Fossil Fuel Production Is Reaching Limits in a Strange Way

Strangely enough, the limit we seem to be reaching with respect to fossil fuel extraction comes from low prices. At low prices, the extraction of oil, coal, and natural gas becomes unprofitable. Producers go bankrupt, or they voluntarily cut back production in an attempt to force prices higher. As the result of these forces, production tends to fall. This limit comes long before the limit that many people imagine: the amount of fossil fuels in the ground that seems to be available with current extraction techniques.

The last time there was a similar problem was back in 1913, when coal was the predominant fossil fuel used and the United Kingdom was the largest coal producer in the world. The cost of production was rising due to depletion, but coal prices would not rise sufficiently to cover the higher cost of production. As a result, the United Kingdom’s coal production reached its highest level in 1913, the year before World War I started, and began to fall in 1914.

Between 1913 and 1945, the world economy was very troubled. There were two world wars, the Spanish Flu pandemic and the Great Depression. My concern is that we are again headed into another very troubled period that could last for many years.

The way the energy problems of the period between 1913 and 1945 were resolved was through the rapid ramp-up of oil production. Oil was, as that time, inexpensive to produce and could be sold for a very large multiple of the cost of production. If population is to remain at the current level or possibly grow, we need a similar “energy savior.” Unfortunately, none of the alternatives we are looking at now yield a high enough return relative to the required investment.

I recently gave a talk to an engineering group interested in energy research talking about these issues. In this post, I will discuss the slides of this presentation. A PDF of the presentation can be found at this link.

The Low Oil Price Problem

Oil prices seem to bounce around wildly. One major issue is that there is a two-way tug of war between the prices that citizens can afford and the prices that oil companies require. We can look back now and say that the mid-2008 price of over $150 per barrel was too high for consumers. But strangely enough, oil producers began complaining about oil prices being too low to cover their rising cost levels, starting in 2012. Prices, at a 2019 cost level, were at about $120 per barrel at that time. I wrote about this issue in the post, Beginning of the End? Oil Companies Cut Back on Spending. Oil prices now are in the $40 range, so are way, way below both $120 per barrel and $150 per barrel.

Interest rates and the availability of debt also play a role in oil prices. If interest rates are low and debt is readily available, it is easy to buy a new home or new car, and oil prices tend to rise because of the higher demand. When prices are too low for producers, central banks have been able to lower interest rates through a program called “quantitative easing.” This program seems to have helped oil prices to rise again, over a three-year period, after they crashed in 2008.

OPEC producers are known for their low cost of production, but even they report needing high oil prices. The cost of extracting the oil is reported to be very low (perhaps $10 per barrel), but the price charged needs to be high enough to allow governments to collect very high taxes on the oil extracted. If prices are high enough, these countries can continue the food subsidies that their populations depend upon. They can also sponsor development programs to provide jobs for the ever-growing populations of these countries. OPEC producers also need to develop new oil fields because the old ones deplete.

Oil production outside of the United States and Canada entered a bumpy plateau in 2005. The US and Canada added oil production from shale and bitumen in recent years, helping to keep world oil production (including natural gas liquids) rising.

One reason why producers need higher prices is because their cost of extraction tends to rise over time. This happens because the oil that is cheapest to extract and process tends to be extracted first, leaving the oil with higher cost of extraction until later. 

Some OPEC countries, such as Saudi Arabia, can hide the low price problem for a while by borrowing money. But even this approach does not work well for long. The longer low oil prices last, the greater the danger is of governments being overthrown by unhappy citizens. Oil production can then be expected to become erratic because of internal conflicts.

In the US and Canada, oil companies have been funded by bank loans, bond sales and the sale of shares of stock. These sources of funding are drying up, as many oil companies report poor earnings, year after year, and some are seeking bankruptcy protection. 

Chart 6 shows that the number of drilling rigs in operation has dropped dramatically in both the United States and Canada, as oil companies cut back on drilling. There is a lag between the time the number of drilling rigs is cut back and the time production starts to fall of perhaps a year, in the case of shale. These low drilling rig counts suggest that US and Canadian oil production from shale will fall in 2021.

Of course, unused drilling rigs cannot be mothballed indefinitely. At some point, they are sold as scrap and the workers who operated them find other employment. It then becomes difficult to restart oil extraction.

How the Economy Works, and What Goes Wrong as Limits Are Reached

Slide 7 shows one way of visualizing how the world economy, as a self-organizing system, operates. It is somewhat like a child’s building toy. New layers are added as new consumers, new businesses and new laws are added. Old layers tend to disappear, as old consumers die, old products are replaced by new products, and new laws replace old laws. Thus, the structure is to some extent hollow.

Self-organizing objects that grow require energy under the laws of physics. Our human bodies are self-organizing systems that grow. We use food as our source of energy. The economy also requires energy products of many kinds, such as gasoline, jet fuel, coal and electricity to allow it to operate.

It is easy to see that energy consumption allows the economy to produce finished goods and services, such as homes, automobiles, and medical services. It is less obvious, but just as important, that energy consumption provides jobs that pay well. Without energy supplies in addition to food, typical jobs would be digging in the dirt with a stick or gathering food with our hands. These jobs don’t pay well.

Finally, Slide 7 shows an important equivalence between consumers and employees. If consumers are going to be able to afford to buy the output of the economy, they need to have adequate wages.

A typical situation that arises is that population rises more quickly than energy resources, such as land to grow food. For a while, it is possible to work around this shortfall with what is called added complexity: hierarchical organization, specialization, technology, and globalization. Unfortunately, as more complexity is added, the economic system increasingly produces winners and losers. The losers end up with very low wage jobs, or with no jobs at all. The winners get huge wages and often asset ownership, as well. The winners end up with far more revenue than they need to purchase basic goods and services. The losers often do not have enough revenue to feed their families and to buy basic necessities, such as a home and some form of basic transportation.

The strange way the economy works has to do with the physics of the situation. Physicist Francois Roddier explains this as being similar to what happens to water at different temperatures. When the world economy has somewhat inadequate energy supplies, the goods and services produced by the economy tend to bubble to the top members of the world economy, similar to the way steam rises. The bottom members of the economy tend to get “frozen out.” This way, the economy can downsize without losing all members of the economy, simultaneously. This is the way ecosystems of all kinds adapt to changing conditions: The plants and animals that are best adapted to the conditions of the time tend to be the survivors.

These issues are related to the fact that the economy is, in physics terms, a dissipative structure. The economy, like hurricanes and like humans, requires adequate energy if it is not to collapse. Dissipative structures attempt to work around temporary shortfalls in energy supplies. A human being will lose weight if his caloric intake is restricted for a while. A hurricane will lose speed, if the energy it gets from the warm water of the ocean is restricted. A world economy with inadequate energy is likely to shrink back in many ways: unprofitable businesses may fail, layers of government may disappear and population may fall, for example.

