reducing both the incidence of COVID-19 and the disease’s severity. Web MD reports:

Several groups of researchers from different countries have found that the sickest patients often have the lowest levels of vitamin D, and that countries with higher death rates had larger numbers of people with vitamin D deficiency than countries with lower death rates.

Experts say healthy blood levels of vitamin D may give people with COVID-19 a survival advantage by helping them avoid cytokine storm, when the immune system overreacts and attacks your body’s own cells and tissues.

While we don’t know for certain that vitamin D is helpful, there is certainly enough circumstantial evidence to suggest that it would likely be worthwhile to raise vitamin D levels to the amount recommended by the National Institute of Health (30 nmol/L or higher). People with dark skin living in areas away from the equator might especially be helped by this strategy, since dark skin reduces vitamin D production.

Masks seem to be helpful in preventing the spread of infection. A person’s own immune system can handle some level of germs. If two people meeting together both wear masks, the combination of masks can perhaps reduce the level of germs to within the amount the immune system can handle. Our immune systems are built to handle a barrage of small attacks by viruses and bacteria. Continued “practice” with relatively low combinations of good and bad bacteria (as occur with masks) will tend to build up our bodies’ natural defenses.

We see dentists and dental hygienists wearing face shields. These shields are readily available over the internet and can be worn with a mask or by themselves. We don’t yet know precisely how much protection they provide, but early models suggest that they can be helpful in two directions: (a) preventing the wearer’s droplets from harming others and (b) reducing the droplet exposure from others. Thus, they may be a worthwhile way to reduce exposure to the virus causing COVID-19, even when others are not wearing masks.

[3] The medical community’s ability to treat COVID-19 cases keeps improving.

There seem to be many small changes that are improving treatment of COVID-19. If patients are having trouble getting enough oxygen, having them lie on their stomachs seems to increase their blood oxygen levels. The cost of this change is pretty much zero, but it keeps people out of the ICU longer.

Originally, planners thought that ventilators would be needed for patients with COVID-19, since ventilators are often used on pneumonia patients. Experience has shown, however, that oxygen plus something like a CPAP machine often works better and is less expensive.**

The simple change of not sending recuperating patients to nursing home-type facilities for the last stages of care has proven helpful, as well. Many of these patients can still infect others, leading to infections in long-term care facilities. Tests to tell whether patients are truly over the disease do not seem to be very accurate.

Last week, it was announced that treatment with an inexpensive common steroid could reduce deaths of people on ventilators by one-third. It could also reduce deaths of those requiring only oxygen treatment by 20%. Using this treatment should significantly reduce deaths, at little cost.

We can expect improvements in treatments to continue as doctors experiment with existing treatments, and as drug companies work on new solutions. Looking at cumulative historical mortality rates tends to overlook the huge learning curve that is taking place, allowing mortality rates to be lower.

[4] More doubts are being raised about quickly finding a vaccine that prevents COVID-19. 

The public would like to think that a vaccine solution is right around the corner. Vaccine promoters such as Anthony Fauci and Bill Gates would like to encourage this belief. Unfortunately, there are quite a few obstacles to getting a vaccine that actually works for any length of time:

(a) Antibodies for coronaviruses tend not to stay around for very long. A recent study suggests that even as soon as eight weeks, a significant share of COVID-19 patients (40% of those without symptoms; 12.9% of those with symptoms) had lost all immunity. A vaccine will likely face this same challenge.

(b) Vaccines may not work against mutations. Beijing is now fighting a new version of COVID-19 that seems to have been imported from Europe in food. Early indications are that people who caught the original Wuhan version of the COVID-19 virus will not be immune to the mutated version imported from Europe.

Vaccines that are currently under development use the Wuhan version of the virus. The catch is that the version of COVID-19 now circulating in the United States, Europe and perhaps elsewhere is mostly not the Wuhan type.

(c) There is a real concern that a vaccine against one version of COVID-19 will make a person’s response to a mutation of COVID-19 worse, rather than better. It has been known for many years that Dengue Fever has this characteristic; it is one of the reasons that there is no vaccine for Dengue Fever. The earlier SARS virus (which is closely related to the COVID-19 virus) has this same issue. Preliminary analysis suggests that the virus causing COVID-19 seems to have this characteristic, as well.

In sum, getting a vaccine that actually works against COVID-19 is likely to be a huge challenge. Instead of expecting a silver bullet in the form of a COVID-19 vaccine, we probably need to be looking for a lot of silver bee-bees that will hold down the impact of the illness. Hopefully, COVID-19 will someday disappear on its own, but we have no assurance of this outcome.

