2020: The Year Things Started Going Badly Wrong

How today’s energy problem is different from peak oil

Many people believe that the economy will start going badly wrong when we “run out of oil.” The problem we have today is indeed an energy problem, but it is a different energy problem. Let me explain it with an escalator analogy.

Figure 1. Holborn Tube Station Escalator. Photo by renaissancechambara, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons.

The economy is like a down escalator that citizens of the world are trying to walk upward on. At first the downward motion of the escalator is almost imperceptible, but gradually it gets to be greater and greater. Eventually the downward motion becomes almost unbearable. Many citizens long to sit down and take a rest.

In fact, a break, like the pandemic, almost comes as a relief. There is suddenly a chance to take it easy; not drive to work; not visit relatives; not keep up appearances before friends. Government officials may not be unhappy either. There may have been demonstrations by groups asking for higher wages. Telling people to stay at home provides a convenient way to end these demonstrations and restore order.

But then, restarting doesn’t work. There are too many broken pieces of the economy. Too many bankrupt companies; too many unemployed people; too much debt that cannot be repaid. And, a virus that really doesn’t quite go away, leaving people worried and unwilling to attempt to resume normal activities.

Some might describe the energy story as a “diminishing returns” story, but it’s really broader than this. It’s a story of services that we expect to continue, but which cannot continue without much more energy investment. It is also a story of the loss of “economies of scale” that at one time helped propel the economy forward.

In this post, I will explain some of the issues I see affecting the economy today. They tend to push the economy down, like a down escalator. They also make economic growth more difficult.

[1] Many resources take an increasing amount of effort to obtain or extract, because we use the easiest to obtain first. Many people would call this a diminishing returns problem.

Let’s look at a few examples:

(a) Water. When there were just a relatively few humans on the earth, drinking water from a nearby stream was a reasonable approach. This is the approach used by animals; humans could use it as well. As the number of humans rose, we found we needed additional approaches to gather enough potable water: First shallow wells were dug. Then we found that we needed to dig deeper wells. We found that lake water could be used, but we needed to filter it and treat it first. In some places, now, we find that desalination is needed. In fact, after desalination, we need to put the correct minerals back into it and pump it to the destination where it is required.

All of these approaches can indeed be employed. In theory, we would never run out of water. The problem is that as we move up the chain of treatments, an increasing amount of energy of some kind needs to be used. At first, humans could use some of their spare time (and energy) to dig wells. As more advanced approaches were chosen, the need for supplemental energy besides human energy became greater. Each of us individually cannot produce the water we need; instead, we must directly, or indirectly, pay for this water. The fact that we have to pay for this water with part of our wages reduces the portion of our wages available for other goods.

(b) Metals. Whenever some group decides to mine a metal ore, the ore that is taken first tends to be easy to access ore of high quality, close to where it needs to be used. As the best mines get depleted, producers use lower-grade ores, transported over longer distances. The shift toward less optimal mines requires more energy. Some of this additional energy could be human energy, but some of the energy would be supplied by fossil fuels, operating machinery in order to supplement human labor. Supplemental energy needs become greater and greater as mines become increasingly depleted. As technology advances, energy needs become greater, because some of the high-tech devices require materials that can only be formed at very high temperatures.

(c) Wild Animals Including Fish. When pre-humans moved out of Africa, they killed off the largest game animals on every continent that they moved to. It was still possible to hunt wild game in these areas, but the animals were smaller. The return on the human labor invested was smaller. Now, most of the meat we eat is produced on farms. The same pattern exists in fishing. Most of the fish the world eats today is produced on fish farms. We now need entire industries to provide food that early humans could obtain themselves. These farms directly and indirectly consume fossil fuel energy. In fact, more energy is used as more animals/fish are produced.

(d) Fossil Fuels. We keep hearing about the possibility of “running out” of oil, but this is not really the issue with oil. In fact, it is not the issue with coal or natural gas, either. The issue is one of diminishing returns. There is (and always will be) what looks like plenty left. The problem is that the process of extraction consumes increasing amounts of resources as deeper, more complex oil or gas wells need to be drilled and as coal mines farther away from users of the coal are developed. Many people have jumped to the conclusion that this means that the price that buyers of fossil fuel will pay will rise. This isn’t really true. It means that the cost of production will rise, leading to lower profitability. The lower profitability is likely to be spread in many ways: lower taxes paid, cutbacks in wages and pension plans, and perhaps a sale to a new owner, at a lower price. Eventually, low energy prices will lead to production stopping. Without adequate fossil fuels, the whole economic system will be disrupted, and the result will be severe recession or depression. There are also likely to be many job losses.

In (a) through (d) above, we are seeing an increasing share of the output of the economy being used in inefficient ways: in creating deeper water wells and desalination plants; in drilling oil wells in more difficult locations; in extracting metal ores that are mostly waste products. The extent of this inefficiency tends to increase over time. This is what leads to the effect of an escalator descending faster and faster, just as we humans are trying to walk up it.