In the discussion of Slide 7, I mentioned the fact that if we try to “stretch” energy supply with added complexity, many workers would end up with very low wages. Some of these low wage workers would be in the US and Europe, but many of them would be in China, India and Africa. Even though these workers are producing goods for the world economy, they often cannot afford to buy those same goods themselves. Henry Ford is remembered to have said something to the effect that he needed to pay his workers enough so that they, themselves, could buy the cars they were making. To a significant extent, this is no longer happening when a person takes into account international workers.

The high interest rates that low-wage workers pay mean that loans don’t really help low-wage workers as much as they help high-wage workers. The high interest on credit card debt and personal loans tend to transfer part of the income of low-wage workers to the financial sector, leaving poor people worse off than they would have been without the loans. 

COVID shutdowns are extremely damaging to the world economy. They are like taking support sticks out of the dome on Slide 7. They produce many more unemployed people around the world. People in low wage countries that produce clothing for a living have been particularly hard hit, for example. Migrant workers and miners of various kinds have also been hard hit.

We Seem to Be Reaching a Major Turning Point

Oil production and consumption have both fallen in 2020; oil prices are far too low for producers; wage disparity is a major problem; countries seem to be increasingly having problems getting along. Many analysts are forecasting a prolonged recession.

The last time that we had a similar situation was in 1913, when the largest coal producer in the world was the United Kingdom. The UK’s cost of coal production kept rising because of depletion (deeper mines, thinner seams), but prices would not rise to compensate for the higher cost of production. Miners were paid very inadequate wages; poor workers regularly held strikes for higher wages. World War I started in 1914, the same year coal production of the UK started to fall. The UK’s coal production has fallen nearly every year since then.

The last time that wage disparity started to spike as badly as it has in recent years occurred back in the late 1920s, or perhaps as early as 1913 to 1915.  The chart shown above is for the US; problems were greater in Europe at that time.

With continued low oil prices, production is likely to start falling and may continue to fall for years. It is hard to bring scrapped drilling rigs back into service, for example. The experience in the UK with coal shows that energy prices don’t necessarily rise to compensate for higher costs due to depletion. There need to be buyers for higher-priced goods made with higher-priced coal. If there is too much wage disparity, the many poor people in the system will tend to keep demand, and prices, too low. They may eat poorly, making it easier for pandemics to spread, as with the Spanish Flu in 1918-1919. These people will be unhappy, leading to the rise of leaders promising to change the system to make things better.

My concern is that we may be heading into a long period of unrest, as occurred in the 1913 to 1945 era. Instead of getting high energy prices, we will get disruption of the world economy.  The self-organizing economy is attempting to fix itself, either by getting more energy supply or by eliminating parts of the economy that aren’t contributing enough to the overall system. Conflict between countries, pandemics, bankruptcies and economic contraction are likely to be part of the mix.

Coal Seems to Be Reaching Extraction Limits as Well 

Coal has essentially the same problem as oil: Prices tend to be too low for producers to extract coal profitably. Many coal producers have gone bankrupt. Prices were higher back in 2008, when demand was high for everything, and again in 2011, when quantitative easing had been helpful. 

There have been stories in the press in the past week about China limiting coal imports from Australia, so as to make more jobs for coal miners in China. The big conflict among countries relates to “not enough jobs that pay well” and “not enough profitable companies.” These indirectly are energy issues. If there was more “affordability” of goods made with high-priced coal, there would be no problem.

Coal production worldwide has been on a bumpy plateau since 2012. In fact, China, the largest producer of coal, found its production stagnating, starting about 2012. The problem was a familiar one: The cost of extraction rose because many mines that had been used for quite a number of years were depleted. The selling price would not rise to match the higher cost of extraction because of affordability issues.

The underlying problem is that the economy is a dissipative structure. Commodity prices are set by the laws of physics. Prices don’t rise high enough for producers, if there are not enough customers willing and able to buy the goods made with high-priced coal.

We Have a Major Problem if Both Coal and Oil Production Are in Danger of Falling Because of Low Prices

Oil and coal are the two largest sources of energy in the world. We can’t get along without them. While natural gas production is fairly high, there is not nearly enough natural gas to replace both oil and coal.

Looking down the list, we see that nuclear production hit a maximum back in 2006 and has fallen since then.

Hydroelectric continues to grow, but from a small base. Most of the good sites have already been taken. In many cases, there are conflicts between countries regarding who should get the benefit of water from a given river.

The only grouping that is growing rapidly is Renewables. (This is really Renewables Other than Hydroelectric.) It includes wind and solar plus a few other energy types, including geothermal. This grouping, too, is very small compared to oil and coal.

Natural Gas Has a Low Price Problem as Well

Natural gas, at first glance, looks like it might be a partial solution to the world’s energy problems: It is lower in carbon than coal and oil, and it is fairly abundant. The problem with natural gas is that it is terribly expensive to ship. At one time, people used to talk about there being a lot of “stranded” natural gas. This natural gas seemed to be available, but when shipping costs were included, the price of goods made with it (such as electricity or winter heat for homes) was often unaffordable.

After the run-up in oil prices in the early 2000s, many people became optimistic that, with energy scarcity, natural gas prices would rise sufficiently to make extraction and shipping long distances profitable. Unfortunately, it is becoming increasingly clear that, while prices can temporarily spike due to scarcity and perhaps a debt bubble, keeping the prices up for the long run is extremely difficult. Customers need to be able to afford the goods and services made with these energy products, or the laws of physics bring market prices back down to an affordable level.

The prices in the chart reflect three different natural gas products. The lowest priced one is US Henry Hub, which is priced near the place of extraction, so long distance shipping is not an issue. The other two, German Import and Japan Liquefied Natural Gas (LNG), include different quantities of long distance shipping. Prices in 2020 are even lower than in 2019. For example, some LNG imported by Japan has ben purchased for $4 per million Btu in 2020.

The Economy Needs a Bail-Out Similar to the Growth of Oil After WWII

The oil that was produced shortly after World War II had very important characteristics:

  1. It was very inexpensive to produce, and
  2. It could be sold to customers at a far higher price than its cost of production.

It was as if, today, we had a very useful energy product that could be produced and delivered for $4, but it was so valuable to consumers that they were willing to pay $120 for it. In other words, the consumer was willing to pay 30 times as much as the cost that went into extracting and refining the oil.

With an energy product this valuable, a company producing it would need virtually no debt. It could drill a well or two, and with the profits from the first wells, finance the investment of many more wells. The company could pay very high taxes, allowing governments to build roads, schools, electricity transmission lines and much other infrastructure, without having to raise taxes on citizens.

Besides using the profits for reinvestment and for taxes, oil companies could pay high dividends. This made oil company stocks favorites of pension plans. Thus, in a way, oil company profits could help subsidize pension plans, as well.

Now, because of depletion, we have reached a situation where oil companies, and in fact most companies, are unprofitable. Companies and governments keep adding debt at ever lower interest rates. In fact, the tradition of ever-increasing debt at ever-lower interest rates goes back to 1981. Thus, we have been using debt manipulation to hide energy problems for almost 40 years now.

