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 virus 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.

Notes:

*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.
This entry was posted in Financial Implications and tagged , , , , , . Bookmark the permalink.

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

  1. Harry McGibbs says:

    “Anyone who believes that we are now well on the road to a global V-shaped economic recovery has not read the International Monetary Fund’s (IMF) recent gloomy World Economic Outlook.

    “More tellingly, they clearly have not considered how very likely it is that, if the IMF’s depressing world economic outlook is realized, we will have a series of major debt crises in systemically important countries such as Italy and Brazil.”

    https://thehill.com/opinion/finance/504842-the-tale-of-a-global-debt-crisis-foretold

    • Harry McGibbs says:

      ” The full extent of the economic recession probably will not become apparent until this fall and winter, when it will most likely come as another shock, because the world is no longer accustomed to such dramatic contractions. Both psychologically and in real terms, we are accustomed to continuous growth.

      “Will richer countries in the West and Asia be able to deal with a deep, widespread, prolonged recession or even depression? Even if trillions of dollars in stimulus spending proves sufficient to offset a full collapse, the question will be what comes next.”

      http://www.koreatimes.co.kr/www/opinion/2020/06/197_291913.html

      • K says:

        @ Harry McGibbs…. You have for the past while been a great aggregator of articles and information…What makes your posts great is they link directly to source. Thank You for leaving your information trail for others to see here on the blog. Remarkably, the comment section at OFW is many times a better aggegator of information than most websites with that explicit purpose.

    • It seems like China could have a debt crisis too. Plus lots of smaller countries that are not considered systematically important, like Nigeria and Venezuela.

    • Minority Of One says:

      “…Even before the pandemic chose Italy as its European epicenter, that country had an excessive public debt-to-GDP ratio of 135 percent. In the wake of the pandemic, the IMF now expects that in 2020 Italy’s economy will contract by a staggering 13 percent and its budget deficit will widen to around 10 percent of GDP. That in turn will cause the country’s public debt to skyrocket to an unsustainable 160 percent of GDP by the end of 2020.

      Markets know that Italy’s very poor past economic growth record within the Euro makes it highly improbable that it will ever be able to grow its way out of its debt problem. As investors have started to shun Italian government bonds, the only thing right now keeping that country afloat is the large-scale Italian bond purchases by the European Central Bank (ECB). However, there are political limits to how long the ECB can keep bailing out a member country on the scale at which it is doing in Italy. It would seem that those limits make it only a matter of time before we have a full-blown sovereign debt crisis in a major European economy.”

      You have to wonder just how long before Italy’s economy ‘pops’, and the knock-on consequences for the EU. Of course, the UK’s economy is in the same boat, but Italy’s seems nearer to melt-down. Who knows?

  2. Harry McGibbs says:

    “This summer will usher in some of the worst catastrophes the world has ever seen if the pandemic is allowed to spread rapidly across countries already convulsed by growing violence, deepening poverty and the spectre of famine, the BBC war reporter Lyse Doucet has warned.”

    https://www.theguardian.com/world/2020/jun/27/toxic-mix-of-violence-and-virus-sweeps-poorest-countries-warns-war-reporter-lyse-doucet

    • Harry McGibbs says:

      “Police and residents have clashed over wearing face masks in a small town in Kenya’s Rift Valley. A witness says three people were killed, the Associated Press reported. Police confirmed the deaths.”

      https://www.telegraph.co.uk/news/2020/06/27/watch-violent-clashes-erupt-kenyan-police-protesters-wearing/

    • Robert Firth says:

      “… if the pandemic is allowed to spread rapidly …”

      Look no further: our fatal hubris is here on full display. The pandemic will spread as rapidly as Nature decides; we can at best slow it down slightly at the margin. This has been known for over a century, but those in charge are ignorant of the science, and so can indulge in the illusion of control. Men and bits of paper, blown by the cold wind…

      • I think that you have hit on a major issue. We can’t stop this virus. If it were a virus with obvious symptoms that came on immediately, there would be some chance that we could segregate the sick from the well, and somehow stop the surge of the illness. We could have the equivalent of temporary leper colonies.

        This illness has way too may people without symptoms, or with minor symptoms that can easily be mistaken for something else. Testing is expensive; it doesn’t yield immediate results, and when those results do arrive, they tend to include a lot of false negatives.

        We also don’t fully understand how the illness spread. For example, how did the illness get to China in imported salmon?

        • GBV says:

          Probably forgot to put face masks on the salmon… that, or schools of fish aren’t very good at social distancing…

          🙂

          Cheers,
          -GBV

        • Xabier says:

          Our pretensions to control the virus do seem to be a bit King Canute-ish.

          ‘I command you to stop!’

          • According to Wikipedia:

            The story of King Canute and the tide is an apocryphal anecdote illustrating the piety or humility of King Canute the Great, recorded in the 12th century by Henry of Huntingdon.