Humans work for wages, but they find that when they buy a box of corn flakes, very little of the price actually goes to the farmer growing the corn. Instead, all of the intermediate parts of the system are becoming overly large. The buyer cannot afford the end products, and the producer feels cheated by the low wholesale prices he is being paid. The system as a whole is pushed toward collapse.

[2] Increasing complexity can help maintain economic growth, but it too reaches diminishing returns.

Complexity takes many forms, including more hierarchical organization, more specialization, longer supply chains, and development of new technology. Complexity can indeed help maintain economic growth. For example, if water supply is intermittent, a country may choose to build a dam to control the flow of water and produce electricity. Complexity tends to reach diminishing returns, as noted by Joseph Tainter in The Collapse of Complex Societies. For example, economies build dams in the best locations first, and only later build them at less advantageous sites. These are a few other examples:

(a) Education. Teaching everyone to read and write has significant benefits because it allows the use of books and other written materials to disseminate information and knowledge. Teaching a few people advanced subjects has significant benefits as well. But after a certain point, the need for additional people to study a subject such as art history is low. A few people can teach the subject but doing more research on the subject probably won’t increase world GDP very much.

When we look at data from about 1970, we find that people with advanced education earned much higher incomes than those without advanced degrees. But as we add an increasing large share of people with these advanced degrees, jobs that really need these degrees are not as plentiful as the new graduates. Quite a few people with advanced degrees end up with low-paying jobs. The “return on investment” for higher education drops increasingly lower. Some students are not able to repay the debt that they took out in order to pay for their education.

(b) Medicines and Vaccines. Over the years, medicines and vaccines have been developed to treat many common illnesses and diseases. After a while, the easy-to-find medicines for the common unwanted conditions (such as diabetes, high blood pressure and inflammation) have already been found. There are medicines for rare diseases that haven’t been found, but these will never have very large total sales, discouraging investment. There are also conditions that are common in very poor countries. While expensive drugs could be developed for these conditions, it is likely that few people could afford these drugs, so this, too, becomes less attractive.

If research is to continue, it is important to keep expanding work on expensive new drugs, even if it means completely ignoring old inexpensive drugs that might work equally well. A cynical person might think that this is the reason why vitamin D and ivermectin are generally being ignored in the prevention and treatment of COVID-19. Without an expanding group of high-priced new drugs, it is hard to attract capital and young workers to the field.

(c) Automobile Efficiency. In the US, the big fuel efficiency change that took place was that which took place between 1975 and 1983, when a changeover was made to smaller, lighter vehicles, similar to ones that were already in use in Japan and Europe.

Figure 2. Estimated Real-World Fuel Economy, Horsepower, and Weight Since Model Year 1975, in a chart produced by the US Environmental Protection Agency. Source.

The increase in fuel efficiency between 2008 and 2019 (an 11 year period) was only 22%, compared to the 60% increase in fuel efficiency between 1975 and 1983 (an 8 year period). This is another example of diminishing returns to investment in complexity.

[3] Today’s citizens have never been told that many of the services we take for granted today, such as suppression of forest fires, are really services provided by fossil fuels.

In fact, the amount of energy required to provide these services rises each year. We expect these services to continue indefinitely, but we should be aware that they cannot continue very long, unless the energy available to the economy as a whole is rising very rapidly.

(a) Suppression of Forest Fires. Forest fires are part of nature. Many trees require fire for their seeds to germinate. Human neighbors of forests don’t like forest fires; they often encourage local authorities to put out any forest fire that starts. Such suppression allows an increasing amount of dry bush to build up. As a result, future fires spread more easily and grow larger.

At the same time, humans increasingly build homes in forested areas because of the pleasant scenery. As population expands and as fires spread more easily, forest fire suppression takes an increasing amount of resources, including fossil fuels to power helicopters used in the battles. If fossil fuels are not available, this type of service would need to stop. Trying to keep forest fires suppressed, assuming fossil fuels are available for this purpose, will take higher taxes, year after year. This is part of what makes it seem like we are trying to move our economy upward on a down escalator.

(b) Suppression of Illnesses. Illnesses are part of the cycle of nature; they disproportionately take out the old and the weak. Of course, we humans don’t really like this; the old and weak are our relatives and close friends. In fact, some of us may be old and weak.

In the last 100 years, researchers (using fossil fuels) have developed a large number of antibiotics, antivirals and vaccines to try to suppress illnesses. We find that microbes quickly mutate in new ways, defeating our attempts at suppression of illnesses. Thus, we have ever-more antibiotic resistant bacteria. The cost of today’s US healthcare system is very high, exceeding what many poor people can afford to pay. Introducing new vaccines results in an additional cost.

Closing down the system to try to stop a virus adds a huge new cost, which is disproportionately borne by the poor people of the world. If we throw more money/fossil fuels at the medical system, perhaps it can be made to work a little longer. No one tells us that disease suppression is a service of fossil fuels; if we have an increasing quantity of fossil fuels per capita, perhaps we can increase disease suppression services.

(c) Suppression of Weeds and Unwanted Insects. Researchers keep developing new chemical treatments (based on fossil fuels) to suppress weeds and unwanted insects. Unfortunately, the weeds and unwanted insects keep mutating in a way that makes the chemicals less effective. The easy solutions were found first; finding solutions that really work and don’t harm humans seems to be elusive. The early solutions were relatively cheap, but later ones have become increasingly expensive. This problem acts, in many ways, like diminishing returns.

