Reaching the End of Early Stimulus – What’s Ahead?

Many people thought that COVID-19 would be gone with a short shutdown. They also thought that the world’s economic problems could be cured with a six month “dose” of stimulus.

It is increasingly clear that neither of these assumptions is correct. Despite the claims of epidemiologists, our best efforts have never been able to reduce the number of newly reported COVID-19 cases for the world as a whole for any significant period of time. In fact, the latest week seems to be the highest week so far.

Figure 1. Chart of worldwide COVID-19 new cases, in chart prepared by Worldometer with data through September 20, 2020.

At the same time, the economy, despite all of the stimulus, is not doing very well. Airlines are doing very poorly. The parts of the economy that are dependent upon tourism are having huge problems. This reduces the “upside” of economic recovery, pretty much everywhere, until it can be corrected.

Another part of the world economy doing poorly is clothing sales. For example, many fewer people are attending concerts, weddings, funerals, out-of-town business meetings and conventions, leading to a need for fewer “dressy” clothes. Also, with air travel greatly reduced, people don’t need new clothing for visiting places with different climates, either. Most clothing is bought by people from rich countries but made by people in poor countries. This cutback in clothing purchases disproportionately affects people who are already very poor. The loss of jobs in these countries may lead to an inability to afford food, for those who are laid off.

Besides these difficult to solve problems, initial programs set up to help mitigate job losses are running out. What kinds of things might governments do, if they are running short of borrowing capacity, and medical solutions still seem to be far away?

In Section A of this post, I outline what I see as some approaches that governments might take to try to “kick the can down the road” a while longer, as well as some general trends regarding near term outcomes.

In Section B, I explain how our current problems seem to be related to the more general “overshoot and collapse” problems of many prior economies. I show that historically, these overshoot and collapse situations seem to have played out over a number of years. In many ways, the outcome might look more like “overshoot and decline” than “overshoot and collapse” from the point of view of an observer at the time.

In Section C, I explain two different types of “breakage” we can expect going forward, if we are really dealing with an overshoot and collapse situation. In the first, oil production is likely to fall because of the collapse of some of the governments of oil exporters. In the second, the international trade system breaks down because of problems with the financial system and countries no longer trusting each other’s currencies.

[A] Ideas for “Sort of” Addressing the Economic Problems at Hand 

The following are a few ideas regarding possible mitigation approaches, and the expected results of these attempted solutions:

[1] Programs to keep citizens in their homes will likely be extended. Mortgage repayment programs will be extended. Renters will be allowed to stay where they are, even if they cannot afford the rent.

[2] New programs may be added, allowing those without adequate income to pay for electricity, heat, water and sewer connections. These programs may be debt-based. For example, homeowners and renters may be given loans to pay for these programs, with the hope that eventually the economy will bounce back, and the loans can be repaid.

[3] More food bank programs will be added, with governments buying food from farmers and donating it to food banks. There is even an outside chance that people will be given loans so that they can “buy” food from the food bank, with the hope that they can someday repay the loans. All of these loan-based programs will appear to be “cost free” to the government, since “certainly” the crisis will go away, and borrowers will be able to repay the loans.

[4] Loans to students will increasingly be put in forbearance, to be repaid when the crisis is over. Auto loans and credit card debt may be also be put into forbearance, if the person with the debt has inadequate income.

[5] Even with all of these actions, families will tend to move back together into a smaller total number of residences. This will happen partly because citizens won’t want to be burdened with even more debt, if they can avoid it. Also, older citizens won’t want to move into facilities offering care for the elderly because they know that COVID restrictions may limit with whom they can have contact. They will much prefer moving in with a relative, if anyone will take them in return for a suitable monthly payment.

[6] As extended families move in together, the total number of housing units required will tend to fall. Prices of homes will tend to fall, especially in areas where citizens no longer want to live. Governments will encourage banks and other mortgage holders to look the other way as prices fall, but as homes are sold, this will be increasingly difficult to do. In many cases, when homes are sold, the selling prices will fall below the balance of the debt outstanding. Governments will pass laws not allowing financial institutions to try to obtain the shortfall from citizens, at least until the crisis is over.

[7] Some businesses, such as restaurants without enough patrons and colleges without enough students, will need to close. Clothing stores without enough sales will also need to close, as will retirement homes without enough residents. All of these closures will lead to a huge amount of excess commercial space. It will also lead to the loss of more jobs, raising the number of unemployed people.

With these closed businesses, the price of commercial real estate will tend to fall. Lenders will be encouraged to “extend the loans” and “pretend that asset prices will soon recover,” when renewing loans. Even this approach won’t be enough in many cases, as businesses file for bankruptcy.

[8] With fewer residences and business properties occupied, the amount of electricity required will fall. Wholesale prices for electricity will tend to fall, pushing ever more fossil fuel and nuclear electricity providers out of business. Electricity outages will become an increasing problem, as renewables become a larger share of the electricity mix and are unable to increase supply when needed. Rolling outages will become more common.

[9] Pensions of all kinds will become more difficult to pay. Government programs, such as Social Security in the US, will have less revenue to pay pensions. There are funds set aside in the Social Security Trust Fund to cover a shortfall in funding, but these funds are simply non-marketable US government debt. In theory, the US government could add more debt to the Trust Fund and make payments on the basis of this added debt. Otherwise, the US will likely need to either raise taxes or increase the “regular” government debt level, in order to continue to pay Social Security pensions as planned.

Private pensions, backed by bonds and shares of stock (and perhaps other assets), will find the values of their available assets are falling. Governments, if they are able to, will try to hide this problem. For example, regulators may develop a new way to value assets, so as to make pension funding shortfalls mostly disappear.

In the case of pension bankruptcy, government insurance is often theoretically available. In the US, Pension Benefit Guaranty Corporation provides coverage; other countries may have similar programs. Unfortunately, this program is not set up to handle a large influx of new bankrupt plans, without raising taxes. The problem then will be raising taxes enough so that one year’s pension benefits can be paid, pushing the problem down the road a bit longer.

Bank accounts have similar guarantees, with similar funding problems. The guarantee organization has very little funds available, without raising taxes or somehow increasing debt.

[10] Stock market prices will tend to fall, leading those who have purchased shares using debt to want to sell quickly, pushing the stock market down further. Currency relativities will fluctuate wildly. Derivatives of many kinds will encounter payment problems. Many ETFs likely won’t work as planned. Governments will try to figure out ways to somehow mitigate these problems to the extent possible. For example, stock markets may be closed for a time to hide the problems. Or, additional time may be given to settle purchases, so that perhaps the deficiencies can be corrected. Eventually, some banks may be taken over by governments, to assure the operation of the parts deemed essential.

[11] Eventually, governments may find it necessary to nationalize a wide range of essential businesses. These could range from trucking companies to banks to oil companies to electricity transmission repair companies. If the balance sheets of these companies are too bad, governments may simply stop publishing them.

[12] These types of actions will mostly be available to “rich” countries. Poor countries can tap their “rainy day” funds, but these will soon be exhausted. In this case, poor countries will find that there is little they can do unless international organizations bail them out. Because of cutbacks in tourism and in orders of finished goods, such as clothing, these countries are likely to encounter high levels of unemployment. Without aid, the poorer citizens of these countries will find it impossible to afford an adequate diet. With inadequate nutrition, the health of low income citizens will decline, and they will easily succumb to communicable diseases, such as tuberculosis and malaria. Death rates are likely to skyrocket.

[B] What Happens When an Economy Outgrows Its Resources? 

Most people think that the issue we are dealing with is a temporary problem associated with a new coronavirus. I think that we are dealing with a much worse problem: The world’s population has outgrown the world’s resource limits. This is why our current problems look so difficult to solve from a financial point of view. This is part of the reason many people feel that shutting down the economy for COVID-19 is a good choice. There are really many reasons for the shutdowns, besides preventing the spread of COVID-19: Keeping people inside stops the many protests related to low wages. The shutdowns appear to restore order to a troubled system. Broken supply lines from shutdowns elsewhere reduce raw materials availability, making it more difficult to keep production in one part of the world operating, when others are closed.