We need a way to counteract this trend toward ever-lower returns. Some people talk about “Energy Return on Energy Investment” or EROEI. I gave an example in dollars, but a major thing those dollars are buying is energy, so the result is very similar.

I think researchers have set the “bar” far too low, in looking at what is an adequate EROEI. Today’s wind and solar don’t really have an adequate EROEI, when the full cost of delivery is included. If they did, they would not need the subsidy of “going first” on the electric grid. They would also be able to pay high taxes instead of requiring subsidies, year after year. We need much better solutions than the ones we have today.

Some researchers talk about “Net Energy per Capita,” calculated as ((Energy Delivered to the End User) minus (Energy Used in Making and Transporting Energy to the End User)) divided by (Population). It seems to me that Net Energy per Capita needs to stay at least constant, and perhaps rise. If net energy per capita could actually rise, it would allow the economy to increasingly fight depletion and pollution.

Conclusion: We Need a New Very Inexpensive Energy Source Now

We need a new, very inexpensive energy source that buyers will willingly pay a disproportionately high price for right now, not 20 or 50 years from now.

The alternative may be an economy that does poorly for a long time or collapses completely.

The one ray of hope, from a researcher’s perspective, is the fact that people are always looking for solutions. They may be able to provide funds for research at this time, even if funds for full implementation are unlikely.

This entry was posted in Financial Implications by Gail Tverberg. Bookmark the permalink.

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.

2,885 thoughts on “Fossil Fuel Production Is Reaching Limits in a Strange Way

  1. “The US economy is in Recession; we just haven’t felt it because of the CARES Act stimulus, but, eventually we will because we have a huge, huge unemployment problem.

    “And then there is the oncoming eviction crisis (on hold until year’s end); there hasn’t been much discussion about this, and I wonder if it is priced into financial markets.”

    https://www.forbes.com/sites/greatspeculations/2020/10/18/the-real-recession-is-just-starting/#118fe2f57006

    • The question is how long all the problems can be hidden behind temporary government programs that distort the financial system. Airlines are operating at far below capacity, as are restaurants, hotels and daycare centers. Entertainment venues have far too few customers. It seems like, at some point, the situation has to fail.

      If is hard to see governments ever allowing evictions, however. Perhaps, the problem will come elsewhere, as in a shortage of food in stores.

      • If you cant evict you cant rent out a property. It already had reached crazy lengths of time prior to covid. My friend allowed a couple into his house. She was pregnant and they had no where to go. After the child was born he asked them to leave after a month. They refused it took him omost 6 months to get them evicted from his own house. Most tenants resent that they have to pay and see the landlord as despicable. Many people have familiarized themselves with the laws and know how to work the system. In the long run this leads to no one renting out property. I have liked being able to help people and offer a spare room to those in need but its too risky now. Its very sad. When someone needs shelter it means the world to them and its a minor inconvenience to me but the risk is just too great. As owning a house becomes near impossible for the working class and renting or sharing homes becomes too risky where will people live?

        • Using commercial materials, you can slap a shelter together (less with creativity and volunteers). The design I have in mind is “easy” to instal and remove. I’d give everyone who needs it such a shelter, Where to locate them is the problem. Assume that they will tend to be unruly, noisy trouble making wherever you locate them and give much consideration to how to manage the resulting problems. Part of that would require incredibly sophisticated and rigorous management.

            • Where i live a lot of people do just that. It doesn’t solve the real problem. The real problem is finacialization of homes and overpopulation. I am all for smaller more austere homes. I like Robert Riversongs work. You need a toilet. You need a water source. You need a heat source. You need at least minimal power for lighting. Yes you can live under a piece of plastic. I am well aware of that. The question is what does the shelter represent in terms of appropriate relation to the planet, and the community for the dweller. A $500 box does not address that. We could discuss which $500 box is best but it would be a waste of time. Yes you can do a bootleg home. I would argue that one of the primary functions of a home is to provide the sense of security. If you know your home is non compliant and can and will be destroyed if it comes to the authorities attention it does not serve those functions. I know of a perfectly good straw bale home that was torn down once the authorities found out about it. Straw bale is still the best from a sustainability standpoint. Followed by well insulated stick frame home. Look at Riversongs work. Its all academic. I am talking about real world. The problem is not boxes. We have plenty of boxes. The problem is food. Does your $500 design has food production capability?

          • Art,

            Do not do shelter personally, only know what I have heard at various seminars. The type of tenant you describe if not homeless lives in a very low rent area, rules are different, not unusual to have various gangs provide assistance in management. They are neither sophisticated nor rigorous in management, they are as we say here, “self organizing.”

            You are also ignoring sanitation, plumbing, RE taxes to pay for all that.

            No easy solutions,

            Dennis L.

          • if a shack has a lifetime of 10 years, you might as well put the cost of rigourous management’ towards a decent house in the first place

            • I’m not seeing the space or economic circumstances for what I presume you mean by “decent housing.” I know people will build them anyway, but they will come in like more rope to hang themselves with. And I totally disagree that rigorously managing a shack is as costly than building what is generally called “decent housing.”

            • i assumed that ‘rigourous management’ meant a paid outside body of some kind

              since we left trees and caves, we have had to seek places to live,

              this has put a premium of rising cost on them.

              though around here, people lived well enough in caves untill well into the 2oth c, and still are.

              this one was sold recently, truly stunning

              https://www.theguardian.com/business/video/2016/jan/19/inside-a-cave-conversion-house-on-the-market-for-200000-video

            • “i assumed that ‘rigourous management’ meant a paid outside body of some kind”

              Unfortunately it does. 🙂 I’d like to be given an extraordinary amount of money (with few strings attached) to pay people. Starting with a very capable manger of the program (who will do what I tell them). I wouldn’t argue with anyone who said that this was not a feasible idea. But the infeasibility has to do with psychological rather than physical limits.

              Thanks for the cave link. It’s a palatial concept and wouldn’t suit as a place to squeeze in a lot of dwelling units and allow the degree of privacy and independence I have in mind. 🙂

          • There is a big difference in the type of shelter needed, depending upon the climate. In warm, moderately wet parts of the world, the equivalent of a $500 box does seem to serve as housing for a lot of people, especially in the slums of third-world countries. If the temperature gets down to -10F, then you need heat and insulation. Even a nearby water pump you could walk to needs heat and insulation. It becomes a much more infrastructure-dependent arrangement.

            https://gailtheactuary.files.wordpress.com/2016/11/woman-carrying-two-pots-of-water-on-her-head.jpg

            • Thanks. I meant to say some of this. And I’m impressed by the neatness of the spreads on the clothes line. However it’s done (and it can be done in endless variety and places) there is order here.

          • “Assume that they will tend to be unruly, noisy trouble making wherever you locate them …” Then locate them nowhere. They made their bed; let them lie in it. We are too soft hearted towards people who live only to exploit our compassion.

            • 🙂 There are lots of troublesome people in the world. So many in fact, that leaving them to their own devices makes life next to impossible for the rest. So “taking care of them” is less soft heartedness than pragmatism. Taking care of the helpless in this manner is what the British colonial system at its height did reasonably well. Or it at least provided clues as to how best to try it.