[5] The basic underlying issue that the world economy faces is overshoot, caused by too high a population relative to underlying resources.

When an economy is in overshoot, the big danger is collapse. The characteristics of overshoot leading to collapse include the following:

  • Very great wage disparity; too many people are very poor
  • Declining health, often due to poor nutrition, making people vulnerable to epidemics
  • Increasing use of debt, to make up for inadequate wages and profits
  • Falling commodity prices because too few people can afford these commodities and goods made from these commodities
  • Gluts of commodities, causing farmers to plow under crops and oil to be put into storage

Thus, pandemics are very much to be expected when an economy is in overshoot.

One example of collapse is that following the Black Death (1348-1350) epidemic in Europe. The collapse killed 60% of Europe’s population and dropped Britain’s population from close to 5 million to about 2 million.

Figure 1. Britain’s population, 1200 to 1700. Chart by Bloomberg using Federal Reserve of St. Louis data.

We might say that there was a U-shaped population recovery, which took about 300 years.

A later example that almost led to collapse was the period between 1914 and 1945. This was a period of shrinking international trade, indicating that something was truly wrong. On Figure 2 below, the WSJ calls its measure of international trade the “Trade Openness Index.” The period 1914-1945 is highlighted as being somewhat like today.

Figure 2. The Trade Openness Index is an index based on the average of world imports and exports, divided by world GDP. Chart by Wall Street Journal.

Many of the issues in the 1914-1945 timeframe were coal related. World War I took place when coal depletion became a problem in Britain. The issue at that time was wages that were too low for coal miners because the price of coal would not rise very high. Higher coal prices were needed to offset the impact of depletion, but high coal prices were not affordable by citizens.

The Pandemic of 1918-1919 killed far more people than either World War I or COVID-19.

World War II came about at the time coal depletion became a problem in Germany.

Figure 3. Figure by author describing peak coal timing compared to World War I and World War II.

The problem of inadequate energy resources finally ended when World War II ramped up demand through more debt and through more women entering the labor force for the first time. In response, the US began pumping oil out of the ground at a faster rate. Instead of depending on coal alone, the world began depending on a combination of oil and coal as energy resources. The ratio of population to energy resources was suddenly brought back into balance again, and collapse was averted!

[6] We are now in another period of overshoot of population relative to resources. The critical resource this time is oil. The alternatives we have aren’t suited to fulfilling our most basic need: the growing and transportation of food. They act as add-ons that are lost if oil is lost.

If we look back at Figure 2 above, it shows that since 2008, the world has again fallen into a period of shrinking imports and exports, which is a sign of “not enough energy resources to go around.” We are also experiencing many of the other characteristics of an overshoot economy that I mentioned in Section 5 above.

Figure 4 shows world energy consumption by type of energy through 2019, using recently published data by BP. The “Other” combination in Figure 4 includes nuclear, hydroelectric, wind, solar, and other smaller categories such as geothermal energy, wood pellets, and sawdust burned for fuel.

Figure 4. World energy consumption by fuel, based on BP’s 2020 Statistical Review of World Energy.

Oil has been rising at a steady pace; coal consumption has been close to level since about 2012. Natural gas and “Other” seem to be rising a little faster in the most recent few years.

If we divide by world population, the trend in world energy consumption per capita by type is as follows:

Figure 5. World Per Capita Energy Consumption based on BP’s 2020 Statistical Review of World Energy

Many people would like to think that the various energy sources are substitutable, but this is not really the case, as we approach limits of a finite world.

One catch is that there are very few stand-alone energy resources. Most energy resources only work within a framework provided by other energy sources. Wood that is picked up from the forest floor can work as a stand-alone energy source. Wind can almost be used as a stand-alone energy source, if it is used to power a simple sail boat or a wooden windmill. Water can almost be used as a stand-alone energy source, if it can be made to turn a wooden water wheel.

Coal, when its use was ramped up, enabled the production of both concrete and steel. It allowed modern hydroelectric dams to be built. It allowed steam engines to operate. It truly could be used as a stand-alone energy source. The main obstacle to the extraction of coal was keeping the cost of extraction low enough, so that, even with transportation, buyers could afford to purchase the coal.

Oil, similarly, can be a stand-alone energy solution because it is very flexible, dense, and easily transported. Or it can be paired with other types of less-expensive energy, to make it go further. We can see our dependence on oil by how level energy consumption per capita is in Figure 5 since the early 1980s. Growth in population seems to depend upon the amount of oil available.