Overshoot and collapse is a problem that many smaller economies have encountered over the years. If I am right that we are now encountering a similar situation, there is a big change ahead. The change will not be instantaneous, however. The big question that arises is, “Over what time scale does such a collapse take place?” If it takes place over a number of years, it may look more like “overshoot and decline” than “overshoot and collapse” to those who are living through the era.

A recent partial collapse was that of the Soviet Union in 1991. The Soviet Union was an oil exporter. Oil prices had hit a high in 1981 and had been declining for 10 years when the Soviet Union collapsed. With low oil prices, it had been difficult to earn enough revenue to reinvest in new oil fields to replace the production that naturally declines as oil is extracted. Oil, directly and indirectly, had provided many jobs for the Soviet Union. After ten years of stress, the central government of the Soviet Union collapsed in 1991.

Low oil prices first slowed production growth between 1982 and 1987 (Figure 2). Oil production began to decline in 1988, three years before the government collapsed. Production gradually rose again in the early 2000s, as oil prices rose again.

Figure 2. Oil production and price of the former Soviet Union (FSU), based on BP’s Statistical Review of World Energy 2015.

What was surprising to me was the fact that consumption of all types of energy by the Soviet Union fell at the time of the central government collapse in 1991, even hydroelectric. The overall level of energy consumption never bounced back to its previous level.

Figure 3. Former Soviet Union energy consumption by fuel, based on data of BP’s Statistical Review of World Energy 2018.

What happened was that many inefficient industries were forced to close. Some of these industries were in the Ukraine; others were in Russia and elsewhere. As they closed, less electricity and less oil and gas were used.

The loss in energy consumption was pretty much permanent. The manufacturing that left the Soviet Union was replaced by other, more efficient, manufacturing elsewhere. Also, without their previous manufacturing jobs, the people of the former Soviet Union were poorer. They could not afford to buy cars and homes, keeping fuel consumption lower.

Another indicator regarding the speed of collapses is the analysis done by researchers Peter Turchin and Sergey Nefedov, regarding collapses of eight agricultural economies from earlier periods. I compiled the information they provided in the book Secular Cycles in the chart shown in Figure 4. In the cycles they analyzed, the “crisis period” seemed to last 20 to 50 years. One thing that is striking in their analysis is that epidemics often played a major role in the declines. As wage disparity grew, poorer workers ate less well. They became more vulnerable to epidemics and often died.

Figure 4. Chart by author based on information provided in Turchin and Nefedov’s book, Secular Cycles.

In these early cycles, the major industry was farming. These collapses were in the days before electricity use. In these situations, collapses tended to play out over 20 to 50 years. Our more modern economy, with its just-in-time supply lines, would seem likely to collapse more quickly, but we can’t know for certain. This analysis is thus another data point that suggests that what may be ahead could be closer to “overshoot and decline” than “overshoot and collapse.”

[C] What May Be Ahead

[1] We are likely to experience the collapse of central governments of several of the oil exporting nations, in a manner not entirely different from the collapse of the Soviet Union in 1991.

Oil prices have been low for a very long time, since 2008, or at least since 2014.

Figure 5. Weekly average spot oil prices for Brent, based on data of the US Energy Information Administration.

Most OPEC oil producers seem to require prices in the $100+ per barrel range in order to be able to fund the programs their people expect (Figure 6). One important program provides subsidies for imported food; other programs provide jobs. Without these programs, revolutions to overthrow the current leaders seem much more likely.

Figure 6. Estimate of OPEC break-even oil prices, including tax requirements by parent countries, from APICORP. Figure is from 2014.

At this point, oil prices have been below $100 per barrel since 2014, a period of 6 years (Figure 5). Stress is increasing; OPEC producers have cut production in an attempt to try to get prices up. Prices are now in the low $40s.

We should not be surprised if, over the next few years, oil production starts to fall in several areas around the world because of internal problems. Another possible impetus for the drop in production may be wars with other nations. Some such wars might be started simply to try to get the price of oil up to a more acceptable level.

We have been falsely led to believe that oil is not important; renewables can handle our needs in the future. In fact, oil is essential for today’s farming. It is essential for transportation of goods and services of all kinds. It is essential for the construction industry and for mining. Researchers in academic institutions have received grants, encouraging them to put together models regarding what could be ahead. These models tend to be extremely unrealistic.

One of the most absurd models is by Mark Jacobson. He claims that by 2050, the world economy can operate almost entirely using wind, solar, and hydroelectric. Unfortunately, we don’t have until 2050; world oil, coal, and natural gas supplies look likely to decline in the 2020 to 2025 timeframe because of low prices. Another problem with this approach is that there is not very much fossil fuel to extract, because most of what appears to be available from resource studies cannot really be extracted at the low prices set by physics. 

The underlying problem is confusion about which direction prices go, as an economy reaches limits. Economists assume that scarcity will cause prices to rise; the real story is that fossil fuel prices are set by the laws for physics because the economy is a dissipative structure. As the economy approaches limits, prices tend to fall too low for producers, rather than rise too high for consumers.The sad truth is that we can’t even count on the continued extraction of the small amount of fossil fuels that Jacobson assumes will exist after 2050.

[2] We are likely to see a huge change in the international financial system and in the international trade system in the next few years. 

As long as there were plenty of resources, relative to the world population, the optimal approach was to do as much international trade as possible. This approach would maximize world GDP. It would also add jobs in developing areas of the world without too huge an impact on job availability in the countries moving their manufacturing to lower-cost areas.

In the last few years, it has become increasingly evident that there aren’t enough jobs that pay well to go around. This is really the underlying problem with respect to the increased hostility among nations, such as between the US and China. Tariffs are being used to try to bring jobs that pay well back to those who need them. Strange as it may seem, it takes fossil fuels to create jobs that pay well.

Figure 7. World Trade as a percentage of GDP, based on data of the World Bank.

Figure 7 shows that international trade was rising as a percentage of GDP for many years, and it hit a high point in 2008. Since then it has bounced around a little below that high point. In 2020, it will clearly take a big step down because of all of the cancellation of trade related to COVID-19 restrictions.

We saw earlier that commodity prices tend to fall too low for producers. Indirectly, this means that profits tend to fall too low. Interest rates tend to follow these low profits down, since businesses cannot afford to pay high interest rates.

With these low profits and low wages, the financial system gets strained. “Debt and more debt” seems to be the way to fix the system. Growing debt at ever-lower interest rates is encouraged. These low interest rates tend to raise asset prices because monthly payments to buy these assets fall with the falling interest rates. Stock markets tend to rise, even when the economy is doing poorly.

If the many strange approaches I outlined in Section A are used to add even more debt to keep the system afloat, eventually some part of the system is going to “break.” For example, banks will stop issuing letters of credit with respect to purchases made by buyers that don’t seem sufficiently creditworthy. Banks may stop trusting other banks, especially if the banks do not really seem to be solvent. At some point, the international financial system seems likely to start “coming apart.” Eventually, the US dollar will stop being the world’s reserve currency.

My guess is that a new two currency system will develop. Governments will issue a lot of currency for local use. It will not be useful for buying goods from other countries. Much of it will be used for buying locally produced food and other locally produced goods.

Very little international trade will be done. Any international trade that will be done will occur between trusted partners, at agreed upon exchange rates. Perhaps a special currency will be used for this purpose.

In this new world, individual countries will be very much on their own. With very little fossil fuel, countries will tend to lose electricity availability very quickly. Transmission lines will go unrepaired. It will become impossible to fix existing wind turbines. Road repair will become impossible. Electric cars will likely be as unusable as gasoline powered ones.

There will likely be fighting about resources that are available, leading to countries subdividing into smaller and smaller units, hoarding what little resources they have available.


1Energy prices tend to fall too low because, as the economy gets more complex, wage and wealth disparity tend to grow, reflecting differences in training and responsibility. The problem occurs because low-paid workers cannot afford to buy very large quantities of goods and services produced by the economy. For example, many cannot afford a car or a home of their own. The spending of high-paid workers does not offset the loss of demand by low-paid workers because high-paid workers tend to spend their wages more on services, such as advanced education, which require proportionately less energy consumption. Ultimately, the lack of demand by low-paid workers tends to pull down the prices of oil and other commodities below the level required by producers.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,450 Responses to Reaching the End of Early Stimulus – What’s Ahead?