          • The most free people I have seen in life lived in remote Papa New Gineau near the sea. A stick hut house sitting 4 or so feet high above the ground protected them from flooding, rain and snakes I guess. Add in some chickens and a pig or two. Along the shore one can pick wild coconuts and mangos and eat them on the spot. Have a small canoe carved from a tree and fish the sea. Total freedom. It was amazing. Poverty also but your basic needs were met.

            • To Papuans, life was what they made it. Idyllic in so many ways.

              Their immediate needs: food warmth and shelter were met by their immediate surroundings. No need for more.

              We are the only species to have made the decision to try to ‘improve’ their situation. We trekked away from the comfort of the equatorial regions and ensured our survival by stealing our ‘energy resources’ from other animals.

              Right now we are finding that wasn’t such a good idea after all. We didn’t know they were protected by some very bad tempered little bugs. We thought we owned the world, not realising they did.

              poverty only becomes apparent when there is affluence to measure it by. Now indigenous tribes ‘know’ they live in poverty because they see affluence all around them. They want electric light and boat engines to ‘improve’ their lives.

              In the long run they won’t of course, but we are all afflicted by short-termism

              Viruses are here for the long haul. I doesn’t include us.

            • Jesse, I learned log ago that wealth is not measured by how much you have, but by how little you need. Granted, compared with a Papuan I need a lot more, but my savings will outlast me, and I can live a gentle retirement on EUR 500 a month. For personal comfort, I have my five children; for spiritual comfort, my Pantheist philosophy. As for the rest, “my library is dukedom large enough”.

        • mis,

          The other aspect is the professional class whose livelihood depends on keeping the process going, be it government services or fee for service lawyers, etc.

          A number of years ago I picked up a RE broker’s license, MN, the rules are not in the landlords favor. From what I see, many are not really capable of owing a house, more in temperament than anything else. Partially as a result of what you describe landlords run properties to the ground, tenants live on the street in the extreme, no one wins, some scrapped money off the top as it went by in the name of helping people in need.

          Commercial at one time was much less regulated, fewer laws, easy eviction, etc. Now, there are no tenants with money, strip malls around here are emptying out.

          There is nothing easy any more.

          Dennis L.

          • All of these regulations require energy consumption for enforcement. Also, for compliance with the regulations. As the economy goes downhill, leaders will push in the direction of less enforcement of regulations. At some point, other part of the system will fail. The sales price of the property may fall far below the amount of mortgage outstanding, for example, causing problems for banks.

            • From what I’m learning here (that supplies factual analysis for much of what I had previously assumed) is that:

              – regulation will get harder to enforce, and governments might be corralled into accepting non-government help to create and manage emergency housing.

              – solar panels at scale should be able to light a tiny space. Charge a tiny battery to run a tiny heater (supplied by management)?

              – humans must evolve

              – evolution doesn’t mean dramatic changes; it means very minor changes, a greater amount than now rigorously managed.

              – not everything needs to be managed in a command sense.

              – rigorous management can mean knowing when to leave well enough alone

              – rigorous management can also be intelligent management

              – intelligent management will be cognizant of limitations and will welcome every possible means to delegate and synchronize. This can partly be described as systems thinking

              – it seems unlikely that third world societies can be asked to provide sophisticated or academic systems thinking.

              – Food is unquestionably part of the planning for crisis shelter. Space to grow food would of course be part of the planning. But one would not expect novices to grow even a majority of their food. A command management system (again, delegating to the maximum) would arrange for one daily cooked meal for all.

              – Water is similar to food. Indispensable. Similar to the food-supply principle, a certain amount would be collected from roofs. Backed up by regular supplies of trucked-in water. If people didn’t manage their provided (and partly self-created) water containment infrastructure they would get no water, and could be forcibly removed to an infirmary. It clearly would require police and military planning around this.

              – Sanitation would be via compost toilets that would clearly be managed. There are countless outlying mine pits needing to be filled with such supplies, at the very least. If there is a means to professionally compost sewerage–no pipes involved–then you have more sanitary compost, and jobs.

              – We certainly need to hang on th as much central government as we can. They might be good at collecting taxes, fixing the grid, filling potholes. The better small local units of governance are run, the better they should be at getting represented by central government.

              – Population is too grand a subject to consider here. It sure isn’t my basic concern. As the economic system declines population, just like climate, should go in a more sustainable direction. The problem is human conduct and organization. Many women I know would have welcomed not being “forced” and pressured into marriage and child bearing. So why force and pressure them?

              Finally, crisis housing isn’t a “real” problem? Check in with a homeless person.

          • Yes, home interest is deductible, but it’s still costly if you buy a historically overpriced and not highly liquid asset with a low down payment. If you up the down payment so that you pay less total interest, then the value of the deduction declines further. And of course the risk of a price correction putting you underwater does not go away, which is probably the biggest risk you run.

            You can always get lucky because you never know how long a bubble can continue, but it is never an intrinsically prudent investment to buy a long term investment with limited and variable liquidity at a historically high valuation. And deducting that interest from your pre-tax income is not nearly as valuable as not paying the interest at all. Of course, if are a spooky psychic with an infallible crystal ball that let’s you know exactly when the bubble will burst in your area, then you can safely buy under any conditions. Otherwise, you always run the risk of overpaying at or near the market top. And if you want to maximize those tax free cap gains, your best bet is to buy when historical prices are low or at least typical.

            But the point I originally meant to imply is that there is something strange about houses trading like bonds.

            • Nehemiah,

              You are well thought and enjoyable to read. As always, no arguments.

              Whether or not the house goes up or down in price really doesn’t matter unless liquidation is involved.

              People purchase on the basis cashflow, monthly payments as you noted, purchase when interest rates are high, cost is low, refinance. People need a home, rental builds no equity.

              Don’t over leverage, don’t use the house as a piggy bank, taking out equity to purchase depreciating assets. People see things going up, banks love to loan money against a house, it is a secured asset. Buy a house, stay married, have a roof, have some security and enjoy life and don’t do second mortgages that depreciate and also have significant carrying costs, licenses, insurance, etc.

              Dennis L.

        • I’ve been solidly middle-class for 20 years, as has my wife, who only left the labor market for short periods around the birth of our three children. We live in a metropolitan area on the west coast of the US. Owning a home here is next to impossible as any home that is affordable is: on a minuscule lot, would require sleeping with a 9mm under my pillow, would likely need many repairs/upgrades, and would be incredibly difficult to purchase this sort of home in any case, as there’re so many other interested buyers, many of which will pay with cash. This economic/housing reality is so radically different from the paradigm that was in place when I was a young adult. It’s so thoroughly a seller’s market. It’s a zero-sum game, and potential buyers are like myself are rightfully apathetic.