As I have mentioned in previous posts, the economy is a self-organizing system. If there isn’t enough of the energy products upon which the economy primarily depends, the system tends to change in very strange ways. Countries become more quarrelsome. People decide to have fewer children or they become more susceptible to pandemics, bringing population more in line with energy resources.

The problem with natural gas and with the electricity products that I have lumped together as “Other” is that they are not really stand-alone products. They cannot grow food or build roads. They cannot power international jets. They cannot build wind turbines or solar panels. They cannot put natural gas pipelines in place. They can only exist in a complex environment which includes oil and perhaps coal (or other cheaper energy products).

We are kidding ourselves if we think we can transition to modern fuels that are low in carbon emissions. Without high prices, oil and coal that are in the ground will tend to stay in the ground permanently. This is the serious obstacle that we are up against. Without oil and coal, natural gas and electricity products will quickly become unusable.

[7] A major problem with COVID-19 related shutdowns is the fact that they lead to very low commodity prices, including oil prices. 

Figure 6. Inflation-adjusted monthly average oil prices through May 2020. Amounts are Brent Spot Oil Prices, as published by the EIA. Inflation adjustment is made using the CPI-Urban Index.

Oil is the primary type of energy used in growing and transporting food. It is used in many essential processes, including in the production of electricity. If its production is to continue, its price must be both high enough for oil producers and low enough for consumers.

The problem that we have been encountering since 2008 (the start of the latest cutback in trade in Figure 2) is that oil prices have been falling too low for producers. Now, in 2020, oil production is beginning to fall. This is happening because producing companies cannot afford to extract oil at current prices; governments of oil exporting countries cannot collect enough taxes at current prices. They hope that by reducing oil supply, prices will rise again.

If extraordinarily low oil prices persist, a calamity similar to the one that “Peak Oilers” have worried about will certainly occur: Oil supply will begin dropping. In fact, the drop will likely be much more rapid than most Peak Oilers have imagined, because the drop will be caused by low prices, rather than the high prices that they imagined would occur.

Amounts which are today shown as “proven reserves” can be expected to disappear because they will not be economic to extract. Governments of oil exporting countries seem likely to be overthrown because tax revenue from oil is their major source of revenue for programs such as food subsidies and jobs programs. When this disappears, governments of oil exporters are forced to cut back, lowering the standard of living of their citizens.

[8] What our strategy should be from now on is not entirely clear.

Of course, one path is straight into collapse, as happened after the Black Death of 1348-1352 (Figure 1). In fact, the carrying capacity of Britain might still be about 2 million. Its current population is about 68 million, so this would represent a population reduction of about 97%.

Other countries would experience substantial population reductions as well. The population decline would reflect many causes of death besides direct deaths from COVID-19; they would reflect the impacts of collapsing governments, inadequate food supply, polluted water supplies, and untreated diseases of many kinds.

If a large share of the population stays hidden in their homes trying to avoid COVID, it seems to me that we are most certainly heading straight into collapse. Supply lines for many kinds of goods and services will be broken. Oil prices and food prices will stay very low. Farmers will plow under crops, trying to raise prices. Gluts of oil will continue to be a problem.

If we try to transition to renewables, this leads directly to collapse as well, as far as I can see. They are not robust enough to stand on their own. Prices of oil and other commodities will fall too low and gluts will occur. Renewables will only last as long as (a) the overall systems can be kept in good repair and (b) governments can support continued subsidies.

The only approach that seems to keep the system going a little longer would seem to be to try to muddle along, despite COVID-19. Open up economies, even if the number of COVID-19 cases is higher and keeps rising. Tell people about the approaches they can use to limit their exposure to the virus, and how they can make their immune systems stronger. Get people started raising their vitamin D levels, so that they perhaps have a better chance of fighting the disease if they get COVID-19.

With this approach, we keep as many people working for as long as possible. Life will go on as close to normal, for as long as it can. We can perhaps put off collapse for a bit longer. We don’t have a lot of options open to us, but this one seems to be the best of a lot of poor options.


*The CDC estimates are estimates of future deaths per 1000 cases. Thus, they probably reflect the learning curve that has already taken place. It is unlikely that they reflect the benefit of the new steroid treatment mentioned in Section 3, because this finding occurred after April 29.

**I have been told that disease spread can be a problem when using CPAP machines, however. Using ventilators at very low pressure settings seems also to be a solution.




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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2,824 Responses to COVID-19 and the economy: Where do we go from here?