            In the story, Canute demonstrates to his flattering courtiers that he has no control over the elements (the incoming tide), explaining that secular power is vain compared to the supreme power of God. The episode is frequently alluded to in contexts where the futility of “trying to stop the tide” of an inexorable event is pointed out, but usually misrepresenting Canute as believing he had supernatural powers, when Huntingdon’s story in fact relates the opposite.

            People don’t retell the story correctly, it seems.

  3. Harry McGibbs says:

    “Uncertainty about the scale of potential financial losses caused by coronavirus has accelerated a retreat from the European banking sector by global equity fund managers who have cut allocations to these lenders to the lowest level for at least a decade…

    ““Global investors are pulling investment from the European banking sector on concerns over deteriorating financial conditions for businesses and individuals as the pandemic feeds through to the underlying economy,” said Steven Holden, chief executive of Copley Fund Research.”

    https://www.ft.com/content/07956dc1-c49f-4ff5-90e7-a141ae35f11a

    • Harry McGibbs says:

      “Euro-area inflation could dip below zero in coming months, European Central Bank Executive Board member Isabel Schnabel said on Saturday as she rolled out a vehement defense of the institution’s monetary stimulus.”

      https://www.bloomberg.com/amp/news/articles/2020-06-27/ecb-s-schnabel-warns-euro-area-inflation-could-dip-below-zero

      • Harry McGibbs says:

        “Authorities in Paris intervened late on June 27 to clear hundreds of young people gathered in the streets for an impromptu party…

        “Videos shared to social media by local journalists showed crowds of people running through the streets, climbing over cars, throwing objects at emergency services vehicles, and lighting flares.

        “Police in riot gear were seen dispersing crowds with gas canisters and beating some people with batons.”

        https://ca.news.yahoo.com/wild-project-x-party-erupts-074212118.html

        • Harry McGibbs says:

          “An elderly man in the town of Volos, Central Greece, was rushed to hospital on Thursday evening after collapsing from starvation in his home.

          “This is the second such incident this week, after the collapse of a 9-year-old girl in Rhodes who fainted from hunger as she was waiting with her laid-off mother at a local bakery to buy some bread…

          “The two recent incidents are a grim reminder of the destitution many Greeks suffered during the eight-year long economic crisis.”

          https://greece.greekreporter.com/2020/06/27/greek-pensioner-collapses-from-starvation-is-hunger-returning-to-greece/

          • Rodster says:

            “The coronavirus lockdown has hit the country’s economy hard, at a time when indicators suggested that growth was returning. Tourism, the mainstay of the Greek economy and its main export earner, has been particularly affected.”

            The economics of the lockdown will impact and kill more than the virus itself but those numbers will never get reported because it would show how foolish it was to shutdown the eCONomy.

            “Greece’s economic recession in the second quarter will be deep, at 15-16 percent year-on-year, according to Finance Minister Christos Staikouras as well as the National Bank of Greece.”

            And this is why the mainstream media is an absolute joke and the propaganda it spews because Greece has been in a depression for quite some time.

        • Police become enemies with this kind of reaction to a peaceful party.

          • Dennis L. says:

            What do you suggest the police to do? These are not pleasant encounters, maybe someone could sit down on the curb and explore the inner demons causing this individual to throw bricks through windows. After a long day of protesters throwing urine and feces on police sometimes people get a bit grouchy.

            Saw a note that protesters went to Beverly Hills to protest, they didn’t get far, seems police were not very friendly with the protesters, wonder if the residents of the Hills will raise an outcry.

            In olden times when God became angry with his people he sent fire and brimstone. Didn’t he just wipe out a city and start over?

            Dennis L.

    • Europe was doing poorly before the virus arrived. After the virus came, the results can only be worse.

  4. Harry McGibbs says:

    “The challenge facing us in the coming months is altogether broader and now equally in need of attention: debt default on a massive scale.”

    https://www.scotsman.com/health/coronavirus/bill-jamieson-fear-massive-debt-default-should-concentrate-minds-2897149

    • Harry McGibbs says:

      “…central banks have gone even deeper down the monetary rabbit hole…

      “Yet ever more QE is deeply counterproductive. Hosing economies with liquidity doesn’t make them grow faster. That’s like trying to get fat by buying a bigger belt.

      “By holding back the bond vigilantes for now, QE is encouraging governments to rack up huge debts – which will come back to haunt us.

      “Monetary policy is now so deranged that around $12,000bn of bonds worldwide have a negative yield – a fifth of all global debt.

      “Earning no interest on savings and being paid to borrow distorts basic economics. It makes some more reckless, while others fear this madness can’t continue. Real-world investment is hindered, while financial markets lose their ability to “correct” – an astonishingly dangerous state of affairs.”

      https://www.telegraph.co.uk/business/2020/06/27/quantitative-easing-has-created-monetary-hall-mirrors/

    • Lots and lots of bank debt and bonds defaulting. Also US student loans owed to the government. I wonder how this will play out.