(d) Recycling (and Indirectly, Return Transport of Empty Shipping Containers from Around the World). When oil prices are high, recycling of used items for their content makes sense, economically. When oil prices are low, recycling often requires a subsidy. This subsidy indirectly goes to pay for fossil fuels used to facilitate the recycling. Often this goes to pay for shipment to a country that will do the recycling.

When oil prices were high (prior to 2014), part of the revenue from recycling could be used to transport mixed waste products to China and India for recycling. With low oil prices, China and India have stopped accepting most recycling. Instead, it is necessary to find actual “goods” for the return voyage of a shipping container or, alternatively, pay to have the container sent back empty. Europe now seems to have a difficult time filling shipping containers for the return voyage to Asia. Because of this, the cost of obtaining shipping containers to ship goods to Europe seems to be escalating. This higher cost acts much like diminishing returns with respect to the transport of goods to Europe from Asia. This is yet another part of what is acting like a down escalator for the world economy.

[4] Another, ever higher cost is pollution control. This higher cost also exerts a downward effect on the world economy, because it acts like another intermediate cost.

As we burn increasing amounts of fossil fuels, increasing amounts of particulate matter need to be captured and disposed of. Capturing this material is only part of the problem; some of the waste material may be radioactive or may include mercury. Once the material is captured, it needs to be “locked up” in some way, so it doesn’t pollute the water and air. Whatever approach is used requires energy products of various kinds. In fact, the more fossil fuels that are burned, the bigger the waste disposal problem tends to be.

Burning more fossil fuels also leads to more CO2. Unfortunately, we don’t have suitable alternatives. Nuclear is probably as good as any, and it has serious safety issues. In my opinion, the view that intermittent wind and solar are a suitable replacement for fossil fuels represents wishful thinking. Wind and solar, because of their intermittency, can only partially replace the coal or natural gas burned to generate electricity. They cannot be relied upon for 24/7/365 generation. The unsubsidized cost of producing intermittent wind and solar energy needs to be compared to the price of coal and natural gas, not to wholesale electricity prices. There are a lot of apples to oranges comparisons being made.

[5] Among other things, the growth of the economy depends on “economies of scale” as the number of participants in the economy gradually grows. The response to COVID-19 has been extremely detrimental to economies of scale.

The economies of many countries changed dramatically, with the initial spread of COVID-19. Unfortunately, we cannot expect these changes to be completely reversed anytime soon. Part of the reason is the new virus mutation from the UK that is now of concern. Another reason is that, even with the vaccine, no one really knows how long immunity will last. Until the virus is clearly gone, vestiges of the cutbacks are likely to remain in place.

In general, businesses do well financially as the number of buyers of the goods and services they provide rises. This happens because overhead costs, such as mortgage payments, can be spread over more buyers. The expertise of the business owners can also be used more widely.

One huge problem is the recent cutback in tourism, affecting almost every country in the world. This cutback affects both businesses directly related to tourism and businesses indirectly related to tourism, such as restaurants and hotels.

Another huge problem is social distancing rules that lead to office buildings and restaurants being used less intensively. Businesses find that they tend to have fewer customers, rather than more. Related businesses, such as taxis and dry cleaners, find that they also have fewer customers. Nursing homes and other care homes for the aged are seeing lower occupancy rates because no one wants to be locked up for months on end without being able to see other members of their family.

[6] With all of the difficulties listed in Items [1] though [5], debt based financing tends to work less and less well. Huge debt defaults can be expected to adversely affect banks, insurance companies and pension plans.

Many businesses are already near default on debt. These businesses cannot make a profit with a much reduced number of customers. If no change is possible, somehow this will need to flow through the system. Defaulting debt is likely to lead to failing banks and pension plans. In fact, governments that depend on taxes may also fail.

The shutdowns taken by economies earlier this year were very detrimental, both to businesses and to workers. A major solution to date has been to add more governmental debt to try to bail out citizens and businesses. This additional debt makes it even more difficult to maintain promised debt payments. This is yet another force making it difficult for economies to move up the growth escalator.

[7] The situation we are headed for looks much like the collapses of early civilizations.

With diminishing returns everywhere, and inadequate sources of very inexpensive energy to keep the system going, major parts of the world economic system appear headed for collapse. There doesn’t seem to be any way to keep the world economy growing rapidly enough to offset the down escalator effect.

Citizens have not been aware of how “close to the edge” we have been. Low energy prices have been deceptive, but this is what we should expect with collapse. (See, for example, Revelation 18: 11-13, telling about the lack of demand for goods of all kinds when ancient Babylon collapsed.) Low prices tend to keep fossil fuels in the ground. They also tend to discourage high-priced alternatives. Unfortunately, all the wishful thinking of the World Economic Forum and others advocating a Green New Deal does not change the reality of the situation.

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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2,800 Responses to 2020: The Year Things Started Going Badly Wrong

  1. Ed says:

    Xaiber, I think you will enjoy archbishop Vigano’s take on the current situation it has much in common with that you are saying.