  1. Harry McGibbs says:

    “Despite the first monthly double-digit increase, German industrial orders remain some 30% below their levels seen in the first quarter.”

  2. Harry McGibbs says:

    “The giants of Wall Street and European banking are giving up their stronghold on London.

    “In the coming months alone, Barclays Plc may ditch its investment bank’s headquarters in the capital; Credit Suisse Group AG is offloading nine floors of office space; and Morgan Stanley is reviewing its entire London footprint.

    “And all of those moves were planned before the coronavirus hit. Now, with thousands of job cuts likely to follow what’s forecast to be the worst recession in three centuries, the tenants of the glass and steel towers that dominate the City of London and Canary Wharf may face an even bigger retreat.”

  3. Harry McGibbs says:

    “Cracks are appearing in China’s 21.3 trillion yuan (US$31 trillion) trust industry, a key component of the country’s shadow banking system, as fresh trouble at Sichuan Trust highlights growing risks in alternative funding for companies unable to access regular bank loans.”

  4. Harry McGibbs says:

    “A fire at Iran’s underground Natanz nuclear facility has caused significant damage…

    “Iran’s top security body said on Friday that the cause of the fire that broke out on Thursday had been determined but would be announced later. Some Iranian officials have said it may have been cyber sabotage and one warned that Tehran would retaliate against any country carrying out such attacks.”

    • Harry McGibbs says:

      “The Iranian rial fell to a new low against the US dollar on the unofficial market on Saturday, as the economy comes under pressure from the coronavirus pandemic and US sanctions…

      “The rial’s decline has continued despite assurances from Iranian Central Bank Governor Abdolnaser Hemmati last week that the bank had injected hundreds of millions of dollars to stabilise the currency market.”

  5. Harry McGibbs says:

    “Now is the time for Africa to grow food… This Covid-19 crisis has also exposed the extreme fragility of the global food system.”

    • Harry McGibbs says:

      “The United Arab Emirates imported 4,500 dairy cows from Uruguay as part of a drive to boost food security with the coronavirus disrupting global supply chains.

      “The shipment of Holstein cattle is the first of many, state-run news agency WAM reported Sunday.”

      • Kim says:

        I wonder what they will feed those cattle. Imported feed? But isn’t that dependent on global supply chains?

        I think I have detected a flaw in their thinking.

        But I’ll bet that somebody’s brother-in-law has connections in the cattle feed industry.

      • one of my life’s ambitions might be to meet the genius who imports cows to saudi to ‘improve food security’. and point out that in a desert, cows have no food security

        • A few years ago, their plan was to grow wheat in Saudi Arabia. Of course, that acted to deplete the aquifer.

        • JesseJames says:

          There is currently actually excess rain in the deserts of Saudi and North Africa occuring due to weather changes related to the ongoing and deepening solar minimum. North Africa may become the new world breadbasket in the future. That is the one bright spot in future food production for the world.

          • AlfredCairns says:

            Quite correct. It won’t be long before Africans want to return to Africa from Europe. The Big Reset is because governments are going bankrupt. Bankrupt governments cannot support illegal immigration. Just wait for Europeans turning nationalist once they get hungry. It won’t be a pretty sight.

        • Xabier says:

          Too funny for words, isn’t it? Must be a big skim on the contract for someone ‘royal’.

        • neil says:

          They had a fascinating system for growing grass, where desalinated water was flooded on pasture twice a day, featured in a British farmers’ magazine a few years ago. You’re right – sounds no more sustainable than buying dairy products from British farmers.

      • Slow Paul says:

        Might as well use up that petroleum money while there is something to buy.

    • This comes after years of being encouraged to buy cheap US exports. It is hard to return to old ways.

    • Rodster says:

      Too bad parts of Africa overthrew its “White Farmers” because they were, um, White. Since then places like Zimbabwe have had trouble meeting production demand because the farmers who knew how to grow food have either been killed or moved out.

  6. Jan says:

    The conservative/green government of Austria (ca. 8 Mio inhabitants) plans a legal prohibition of private oil and gas heating to fight CO2.

    While the industry requests not to destroy the gas infrastructure which could be used for bio gas and hydrogen, wood pellet heating and heat pumps will become the new standard technologies with this decision.