      • Robert Firth says:

        Gail, an economy run on fiat money is like a hot air balloon. Eventually the energy needed to keep the balloon aloft runs out, and it falls to the ground. Likewise, when the energy backing fiat money runs out, its value falls to its natural level: zero.

        • I think of the economy as running on promises. As long as energy of the necessary kind is inexpensive to extract and we are far from limits, it is possible to produce capital goods (such as machines, factories, trucks, roads and electricity transmission lines) and pay for these capital goods over their lifetimes using promises of various kinds (bonds, bank notes, sale of shares of stock).

          Once limits are reached, these capital goods don’t produce enough to pay back their debt plus interest. (Wind turbines and solar panels are capital goods that are particularly bad in this regard because intermittent electricity has virtually no value. Today’s distorted pricing system gives the impression that they are worth far more than they really are. They require continuing subsidies from the fossil fuel part of the economy.)

          The selling prices of commodities of many kinds don’t rise high enough to cover the cost of extraction/production. Profits tend to fall too low; wages of non-elite workers fall too low; governments can’t collect enough taxes. Interest rates fall lower and lower.

          The whole system tends to fall apart. It is sort of like a hot air balloon deflating.

  5. Harry McGibbs says:

    “About eight million people [UK] have sought help with their debts during the coronavirus crisis, research by Virgin Money has found.

    “The figures will raise fears of a growing debt bubble…”

    https://www.thisismoney.co.uk/money/news/article-8466501/UK-debt-bubble-fears-rise-8m-seek-help.html

  6. Harry McGibbs says:

    “Profits of China’s major industrial firms dropped 19.3 percent year on year in the first five months of 2020 due to the COVID-19 impact, official data showed on Sunday.”

    [Some improvement in May, largely on the back of oil refining where lower oil prices helped profits for May rise 8.9% yoy]

    https://www.shine.cn/biz/economy/2006281001/

    • Harry McGibbs says:

      “For years, China staked its future on world class manufacturing and new technology. Now, it’s having to contemplate a simpler, and older, solution to its looming jobs crisis involving millions more street vendors — and the idea is exposing divisions in Beijing.”

      https://edition.cnn.com/2020/06/27/economy/china-unemployment-street-vendors-intl-hnk/index.html

      • Harry McGibbs says:

        “Hawkish Chinese military strategists have called on Beijing to be better prepared for an escalation in its border dispute with India, saying the potential for armed conflict between the two nuclear powers is on the rise.”

        https://www.scmp.com/news/china/military/article/3090855/prepare-india-border-row-escalate-chinese-strategists-warn

        • Harry McGibbs says:

          Well, it’s a theory. I can’t personally see how the global financial system could survive a colossal banking crisis resulting in the collapse of the US$:

          “Unfortunately, a banking crisis is embedded in the script, which will have fundamental effects on all fiat currencies, some more than others. And since international banking is overwhelmingly a dollar affair, after a short pause the consequences are bound to weigh heavily upon it as the reserve currency.

          “This credit cycle unwind is a Category 5 compared with 2008-09’s Category 2 or 3. It is only after such a cataclysm that China will have no alternative to abandoning all attempts to support the dollar and its means of buying overseas influence. China will then need to secure its own currency.”

          https://seekingalpha.com/article/4355971-collapsing-dollar-and-chinas-monetary-strategy

          • Harry McGibbs says:

            “China’s tourism revenues slumped by nearly 70 per cent during the three-day Dragon Boat Festival, as people shunned trips amid a new wave of coronavirus infections in the north and floods in the country’s southern provinces.”

            https://www.scmp.com/news/china/society/article/3090904/coronavirus-and-floods-destroy-chinas-dragon-boat-festival

          • Kim says:

            Yes, I can’t see very much surviving a quick abandonment of the $US. How would trade be settled? And to suggest cryptos or SDRs, would banks and ATMs and even the internet still be operating?

            I read something a few months back – should have bookmarked it – that described what vast amounts of physical equipment the modern giant server farms burn through. They are heavily dependent on constant supplies of new gear.

            And aren’t many such big internet firms located in the US? Where would their equipment come from?

            • Harry McGibbs says:

              The gold-bugs do invariably seem to imagine that a financial cataclysm will see them sitting pretty. Or perhaps they are smarter than I give them credit for and they are just trying to talk up prices in the interim.

            • Breaks in supply lines for those providing physical gear to server farms does seem to be a physical limit to growth to the “everything on the internet” solution we are encountering now.

          • This article advocates tying the yuan to physical gold. This is not likely to work well because gold supply does not grow enough to support a growing economy.