    • Ed says:

      a snippet

      “We must all become aware of how much the proponents of the New World Order and the Great Reset hate the inalienable values of our Greco-Christian civilization, such as Religion, the family, respect for life and the inviolable rights of the human person, and national sovereignty.”

      • JMS says:

        The values of the Christian monarchical tradition (God, country, family, etc.) began to be demolished by the philosophes of the 18th century, the liberals of circa 1850 finished the job, with the later help of commies. Today, in Europe at least, the presence of these values is vestigial.

        The strategy is clear and did not start in 2020, but decades ago: create or direct events, ontrol their perception through the media, in order to rob/divide/confuse your opponents (in this case, the ex-citizens) and take the respective dividends in the form of money and power. As we all know, concentration of both in their hands (and impoverishment of all the others) is the inescapable trend now. The law of diminishing returns predicts it.

        Operation Covid greatly accelerated the whole process of power grab and control, but it’s only fair to recall that it would not have been possible without the credibility tests provided by previous operations (Rei.chstag, JF-K, Gl.adio, Sept11 and a long etc.) If people swallow a Osvald, the sky is the limit for the technocrat owners.
        There’s where we the sheep are now, trapped in the clouds of our shepherds superior intelligence (AI and else).

        19th century bourgeois liberal values (freedom, equality, etc.) resisted the Nazi and Soviet attacks, but wiil not resist the coalition of both ideologies in the 21st century Owners.
        They are too powerfull and we the sheep too gullible, confused, divided and week. That’s how i seet it now, but who knows what will be the situation in nine months, in two years? Some popular uprisings seem inevitable sooner or later, i guess, but they will be quickly stifled. People will be slow-cooked like frogs. When the frogs get at last that there’s no tomorrow, they’ll be to weak to budge. Mission acomplished for the owners, utopia completed, great success and the survivors will live happily forever. End of the movie.

        • It will be eternal. A world where the Great War was never fought, and a century too late.

          • JMS says:

            Yea, i forgot to add an ironic smile after the last sentence. I don’t believe in the end of the History meme. The strife is forever, because that’s what dissipative structures do for a living.

      • Mirror on the wall says:

        Vigano is a loose cannon who is cutting his own path. He is not a serious scholar. A decade ago, the role was played by Bp. Williamson, who at least had a better understanding of traditional RC teaching. Vigano is a ‘conservative’ and thus a ‘liberal’. He followed the post-Vatican II popes until PF. His position is incoherent at best.

        It is a bit of a stretch to claim that the ancient Greeks and medieval and modern liberal Christianity all had the same values. Indeed ‘inviolable rights’ are a modern concept with roots in the early bourgeois period. Plato conceived ‘justice’ as the order of a society in which the masses know their place, have no political say, and are managed by an elite. He proposed three different value systems for three different castes. Only adult male citizens, a tiny proportion of the society, had legal rights in ancient Greece, as in ancient Rome. Feudal Europe was not about liberal rights but the power of institutions, monarchy, aristocracy, RCC.

        Traditional Catholics, like the pre-Vatican II RCC, see liberal ‘rights’ as subversive of RC society. RCC always condemned the ‘right’ of each to publicly worship as they please, and all non-RCC religions were banned from public worship in RC countries. A ‘free press’ was also condemned and banned. It is ironic that Vigano now wants China to tolerate Christianity on the basis of such ‘rights’. Traditional RC see him as basically a liberal who has not got a clue what he is on about. He is a ‘useful idiot’ for Trump hawks at the present time as he chimes with their geopolitical agenda and rhetoric, which is why Bannon interviewed him.

        • JMS says:

          “RCC always condemned the ‘right’ of each to publicly worship as they please, and all non-RCC religions were banned from public worship in RC countries.”

          Except that RCC lost its influence in Catholic countries after the French revolution, and religious freedom was enshrined in liberal constitutions from the beginning of the 19th century. In Portugal, this happened two hundred years ago (1822).

          • Mirror on the wall says:

            Yes, those countries then ceased to be Catholic countries, politically defined, in so far as they separated state from church. RCC itself always condemned religious liberty and it stepped that up in 19 c., such as Leo XIII and Pius IX. RCC itself did not accept religious liberty, and the ‘right’ of the other religions to public worship, until RCC went liberal at Vatican II in the 1960s and it published Dignitatis Humanae.

            RCC had endorsed the clerical fascism of Franco and it was only after Vatican II that it began to pressurise the Spanish government to tolerate non-Catholic public worship. Other RC countries were also pressurised to allow it, and effectively they all ceased to be Catholic countries, politically defined, although RCC continues to try to influence them on ‘morality’ like abortion. Argentina just allowed it for the first time.

            Traditional Catholics like SSPX continue to oppose religious liberty and Vatican II in its entirety. Indeed, RCC itself ceased to be Catholic at Vatican II. Many traditional Catholics square that circle by denying that the post-Vatican II popes were valid. Thus PF is simply Mr. Bergoglio of the Vatican II Sect. For SSPX, the post-Vatican II church both is, and is not, the RCC under different aspects. Still others style it the W/ore of Babylon.