    In the forum – is famous for it’s positive forum culture – people discuss the following points:

    1. Wood pellets are made from illegal harvestings in Romania

    2. Wooden stoves lead to much more visible pollution than gas heating

    3. People cannot afford electricity for heating

    4. People cannot afford 20.000 EURs for a new heating, especially pensionists living in their own real estate (in Austria most people live in rented appartments)

    5. Bio gas is not available in the needed quantities

    6. While the prices of photovoltaic have fallen and people are quite satisfied it does not produce enough for heating purposes

    7. People say they will buy a wood stove for cooking and heating and sleep in winter in the kitchen like their grandparents did is a politically left-intellectual daily newspaper in Austria, usually open to environmental matters. People in the forum discuss what has been topic since years in Gail’s special interest blog. People dont see a connection to peakoil but Gail’s predictions are arriving the European mainstream.

    Not to be able to renovate the house with state-of-the-art technology and reducing the living space to the heated kitchen is a lower complexity of systemic organisation.

    Of course a smaller footprint is a desirable task. But here it comes as a way back to traditional restrictions.

    The idea of the Green New Deal is, to create productivity surplusses by green technology. That cannot be seen here.

    Not mentioned here: People fear raising energy prices and a wood stove is a cheap investment (around 1000,- EURs incl. montage) into resilience.

    As it seems this development is not sustainable: A new study says European wood harvesting increased by 50% and reduced the biomass by 70% already.

    • Solar energy for heating in winter simply doesn’t work. Not enough sunlight, even with lots of solar panels. Snow covering panels can be a problem as well.

      • fred_goes_bush says:

        Aha! A chance to be smug and signal green virtues.

        Solar works well in winter here. A typical clear day at Winter Solstice = hot water + twice as much electricity as we use from the solar panels. Surplus goes back into the grid so the Electricity Co pays us each qtr.

        If only I drove a hybrid or Tesla I’d be a green warrior extraordinaire!

        • Where do you live? Do you heat your home with solar? The issue is providing heat in winter.

          • fred_goes_bush says:

            Mid-north NSW. We have a wood-fired heater in the lounge, plus a wood-fired stove. Our house is well insulated and winter sun shines in, so it’s not hard to keep warm. Mid winter days rarely go below an 18C max, nights usually 6-9 with an occasional frost.

            No shortage of wood as population density is about 1 person per 20 acres aroundabouts and much of the land is old dairy farms reverting to bush.

            I’ve been planting fruit and nut trees like crazy since we arrived, but need another 5 years for them to generate enough food.

            Our PV is grid connected, but we have a separate battery back up system, which is on the list to be upgraded.

            Realistically though, despite all this if IC goes fully down the gurgler, I’ll be going with it.

        • NikoB says:

          Plenty of people here in Northern NSW Australia have stand alone PV systems. However, everyone that I know has a backup generator or grid connection. It is needed when the clouds come over for weeks.

    • Xabier says:

      Interesting, thanks for the news from Austria.

      In a declining economic system, people won’t be able to afford the installation of the new -and inadequate – systems imposed on them for ideological reasons, certainly.

      When the English aristocracy lacked the money and fuel to heat their huge houses during and after WW2, they ended up living in the servants’ small rooms or cottages, and hanging out in the kitchens a lot, too.

      • Kim says:

        The should make a tv show about it. They could call it “Downstairs downstairs”.

  7. Harry McGibbs says:

    “The Canadian industry has borrowed heavily to survive a series of catastrophes, and is facing C$6 billion in refinancing in the next six months, the Bank of Canada said in May.

    “This year’s maturing energy debts are the most on record for the fourth year in a row and a more than 40% increase over 2019, according to Refinitiv data. They are an existential threat for some companies during the worst industry crisis in decades.”

  8. Jan says:

    Those of you with an economic background may know the historical “Mefo bills” of Hjalmar Schacht which allowed Hitler to arm.

    I wonder if our current rescue-the-rich-policy is in fact not a comparable instrument to hide credits in a sink which is equivalent to central banks printing money without creating inflation.

    If that is the case, our national accounts would be false. What is considered a growing economy would be only the effect of credit expansion.

    If we are looking for possible signals for systemic organisation of lower complexity that might be an important issue.

    • Jan says:

      If you invest in a bakery you need energy to expand your business. If you invest into raising assets, like real estate with growing values, spending more energy is not necessarily the case.

      So the idea behind is that “real economy” needs energy to grow while “financial economy” creates surplus without energy.

      If that were the case we had to rescue the rich (who dont consume but invest and thus drive prices) instead of fueling demand (as the Keynesianists suggest). At least that would be a steering instrument to decouple economic growth and energy spent (which is the declared goal of e.g. the EU commission).