            • john Eardley says:

              Gail, please could you explain why you would need gold supply to grow to support a growing economy as I don’t understand? Ta.

            • If they are going to peg money to a physical supply of gold, then to get a growing economy, the supply of gold needs to grow as well. The economy needs to grow for many reasons:

              (1) Growing population. More people require more food and water. Arable land doesn’t increase. Adequate potable water becomes a problem in a growing population. So does sewage disposal.

              (2) Resource depletion, implying that more and more energy consumption or complexity is needed to make the system work. Even if the need is only “growing complexity,” this leads to the need for more devices (machines, solar panels, wind turbines, transport vehicles, roads, transmission lines) which take part of the world’s energy supply, leaving less for the workers. Also, the organizational structure tends to leave little for workers without special training or management responsibility. Some end up unemployed.

              (3) Need to pre-fund capital goods with debt or sale of shares of stock. If the workers making capital goods are paid, somehow, some of the future value of these devices needs to be brought forward to the present. Debt needs to be repaid with interest; shares of stock need to provide a positive return, including dividends. (The problem is that the value that the workers add is not available in advance of the operation of the capital goods. In fact, the value of all of the interest and dividend payments is not available in advance, either.)

              (4) Growing population implies growing population density. Disease transmission becomes an increasing problem. Losses in efficiency due to the need for social distancing and the need for endless application of disinfectants need to be made up for by increasing efficiency of other types. This, in turn, leads to the adverse impacts noted in (3).

              If the economy stops growing, it tends to collapse.

            • beidawei says:

              The idea I’ve always heard floated was to tie it (and/or the ruble) to a basket of commodities, not just gold.

            • Robert Firth says:

              Gail, that was not our experience in the nineteenth century. Yes, there was more gold, but the main result of higher productivity was lower prices: in other words, the same gold could buy more goods, and so indeed support a growing economy. This had the exemplary side effect of encouraging people, even poor people, to save: what they did not buy today would be cheaper tomorrow.

            • If energy products are truly inexpensive and we are a long way from limits, then indeed goods and services can indeed become less expensive. Electricity became less and less expensive during the period between about 1900 and 1998. It is when the world starts approaching limits that the equation gets turned upside down.

              Before limits are reached, the growing efficiency of the economy keeps bringing down the price of goods, relative to wages. This tends to turn around as the impact of diminishing returns start to “bite.”

              I believe that economies did have booms and busts on the gold standard, as well.

      • Sounds like going backward. When my husband and I visited China in 2011, we were warned not to buy food from street vendors. They do not follow any kind of health standards. Goods like watches were likely to be imitations of name brand merchandise.

    • Harry McGibbs says:

      That 8.9% stat refers solely to the oil-refining sector btw. Overall industrial profits for China rose 6% yoy in May.

    • A 19.3% drop during the first 5 months implies a very big hole to get out of.

  7. Harry McGibbs says:

    “An economist has warned that a banking crisis is coming [Malaysia] and urged the government to set up an agency to work towards lightening it.”

    https://www.freemalaysiatoday.com/category/nation/2020/06/27/banking-crisis-imminent-warns-economist/

  8. Minority Of One says:

    Coronavirus: Expert says Scotland ‘could be Covid-free by end of summer’
    https://www.bbc.co.uk/news/uk-scotland-53192024

    Is covid-19 not a flu-type virus? How many countries have got rid of, or even tried to get rid of, flu? Are we (Scotland) closing the border with England to isolate ourselves? No. Looks like wishful thinking to me. Meanwhile, elsewhere in the UK media, we are being warned of the likelihood of a new surge in Covid-19 cases leading to a second lockdown.

    • Kim says:

      It’s the uncertainty whipsaw. Keeps you psychologically vulnerable. It is typical of abuse situations: mom is nice to me and then for no reason she suddenly gets mean. It is the most permanent kind of training. If you are consistent, the training fades. Irregular, and the training is retained. “something conditioning” I forget what.

      • Robert Firth says:

        Kim, it’s a part of “operant conditioning” called “variable ratio reinforcement”. If you always reward “good” behaviour the subject becomes conditioned to expect it, and the behaviour weakens when they become bored with the reward. If you reward unpredictably, however, the subject will persist in the desired behaviour, hoping always that ‘next time’ they will get the reward. BF Skinner observed that in rats; you can observe it just by going to a casino.

      • Harry McGibbs says:

        Or perhaps it is just a not especially competent government, impossibly torn between economic and public health prerogatives, reacting on the fly to a dynamic situation.

        “Leicester could become the first city to be placed into a local coronavirus lockdown, home secretary Priti Patel has confirmed.”

        https://www.google.com/amp/s/www.cityam.com/priti-patel-confirms-likely-leicester-lockdown/amp/

        • Kim says:

          You belong to the Hanlon’s Razor school of thought.

          “Never attribute to malice that which is adequately explained by stupidity”.