  1. Chrome Mags says:

    ‘Study finds altered mental state in nearly one-third of COVID-19 patients’

    “After they were discharged, only 32% of the patients with altered mental function were able to handle routine daily activities like cooking and paying bills. And patients with altered mental function had significantly worse medical outcomes. Patients with altered mental function — the medical term is encephalopathy — were also nearly seven times as likely to die as those who did not have that type of problem.”

    • Xabier says:

      Concerning, possibly, but perhaps we should also bear in mind that these are the very worst cases, which actually needed to go to hospital ?

      And it’s only about 10% of those – for most people, it’s not significant at all, even if they have been hospitalised.

      And in another hospital, and another country, the %’s would probably be different again.

      There is a now very distinct campaign afoot in the media, with obvious political manipulation, to make people overly fearful – without in any way calling it a ‘hoax’ ,which it clearly is not.

      I had some horrible flu-like bug way back in 2004, and its effects lasted quite some time – exhausted, difficulty concentrating: but, guess what, such things are not the end of the world! We have ridiculous expectations of taking some drugs and bouncing back instantly -sometimes it happens, sometimes not.

      I’m growing tired of all the ‘long-haul’ bleating -where have the people with real guts gone?

      ‘Don’t let it dominate your life!’ is good motto going forward – even the Devil speaks the truth sometimes.

      Really, we need more unbiased information as medical understanding progresses, and far less scare-mongering by those who seek to profit both financially and politically from this tragedy.

      Their behaviour is disgraceful, and not public-spirited and humane as they like to pretend.

      • Robert Firth says:

        Xabier, that was my thought also: were these patient’s problems caused by the virus, or by the treatment? The referenced article carefully does not say. A genuine medical article would at least have identified possible causes and suggested further lines of investigation. You are right: this is naked scaremongering.

        • People who have been on ventilators tend to get mental problems, especially if they have been left on them for long periods. Before doctors understood that ventilators don’t really work well for COVID, half of those hospitalized ended up on ventilators. We would expect a lot of fuzzy thinking from this group, after they finished treatment.

          • Dennis L. says:

            This also happens with sedation or general anesthesia and it is recognized more and more. The disease may be cured, the mental state may be much less than prior to surgery. Personal observation, it is worse with age.

            Dennis l.

          • Xabier says:

            It’s probably rather a good thing that most of the ventilators bought in a panic by the UK govt. apparently stayed in their boxes.

        • Xabier says:

          It would certainly appear that the treatments being applied in – perhaps inevitable – ignorance in the early days were rather more harmful than beneficial.

          With the former patients who seem to be in something of a wrecked condition, we really do need to know more about what was done to them.

          There seems to be a determined attempt to keep a state of high alarm on the boil, come what may, when actually things are looking up somewhat – particularly with greatly improved pharmaceutical approaches.

          Vague reports and scaremongering only assist those who seek to claim it is ALL a hoax, and who do thereby endanger lives.

          • Robert Firth says:

            Xabier, your comments confirm my own observations. During my last two years in Singapore, I worked on something called a “smart health” initiative. One reason is that I was invited; the other is that I had earlier experienced my own health emergency. And after a few months into the project, I realised that the main obstacle to smart (or smarter) health care was that the entire middle tiers of the medical profession believed in treating the disease and not the patient.

            The top tier, such as the surgeon who spent eight hours giving me heart surgery, were well aware that health is fundamentally holistic; the bottom tier, such as the Malay nurses (all female) who later gave me a whole body sponge bath (as a European I have no nudity taboo, and was both surprised and pleased that they showed no reluctance) were wholly sympathetic and compassionate. But in between, I was largely treated like a lab rat.

            And I suspect that the great majority of US health care experts regard us as lab rats.

            • Xabier says:

              A customer of mine was left with this advice by his expiring father – himself a doctor:

              ‘For God’s sake, stay clear of the bloody doctors!’

              There was a horrifying case here last year of a lady who was in any case doomed with inoperable cancer, who thought what the hell why not when she was asked if she would care to help with some experimental treatments – seemed more like torture to me, a true ‘lab rat’ experience.

              Quite easy to see how so many medical professionals can slip into doing barbarous things for totalitarian regimes.

            • Slow Paul says:

              As a RN I can relate to your experience. Senior doctors are more comfortable discussing with the patient about potential interventions and outcomes. Younger doctors will to a larger degree send patients through all kinds of intrusive examinations and diagnostics without even looking at the patients. Most nurses I’ve met are naturally inclined to think and act in a holistic manner. I guess it comes down to experience, and that the system is set up with a business bias where these “middle tier” doctors must (and are inclined to) produce results.

            • Robert Firth says:

              For Xabier and EN: Thank you for your replies; it seems my experience was not unique. The surgeon (female, by the way) took a lot of time, valuable time I’m sure, to explain exactly what was planned for me, even the details of the operation, and even down to pointing out the veins she would extract to replace the arteries in question. What? Don’t worry, veins regenerate. And they did. She also said I had about a 90% chance; I suspect she shaded this a little, but only a little, and was grateful for her trust.

              Only once did I see her disconcerted. The day before I was to be wheeled into the prep room at 0800, she asked me whether I needed anything. I replied that the toiletries bag in my room did not contain a razor, and I would appreciate one. She instantly ordered one to be brought, but looked at me a little strangely.

              I could read her thoughts: “You are going for heart surgery tomorrow, and you are worried about a few whiskers?” And I thought in return, “I am going for heart surgery tomorrow, so I must tell the truth.” And therefore I replied: “If I am to meet the Lord Osiris, I would prefer to do so clean shaven.”

              But not on that day, it turned out.

    • Duncan Idaho says:

      ‘Study finds altered mental state in nearly one-third of COVID-19 patients’

      Its actually quite a bit higher from the data I’ve been observing.

      If you get through the second week (when most crash), and no blood clots in week three, this is your next challenge.
      The first week is the easiest, even with high viral loads.

    • Tim Groves says:

      So what else is new about the new virus?
      People get this with bog-standard flu too.

      Acute influenza-associated encephalopathy/encephalitis (IAE) in adults is a rare but well-known complication of influenza virus infection. The diagnosis is difficult to make due to the absence of distinctive clinical symptoms and validated diagnostic criteria.

      The neural complications of influenza are shown in box 1. The commonest of these, particularly in young children from Japan and Taiwan, is influenza virus associated encephalopathy. Influenza virus associated encephalopathy is an acute non‐inflammatory encephalopathy that presents with seizures and coma on the day, or the day after, influenza symptoms start.1 Influenza is characterised by the abrupt onset of a fever greater than 39°C, respiratory symptoms (rhinorrhoea, cough, and sore throat), myalgia (particularly of the back and limb muscles), and headache.2 In infants symptoms are often lethargy, poor feeding, apnoea, and interstitial pneumonia; older children may also have less specific symptoms of croup, otitis media, diarrhoea, and vomiting.

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  3. Kris Nor says:

    This article from Rune Likvern is very good (he has 20 years experience from several international oil companies).

    It’s about the dollar (DXY index), GDP, credit impulse and oil price. It’s a little scary because it seems there’s difficult to see more GDP growth in the world (as total).

    • Thanks! I know Rune fairly well. I even spent an afternoon with him in Norway.

      • This is a very long article, with many very complex charts. He has good ideas, but it takes some time to understand everything he is trying to connect together in this post (debt, economic growth, energy growth, level of the dollar).

    • Thanks for the link, the graphs, especially the [credit impulse->oil price] seems to confirm my suspicion that the next big print fest must be massive; at least on the order of $20-60T globally per 1-2yrs. Obviously, in terms of sequencing, there could be some steps taken (perhaps even negative) to get us there first, so could arrive soonish or in 2023-27 window..

      Another important question is the apparent effort of CBs to phase in blockchain money distribution directly to the consumers as they are not keen to blow even bigger bubbles in the stocks and other asset classes evidently not trickling down.