      It would also mean that the standard of live is to sink as it requires real things made from real energy.

      • Dennis L. says:

        Interesting ideas, thanks.

        Dennis L.

      • the value of ‘real estate’ still requires energy to grow because ‘real estate’ itself is a function of energy input, however remotely.

        you build or invest in, an office block, apartment block or factory, but without the energy-force of the people working/living there, (producing more than the original building is worth) it remains an empty shell.

        yes, residual ‘value’ remains in it, and might support the idea of ‘growth’ but that can exist only as long as there is a likely ‘promise’ of future energy input. Otherwise it diminishes steadily, until the original owners of the building lose interest, go bankrupt or just disappear and the building becomes derelict and falls down

        • Dennis L. says:

          Norman, perhaps that is explained by using different depreciation schedules. As I understand Jan it is similar to flipping houses, dress them up a bit, have excess credit in the system and sell to the next sucker, skim cash off and purchase a lifestyle. It is consistent with the increase in debt seen. The underlying asset does depreciate but it is valued differently monetarily.

          In our area, there is a shortage of “inventory” in Realtors’ terms, prices are increasing considerably, fewer new homes are being built as it is too costly to build. A 2×4 has a long life span, hundred’s of years with no termites of course.

          The economy is not growing, but the prices of existing, useful items are, add leverage and flipping works until it doesn’t.

          Dennis L.

          • Norman Pagett says:

            I take your point Dennis

            but every time a house is ‘flipped’ it requires someone to come along with the belief, backed by actual cash, or if not cash then means to take out a mortgage on the property itself, that the property will go on rising in value

            That mortgage may eventually be defaulted on of course, and the property repossessed, but that just means that the process has to start over.

            eventually this process must come to an end because no one will be able to find the energy resources to support the ever-rising prices in property, and the fantasy of infinite growth is exposed for what it is

            • Dennis L. says:

              One has to wonder about that. The last real estate failure in 2008 many people lived in a foreclosed home(don’t split hairs please, they lived in the home without payments) for approximately a year as well as not paying off the mortgage. It was cheaper than rent. Someone took a loss, but not the first seller(hopefully), not the purchaser who defaulted and not the next person to own the house purchased at a lower cost who has now recouped the monetary cost in increased valuations – same house.

              Most of us here pay our bills, but many do not and this includes large industry and a certain country in which I live that looks to be spending $4T more this year than it takes in. Is is possible that in a declining economy we are the suckers?

              Your fourth paragraph, what about a reset?

              Dennis L.

            • People have asked me for a long time, “Should I pay off my debts ahead of peak oil?” My general response has been that this is not necessary. The lenders are as likely as not the ones who lose out in this contest. Governments won’t want to put everyone out on the street.

              On the other hand, I personally have never had much debt. What debt we had, paid off quickly. Spending less than your income has some benefits. Peace of mind is one of them. Another benefit is knowing that you could easily keep up with the Joneses next door if you wanted to; this is just a contest you choose not to be involved in.

            • Harry McGibbs says:

              “… you could easily keep up with the Joneses next door if you wanted to; this is just a contest you choose not to be involved in.”

              Overcoming simian status anxiety is hard but, as the song says, the race is long and in the end it is only with yourself:

            • Luke says:

              I’m 65, and without my 63-year-old iconoclast of a wife, I would never have used the T.H.I.N.K.E.R. escape plan from the herd existence: two high incomes, no kids, early retirement [permanently at 47 and 45]. Also, discovering Talleyrand’s comment helped clinch the deal for us: “A married man with a family will do anything for money.” [just the way the System has always liked it]

            • GBV says:

              “My general response has been that this is not necessary. The lenders are as likely as not the ones who lose out in this contest.”

              For their sake, I hope you are correct Gail. Also hopeful we do not see the return of debtor’s prison and/or forced military service for the indebted…


            • JMS says:

              Luke, I didn’t know the THINKER plan, but it was in fact my plan since 18yo.Never managed to be more than a TLINKER though. Wich is also nice, even if the early retirment part had to be degrade to “how to make a living in semi-retirement mode”.

            • Luke says:

              JMS, congratulations on your prescience! We didn’t exactly earn a very “high” income either; we did, however, live frugally in order to retire. Children were never an option since we took “Limits to Growth” seriously.

              Joe Dominguez, a man who helped many others avoid debt enslavement, was a major inspiration to us.


          • I can see several homes in my neighborhood that are being fixed up to be flipped.

          • Tim Groves says:

            We saw this depreciation game play out in Japanese cities during the 1990s.