          • Great post! Solutions seem elusive. It basically takes a lifetime to provide a home for yourself nowadays. IF you can find a job. There is no more cheap land. Nevada outside of vegas still affordable tho… 🙂

          • Houses these days trade like bonds, where the principle is inverse to the yield. Depending on market conditions, you get to either pay the bank/mortgage lender a low rate on a large principle or a high rate on a smaller principle. However, in the latter condition, you have the option of saving and paying a fair price with cash, or putting down a large down payment, or paying the principle off early to save on interest payments. In the former condition, which currently prevails, you are overpaying on the principle. If housing corrects to its historic multiple of mean family income, you will be underwater.

            • Nehemiah,

              Interest is deductible, principal is not, capital gains on residences are for the most part non taxable.

              Purchase when interest rates are very high if possible, refinance when they go down, they always do. Purchase when everyone thinks the world is going to end, it never has and what do you have to lose? If the world ends it is game over, if it doesn’t you may win something, expected yield greater for optimists than pessimists.

              Dennis L.

            • These rules certainly worked in the past. It is more iffy now, especially where housing stock is very old. Homes may need substantial renovation to be livable. Nearby roads may need work and the cost may be borne by those living nearby. If the home is considered “historical,” it may be necessary to preserve outside details, whenever renovation is done. If the house has water damage, be very careful; this may be a chronic problem. All of these things may push annual costs way, way up.

              Also, you may need to sell suddenly and not be able to. This may tie you to a very limited job market.

            • Gail, historic preservation is central to worldwide tourism. The same old buildings and artifacts have been attracting centuries of tourism, and must surely be an economic plus to maintain.

          • It is not fun, it is not easy, move your mother in law or your mother in. My dad did it, woman I dated and knew for the same period, her maternal grand parents lived in the house, small house, one bathroom. That woman went on to become full dean and prof at a Big Ten university, married the head of her department, 10 years her senior, I guess if it works.

            Much of what we see from the outside is not what life is like on the inside. Most of us are not unlike the duck moving along the water, feet are going like crazy under the surface.

            Nice job on three children.

            Dennis L.

      • Not able to post. The structure I alluded to below I price at $500 for materials. I worked it out for around $300, but knowing my usual minimizing of the problems I increased the price.

        • Live in your $500 box for a year. I dare you. Double dog dare you. Do that and you will have accomplished something.

          • I’ve slept under a tree, and I’ve slept in a car. The car, especially, was less comfortable than what I’m proposing. If I don’t have some basic experience of the thing I’m proposing, I don’t waste time talking about it.

      • Commercial here is beginning to thin out, more and more vacant buildings, it seems the newer(read higher cost) malls are having more of a challenge. The one doing best by me has mostly very small spaces, one man offices, a liquor store with an up aisle and a down aisle.

        Some food at Sam’s is more spotty than a year ago, Hyvee has less depth on the shelves. Lumber is very expensive and not always available. I am told(not a hunter) bullets are almost impossible to find, no personal experience. There is not the selection in used cars, perhaps people are purchasing them after the lease expires. The local pub had two people in it Saturday night, they closed two three hours early.

        Governments here are facing financial issues, Cities are having requests by citizens for more police coverage(police retired early, imagine that), Minneapolis city council is doing an interesting dance around that issue, they need money to rebuild the precinct station they allowed to burn down, but the neighborhood was also burned and RE taxes reflect lower assessed values, bummer.

        This is a good area, it is beginning to be stressed, there is denial.

        Dennis L.

        • I was surprised to hear about the problems in Minneapolis, earlier this year. It used to be a nice area. We always used to hear about “Minnesota nice.” I have heard that there is a huge between the average income of Somalis and the average income of White residents. This seems to be at least part of the problem.

      • Hello Gail,

        do you really expect food shortages in the foreseeable future? And if so, why?
        Production, transport, retail … all of this continues to run normally here with us (in Germany) regardless of Corona.

  2. The Chinese economy is doing well with 4.9% growth in Q3 year on year. CCP has long practically eradicated c 19 and its economy has recovered to usual levels of growth.

    UK is well behind the pack, down 20+% in Q3 on year and struggling with a second wave of c 19. UK has practically the worst response in the world to c 19 in both excess deaths per capita and economic damage – quite some accomplishment.

    Those who are hoping for a no deal Brexit may take some comfort, TP level of incompetence implies that will be the outcome. And Boris can ‘crown’ his spell in office with a UK split.

    > China’s economy grows 4.9% as industrial production surges, retail sales rise and unemployment sinks – while the rest of the world is crippled by coronavirus epidemic that started in Wuhan

    China’s economy has grown 4.9 per cent in the third quarter from last year proving the country is back to its pre-pandemic trajectory with consumer spending and industrial production going back to normal levels.

    The third-quarter GDP figures fell slightly short of the growth of up to 6.0 per cent forecast at the start of the year before Covid-19 crippled the global economy.

    However, the figures are far more favourable than the dire economic data coming out of most Western countries, showing how China has bounced back quickly despite being the first country to suffer the coronavirus outbreak.

    As the virus spread across the globe, China started to bring the outbreak under control and began to reopen its economy, growing 6.8 per cent in the first quarter of this year, and 3.2 per cent in the April-June quarter.

    Since China fought off the outbreak, Chinese firms have taken advantage of their good fortune while their global rivals grapple with reduced manufacturing capacity.

    Chinese firms have benefited from strong global demand for masks and medical supplies, with exports rising 9.9 per cent in September from a year earlier while factory activity also picked up.

    The country’s technology sector has also taken advantage of the work-from-home phenomenon with apps including DingTalk and WeChat bringing in huge revenues.

    Now the International Monetary Fund is projecting China’s economy to expand by 1.9 percent in 2020 which means it’ll be the only major world economy to grow this year.

    [Q3 year on year:]

    https://i.dailymail.co.uk/1s/2020/10/19/16/34575252-8854129-image-m-45_1603120317736.jpg

    https://www.dailymail.co.uk/news/article-8854129/Chinas-economy-grows-4-9-rest-world-crippled-coronavirus.html

    • But China’s growth rate isn’t really sustainable, partly because the rest of the world is shrinking, so it isn’t a sufficient market for China’s products. Also, China was having economic problems even before the pandemic. These continue. The prices of homes are too high for citizens. People could not afford cars and cell phones. These problems have been hidden by programs to build basically unneeded public infrastructure in China. This adds jobs, but doesn’t have long-run benefit.

      • Very likely so, Gail. CCP has the manufacturing and they have done well flogging disaster gear to the world to help with c 19. Perhaps they will find some niches to help as the global economy collapses like riot gear.

        CCP is ‘changing gear’ to shift its economy more toward internal circulation. It has largely achieved its objectives to develop its industrial base, cutting-edge technology and its ‘middle-income’ group through exports and its next objective is to build on that to develop the internal market.

        CCP is nothing if not strategically adaptable and it is seizing the occasion afforded by Trump’s hostility and now c 19 to refocus on internal circulation. That should make its economy less reliant on international consumers though it obviously takes time.

        As you say, it will be interesting to see how CCP grapples with energy availability. We can be sure that they are thinking seriously and realistically about it. I am obviously not suggesting that CCP development will go on forever after.

        This current article by Jianhuo in the Global Times alludes to ambitions.