      • Mirror on the wall says:

        Spiked has a good article on Bannon.


        His worldview is Hindu, hierarchical and cyclic. He is trying to push the West deeper into its crisis so as to re-establish more ‘traditional’ societies. He is a strategist. CCP is actually much closer to what Bannon wants, with its strong, authoritarian state and its promotion and protection of traditional folk religions. Bannon is against industrial progress and population growth, however.

        The only ‘points’ to his anti-China stance are, guessably, to maintain in USA the influence of the popularism around Trump, firm up nationalism, and slow down the global economy. He seems to favour Christianity simply because he sees it as the ‘traditional’ religion of Europe. Like Vigano, at best he is incoherent and cutting his own odd path.

        • There seem to be a lot of odd ideas around!

        • Kowalainen says:

          Being against industrial progress is an immutable road towards stagnation and domination by an adversary that goes full bore on tech. Tech does not, however, imply rampant consumerism and socialist engineering.

          Where Bannon falls through the floor is in the classical humanoid/life chauvinism/traditionalism/conservatism trap. Big red nostalgia warning sign on that hole of reasoning.

          FFS Steve, follow through with your thoughts. Ultimate reality is created in the limits of what is possible. It isn’t by default. Oh, well, I suppose most humanoids need solid ground for projecting their core being onto the world. Yet we all stand on this sweet little oasis of life floating around the sun in the nothingness of it all.

          Look Steve, there is no firm ground, a safe space to feel the cozies in, it’s an illusion, a myopia of the ordinary. On earth we are all naked facing impending peril. At any moment a comet could slap down on the planetary surface, ending the shit show for quite some time, and then some time. The same goes for the sun, it could flare massively, and that would be all she wrote for eons.

          • Lidia17 says:

            Only from listening to the “War Room” podcast and knowing little about Bannon prior to this… I don’t see how Bannon is “against industrial progress”.. rather the opposite. He is overtly siding with anti-CCP capitalist forces in HK and the Chinese diaspora (which he mentions frequently). The de facto WR theme song about “taking down the CCP” is modeled on boasting bling rap culture: Who got dat big yacht? Who smoke dem fine cigars? Who wear dem bespoke suits?, etc. Only thing missing are the babes, but Guo kinda sets off my gaydar.

            Seems like Bannon’s aligned with forces who look at places like China as opportunities to make material gains (the way the CCP/state looks at the rest of the world). Even the Catholic aspect is to maintain/expand a sphere of influence, no?

        • Bei Dawei says:

          That is a good article. I would question whether Bannon believes in the Four Yugas (Ages) / Cyclical Time, though. “Traditionalism” is doesn’t have clear ideological content, as far as I can see (converts to it have ended up in any number of “traditional” religions), but generally represents a right-wing religious reaction to left-wing politics. For Bannon that took the form of conservative Catholicism.

          N. Wahid Azal has some interesting videos, and at least one paper, about this whole subculture (which he despises).

          • Mirror on the wall says:

            It would be hard to say without questioning him. He has assimilated the traditionalism of Evola, which is very much focused on the Kali Yuga. Remember, Bannon is a strategist and that often involves not disclosing one’s objectives. Note what I said above about the different value systems for different castes in Plato. Nietzsche also, eg. TAC 57. It may be that Bannon sees Christianity as a feudal, peasant religion and thinks that it will serve the lower order as its ‘traditional’ religion, while the ruling caste has a more pan-traditionalist viewpoint rooted in Hunduism, the traditional IE religion. If so, then he is not incoherent, but certainly odd. It is hard to say without more data.

  2. Dennis L. says:

    Some of you might find this summary of 2020 of interest, it is visual and easy to read. Copper did very well which seems to be a different observation posted here regarding an African country and low copper prices.


    This site has a mailing list and the representations are a nice summary.

    Byron Wien has some interesting observations regarding 2021, his thoughts on the Fed are instructive. Inflation seems to be in the air, probably a good time to have some long term debt against a relatively safe asset with appreciation potential and income to boot. He sees oil in the $65/barrel range, Exxon anyone?


    Dennis L.

    • If mines are depleted, even what appear as to be a high price by historical standards can provide too little revenue to pay workers an adequate wage. This is usually when the mines need to be closed.

      Metals are a bit different from energy products. Sometimes their prices can rise, even when energy prices are at low levels. They are subject to diminishing returns as well.

      • Tango Oscar says:

        Gold and silver miners become more valuable the lower fossil fuel cost goes because diesel is such a huge component cost in mining. Copper, nickel, and zinc are increasing in cost because China is using a lot and there isn’t extra capacity that can just be ramped up. Gold and silver are going up because we’re in the midst of a monetary crisis. All of them are a good hedge against a falling dollar.

        • Once the dollar falls too much, however, the system tends to fall apart. Whatever you bought as a hedge won’t really buy anything. So the hedge is a very short term hedge.

          • Yep, the real hedge perhaps being if “your uncle” has got the digital keys into that bunker with small NPP generator or such. But the risks of receiving retaliation strike or the stale preserved food rations served until eternity, not mentioning other weirdo occupants of that joint is sub optimal hedge as well..