            If the City of London “emigrates”, there won’t be nearly enough lucrative business left there to support current notions of real estate value. On the upside, first time buyers may get some bargains.

            • Robert Firth says:

              On the other upside, maybe London will come to its senses and demolish every modern building taller than six storeys. A rule we inherited from the Romans, and that we should never have abandoned.

            • Norman Pagett says:

              if the Romans had figured out elevators and revolving doors—they would have been there 2k years ago

            • Xabier says:

              Although in the UK, the general rule is: ‘If it’s a good price, the neighbours are bad’.

              The Bubble has modified that though, ridiculous prices for new builds and refurbishments in bad and unsafe areas.

            • Robert Firth says:

              For Norman: The Romans didn’t have to figure out elevators; the world’s first elevator was built into the Pharos of Alexandria. With a small quirk: you ascended the lighthouse (at its time the tallest building in the world) by climbing the stairs, and descended in the elevator. The counterweight for the descent was the wood that powered the lighthouse, and it was considered a civic duty to visit the Pharos and help lift the wood.

        • Good point! As a homeowner, I know that there is a need for a constant flow of products that are only available with energy supplies to keep my home from literally falling apart. We need treatments to keep termites from eating away the supports. We need new roofs. Also, new windows and frames, when the condensation on the windows leads to rotting frames. We need work done to keep water away from the foundation of our homes, or to keep it from seeping into the basements. If somehow a window gets broken, it needs to be replaced with a similar one.

          Other real estate has a similar problem. If new, socially distant, requirements are put in place, these by themselves may lead to a reduction in the value of the building.

          • Xabier says:

            We tend not view a building as a kind of machine needing a timely flow of spare parts drawn from an intricate web of suppliers,, but modern houses are just that.

        • JesseJames says:

          I think New York City is done. Huge amounts of empty retail and office space abandoned now with all the lawlessness (DeBasio’s criminal justice reform) and the protests/riots, and the upper and middle classes fleeing (for good) New York is a catastrophe. Just wait until buildings start burning out of control, and depreciating materially, decaying, etc. If you are there and have not wised up, get out while you can.

          • Norman Pagett says:

            I agree

            it hit me when I did a quick tour of Detroit last year—grassed streets where houses used to be

            those houses once had value, and owners saw that value as permanent.

            Now there is nothing. Nature has taken back her own

            Time and again the words of Shelley hit brutally hard:
            Look on my works, O ye mighty and despair

            • Harry McGibbs says:

              FWIW, The Daily Mail was suggesting the same the other day:

              “Nightmare in New York: How Covid-19, BLM protests and a liberal mayor are turning the city into a no-go zone as murders skyrocket, shops are looted and 500,000 middle-class residents flee.”


            • Robert Firth says:

              “I met a traveller from an antique land
              Who said: Two vast and trunkless legs of stone
              Stand in the desert. Near them, on the sand,
              Half sunk, a shattered visage lies, whose frown,
              And wrinkled lip, and sneer of cold command,
              Tell that its sculptor well those passions read
              Which yet survive, stamped on these lifeless things,
              The hand that mocked them and the heart that fed:

              And on the pedestal these words appear:
              ‘My name is Ozymandias, king of kings:
              Look on my works, ye Mighty, and despair!’
              Nothing beside remains. Round the decay
              Of that colossal wreck, boundless and bare
              The lone and level sands stretch far away.”

              Percy Bysshe Shelley, Ozymandias.

              The name is a Greek rendering of “Usr maat ra”, one of the titles of Rameses II. (Power of Truth of Ra) The statue fragments were acquired by the British Museum in 1816

            • Norman Pagett says:

              I must have read those lines a thousand times–yet at every fresh reading, they never fail to twist your emotions

            • Xabier says:

              It is beautiful, in a way. Put firmly in our place.

              I like to contemplate the vanished village near here, just the shadowy vestiges of ditches and house platforms in the grass – once ‘the place in a clearing in the woods belonging to Madda’, presumably a Saxon.

              Did he have to wield the axe himself when he arrived after Rome’s collapse? That his name lasted might have surprised him.

            • Norman Pagett says:

              might have been a Saudi cow importer,

              Madda Sahattar

            • Lidia17 says:

              Norman, also the city assumed those houses were going to be a ‘machine’ for generating tax revenue. I don’t know when listers and municipal and state pols are going to get the message.