      So, it could go as follows: severe depression 2020-21, attempted blockchain stimulus 2021-23, not much demand among terrified commoners as result, so yet another all boats rising stimulus salvo ~2023-27, => total crash and pandemonium before 2030..

      • Xabier says:

        Plausible, worldof.

        Which prompts the reflection that the worst fate of all is -perhaps – to know one’s fate……

        • Robert Firth says:

          Or perhaps, not quite to know it:

               I have no words.
          My voice is in my sword. Thou bloodier villain
          Than terms can give thee out!

               Thou losest labor.
          As easy mayst thou the intrenchant air
          With thy keen sword impress as make me bleed.
          Let fall thy blade on vulnerable crests;
          I bear a charmèd life, which must not yield
          To one of woman born.

               Despair thy charm,
          And let the angel whom thou still hast served
          Tell thee, Macduff was from his mother’s womb
          Untimely ripped.

          (Shakespeare, ‘the scottish play’, Act V scene viii)

      • Rune doesn’t really give forecasts himself, at least that I noticed.

      • davidinamonthorayearoradecade says:

        “… my suspicion that the next big print fest must be massive; at least on the order of $20-60T globally per 1-2yrs.”

        very possible.

        and, if all of the big players govs/CBs join in somewhat equally percentage wise, then no single big player country will experience a plunge in their currency.

        voila: stability. 😉

      • Nehemiah says:

        My forecast: severe recession 2020-2022; weak US recovery 2023-2028; long recession begins in 2029, which future historians will look back on as the beginning of the next Dark Age.

    • It’s kind of interesting that one can (in layman terms) arrive at similar threshold number about the max affordable oil price for ~2020s (~60-70$) as Rune does, while merely observing – projecting the famous triangle of doom price megatrend.

      Perhaps it all just stems from the macro thermodynamic forcing of the “cooling/fading” entropy, hence when observed via the lens of Surplus-OFW-RuneLikvern- … it “must” come to directionaly rhyming conclusions.

  4. Malcopian says:

    Why are stock-market prices rising despite the Covid pandemic?


    The crisis has disproportionately affected small businesses and low-income service workers. They are essential for the real economy, but not so much for equity markets.

    With little chance that rates will rise in the foreseeable future, prices of assets such as houses, art, and gold have been driven upward. And tech firms’ revenue streams have benefited from low interest rates.

    Despite elevated macroeconomic volatility, interest-rate spreads over government debt have narrowed in many markets, and the number of major corporate bankruptcies to date remains remarkably low.

    A big piece of the puzzle: the economic pain inflicted by Covid-19 is falling on small businesses not listed on the stock market. Government programmes that helped keep them afloat are beginning to lapse.

    Plenty of otherwise viable businesses also will fail, leaving large publicly traded companies with an even stronger market position – yet another reason for the market euphoria.

    One likely outcome, if deglobalisation makes it more difficult for corporations to shift their operations to low-tax countries, will be a reversal of the decline in corporate tax rates.

    Until lofty stock-market valuations are underpinned by a broad-based recovery, investors should not get too comfortable with their outsize pandemic profits. What goes up can also come down.

    • I would agree, “What goes up can also come down.”

    • Robert Firth says:

      Thank you, Malcopian; a review well worth reading. But it should not be a “puzzle” why government largesse has gone mostly to those already rich; it is again exactly as classical economics predicts: the primary rent seekers take the first cut, and the “trickle down” indeed soon becomes a trickle.

      The solution is not top down but bottom up: better jobs, more energy leverage, for the workers, and their surplus income, however small, will trickle up through the economy, through shopkeepers, merchants, entrepreneurs, and finally cities. But as Gail has never tired of telling us, that leverage is no longer possible.

  5. Nehemiah says:

    “Stimulus,” lol. We have seen two kinds of stimulus. One has been mailing a $1200 check to people (maybe another later), which, spread over several months, can only slightly slow the contraction of a huge economy.

    Unemployment checks replace existing income (somewhat more than that for lower paid employees, and less than that for the better paid), but in the aggregate are not preventing a fall in private demand, and the increased debt which finances these subsidies will be a net drag on economic growth in the future.

    Second, the Fed’s “easing,” which acts by increasing bank reserves which facilitates increased bank lending IF, and only if, there is demand for additional bank loans from qualified borrowers, but not if we are in a “balance sheet recession” where few qualified borrowers want to go deeper into debt until they have reduced their current debt service obligations.

    Financial system: the current financial system was invented by John Law in the 17th century. It eventually ended in catastrophe, and the world returned to gold and silver until the 20th century when our financial thinkers decided the John Law system (google it) would work if only wiser and nobler technocrats were running it. What is the John Law system? Instead of backing a unit of currency with a reserve of gold, it is backed with a reserve of debt. Every dollar in today’s economy represents a unit of debt. Theoretically, if ever US dollar denominated debt in the global economy were paid in full, so that everyone were debt free, there literally would be no dollars remaining in circulation. The physical greenbacks would all end up in a vault at the Fed, and the larger part of the money supply, which is not physical, would simply evaporate upon repayment. I do not know how this precarious (IMO) system will interact with a world of declining energy supplies.

    Historical curiosity: John Law was born in 1671. Exactly 300 years later, in 1971, President Nixon severed the US dollar’s last link with gold, thus putting the whole world onto a system of fiat floating currencies all ultimately backed by promises to pay more units of currency. Was 1971 chosen for symbolic purposes, or is this just a coincidence?

    Commodity based money can gradually rise in value (deflation) as production of goods and services rises, but money which represents a unit of debt must be serviced by generating more debt (in the form of bank loans which increase the money supply). Thus, debt and money supply must rise together in order to generate enough money in the economy to pay off previously generated debt (money), plus interest which is the banks’ profit. I think that is why we are locked into a cycle of permanent inflation, whereas the classical gold standard, which backed paper money with a large fractional reserve of gold rather than debt, cycled between periods of inflation (when money was borrowed faster than it was repaid) and deflation (when money was repaid faster than it was borrowed).

    Oil prices: Resources are determined by physics, but prices are set by markets (or sometimes governments). Current low prices are because there is a supply cushion. (If you don’t believe me, listen to Art Berman: )
    Eventually, the supply cushion will dry up and prices will skyrocket. Just look at what has happened to the price of rhodium (over $14,000 per oz recently) or helium

    A price for oil so high that no one is able and willing to pay, not even the armed forces of the world’s major powers, will be astronomically high, so production from existing wells (where most of the costs have already been sunk) will continue for a long time to come. Drilling new wells, so long as reserves exist, will always resume when total production from existing wells falls below total demand. The fact that weak bidders get priced out of the market as prices rise is irrelevant. The strong bidders alone are sufficient to support a very high price when supplies become scarce.

    Tariffs: jobs are not the only or the most important argument for a protective tariff. The fewer of its own necessities a country produces, the more vulnerable it is, both financially and militarily. Further, the chain of innovation and productivity increases that raise living standards both tend to be concentrated in goods production. Manufacturing’s beneficent spillover effects are huge.

    Speed of collapse: the speed and severity with which a complex system collapses is not knowable in advance, not even in theory with perfect knowledge. There is an element of unavoidable randomness in the pathway that collapse in a complex system happens to follow.

    • Robert Firth says:

      Thank you, Nehemiah, for a most cogent analysis. John Law used to be an object lesson in bizarro economics, until the whole profession migrated to that world.

    • You have believed a lot of common thinking.

      Let’s talk about the price of helium. Helium is not an energy product. It is used in fairly small quantities, for some limited uses. Blowing up helium balloons for parties may be “out,” but who cares? A higher price will ration what is available among the available buyers. This is also true, if there is a shortage of garlic or onions in one part of the world. It is a tiny piece of the total picture; our lives don’t depend on it.

      Energy prices are very different. The prices tend to depend on what end products customers can afford to buy, using their earnings, available credit, and subject to current regulations. Can they buy a house? A car? An airplane ticket to London? Oops, not an airplane ticket to London, no matter how much funds they have. Too much threat of COVID!

      Energy products are used in every part of the system. Without enough energy products, the system tends to collapse.