          Experience has inclined me much more to the “It’s too stupid to just be stupidity” school.

          A pertinent quote can be found in the “The Fight for America” by Senator Joseph McCarthy in which he describes his first meeting with Secretary of the Navy, James Forrestal (who, like McCarthy died very young and in mysterous circumstances, viz, by being defenestrated from a 16th floor window at Bethesda Naval Hospital):

          Quote:
          “Before meeting Jim Forrestal I thought we were losing to international Communism because of incompetence and stupidity on the part of our planners. I mentioned that to Forrestal. I shall forever remember his answer. He said, “McCarthy, consistency has never been a mark of stupidity. If they were merely stupid they would occasionally make a mistake in our favor.”
          Unquote

          That can sometimes be a very hard point to argue with.

          • Harry McGibbs says:

            I don’t think governments and the people within them and advising them are stupid per se. I just think they are in an impossible situation, torn between apparently divergent imperatives and with the hysterical media and political opponents breathing down their necks.

            I describe the UK government as not especially incompetent because at least in terms of managing the outbreak other governments, like S Korea’s and Taiwan’s have done a much better job.

            I have yet to encounter a motive that makes much sense for a CDP scenario. This is not to say that all manner of ethically challenged individuals and organisations are not striving to benefit from this mess.

            • Harry McGibbs says:

              Not especially *competent*, I should have said.

            • T.Y. says:

              Hi Harry – i think the sense or nonsense of a possible CDP scenario may hinge on: “do you or do you not believe that there are a few entities that have sufficient influence and power to implement CDP” rather than in terms of motives ? If one assumes the answers is yes than motives would seem to be plenty, whereas if one assumes the answer is no then many potential motives no longer make sense, or certain aspects can then indeed as you suggest be ascribed to a few ethically challenged powerful individuals / organisations.
              Given how well some of the motives fit with a CDP, this in itself should already be an indication that the odds may be in favour of it.