            So, dear kids, to keep it short, there is no HEDGE.

    • davidinamonthorayearoradecade says:

      Byron Wien:

      “5. The economy develops momentum on its own because of pent-up demand…”

      the idea of “pent-up demand” seems to be consistently erroneous.

      his thoughts depend mostly on a return to “normal”. If a person buys into that prediction, then his other predictions seem reasonable.

      I favor predictions that are worse than 2019 levels.

      • Dennis L. says:

        I try and a number of such papers, see how many times an idea comes up, follow the most frequent, etc.

        Different time, things don’t seem to work as they once did.

        Dennis L.

        • If you read an idea enough times, it will seem sort of reasonable. If the overarching themes are diminishing returns and too much complexity, you will figure out that we are doing exactly as many other early civilizations has done. We are moving to collapse, after having been in overshoot.

      • Xabier says:

        ‘Pent up demand’ is as shaky an assumption as perpetual growth being the norm, having suffered only a temporary interruption.

        In this respect, Herr Schwab, the world gauleiter, is correct when he says that there will be ‘no going back to normal’.

        • Herr Schwab in his brand spanking new Audi E-tron for the win!
          As they say in Norway..

          /sarc off

          • davidinamonthorayearoradecade says:

            we’re off to see the wizard…

            the wonderful Wizard of Schwab.

            for he is all-knowing and all-powerful.

            it is only a short time now before he rules the world.

            b w w a h a h a h a h a.

  3. Thou Shall Not Be Deceived says:

    Lockdowns Do Not Control the Coronavirus: The Evidence


    Sweden – No Lockdowns – No Masks — Not in the Top 20 Deaths Per Capita.

    But many countries that have repeatedly locked down ARE in the Top 20 including the UK, Spain, France, Canada, Italy, India, Germany etc…


    • Diana Tod says:

      Australia, Taiwan and NZ locked down. These continue to have very little transmission, people are free to move around, and thier economies are doing better than countries overrun by the virus

      • Yes Diana. Australia has recently come out of recession. The strict 6-8 week lockdown that the city of Melbourne (population 5 million) had following a serious outbreak last year is a lesson to those who say it can’t be done. The virus was not merely flattened, it was eliminated.
        Similarly, in my State of Tasmania, a strict lockdown in the northwest and vigilant contact tracing took care of the virus, and, combined with the closure of the State’s borders for a few months, the result is we have been living normally for several months.

  4. relicantproteinfarmer says:

    Decent overview of dollar “bear” argument

    • Dennis L. says:

      Thanks, skimmed it, printed it, will read it carefully. The massive printing and “giving” away of literally trillions of dollars is very concerning. Exponential series are nasty a the end.

      Dennis L.

      • davidinamonthorayearoradecade says:

        also skimmed it:

        “Going forward over the next 3-5 years, I still expect many currencies including the dollar to continue to devalue vs hard assets, and for the dollar to probably be among the weaker major currencies during that timeframe (with occasional counter-rallies against that trend, as is natural).
        While it may or may not continue to be, so far this view has been correct.”

        especially “many currencies to continue to devalue”.

        this is consistent with the idea that the global economy is in the Endgame.

    • Robert Firth says:

      Thank you, I just finished reading it. It makes a lot of sense, and is grounded pretty strongly in classical economic theory. It even explains why Keynes’ “Bancor” cannot work in a multipolar world, and why it is unnecessary in a unipolar world.

    • Thanks! I will want to read it when I have more time. The dollar has been falling since March and the big impact of COVID. I think eventually, the whole system will come apart, but perhaps that will take many years. It may depend on the extent that debt defaults become a major problem. Or maybe international trade (and the lack thereof) will be the big issue.

  5. replicantproteinfarmer says:

    If a computer gets hit by lightning and you render the chips down for gold than smash it to pieces to hide it in your trash and take it to the dump, is that a reset?

    • Dennis L. says:

      Maybe, it seems to me the biggest reset may be in education; the cost of lectures, screen time is literally close to zero. Looking at all those young people taking on debt, guaranteed by government which keeps whole cities going through student housing, etc. That changing could be a huge reset, so many assets become worthless, so much local governmental tax revenue stops. Reset that, ouch.

      It is a very challenging time. Do you actually farm?

      Some land in SE MN recently auctioned at $13K/acre per FSA office so that number should be good. That is investors piling into farm land, no way it can be farmed at that price.

      Seems like we are going for a great reset.

      Dennis L.

      • Both education and medicine are ripe for great resets. The growth of complexity has lead to diminishing returns in both areas. We basically cannot afford to pay for the absurdly complex systems we have put together. Computer programers cannot spend all their lives learning new techniques. Requiring faculty to churn out academic papers in every field has very little positive payback. The papers are too closely tied to what was believed in the past. Also, what is the benefit of endless papers on music theory or any number of other subjects? True insights come from outside the fields.

        • Dennis L. says:

          Music theory has a place, but a Michael Jackson causing it to come to life through sound and movement, wow! M. Jackson was definitely outside academia, he studied Fred Astaire’s movies.