        > China’s domestic consumption to continue spiraling up in 2020

        …. For starters, boosting consumption is not just a temporary priority, but also an important step in deepening supply-side reforms and initiating economic internal circulation. As the top troika driving economic growth, consumption will be stressed in coming years during the 14th Five-Year Plan period.

        As the US is taking all conceivable measures to contain China’s rise, and China has made a strategic decision to initiate internal circulation of the giant economy, increasing consumption will not only solve the current problems of the virus impacts, but also solve the problems of long-term economic development in the future.

        Secondly, China can take measures to further promote consumption, for instance, by expanding the scale of government procurement, creating non-subsidized incentive levers, and setting up more import duty-free shops.

        Meanwhile, priority should be given to the development of education, childcare, elderly care, medical care, culture, tourism and other service industries in order to accelerate the pace of consumption upgrade. For example, making full use of 5G will accelerate the pace of intelligent transformation of manufacturing enterprises.

        After COVID-19, China will lead the global consumer market. China’s middle-income group has reached 400 million, more than the total population of the US, and its purchasing power will become the most important consumer power for China’s economic development.

        Moreover, the impact of COVID-19 is also the best opportunity for China to carry out a “new consumer revolution,” which can facilitate consumption through making use of new technologies like mobile payment, big data, cloud computing, Internet of Things, and smart logistics.

        At the same time, it is necessary to further promote the regionalization and internationalization of consumption, that is, to develop cross-border e-commerce services, bring China’s e-commerce services and new consumer revolution to the world.

        It’s believed that consumption in the Chinese market in 2020 will still be the biggest driving force for China’s economic growth, and it is also an important step in starting the economic internal cycle.

        https://www.globaltimes.cn/content/1200965.shtml

        • The CCP needs a dose of reality. It’s at best a middle income country, its working age population is falling while its elderly population is growing (and most of them must rely on their children–or child), it’s official GDP is a perennial fiction, their total debt is way larger than they admit, and they have the biggest housing bubble in world history, and shoddily built infrastructure that will soon need costly repairs.

          • It seems difficult to untangle the reality of China from CCP and Western accounts as there is obvious bias on both sides. It is the no. 1 ‘h ate’ figure in USA now just as it is the no. 1 ‘love’ figure to CCP itself. It is hard to get anywhere when opposed voices do not agree on the same ‘facts’.

            Demographics have to be contextualised. CCP has access to many workers not presently involved in more productive work. More elderly will affect productivity per capita, with more people not working, but that would not per se constrain the expansion of production while CCP still has many workers to apply to more productive work. The analysis requires nuance according to the actual situation of the economy.

            Western ‘mature’ economies, with flat productivity, particularly rely on ever more inward bound workers to maintain GDP growth. Production in China can be boosted through the creation of more productive jobs. Chinese productivity growth has averaged over 6% per year over the last decade while USA is at stuck at 0.5%.

            So for China it is not all about getting ever more workers, like it is for USA, EU, UK etc., it is about the creation of more productive jobs for the workers that it has. The elderly can function as an aspect of domestic consumption.

    • If you want to get to what causes a person to make certain decisions, you don’t ask, you follow the money. If you want to know the true growth of a Country, you don’t follow the money, you follow the oil. If there is an accurate way of measuring the quantity of oil use in a country, you have an accurate way of measuring growth. Only way in this age of disinformation. Let’s see how much oil/coal China used this year.

  3. The digital currencies can not preserve value, as everybody can create its own digital currency. That way the digital currencies are prone to inflation due uncontrolled creation, while the regulated state currencies are prone to deflation, as their issuance is controlled and they reflect the fundamentals of the ageing populations and energy decline.

    • Maybe the digital currencies are here to mask the inflation caused by the depletion of resources, i.e. that the future promises will be satisfied only partially or not at all.

  4. The following site presents a naively libertarian view of what how people *might* manage post collapse, but overlooking the fact that they never have. I will quote a short portion not dedicated to anarcho-libertarian hopium:
    https://gavinboby.com/law-freedom-after-the-state/3/

    An explosive cocktail

    These things feed on, and magnify, one another.
    Government bankruptcy feeds welfare collapse.
    Welfare collapse feeds public anger.
    Public anger feeds political, wealth-based, and religious conflict.
    Conflict feeds uncertainty about state authority.
    Uncertainty about state authority feeds government bankruptcy. Until…

    ‘…we [pre-collapse Soviets] had a budget deficit [not total debt] of more than 20 per cent [of GDP]. If you look at the point where military coups are carried out in Latin America, you will find that they coincide with a budget deficit of 20 per cent. That is when a country becomes ungovernable.’

    In 2009, after the last credit crunch, Britain’s budget deficit was over 11% of GDP. America’s was over 10%.
    If the next crunch is as bad as the last then the deficit will hit 20%.

    When is the next crunch due?

    1973-1975 OPEC recession
    1981-1982 Monetarist recession
    1990-1991 Savings and loan recession
    2001-2001 Dot.com recession
    2008-2009 Housing bubble recession
    … ? Bond bubble recession

    ‘… whenever there are hard times, people look for somebody to blame. … Financial types get blamed first, the foreigners get blamed second, and (reporters) are next.’

    Discontinuity
    ‘The trend — as shown by the Balkan wars — is toward denationalization, privatization and commercialization of war, in the course of which local warlords, bandit chiefs, mercenary-hiring companies, as well as internationally connected and deployable religious warriors are increasingly the real actors in the prosecution of war. …Do not count on a treaty, a ceasefire or concluding peace. Just think about informing yourself on the effects of it and preparing for its development.’ – Udo Ulfkotte, author and journalist, Frankfurter Allgemeine Zeitung

    =================================================
    My own comments:

    The Wuhan viral recession is only the second in a long series of US recessions that was not preceded by a spike in oil prices during the previous 12 months. It is especially interesting to look at the three worst “post war” recessions:

    1974-5: after OPEC imposed an oil embargo and then doubled prices, worst recession since the Great Depression.

    1981-82: after OPEC doubled oil prices, the new ‘worst recession since the Great Depression.”

    2008-09: started while oil futures were spiking, ultimately to $147 a barrel before global demand imploded, the newest “worst recession since the Great Depression.”

  5. Addendum: I should have added, all three of those “worst recessions since the Great Depression” were also compounded by monetary policy:

    1971: Arthur Burns targeted lower interest rates which sparked the biggest bank lending boom in US history, allowing the not very popular Nixon to win reelection in an all time record landslide in 1972, but recession took off afterward, forcing the Fed to tighten in 1974 in a drive to “Whip Inflation Now.” They knew it would trigger a recession, but they had no idea how severe.

    1981-82: Fed head Paul Volker was bidding up interest rates to record highs in another bid to drive down inflation.

    2008-09: began after Fed started tightening after spinning a huge credit bubble for several preceding years.

  6. Oil and gas companies are tightening their belts due to ‘low’ prices that the article below links to low demand due to c 19 and ‘green’ policies. The industry is shrinking and many companies are filing bankruptcy or entering mergers as the larger companies begin to dominate.