              The main storefront in my town used to house a “Five and Dime” (old style “Woolworth’s” or “Ben Franklin”, one step up from the old “general store”). It’s been valued by the town at $799k, but it has been for sale for a number of years now, with an initial asking price of half that. There is no way on God’s Green Earth that anyone moving into that space (even for free) will be able to generate enough revenue to pay the property taxes at that valuation. The inflation in asset values is thus doubly problematic.

              I’m not sure if the owner is getting any relief.. would be interesting to find out.

            • owners of real estate get fixated on what was

              and can never accept that times have changed

          • info says:

            Order is ultimately enforced by the edge of the sword and the morality enforced by Christianity.

            Violence is the best way to end gentrification as much as gentrification is enforced by it also.

      • I agree.

        It is the lack of real things that will be the problem. A replacement part for a broken elevator may not be available. A computer from China may not be available. There may be more empty shelves in grocery stores.

        Failing businesses in the supply chain are a particular problem. If there is not enough cargo space on boats/airplanes, not as much can be shipped.

    • Kim says:

      Schacht was a very interesting guy. After the war he was involved in setting up the Reserve Bank of Indonesia and was an early entrepreneur and big wheel in the palm oil industry in Indonesia in the early 1960s.

      A real survivor – teflon in fact – and clearly very strongly connected to the very highest ranks of the global Elders (as FE would call them).

      • Xabier says:

        The people who really ran the Third Reich, but never actually killed anyone directly, did very well indeed on the whole post-war. A disgraceful, but not surprising, tale.

    • Kim says:

      If the topic is “hiding money” then this video is relevant. This fellow, Mark Skidmore, is a Professor of Accounting at a US university. He says that there are tens of trillions of dollars hidden out there and that the debt is vastly bigger than is admitted.

    • Kim says:

      If that is the case, our national accounts would be false.

      Yes, the national accounts are entirely false. according to Michigan State Economics Professor, Mark Skidmore. And he says that the rules of the FASAB, the Federal Accounting Standards Advisory Board, have been changed to hide the relevant criminal antics. USA Watchdog had a Youtube show on this on 27 June 2020.

      • Hubbs says:

        FASABY 56 was quietly voted for by both sides of Congress while everyone was distracted by the ongoing sexual accusations being made against Supreme Court Justice Kavanaugh during his confirmation. If you’re going to print money, you’ve got to find a way to hide it.

    • I found a blog about the REPO bills with some nice graphs. They can be found at this link:

      Hjalmar Schacht, Mefo Bills and the Restoration of the German Economy 1933-1939

      They seem to have worked. GDP and inflation turned positive.

  9. Kim says:

    But these guys say a hydrogen economy is not workable.

    But of course what they really need is a monorail!

    • Dennis L. says:

      Very funny with the monorail – it is called Disneyland where the ride is free but the Coke is $4.50/bottle.

      Dennis L.

    • Robert Firth says:

      I’ve ridden the Disneyworld monorail. Silly contraption. And I lived through the (non) story of the Pittsburgh monorail. This was supposed to connect the city to the airport, which was sited at the other end of a narrow road tunnel and so was a nightmare to get to. The idiots planning the system wanted to build a brand new monorail (later changed to magnetic levitation), paid for by the Federal Government. Not a prayer that would happen.

      But the silliest part of the whole plan is that there existed a complete railway right of way from downtown to the airport perimeter, that could have been brought back into service at a fraction of the cost. And even a US train could have made that journey in 20 minutes.

      Once again, our modern obsession with ever more elaborate and more expensive technology killed off a cheap, lower tech, and rational idea.

    • GBV says:

      “But of course what they really need is a monorail!”

      Were you sent here by the devil?


    • Robert Firth says:

      The article is behind a subscription wall, which is an invasion of privacy i never accept. So could someone else answer the question: are they suffering from the disease, or from the cure?

    • The article is about a group of patients, about 80% of whom are women, who experience a variety of symptoms, including fatigue and headache, long after COVID-19 symptoms should have disappeared. “Some long-haulers report having previous autoimmune disorders or prior bad reactions to viruses like Epstein-Barr, which causes mononucleosis.” Some of the patients test positive for COVID-19, but doctors don’t think they are really contagious.

      According to the article,

      Ron Davis, a professor of biochemistry and genetics at Stanford Medical Center, is also conducting a study with the nonprofit Open Medicine Foundation. He says studies have found that up to 10% of people with some viruses can develop ME/CFS [myalgic encephalomyelitis/chronic fatigue syndrome] “So the concern with this coronavirus is that we will get a large number of cases,” says Dr. Davis.

      Other theories are also being explored.

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