      An easy comparison to oil shortages is coal shortages, at the time of World War I, the Depression, and World War II. This was a Peak Coal problem, with the UK experiencing Peak Coal in 1913 and Germany experiencing Peak Hard Coal about 1938. The problem was too low coal prices. Coal miners could not make an adequate living. The result wasn’t high prices; it was gluts of unaffordable food and unaffordable oil. The result was World War I and World War II. Our idea of what goes wrong, when there is too small a supply of energy products is too limited. We get a combination of

      -Huge wage disparity. The poor cannot afford to eat well. They can’t afford cars or homes. Has anyone heard complaints of this sort?
      –Propensity for epidemics, because of the many poor who don’t eat well and live in crowded conditions. Anyone notice an epidemic recently?
      –Tendency toward population unrests and a desire to overthrow governments, to protest low wages. Anyone notice any of this recently?

      These things don’t work out with higher oil prices; they work out with overthrown governments and wars. Many people die, but not necessarily from epidemics themselves, to bring population down in line with available energy supply.

      • as i sum it up

        all conflict is over resources

        differences are only a matter of scale

      • Bei Dawei says:

        This should be its own (top of the page) post.

        • You are right.

          Economists think in terms of their overly simple models. If there is too much, the price goes down; if there is too little, the price goes up. Everyone seems to believe these overly simple models.

          Energy is what provides jobs that pay well, besides providing food and the ability to pay back debt with (non-negative) interest. When there isn’t enough energy, all kinds of bad things happen. And besides the bad things happening, the price of energy products tends to fall, rather than rise, causing production to fall.

      • Nehemiah says:

        “Let’s talk about the price of helium. Helium is not an energy product.”

        True, but not relevant. Energy prices have a long history of behaving exactly like the prices of other commodities, such as helium and rhodium. The reason oil prices are not lower is not because oil is currently in short supply (it is not–supplies are currently more than adequate to fuel weak global demand). Rather, supply is more abundant than demand, and theory and experience both say that under that condition, prices will be low–which they are. The real test will be when demand rises faster than supply OR supply falls faster than demand. Your theory says that will crush prices, but, in all of history, supply shortages have never crushed prices. Except in the presence of price controls, prices have always risen sharply under such circumstances. I predict that history will repeat: supply shortages of anything, including energy, will drive prices up, not down. Fortunately, we are both likely to live long enough to see our respective theses tested.

        “Energy prices are very different. The prices tend to depend on what end products customers can afford to buy,”

        So do helium prices and rhodium prices. Nothing will sell if the price is higher than anyone is willing and able to pay. What is the last thing that people will quit buying? The last they they will give up buying is the thing that is most, not least, essential to life: energy! One source of energy is food. This is the primary energy source that must be provided before other forms of energy can be accessed. When supply of energy from food falls below demand, do prices crash? No, they rocket upwards. The second most important source of energy is the energy to fuel our machines (which replace human and animal muscle). Like the energy from food, the energy from oil and other underground resources rises when supply falls below demand. To say that energy production will cease when *everyone* gets priced out of the market is correct, but what is *incorrect* is to say that energy production will cease when the *average* consumer gets priced out of the market. What will happen is that the average consumer will just buy less but pay more for each unit of energy purchased, and the wealthier consumers, private and public, will still buy as much as they want, but will pay much more for it than previously. Again, like any other commodity, such as wheat, rice, potatoes, and other essential energy sources, and like non-energy commodities too.

        “An airplane ticket to London? Oops, not an airplane ticket to London, no matter how much funds they have. Too much threat of COVID!”

        Most international travel has stopped because governments have temporarily suspended or sharply reduced freedom of cross border travel. Some countries have even curtailed travel between provinces. Not really a supply and demand issue for now.

        “Energy products are used in every part of the system. Without enough energy products, the system tends to collapse.”

        And that is even more true for energy from food. Yet are food prices collapsing? Anyone who shops knows I hardly need to answer the question. (And, yes, I know that food is more essential than oil, but, just to head that line of reasoning off at the pass, previously you argued it was the most essential resources (energy) that respond “in reverse” to supply and demand dynamics, and not less essential resources such as helium and rhodium, so food should act exactly like oil, perhaps more so. Instead of food prices skyrocketing while those least able to afford it starve as I predict, by your theory food production, and therefore everyone’s food consumption as well, poor and rich alike, should go to zero in a famine. Yet what does history show?)

        “An easy comparison to oil shortages is coal shortages, at the time of World War I, the Depression, and World War II. This was a Peak Coal problem, with the UK experiencing Peak Coal in 1913 and Germany experiencing Peak Hard Coal about 1938. The problem was too low coal prices. Coal miners could not make an adequate living. The result wasn’t high prices; it was gluts of unaffordable food and unaffordable oil.”

        Which depressed prices, causing the gluts to get drawn down, after which prices rose again. Every commodity trader has seen this pattern time and time again. Watch or listen to your local farm-and-market show, and they will frequently talk about this pattern as well. “The cure for low prices is low prices,” as the old saying goes.

        “The result was World War I and World War II.”

        Not the result. WW I was caused by the Austrian Empire’s determination to annex little Serbia, and the network of often secret alliances that this triggered into action. It was not a secret international strategy to get rid of Britain’s coal glut. The rest of Europe could not have cared less about the UK’s temporary coal glut.

        WW II was a bit different. Germany’s invasion of the USSR was planned years in advance. They knew they would need more oil for the coming war effort, so they launched a very ambitious coal-to-oil program in the 1930s. I don’t know every detail, but I imagine coal production ramped up faster than the coal-to-oil factories could be built and use the available supplies. By the way, Germany’s experience is a cautionary tail in regard to the idea that we can quickly or easily replace oil shortfalls with liquified coal. Germany’s all out effort, in spite of its early start, never was able to fill the supply gap. Also, the energy contained in the “synthetic” liquid fuel was considerably less than the original energy content of the coal, apparently another drawback of coal to liquids.

        “Our idea of what goes wrong, when there is too small a supply of energy products is too limited. We get a combination of

        “-Huge wage disparity. The poor cannot afford to eat well. They can’t afford cars or homes. Has anyone heard complaints of this sort?”

        Yes, this was a common complaint in the 1930s *and* even in the “roaring” 1920s. The presence of this condition does not prove the existence of an energy shortfall.

        “–Propensity for epidemics, because of the many poor who don’t eat well and live in crowded conditions. Anyone notice an epidemic recently?”

        Perhaps I was one of few who were paying attention, but all my life epidemiologists have been warning that modern civilization was perfectly designed to facilitate a devastating global pandemic. And *abundant* energy is one of the key factors that make pandemics more likely, since abundant energy fuels rapid, large scale transportation on continental and global scales. Increased long distance travel also contributed to earlier epidemics in the past 2000 years. Reduced energy availability would make pandemics less likely, or slow down its spread if one did occur.

        “–Tendency toward population unrests and a desire to overthrow governments, to protest low wages. Anyone notice any of this recently?”

        Totally orchestrated by partisan activists, planned literally years in advance, and funded to the tune of tens of millions of dollars by globalist oligarchs who want to replace Trump with compliant lackeys such as “Chinese Joe” Biden and Camel Harris. This does not prove the presence of an energy deficiency. Au contraire, there is currently a global oil surplus (based on actual measurements), something that has happened many times in the last hundred years.

        For example, I remember in the 1990s the price of a barrel of oil hit a nadir of less than $11 as barrel and many oil wells were getting “shut in” because they were no longer profitable. But was that the death knell of the oil age? No, just a normal commodity cycle.

        About 1986, Reagan made a then-secret agreement with Saudi Arabia to hold global oil prices down to underprice the Soviet Union. Texas, Oklahoma, and Louisiana, with economies based on energy production, were plunged into a regional depression, with many employers placing “not hiring” signs in their shop windows to keep away pesky job seekers, much worse than the “Great Recession” of 2008-9. But did that signal the end of the oil age? No, it was just another cycle, although a bit artificial.