    It does not seem to occur that $40 per barrel is double the historical price and may somewhat account for low demand. To admit that would be to suggest that the game is up and other factors like c 19 and ‘green’ policies allow for other narratives.

    Oil Industry Turns to Mergers and Acquisitions to Survive

    With the price of a barrel stuck around $40 and no recovery in sight, companies are combining to cut costs and ride out the pandemic.

    HOUSTON — The once mighty oil and gas industry is flailing, desperately trying to survive a pandemic that has sharply reduced demand for its products.

    Most companies have cut back drilling, laid off workers and written off assets. Now some are seeking out merger and acquisition targets to reduce costs….

    The big problem is that the fortunes of oil companies are fundamentally tied to oil and natural gas prices, which remain stubbornly low. Few experts expect a full recovery of oil demand before 2022, and some analysts have gone so far as to declare that oil demand might have peaked in 2019 and could slide in the years to come as the popularity of electric cars grows….

    More than 50 North American oil and gas companies with debts totaling more than $50 billion have sought bankruptcy protection this year….

    European oil companies have already begun pivoting away from oil and gas, plotting investments in renewable energy like wind and solar to attract new investors. While those companies have had limited success so far, American companies have for the most part stuck with their traditional businesses. They have adapted to low oil and gas prices by slashing investments by 30 percent or more. The oil and gas rig count has dropped by 569 since last fall, to only 282 operating across the country….

    As the shale industry grew over the last decade or so, many smaller companies poured billions of dollars into the Permian and other parts of the country. Now, the process appears to be headed in the opposite direction as the industry retrenches and becomes smaller.

    Investment in U.S. shale oil has dropped to an estimated $45 billion this year from roughly $100 billion annually in 2018 and 2019, according to the International Energy Agency. In its annual report released this month, the Paris-based organization said a shakeout was underway….

    Globally, daily oil consumption was down more than 6 percent in September from a year earlier, according to the Energy Department. Oil production continues to outpace demand, keeping inventory levels high and prices low….

    https://www.nytimes.com/2020/10/19/business/energy-environment/conocophillips-concho-oil-merger.html

  7. From the mouth of a defective canadian horse, the alleged schedule to The Plan:

    – Phase in secondary lock down restrictions on a rolling basis, starting with major metropolitan areas first and expanding outward. Expected by November 2020.
    – Rush the acquisition of (or construction of) isolation facilities across every province and territory. Expected by December 2020.– Daily new cases of COVID-19 will surge beyond capacity of testing, including increases in COVID related deaths following the same growth curves. Expected by end of November 2020.– Complete and total secondary lock down (much stricter than the first and second rolling phase restrictions). Expected by end of December 2020 – early January 2021.– Reform and expansion of the unemployment program to be transitioned into the universal basic income program. Expected by Q1 2021.– Projected COVID-19 mutation and/or co-infection with secondary virus (referred to as COVID-21) leading to a third wave with much higher mortality rate and higher rate of infection. Expected by February 2021.– Daily new cases of COVID-21 hospitalizations and COVID-19 and COVID-21 related deaths will exceed medical care facilities capacity. Expected Q1–Q2 2021.– Enhanced lock down restrictions (referred to as Third Lock Down) will be implemented. Full travel restrictions will be imposed (including inter-province and inter-city). Expected Q2 2021.– Transitioning of individuals into the universal basic income program. Expected mid Q2 2021.– Projected supply chain break downs, inventory shortages, large economic instability. Expected late Q2 2021.
    – Deployment of military personnel into major metropolitan areas as well as all major roadways to establish travel checkpoints. Restrict travel and movement. Provide logistical support to the area. Expected by Q3 2021.
    The whistleblower said committee members asked who would become the owner of the forfeited property and assets in that scenario and what would happen to lenders or financial institutions. “We were simply told “the World Debt Reset program will handle all of the details.

    “Several committee members also questioned what would happen to individuals if they refused to participate in the World Debt Reset program, or the HealthPass, or the vaccination schedule, and the answer we got was very troubling.
    “Essentially we were told it was our duty to make sure we came up with a plan to ensure that would never happen. We were told it was in the individual’s best interest to participate.
    “When several committee members pushed relentlessly to get an answer, we were told that those who refused would first live under the lock down restrictions indefinitely. And that over a short period of time as more Canadians transitioned into the debt forgiveness program, the ones who refused to participate would be deemed a public safety risk and would be relocated into isolation facilities. “Once in those facilities they would be given two options, participate in the debt forgiveness program and be released, or stay indefinitely in the isolation facility under the classification of a serious public health risk and have all their assets seized.”
    The whistleblower said the heated discussion “escalated beyond anything I’ve ever witnessed before”.
    “In the end it was implied by the PMO that the whole agenda will move forward no matter who agrees with it or not, that it won’t just be Canada but in fact all nations will have similar roadmaps and agendas, that we need to take advantage of the situations before us to promote change on a grander scale for the betterment of everyone.
    “The members who were opposed and ones who brought up key issues that would arise from such a thing were completely ignored. Our opinions and concerns were ignored. We were simply told to just do it. All I know is that I don’t like it and I think it’s going to place Canadians into a dark future.”

    https://cairnsnews.org/2020/10/16/canadian-politician-leaks-new-covid-lockdown-plan-and-great-reset-dictatorship-australia-is-part-of-it/

    • wow, I was very worried but then I noticed this:

      “We were simply told “the World Debt Reset program will handle all of the details.”

      that is quite a relief.

      everybody okay with this now?

    • If the planners insist that 100% of the population must be vaccinated against covid-19, we have the right to suspect there’s’s something fishy with this vaccine, since it is well known that to obtain immunity it’s never necessary to vaccinate 100% of the population.

      But a one year implementation plan? Hard to believe i think. That bit seems too “optimistic” to me. It’s hard to see how they can get this boat to mid-2121 without major disruption everywhere Social unrest can rapidly escalate to an out-of-the-plan outcome. Social media are a threat to the plan and will be treated as such. Gaggling of all dissent is on course now, as we all now. Next who knows if we’ll have detention camps for “infected” rebels, labeled as an “health hazard”. Every person is a potencial virus (carrier) now, as in the earlier narrative every person was a potential terr-orist.

      And suddenly, the old idea of looking for a bugout in the most remote and unpopulated region of my country, seems almost appealing again. But nah. Too much work for a 50’s yo couple. So, if there really comes a time when we’ll have to submit to totalitarian power, next year or later on, our only options will be to accept the yoke …or. My mind would fancy the second option, since it’s the honourable one for somebody who ever hated tiranny. But will my guts allow such a brave and graceful farewell? Ah, that only the dogs, pardon the gods know.

      • yes, it’s one thing to decide now that I will resist the vaccine no matter what.

        but when/if the times comes? and what will be the authoritarian penalty?

        • If it comes to pass they will whittle away I think. No renewing license plate or dl until you get the mark. Then up the pressure bit by bit. People aint going to do it. There already not complying with the mask decree let alone allow a gov mandated something injected into their body.