          Medicine: Having a personal experience, a $188m machine will save me from surgery and the downward spiral I saw in my father – a memory is so strong that early on I had decided there would be no surgical treatment, my alternative choice was hospice and morphine. Complexity avoided that fate.

          So far, trivial bills, I paid my dues, worked hard, contributed my 3% to medicare, no maximum income test in the last years, purchased a good supplemental and paid for same skimping on other things. By chance retired to Rochester, MN, Mayo a short walk from my home.

          The machine was made possible by a gift from a man who in the 1930’s started a small 3000 sq foot warehouse in IA, at the end he gave $100m to Mayo. Not everyone who accumulates fortunes is a bad guy. The man who runs it is a MIT Phd, MD, two long journeys by two men that no one could have foreseen. The first started his business in the depression, survived a World War, a Korean War, a Viet Nam war and what was close to an agricultural depression in the late seventies, early eighties. Striving is not always fruitless even in bad times.

          Arising and expecting disaster each day causes one to miss the joy of the moment.When I read I try and see what might work, and then try and find a number of others who have a somewhat similar idea, is the idea plausible? Not smart enough to come up with my own ideas.

          Today came across my morning Youtube and Manolis Kellis with a fellow Lex Fridman. Manolis is positive, he embraces the struggle that is life and goes forward. Yes, he is brilliant and that always makes things easier.

          Time for other things, safe travels Gail,

          Dennis L.

  6. Thou Shall Not Be Deceived says:

    Why did the world react so hysterically to covid?

    Over the last few months, I’ve sought to demonstrate that covid is nowhere near as bad as it is portrayed by the mainstream media. I’ve written about how the mortality rate is below 0,2%, meaning that for most people the risk of dying if you get infected is less than one in 500 (and less than one in 3,000 if you’re below 70 years of age).

    I’ve also written about how the disease preferentially strikes people who are anyway very close to the end of life, so the amount of lifetime lost when someone dies of the disease is usually small. And I’ve noted that 2020 will likely turn out to have been a very average year in terms of overall mortality, in spite of the supposedly deadly pandemic that is currently raging.

    Some have countered that covid might not be that deadly, but lots of people have “long covid”. I’ve pointed out that 98% of people who get covid are fully recovered within three months, and that there is no good evidence that covid results in long term health consequences (there is bad evidence, based on low quality science, that has intentionally been used to scare people).

    I’ve also pointed out that the measures taken to fight covid, such as the huge fear campaigns, canceled childhood vaccination programs, and school closures, will result in far more years of life lost than will be lost to the virus directly. And the data I’ve used to point out all these things is publicly available, and published in some of the most prestigious and respected scientific journals in the world.


    • Robert Firth says:

      Thank you. A most informative read. I remember posting almost a year ago that covid could not be stopped, merely delayed at enormous cost. At that time, I had no idea how dangerous it might be, so your ample research has confirmed my worst fears.

      • It can be stopped. It can be eliminated. This happened in Melbourne Australia, population 5 million, where the State Govt of Victoria instituted a strict 7-8 week lockdown, (with compulsory mask wearing)following a serious outbreak of Covid last July/August.
        No one is in hospital with Covid now. Life is normal. Australia as a whole has done very well. Good governance, a cooperative citizenry combined with earlier national and state border closures has resulted in a death rate of 909 people ( for a total Australian population of 25 million.) The country has just come out of recession.

    • From the article:

      A hundred years from now, historians will not be talking about covid-19 as an example of a deadly pandemic on par with the Spanish flu. They will be talking about it as an example of how easy it is to induce a state of collective mass hysteria. Given that this is the case, how long will the present hysteria continue?

      The situation seems to be very strange. The Chinese (with the help of researchers elsewhere) put together a virus that was somewhat lethal. The Chinese put on a big show of stopping it, implying that anyone else could too.

      I think the reaction to COVID-19 is part of how a self-organizing system works. People were looking for a reason to cut back/shut down. The illness provided this.

      • Tim Groves says:

        Gail, are you going with the supposition that somebody, perhaps the Chinese, engineered this virus?

        Keith, among others, is confident it evolved naturally.

        While others think it is a make-believe pathogen and everyone who suffers from it is really suffering from something else—such as severe vitamin deficiency, cyanide poisoning, EMF exposure, Roundup contamination, or bog-standard flu.

        Me, I’m just trying to keep up by trying to test whether statements made by authorities about this virus are mutually consistent—whether they add up to a coherent Leonardo Sticks structure of knowledge—or not. I find that just doing that is a full time task.

    • Induced says:

      Why did the world react so hysterically to covid?

      That’s the plan.

  7. Tegnell says:


    I have not written much about COVID19 recently. What can be said? In my opinion the world has simply gone bonkers. The best description can be found in Dante’s Inferno, written many hundreds of years ago.

    In it, Dante describes the outcasts, who took no side in the rebellion of angels. They live in the vestibule. Not in heaven, not in hell, forever unclassified. They reside on the shores of the Acheron. Naked and futile, they race around through a hellish mist in eternal pursuit of an elusive, wavering banner, symbolic of their pursuit of ever-shifting self-interest.