        1930s: oil was very cheap, production was low, demand was low, prices of everything were falling, unemployment was extremely high. Many Marxists were saying it was the end of capitalism. Was it all because we lacked enough energy? No, it was driven by a combination of financial imbalances (like now) and bad policy responses by politicians and central banks, and also some unfavorable age demographics (like now).

        We will know when the oil is running short not because prices will collapse but because prices will go to the moon. (I wish I were having this debate with Alice Friedman at so I could type the classic “Honeymooners” line, “To the moon, Alice! One of these days, to the moon!”)

        “they work out with overthrown governments and wars. Many people die, but not necessarily from epidemics themselves, to bring population down in line with available energy supply.”

        Isn’t this rather tautological? in the absence of rationing or price controls, supply and demand will always be in approximate balance, whether people are thriving or dying.

    • tim says:

      “Speed of collapse: the speed and severity with which a complex system collapses is not knowable in advance, not even in theory with perfect knowledge. There is an element of unavoidable randomness in the pathway that collapse in a complex system happens to follow.”
      Very very true and very well put!

      • Harry McGibbs says:

        We can, however, hazard a guess that a growth-dependent financial system might not last all that long once its “real” economic underpinnings enter a state of irreversible de-growth.

  6. Nehemiah says:

    Gail wrote: “With very little fossil fuel, countries will tend to lose electricity availability very quickly. Transmission lines will go unrepaired. It will become impossible to fix existing wind turbines. Road repair will become impossible.”

    Proximity to hydro-electric plants, which may linger for centuries in some prime locations, will become the preferred sites for mass production manufacturers. Settling in one of these locations now could pay off well for one’s descendants.

    • mass production requires five things

      mass energy

      mass input of materials

      mass output of products

      plus mass transport and mass markets to take those products

      it is critical to have all those working in harmony and balance, having one or two doesn’t work.

      having lots of energy available is like having an electric light switch but no bulb in the socket

      • Good way of putting the problem!

      • Nehemiah says:

        Even the Roman Empire had a fairly sophisticated level of mass production. When Adam Smith wrote _The Wealth of Nations_ (1776), England also had mass production, Yes, England was burning a bit of coal, but not a great deal, and not yet for transport.

        A key factor in the absence of motor transport seems to be access to water transport. Water transport may also be supplemented by electrically powered railways to the extent that some areas can produce enough hydro electric to fuel them. Electrical generation is a 19th century technology.
        Think, for example, of the hydroelectric plant at Niagara Falls.

        Even without a large scale power grid, local electrical generation is likely to remain with us for a very long time, since electricity is too useful a fuel to completely abandon, and not super-advanced technology. However, I am sure it will cost a lot more, but fueling machines with electricity will probably still be cheaper for certain purposes than hiring large numbers of human workers. Goods will move much slower than today, but they will still move, just as they did in the pre-industrial past.

        When civilizations in the past traversed a cultural valley, they afterward climbed to a higher peak. After the next valley, man will again climb to a new peak of complexity, but this time it will be a lower peak. I expect much lower, but still higher than the valley-of-undershoot that they emerged from. And it is quite possible that communities near a hydroelectric plant will not fall as far off of today’s peak as other locales. The higher supply of local energy will allow them to maintain a higher level of complexity than other areas. There is a close link between energy flows and complexity.

        White’s law – › wiki › White’s_law
        White’s law, named after Leslie White and published in 1943, states that, other factors remaining constant, “culture evolves as the amount of energy harnessed per capita per year is increased, or as the efficiency of the instrumental means of putting the energy to work is increased”.

        • Lidia17 says:

          Electricity is not a fuel.

          • Robert Firth says:

            Lydia, a necessary truth captured in five words! Thank you, you have made my day.

            Electricity is an energy carrier: a very good one, because all it needs is wires. To the Romans, similarly, aqueducts were an energy carrier: they carried water, which kept hale and healthy the workers who were their main source of energy.

            Of course, the Romans regarded aqueducts as essential services, and mandated a 200 year life for them; today we are lucky if an electric wire has a 20 year life, because we have lost the ability to think about the future.

            But, just as aqueducts require a reliable source of water at the other end, so do our electric wires require a reliable source of energy. And it seems Nature is depriving us of that source, even as the green revolutionaries are trying to persuade us we do not need it. A fatal convergence of fact and fantasy.

        • We have a problem with prices that are too low for producers for fossil fuels of all types. This is a huge problem because it drives these producers out of business. You need fossil fuels for fixing electricity transmission lines and for maintaining the hydroelectric dam itself–removing sedimentation, for example.

          Electricity is helpful for some things, but it is generally not very helpful for growing and transporting food. We would starve if we needed to depend on electricity.

          Electricity also doesn’t work for paving roads or for building buildings, at least with our current technology.

  7. Harry McGibbs says:

    “President Donald Trump on Tuesday tweeted that he told his team to stop negotiating with congressional Democrats on a stimulus package until after the election.”

    • That’s important it means these Congressional $2-3T (or more) are canceled at least till Q1 next year or if the incumbent looses the election anyway.. Hm, so the synthetic money dept. at FED is going to have very bad upcoming Christmas, working over time to get that alt tool ready..

      Perhaps there is no rush at all, plenty of time: Chinese kept docile no stress, Russians have -stans on color revolution fire and Europeans are preoccupied with appeasing the Sultan among their other weird cultural activities of the day..


  8. MG says:

    The problem of the population is that the people have become accustomed to the growth that is here just during the last few centuries thanks to the fossil fuels. The majority of the population is not prepared to accept the stalling growth, which accelerates the collapse itself.

    The implosion is something that the majority of the people can not imagine. But it is here. There will be no recovery, as a part of this implosion are erroneous beliefs in automation, green economy etc. totally ignoring the skyrocketing debt.

    The small number of the people who see the reality is not believed by the majority. Even your family members do not believe you. There will be no growth, no recovery, as there is no energy for that with the current huge human population and the environmental pollution.

    Using the Latin proverb “Memento mori” in modern times sounds ridiculous or strange. When I told to a catholic priest that I think abou the end of the world every day, he tried to downplay it, which is the real picture of our times when even the spiritual people are not able to accept the finite nature of the reality we live in.

    There are people who become greedy now, as the deflation is inevitable and the cheap goods become a big temptation. But what can this polluted world running out of energy offer you?

    The sad thing is when you see your friends and the relatives drowning in this mess and you can not save them, as they do not want to believe that the world is imploding, can not grasp it…

    • Very few people can think about the possibility of overshoot and collapse affecting us, in the near term. Young people especially find this impossible to believe. We really don’t know exactly how things will play out, on what time scale. Perhaps that is for the best.

      • MG says:

        Because of the growth of the last centuries, the people have become really greedy. In an effort to save the growth they take measures that are crippling and self-destructing, as they often act in haste vis-a-vis the rising complexity.

        When the complexity rises, there is a need for deeper and deeper analysis in order to take correct measures, which requires more and more time and resources. The recent falling of the planes because of the software bugs revealed what is happening on smaller scale everywhere: the people take wrong measures because they act in a hurry to save the growth.

        Recently, I have visited the dentist. Before the coronavirus, she was so attacked by the impatient people, that she had to put a notice in the waiting room stating that the people should come to the dentist in proper clothes, not in the dirty working overalls, that she needs breaks, needs to go to the toilet etc.

        Then the coronavirus came and only small number of planes is in the air and due to the strict hygienic measures, the dentists can accept only a limited number of the patients per day.

        The world slowed down, because of less work, the people have lower incomes, which means no growth, they have to satisfy the mortgages and the debt they have.

        The coronavirus materialised the wall of the crippling complexity that limits the growth.

      • Xabier says:

        And yet there has never been so much accurate information on past collapses available: any number of Collapse videos on Youtube, for instance.

        But they would require an attention span which can stretch to about an hour in most cases, and a mind not dazzled by Techno-Utopian promises, open and curious.

    • Robert Firth says:

      MG, early in this pandemic I reread the Ars moriendi, but gained little comfort from struggling through a lot of rather bad Latin. I feel a better course of action is to review ones life, and lay the result at the feet of whomever.