        • We already have documented cases of people contracting covid twice, and the other four coronaviruses that routinely infect humans do not confer permanent immunity either.

      • JMS, if you are in your 50s and moving is too much work, then you deserve what is coming to you.

        • “Deserve” is moral language. We are not in a moral situation. The collapse of IC is a physical fact, it has little or nothing to do with morality. We are not being punished for being naughty. This is not the last judgment.
          So why would I leave my house and my village to hide alone in a remote hole, if an eventual totalitarian state would not have difficulties in finding me? Kaczynski life is not for me. But if you believe you can defeat the repressive machine of a techno-totalitarian state, go ahead. All the luck for you.

      • I am guessing countries will try to forgive all debt. They may also try to maintain asset prices, but this will be difficult to do. An office building with no tenants is not worth much.

        • I’ve been thinking that empty buildings need to become indoor micro villages (depending on size). sO MANY UNEMPLOYED, ROOTLESS AND HOMELESS PEOPLE NEED A BASE. The way I see them do it, growing food in layers under lights LOOKS energy economical.

          Every roof can collect water, but most need central water backup. Same applies to food. (Capitalism and bureaucracy don’t work in these terms, but arranging such micro villages might maintain the buildings as assets of sorts?

          Of course, this all depends on top down, centralized planning (OF SORTS–NOT THE KIND WE HAVE NOW). Awareness of limits of all sorts.

          • don’t see how debt can be forgiven, when house and cars are bought on credit, and businesses are financed by investment/loans as well

            surely the economic system would collapse faster that way than any other

            • But if there’s a place for the indebted to fall back to? People default (or are on track to default) on debt payment. The debtors (?) “rulers?” pay a small portion of the debt to a fall back program for the indebted. (Emergency housing, basic water, food, etc.) That would be an “investment.” The indebted, forgiven of immediate debt, are nonetheless obliged to grow/produce/occupy/sell something that provides a small portion of “tax” income to the investors. Way more complex and feudal than I would hope for. Just trying to address your points in some way. The investors don’t pay the “owed” individually. They pay into a program that keeps the system going and that the owed can be compensated by. Not many new cars or new homes involved here. More like making what’s here already work (under seemingly impossible odds). Highly socialistic, but not ideologically so. Very pragmatic. Top down and bottom up integrated. Small units of governance integrated with top down, broad oversight.

            • I have a n amount of money invested in a UK building society

              which means that it is supporting the debt of someone else’s house

              if that debt is cancelled then a chunk of my savings pot gets wiped out, no matter what fancy accounting system is used to say it isn’t

            • But don’t forget to add a huge increase in mortality, especially among people with chronic diseases and the old in general. I believe there’s also a cull involved in all this, since less population equals (at least in theory) more ressources per capita.

    • Re: renewable electricity generation

      “This map shows its rapid proliferation across the US over the past 35 years. It is possible that all 50 US states could move to 100% renewable grid energy by 2050.” (The Guardian)

      Renewable energy has risen from 7% of USA electricity consumption in 2000 to 17% in 2020 – but it ‘could’ rise to 100% in another 30 years.

      Up 10 points in 20 years, up another 83 points in another 30 years.

      The Guardian is pushing a relentlessly optimistic view of renewable electricity consumption.

      To give another perspective:

      Renewable hydroelectricity provided 30% of USA electricity in 1950 but failed to keep to pace with the growth in demand. Other renewables have been added since.

      Renewables accounted for 13% of electricity in 1997 – so 17% in 2020 represents a rise of 4 points in 23 years. 7% in 2000 was the low point.

      Renewables in 2000 provided half the proportion of electricity in USA as in the 1940s.

      But it ‘could’ provide 100% in 30 years time – the Guardian says so anyway.

      Up 4 points in 23 years, up another 83 points in 30 years.

      https://upload.wikimedia.org/wikipedia/en/1/16/USRenewableElectricity.jpg

      • Typo correction: Renewables in [2020] provided half the proportion of electricity in USA as in the 1940s.

      • remember that in absolute terms, in the world, from 2000 to 2018, energy consumption sourced from burning coal increased 11 times faster than solar sourced energy and 5 times faster than wind sourced energy.

        • The secret of all of the growth in coal consumption was outsourcing manufacturing to China and India. Both countries use coal very heavily. This change, of course, was made in the hope of “preventing climate change.” All of the metrics for checking to see whether a given country complied considered only local fossil fuel use, not fossil fuel use in imported goods.

      • I agree that the 100% renewable electricity generation by 2050 is entirely unrealistic.

        It should be noted that even this goal is tiny compared to replacing all energy consumption with renewable electricity. Depending upon how a person counts the electricity, only about 20% or 30% of energy consumption is from electricity now. A big reason that the US and Europe import so many goods from China is because they are effectively exporting goods made with their primarily coal-based electricity. We have outsourced our electricity production to a coal producing country.

        https://gailtheactuary.files.wordpress.com/2020/10/world-electricity-generation-by-part-of-the-world-stacked.png

        • “100% renewable electricity generation by 2050 is entirely unrealistic.”

          I think any prediction that far into the future is unrealistic. That’s probably on the far side of the singularity. “Building” a wind turbine or a PV array could be as simple as planting a seed. After all, the instructions for making a wind turbine are a lot less complicated than a tree.

          https://www.youtube.com/watch?v=FIK3X2fKJrE

          If you don’t want to watch the whole thing, jump to the last minute.

          • “That’s probably on the far side of the singularity.”

            How did you statistically ‘calculate’ that ‘probability’?

            Could you replicate the formula?

            • > How did you statistically ‘calculate’ that ‘probability’?

              I didn’t. If you are actually interested, it’s in the first 70 pages of Ray Kurzweil’s book, _The Singularity is Near_. You could also Google for Vernor Vinge.

              > Could you replicate the formula?

              Sure. It’s not hard to state an equation from the graphs in Kurzweil’s book.

              I should add that the singularity or some of the things that lead up to it could be an absolute disaster for naturally evolved humans. Very few people are aware of their psychological mechanisms. One of these, which I will not try to explain, is that stressed humans groups work themselves up to wars. A trait that is easier to understand is https://en.citizendium.org/wiki/Capture-bonding

    • For most of the world’s people, life did indeed get better from 1945 to 2020. It may not be sustainable going forward, but let us not pretend that the recent past was not mankind’s material golden age. I notice among environmentalists in particular that there is often a tendency to see nothing but misery everywhere they look. Instead of naively extrapolating the past into the future, they try to extrapolate a dystopian future into the past!

  8. “Tens of thousands of protesters brought the largest city in Africa [Lagos, Nigeria] to a standstill on Monday, mounting the biggest demonstration in a two-week campaign against police brutality and escalating a standoff with a government that has pledged to restore order…

    “The Lagos protests were the largest of a series of demonstrations on Monday across the West African nation of 206 million people that appeared to significantly raise the temperature between demonstrators and the government.”

    https://www.wsj.com/articles/nigerian-protesters-shut-down-africas-largest-city-escalating-standoff-with-government-11603125398

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