              Motives for CDP:
              1. reduce consumption to something more in line with what can be considered sustainable, some might even consider that all the extra mortality from hunger & poverty is also ‘by design’ to reduce population; this is a motive very little individual actors or even organisations would be able to bring about (if they would be even inclined so: for the majority of institutions, companies & it would go directly against their role & mandate in a neoliberal economy), at least not in a swift manner as would be required by our relentlessly decreasing oil-EROI, cracks were starting to show and it might have been nearly impossible to keep them hidden for much longer. Letting things run their course would mean risking a swift loss of government’s & institutions authority as it would be increasingly clear for all to see that they cannot fix this issue (resources running out without any price or other market signals as they are not adequately priced relative to real scarecety…as we keep seeing with oil). A pandemic as cover for this issue would allow a reduction in consumption without infuriating the massive amounts of newly unemployed.
              2. implement various electronic surveillance and control grids with extreme centralisation of data and associated algorithms deciding on your privileges & freedoms depending where you have been & who you have met (or various other parameters). This is a strong pro-CDP motivation. Consider this: How exactly would free market actors profit from such grids ? To a large extent we already have data-mining from smart-phones for marketing purposes and many people kind of tolerate that as long as the service we have from the device is somewhat useful. However: would you consider affording a company or government total access to track everything under the guise of COVID-19, for the privilege of being able to walk about your business ? , Would you pay for it in the form of a privately developed app (which would have the obvious problem that it needs universal adoption to work) or see taxes spent in the form of a government developed tracking application, where previously you had this freedom without costs to start out with ? Of course you wouldn’t – especially not given the very low odds that COVID would actually affect any particular individual unless you are already fairly old – and thats even besides the obvious risks of power abuse of such a control grid. Who was it again that said “power corrupts and absolute power corrupts absolutely’? No individual corporation or government would be able to gather the necessary ‘customer-base’ for that to work voluntarily, only a large global event would possibly do that. Keep in mind we are now only talking about the cheapest part of the surveillance network : the smartphone you already own. It seems to me that companies that make money of those devices – via social media platforms with business models of customised marketing – are having trouble running sufficient profit unless they are really big. Even then : although some of these big players are much hyped on the stock market, doesn’t anybody stop to wonder why they need to sell other aspects of their platforms, such as possibility to sway public opinion ? Might it be they actually need it to make a profit (hence the scandals on selling accounts / data trying to influence elections) ?. Additionally i would anticipate these companies will see their profits disappear as living standards decline, so even if parts of a “COVID tracking system” could run profitably as free-market venture now and be free for users, chances of that continuing are small and they would likely need to impose annual fees that massively increase every year as more and more people cannot afford it or feel disenfranchised as they suddenly belong to the very category of people the ‘social scoring’ or tracking app helped you avoid in the first place: usefulness of such a voluntarily used app declines as the user-base vanishes. Many aspects of an advanced surveillance grid (various extra sensors & camera’s, smart- access gates, additional large scale server-farms, …) are just as expensive or even more expensive if they can’t piggy-back on the smartphone platform. Many of these aspects are mainly valuable as a totalitarian tool to control large masses and can offer very little to most individuals beyond what we already have, except ‘security’ which is normally the governments task and would likely not be needed as much if the wealth gap wasn’t there. But it may not be feasible in a regular democracy to wait for the wealth gap to get big enough for people to need such ‘security’ , because then there is by definition no majority to agree with the government implementing such measures (more losers than winners) and people would question the authority of a government that has failed to keep peace & employment at reasonable levels anyway. Here is a real indicator of wether it is CDP or not: if such a control-grid is rolled out, it would have to be abandoned as soon as vaccines are available as it cannot be profitable or justifiable in a reasonably functioning & peaceful society and would cease to have all reason for being: Well, are you feeling lucky ? Do you think they will abandon ? I do not say dismantle as that would just cost more… On the other hand, if governments – possibly with encouragement from power-elites pulling the financial strings – were expecting a lot of civil unrest because there is not enough to go around, such a grid may be significantly cheaper in resource expenditure than continuing to pacify everybody with unemployment compensation at a level high enough to still keep consumption & living standards relatively high. Unemployment compensation could be lowered significantly or removed, but good luck finding a politician that will implement that, quick reversal of that would likely be attempted in a democracy, but will likely fail relatively soon and lead to loss of authority and control if a population suddenly drops from affluent to struggling for food safety.
              3. Vaccines: yes the “corporate profit motive” may explain a great deal, but consider this : if a successful vaccine is developed and large amounts of it sold at a profit the story should end there (or repeated every season like the flu, but without much further issues being piggy-backed onto this). After all: a functional vaccine will keep you safe, and anybody who can’t or won’t have it is just their choice to run a risk at COVID19. But will this be how it will be or where it will stop though ? If we find that the vaccine is made mandatory or coupled in any way to the availability of other privileges (previously freedoms) you may know with certainty that it is CDP, as there is no other need for this but to enforce compliance and control. Arguments such as ” to avoid you from spreading it” are misleading in my opinion ; if the vaccine is there, individual protection is there to those who want it and are most at risk. If they wanted to be nice It would be far more reasonable to just offer reimbursement of medical costs to those most at risk – or even free for everybody – rather then enforce it on everyone by coupling it to an electronic ID or some such. Conversely; what if the hastily developed medicine is accidentally dangerous , potentially to an equal or larger group of the population as the virus itself ? What if points 1 & 2 above are true and CDP is a fact ? What if there was a true population reduction / control agenda ? Would it not make sense to put the venom (selective impairment, infertility, or possibly even worse…) in the vaccine – or at least have the option to do so with ‘uncompliant’ individuals – rather than to unleash a very dangerous virus and come up with a real cure – after all who knows how accurate this sort of thing can be engineered and it would require success twice to safeguard the originators of this plan. Whereas with vaccine you know exactly what is administered to whom and only need it to either not work or work its bad effects slowly enough for people not to realise them or to apply only very selectively the occasional ‘unintended consequences’..

              Finally consider this: the “warp-speed” with which the “great reset” and all associated reports, articles are released…..all detailing how we will ‘transform’ entire sectors & indeed the entire economy to life after & with COVID19 to a more sustainable world … all the above should be enough to make anybody wonder wether somebody knew something in advance. At the very least anybody bringing up these matters should be taken serious enough to investigate these matters seriously and not use the ever-prevalent ‘conspiracy theory’ rebuttal as a means to stiffle all critical enquiry. The other rebuttal ; “‘don’t assign to malice what mere stupidity can explain” is even more dangerous: when things align as well as the above explanation, it would be rather stupid to a priori rule out malicious intent rather than throughly investigate it. The costs of failing to do so are almost guaranteed to overshadow any costs and efforts spent investigating.

          • Robert Firth says:

            James Forrestal’s death was not mysterious. He was a threat to the cabal that really runs the US, and paid the price. As later did John F Kennedy.

        • Robert Firth says:

          Half the population of Leicester is from India or Pakistan, and the British government in its infinite stupidity has placed no restrictions on flights from those countries, not even testing the arriving passengers. Many of these immigrants are employed at low wages in the local food processing business, which has minimal to zero safety precautions, and anyway the workers’ religions tend to discourage them from anything resembling science. Colour me vastly unsurprised.

    • Xabier says:

      And isn’t domestic tourism -ie the Highlands and Islands of Scotland – also being encouraged to re-start the economy? I wonder what the % is of those who travel from England?