  9. Oh dear says:

    “These things don’t work out with higher oil prices; they work out with overthrown governments and wars. Many people die, but not necessarily from epidemics themselves, to bring population down in line with available energy supply.”

    Gail, a smaller population may not be such a bad thing.

    It is generally assumed that smaller populations lose their genetic diversity and are more liable to extinction as they do not have the variations that allow for adaptation. An empirical study seems to suggest otherwise: genetic diversity is retained and the genome is instead cleaned of deleterious mutations, which otherwise can ‘pile up’ and tend to be resistant to elimination. Which would be all that we could have hoped for on that front. It has become almost a ‘dogma’ with conservationists that smaller populations are genetically bad for a species, but that may not actually be so.

    It could be important for us also to draw out the potential ‘positives’ of collapse. If ‘history’ has determined that our civilisation, and its mass population, is coming to an end, then it is not simply an ‘end’ but also potentially a new ‘beginning’. Our current civilisation was one ‘experiment’ in history, and its ‘failure’ is its ‘result’. But that does not imply that there will not be other cultures that will arise with their own ‘plusses’ in our place. A healthier population would be such a ‘plus’.

    Industrial civilisation has been a glorious dissipative structure, it has performed its ‘function’, and physics will ‘pick up’ and ‘carry on’. If civilizational ‘progress’, like agriculture and industrialism, does not necessarily lead to healthier, happier populations, as studies seem to suggest, then collapse may actually be a ‘mercy’ on the human species. It may be that we have ‘performed’ our ‘grand function’ to ‘burn off’ the carbon and that history will be ‘easier’ on us in the future. There may be other counter-intuitive ‘plusses’, like cultural accomplishments, that we cannot foresee. Who knows?

    ‘Always look on the bright side’?

    > Genetic diversity of small populations: Not always “doom and gloom”?

    Is a key theory of evolutionary and conservation biology—that loss of genetic diversity can be predicted from population size—on shaky ground? In the face of increasing human-induced species depletion and habitat fragmentation, this question and the study of genetic diversity in small populations are paramount to understanding the limits of species’ responses to environmental change and to providing remedies to endangered species conservation. Few empirical studies have investigated to what degree some small populations might be buffered against losses of genetic diversity. Even fewer studies have experimentally tested the potential underlying mechanisms. The study of Schou, Loeschcke, Bechsgaard, Schlotterer, and Kristensen (2017) in this issue of Molecular Ecology is elegant in combining classic common garden experimentation with population genomics on an iconic experimental model species (Drosophila melanogaster). The authors reveal a slower rate of loss of genetic diversity in small populations under varying thermal regimes than theoretically expected and hence an unexpected retention of genetic diversity. They are further able to hone in on a plausible mechanism: associative overdominance, wherein homozygosity of deleterious recessive alleles is especially disfavoured in genomic regions of low recombination. These results contribute to a budding literature on the varying mechanisms underlying genetic diversity in small populations and encourage further such research towards the effective management and conservation of fragmented or endangered populations.

    • I haven’t been reading about the subject of loss of genetic diversity. My impression has been that it doesn’t take a very large sample, if it is not all from the same closely related group, to get adequate diversity. It would not surprise me if 100 were enough. Certainly, 1000 individuals with a variety of backgrounds would be sufficient. We might expect the “least well adapted” to be lost at a greater rate than others. This might be for the best.

      Also, more radiation to increase diversity might be part of the self-organizing system’s plan. This might come from spent fuel pools, for example.

      • Ed says:

        My impression from reading is 10,000 is a viable group. When we are talking about human population on planet 10,000,000 is a small population. It is the step down by 100 or 1000 that we need. No need to go down by a factor of 100,000,000

        • Oh dear says:

          Gail, in a sense, what is ‘living’ and ‘thinking’ is the overall dissipative structure – just as we say that a ‘person’ ‘lives’ and ‘thinks’ rather than the organs that comprise the person. Persons comprise the ‘organs’ that work together to allow the wider dissipative structure (society, economy) to function, to dissipate energy, to ‘maintain’ itself and to ‘grow’.

          The ‘value’ of the ‘organs’ is their functionality within the ‘organism’, they are ordered to its ‘health’, to its ‘life’. So it is with the ‘organs’ of the human body and so it is with the ‘organs’ (persons) of the wider, ‘living’ dissipative structure (society, economy). ‘Organic function’ (biology) is ordered to wider dissipative function (energy) and biological organisms are ‘organs’ to wider dissipative structures.

          The ‘values’ through which we regard the ‘organs’ of the body ‘reflect’ their ‘value’ to the functioning of the body. Even so, the ‘values’ that appear in consciousness ‘reflect’ the manner of functioning of the wider dissipative structure (society, economy), the functionality of its ‘organs’ (persons) and their ‘ordering’ to its ‘health’ and to its ‘life’.

          That systemic functionality, and the ‘values’ that are ‘relative’ to the dissipative structure and to its functioning, condition our ‘perspective’ toward the ‘level’ of the population according to its ‘adjustment’ to the dissipative structure and to its functioning.

          The present, capitalist dissipative structure functions through a magnificent, reckless growth that requires an ever-growing abundance of persons, producers and consumers, a constant multiplication of its ‘organs’ (persons) that allow it to function. The multiplicity of the ‘organs’ has its ‘value’ to the functioning of the structure and the ‘values’ through which we consider the multiplicity of persons ‘reflects’ that ‘value’.

          The bourgeois ‘values’ of ‘the greatest happiness of the greatest number’ (Bentham), and ‘each person an end in their own right’ (Kant), concern the functionality of the multiplicity of the ‘organs’ (persons) required by the capitalist, consumerist dissipative structure. It is ‘correct’ that we should now ‘think’ like that because that allows the present dissipative structure to function.

          Post-collapse dissipative structures (societies, economies) are likely to have much less energy available for their maintenance and growth. They will require and maintain entirely fewer human ‘organs’ (persons) to provide for their functioning. The ‘organs’, and their number, will be ‘adjusted’ to their functionality within the new, smaller, less expansive dissipative structure.

          A ‘modicum’ of ‘organs’ (persons), a lower population ‘level’, will have ‘value’ to a more constrained wider structural dissipative function and ‘values’ will ‘reflect’ that. People will ‘value’ a ‘lower’ population level, and perhaps a better ‘adapted’ population, because that is what then has ‘value’ to the wider dissipative structure. It is, in effect, the wider dissipative structure itself that is ‘thinking’ and ‘valuing’ through persons and ‘ordering’ them to itself.

          Conscious ‘values’ are epiphenomenal to the ‘value’ of the ‘organs’ (persons) and to their functionality within the wider ‘living’ dissipative structure (economy, society), just as the ‘values’ by which we regard the organs of the human body concern their ‘value’ to the functioning of the human dissipative structure (person).

          What ‘lives’ and ‘thinks’, ‘wills’ and ‘values’, and ‘orders’ to itself, is the wider dissipative structure, just as the ‘person’ ‘thinks’ and not just an organ thereof. The ‘thinking’ and ‘willing’ of the wider dissipative structure, and its ‘evaluations’, concern the ‘ordering’ of its ‘organs’ (persons) to its own functioning, to its maintence and to its growth. It is a ‘living’ thing and its ‘values’ are ‘ordered’ to its continued existence and to its functioning.

          The cosmos is the widest dissipative structure, and is itself an ‘organism’. All other dissipative structures (stars, solar systems, ecosystems, societies, biological organisms) are its ‘organs’.

          • Oh dear says:

            Ed, I must apologise for misdirecting that post, I could have sworn that I clicked on the ‘reply’ above your post, which would have put the post beneath the post beneath your own.

          • Perhaps; it is hard to envision the cosmos as thinking. It is more a matter of understanding what is consistent with how the order of the cosmos must actually behave.

            If, early on, the earth needed life on the planet to maximize energy dissipation, the cosmos might arrange life from elsewhere to speed the process along.

            Now, the cosmos perhaps can understand that world population needs to be lower. The way that this can be arranged is by a lab accident in Wuhan and a Chinese government that is bent on covering up what happened and not losing face with the outside world.

      • Oh dear says:

        It is difficult to estimate ancient population levels but these guys at the university of Helsinki suggest ‘330,000 people at 30 ky ago to a minimum of 130,000 people at 23 ky ago’ in Europe. The population of Europe today is 747,756,312, so a Palaeolithic population of 330,000 was 0.044% of the present population. The population has seen a 226492.82% increase.

        Likely our historical location within dissipative structures that entail large populations, first agricultural and then industrial, conditions our ‘perspective’ to ‘value’ a larger population. ‘The greatest happiness of the greatest number’, as the bourgeois philosopher Jeremy Bentham put it. Likely ‘angst’ at the prospect of a population crash is conditioned by those ‘values’.

        A post-collapse population might find those bourgeois ‘values’ quite alien to their own conditioned ‘perspective’ within their own dissipative structures. ‘Values’ are ‘relative’ to the dissipative structure and to its manner of function. They are likely to be concerned with the maintenance of a much smaller population that is proportioned and well adapted to a situation of limited resources, and their ‘values’ are liable to be quite different to ours.

        Initially, as you suggest Gail, the population is likely to be much lower than 30 ky ago, as people learn how to adapt and to structure dissipation in unfamiliar conditions that have been transformed since the Palaeolithic. The landscape is largely stripped bare of the means that provided our hunter-gatherer ancestors with sustenance. The environment too will take time to recover to a more ‘natural’ condition. Smaller groups will be ‘scattered’ across the continent.

        > Human population dynamics in Europe over the Last Glacial Maximum

        The severe cooling and the expansion of the ice sheets during the Last Glacial Maximum (LGM), 27,000–19,000 y ago (27–19 ky ago) had a major impact on plant and animal populations, including humans. Changes in human population size and range have affected our genetic evolution, and recent modeling efforts have reaffirmed the importance of population dynamics in cultural and linguistic evolution, as well. However, in the absence of historical records, estimating past population levels has remained difficult. Here we show that it is possible to model spatially explicit human population dynamics from the pre-LGM at 30 ky ago through the LGM to the Late Glacial in Europe by using climate envelope modeling tools and modern ethnographic datasets to construct a population calibration model. The simulated range and size of the human population correspond significantly with spatiotemporal patterns in the archaeological data, suggesting that climate was a major driver of population dynamics 30–13 ky ago. The simulated population size declined from about 330,000 people at 30 ky ago to a minimum of 130,000 people at 23 ky ago. The Late Glacial population growth was fastest during Greenland interstadial 1, and by 13 ky ago, there were almost 410,000 people in Europe. Even during the coldest part of the LGM, the climatically suitable area for human habitation remained unfragmented and covered 36% of Europe. (dot pdf)

    • Tim Groves says:

      a smaller population may not be such a bad thing.

      It’s not the destination but the journey that may be irksome.

      To reach a smaller population, a lot less people are going to have to be born each year or a lot more people are going to have to die young.

      Your value judgement about that is likely to vary considerably depending on your place in the scheme of things. Are you willing to forgo having children? Are you willing to die before your time or witness your own children die before you do and then proclaim that this may not be such a bad thing?

      • Ed says:

        I am happy with a limit of one child per couple.

      • Oh dear says:

        Tim, thank you for your reply.

        I expect that post-collapse dissipative conditions will themselves ‘manage’ the population. It will be proportioned to the dissipative structure of the time and to its manner of function.

        I do not envisage a deliberate or rational pre-collapse ‘downsizing’ and my ‘values’ do not come into it. The ‘logic’ of the present, capitalist dissipative structure precludes such a societal effort.

        See my reply to Gail, above, which explains some of what I foresee.

        Thanks again for your enquiry.

        • Tim Groves says:

          Oh, dear, thanks for a clear response. Sorry I jumped to a confusion in assuming you were alluding to deliberate pre-collapse “downsizing”.

          I also expect post-collapse dissipative conditions to downsize the population drastically. I don’t see the process as a good thing for the people caught up in it, but it seems inevitable given that the industrial food production and distribution system will be disrupted and degraded by the collapse.

          • Oh dear says:

            Yes, it would be ‘completely insane’ to go around telling people that it is ‘wrong’ that they should have kids, let alone hoping that people will die younger. I strictly keep my ‘values’ adapted to dissipative conditions today, and tomorrow will just have to take care of itself.

            ‘Today’ is hardly my responsibility, let alone ‘tomorrow’, and neither should it be my burden. The key to a happy life is to know the limits of one’s responsibilities and to stay ‘sane’ in the ‘here and now’.

            It will not be ‘good’ that ‘downsizing’ pressures will be put on populations after collapse but it will be ‘good’ that smaller populations will be better able to adapt to those conditions.


    • Nehemiah says:

      “a smaller population may not be such a bad thing.”

      Perhaps not, but getting there might be awful.

      “It is generally assumed that smaller populations lose their genetic diversity”

      It depends on how small. So small that it is subject to genetic drift, yes, but that is very small indeed.

      “An empirical study seems to suggest otherwise: genetic diversity is retained and the genome is instead cleaned of deleterious mutations,”

      The abstract you quote simply says that a captive fruit fly population lost diversity s l o w e r t h a n e x p e c t e d. That is still bad, but in any case not relevant to the human situation.

      I remember over a decade ago there was a “landmark” study of mammal populations living under natural conditions which concluded that genetic purging was a slow and insufficiently effective process in very small populations, but, again, this is not a situation that applies to man.

      The rule of thumb worked out by geneticists for mammalian population is the 50/500 rule: to avoid inbreeding depression due to genetic drift, an effective population size of at least 50; and to maintain longer term genetic potential, an effective population of at least 500. Keep in mind that to get an effective population size in this range, you usually need a considerably larger census (=total) population for various reasons I won’t go into. Some have argued for much larger Ne sizes numbering in the thousands, but I find the arguments I have read against these much larger requirements convincing. If you were gathering a small, isolated community, that you thought might remain isolated for many generations, such as some small religious communities, I would argue for doubling the 50/500 rule for “insurance.”

      By far the most important factor in purging deleterious alleles is the strength of natural selection rather than population size. Specimens with a larger than average number of deleterious mutations is more likely to succumb to predation or hardship than genetically healthier individuals. This also applies to man when living under more or less natural conditions (not necessarily hunter gatherers, though).

      “which otherwise can ‘pile up’ and tend to be resistant to elimination.”

      They have been piling up in the western world for roughly 8 generations, and for a shorter length of time in other countries. In particular, sanitation, vaccines, and general knowledge of the germ theory of disease have brought childhood mortality down to an unnaturally low level in all but the most isolated and “backward” populations, and to almost nothing in the most advanced countries. This is a mutational load disaster, and it was the primary concern that inspired the eugenics movement in the late 19th to early 20th century.

      If we are lucky, we will experience a catastrophe so severe that we forget all about that self-defeating germ theory of disease, and hopefully we will become so stupid in the near future that literacy entirely disappears so that we cannot relearn it from old books. It is imperative in the developed world that we raise early childhood mortality at least 30 fold, and a less drastic increase in poorer places such as Africa. For 200 years, we have been working to decrease childhood mortality, when we should be working instead to raise the childhood death rate. Perhaps I should write letters to UNICEF and the WHO explaining why they need to reverse their current health policies. We need more death, lest people in their desperation be tempted to support eugenic policies once again as succeeding generations continue to weaken in body and mind.

  10. The American Institute for Economic Research has an article up called, The Pandemic that Killed Debate

    The latest smear target is neuroradiologist and health policy expert Dr. Scott Atlas, formerly of Stanford. A longtime lockdown dissenter, his principal and latest offense seems to be agreeing to serve on The White House’s coronavirus task force, although Anthony Fauci — a researcher who funds grants, and who is not a public health expert — is permitted to do so without adverse media coverage. Where Dr. Atlas and Dr. Fauci differ is in their fundamental approach to the virus: Fauci believes we can never return to normal, while Atlas believes all low-risk groups should do just that, with protective measures targeted towards vulnerable populations. Atlas believes epidemics end with herd immunity, while Fauci apparently believes they end if you lock down well enough for long enough, and then fundamentally change your way of life because you now have the insight that more pandemics will occur.

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