    • Lidia17 says:

      Meanwhile, flights **still** coming into the UK from Pakistan!
      https://www.thesun.co.uk/news/11968577/coronavirus-cases-uk-pakistan/

      Data from Public Health England showed 30 cases of coronavirus in people who have travelled from Pakistan since June 4 and that figure is understood to represent half of the incidents of imported infection. There are up to two flights a day from Pakistan and there have been reports of some arrivals going straight to hospital upon landing, The Daily Telegraph reported.
      Original Telegraph article behind paywall:
      https://www.telegraph.co.uk/news/2020/06/26/exclusive-half-uks-imported-covid-19-infections-pakistan/

      IMO, an indication that “they” are unserious about actually stopping health threats. Citizens can’t visit relatives the next town over, but random foreigners can fly in anytime?
      Where are the torches and pitchforks?

    • Robert Firth says:

      Please do close the border with England. Import all of our viruses you want, as long as you stop importing our money.

  9. Herbie R Ficklestein says:

    Doomed, Bloomers…Damn the torpedoes…FULL SPEED AHEAD…BAU demands it🚀
    Bloomberg
    Urged by Trump to Decouple, U.S. Companies Want More China Faster
    Brendan Murray
    June 28, 2020, 3:00 AM EDT
    Capable of carrying almost 4,300 containers, she’s downright petite in an industry where the biggest can handle more than 20,000. The Melina is part of a budding fleet of smaller vessels that Covid-19 has thrust into service between the world’s biggest economies. Smaller means faster. She’ll dock in Los Angeles on July 6 after a 12-day nonstop journey — a week ahead of a larger ship doing the same route.
    With the extra speed comes a price that’s as much as double the cost of standard transpacific service, which is already skyrocketing because the world’s biggest shipping companies have scaled back capacity by about 25% this quarter and may cut it 10% in the third quarter, according to industry observers. They’re downshifting because broadly they see demand recovering only slowly and plenty of fog on the global economic horizon.
    But for now, shipping demand from some companies remains brisk, justifying the added import cost of fast delivery to meet the burst of online shopping for everything from protective medical gear to baby pools for the backyard.
    ……We expect the need for this expedited service to be permanent and actually grow as the share of e-commerce in global trade will continue to grow at a higher pace than other commerce,” Nissim Yochai, Zim’s executive vice president in the Pacific, said from Hong Kong. “This abnormal period will continue as long as the world will continue to find a balance between protecting from the Covid-19 pandemic and the need for people to get out to work and socialize and, of course, consume.”

    Sorry, there is NO going BACK…whatever it takes or we are hitting rocks together to start a fire

  10. northsheep says:

    In an otherwise reasonable and well written account, the most glaring error I see is the statement, “overshoot, caused by too high a population relative to underlying resources.” No, elementary understanding of the systems ecology concept of overshoot of carrying capacity is that in human societies it is caused by excessive consumption relative to underlying resources. Consumption is both population and per capita consumption.

    This error, widely repeated among population activists, in effect neatly absolves our affluent populations, who are guilty of consuming the lion’s share of global resources. Rich countries consume 5-6 times the world average, and many more times the consumption levels of the poorest.Dropping rich country consumption to world average levels is the single most effective step to reduce overshoot.

    • The thing that most people don’t understand is that our economy is governed by the laws of physics. In physics terms, it is a dissipative structure. It takes energy to move anything. It takes energy to heat anything. Any action that we consider to be equivalent to added GDP takes energy.

      The whole idea of dissipative structures is fairly new. Ilya Prigogine earned a Nobel Prize in 1977 for his work on dissipative structures. Dissipative structures are thermodynamic structures that stay far from equilibrium. In lay terms, they are structures that self-organize and grow, with the use of energy. All ecosystems are dissipative structures. Hurricanes are dissipative structure. All plants and animals, including human beings, are dissipative structures. Stars are dissipative structures.

      An economy will collapse if it doesn’t have enough energy per capita. This is essentially what has happened many times, over the ages.

      Economists have never looked into this issue; it has simply been a physics theory that they were unconcerned about. Economists prefer a result that politicians like. They would like to believe that it is easy to use less and less energy, without the economy collapsing. Can human beings get along with fewer and fewer calories? Within a limit they can, for a while, but not indefinitely. Can a hurricane retain the strength that it gets from hot water, when it goes over land? Not for many days.

      I wrote a post about this subject back in 2016. The Physics of Energy and the Economy. I am one of the authors of an academic article that says indirectly that the limit on oil extraction is how high the price can rise. If the price doesn’t rise high enough, oil stays in the ground. See Section 2 of this paper, which was published in the journal Energy: An Oil Production Forecast for China Considering Economic Limits

      The physicist Francois Roddier wrote a book in French about energy and the economy called Thermodynamique de l’évolution: Un essai de thermo-bio-sociologie. A rough English PDF translation by Roddier is available online at this link, The Thermodynamics of Evolution.

      Another author in this field is Eric Chaisson, author of the 2001 book, Cosmic Evolution: The Rise of Complexity in Nature. This is an image that is similar to images shown in that book. Chaisson uses the word “Societies” for what most of us would call “Economies.” He puts them at the peak of energy intensity. Of course, today’s (or perhaps 2019’s, before the recent shutdowns) economy is even more energy intense than prior economies.

      • GBV says:

        “Can human beings get along with fewer and fewer calories? Within a limit they can, for a while, but not indefinitely.”

        Can human beings get along with more and more (and MOAR!) calories? Within a limit they can, for awhile, but not indefinitely…

        Cheers,
        -GBV

      • Robert Firth says:

        Thank you, Gail, for another excellent post. Ilya Prigogine is one of my heroes; I studied his work extensively. It was the basis of my own research into what I called “zero entropy technology”: technology that used existing dissipative structures exclusively, mediaeval windmills for example. From that perspective, the discovery and use of fossil fuels was a giant step in the wrong direction.

        • fascinated by the concept of ‘zero entropy technology.’

          not being facetious here. You seem to know a lot of stuff, and I freely admit to possibly missing something (imagine that–I don’t know it all)

          A medieval windmill is effectively a land based sailing ship. You cut down xxx trees, rework them using only hand tools into a machine for (mainly) processing food, specifically grains of one sort or another. Or pumping water.
          The Dutch became world leaders in this technology. Holland being dead flat has lots of wind and too much water. Necessity drove them to invention. They also put their windmils on water and became masters of the sea as well

          Holland doubled its land area and the Dutch became very wealthy as a result.
          The dutch were converting one energy form into another, and selling the result to create prosperity. Which is exactly what we do today, only on a bigger scale. But the Dutch ran into an energy-wall, which as far as I can see all ‘zero entropy technologies’ must do

          This is where I run into problems

          The medieval windmill was a tremendous powerhouse, but only in the context of its time and situation.. It was kept supplied with grains which ultimately depended on muscle power alone. If you built 1000+ windmills, the human population in the vicinity could not increase their grain supply, and by definition, their own food supply and nutritional support system. Beyond a certain point then, the windmill seems a waste of effort.

          Same would apply to a well.

          A wooden bucket and a rope would be the result of ‘zero entropy technology’ after hand digging a well to say–30ft or so. But that might only supply a dozen or so people +crops and animals etc.
          Or you dig another well.

          Feel free to correct me if I’m wrong, but zero entropy technology can only sustain the ‘status quo’ of its immediate environment. Which isn’t very much in terms of perceived need. This why medieval living was primitive and precarious.
          we wont willingly return to that without a lot of kicking and screaming. (and dead people)

          I agree that fossil fuel usage has been a dead end, and will ultimately destroy us, but that destructive force has been of our own choosing. And even now, with that destruction becoming increasingly obvious, we continue to vote for infinite growth

          • Robert Firth says:

            Norman, thank you for your thoughtful response. The basic principle of zero entropy technology is simple, and the windmill illustrates it. The motive power comes from the wind, and after grinding corn or whatever (there is a working windmill at Heage in Derbyshire that does exactly that; it is brilliant low technology) the energy ultimately degrades into heat. But without the windmill the same would happen, only the heat would be generated by hitting cliffs, shaking trees, or whatever. The same is true of anything powered by falling water, a sawmill for example.

            Now this refers only to running costs; the capital cost may indeed involve woodcutters, carpenters, blacksmiths and so on. Though note that wooden structures tend to last longer than trees, so we have a little negative entropy there. And one sawmill can do most of the work needed to build another sawmill.

            And yes, we are talking about a far lower energy flux density; in particular, I believe we will have to abandon the grid and almost all electric power. But since an acre of solar panels will leach enough poison into the soil to render it unusable for a thousand years, I shed few tears over that.

            The big sticking point is that we are also talking about a world population of some 500 million. But since i do have some love of humanity, I believe a healed Earth with 500 million of us is a better bargain than a ruined Earth with none of us. And that is the fork in the road that now faces us.

    • Phil D says:

      “This error, widely repeated among population activists, in effect neatly absolves our affluent populations, who are guilty of consuming the lion’s share of global resources. Rich countries consume 5-6 times the world average, and many more times the consumption levels of the poorest.Dropping rich country consumption to world average levels is the single most effective step to reduce overshoot.”

      This has to be one of the most unintellectual intellectual posts on this thread.

      Yes, we should all be poor so that we can cram ever more people onto the planet. At that rate, we’ll turn the whole world into a giant India in a couple of centuries.

      So if the “rich” countries drop their consumption to the current world average, doesn’t that shift the world average down again, and then the “rich” will again have to drop their consumption lower so that they don’t take more than their God-given, justly-distributed “fair share”, etc. and so on in perpetuity?

      If you think some are “guilty” of consuming too much, as in, anything other than equal distribution among all nations and races is unjust, doesn’t that make you a communist?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.