    I find this description of the desperate pursuit of an elusive wavering banner rings rather true. This, it seems, is pretty much the place we have arrived at. Which banner have you decided to follow?


    • Mirror on the wall says:

      Let Babylon fix itself!

    • Kowalainen says:

      Has gone bonkers? Really? You make it sound its something fairly recent phenomena. It isn’t.

      The world, or correctly, the rapacious primates has gone over the top with this sucker. Yup, we went flying over the proverbial Seneca crest. Expect the machinations of futility continue with increased intensity until the tumble down gets seriously uncomfortable, then priorities will be better aligned as we move closer to the truth.

      Never, ever, leave the guiding principles of the biosphere.
      The 7 #Rules of Mankind and every _single_ living organism.

    • Jarle says:

      Dr Malcolm: “Using an extreme example, someone with terminal cancer who is a week from death, catches COVID19 in hospital, and dies. What killed them? The statistics say COVID19. I say, bollocks.”

    • Perhaps the economy was already set to collapse, and the collapse coalesced around this particular issue. If COVID-19 wasn’t enough, some other issue would have caused it to fall down.

  8. Herbie R Ficklestein says:

    No one is bigger than Mister BAU…NO ONE…back off

    Billionaire Jack Ma, one of China’s richest men and the founder of e-commerce giant Alibaba, is suspected missing since he has not made a public appearance in more than two months, according to a report from Yahoo Finance.

    Ma’s reported disappearance comes after he called for economic reform in an Oct. 24 speech in Shanghai, according to Yahoo Finance.

    “Today’s financial system is the legacy of the Industrial Age,” Ma said according to Yahoo Finance. “We must set up a new one for the next generation and young people. We must reform the current system.”

    But the “Elders” don’t like being told what to do publicly and by an upstart at that no less.
    Sure, a reset is being undertaken, not YOUR way , now enjoy your ride on the highway

    Fox News

  9. Herbie R Ficklestein says:

    SolarWinds: The more we learn, the worse it looks
    While you’ve been distracted by the holidays, coronavirus, and politics, the more we learn about the SolarWinds security fiasco, the worse it looks.

    Steven J. Vaughan-Nichols
    By Steven J. Vaughan-Nichols for Zero Day | January 4, 2021 — 20:35 GMT (12:35 PST) | Topic: Security

    In March of 2020, Americans began to realize that the coronavirus was deadly and going to be a real problem. What no Americans knew then was that at about the same time, the Russian government’s hack of SolarWinds’s proprietary software Orion network monitoring program was destroying the security of top American government agencies and tech companies. There were no explosions, no deaths, but it was the Pearl Harbor of American IT.

    Russia, we now know, used SolarWinds’ hacked program to infiltrate at least 18,000 government and private networks. The data within these networks, user IDs, passwords, financial records, source code, you name it, can be presumed now to be in the hands of Russian intelligence agents.

    The Russians may even have the crown-jewels of Microsoft software stack: Windows and Office. In a twist, which would be hilarious if it weren’t so serious, Microsoft claims it’s no big deal.

    LOOKS like a new game of warfare going on in the cloud theater…

  10. Herbie R Ficklestein says:

    See, lession learned…National Parks, Wildlife Preserves, and Protected Forests are really BANKS for Mister BAU…
    one of its last strikes against the American wilderness, Donald Trump’s administration will on
    Wednesday auction off portions of the Arctic National Wildlife Refuge to oil drillers.

    The lease sales are the climax to one of the nation’s highest-profile environmental battles. The lands on the northern coastal plain of Alaska are home to denning polar bears and migrating herds of porcupine caribou that indigenous communities depend on and consider sacred. But the oil industry has long suspected that the ground beneath the plain holds billions of barrels of petroleum.

    Once the leases in the refuge, known as ANWR, are sold to energy companies, they would be difficult to claw back. The incoming president, Joe Biden, could, however, discourage development in the refuge by putting regulatory hurdles in the way of drillers.

    The refuge has become central to America’s debate over how quickly to stop drilling for and burning fossil fuels as the climate crisis accelerates. Climate experts say there should be no new oil and gas extraction, as the world is already more than 1C hotter than pre-industrial times. Even if humans stopped using fossil fuels today, the planet would continue to heat.
    Yahoo News

    The Salt Lake Tribune
    10 years after he monkey-wrenched a Utah oil and gas lease auction, Tim DeChristopher is ‘feeling demoralized’ by ‘the state of the world’ but sees hope in humanity
    (Steve Griffin | Tribune file photo) Tim DeCristopher talks with members of the media in 2008 after he was escorted out of the Bureau of Land Management offices in Salt Lake City following his bid on several oil and gas leases during an auction. His bidding drove up the prices of several auctions and he won an estimated $1.8 million worth of leases. He has no intention of paying for the leases and said it was a way for him to protest the auction.
    (Steve Griffin | Tribune file photo) Tim DeCristopher talks with members of the media in 2008 after he was escorted out of the Bureau of Land Management offices in Salt Lake City following his bid on several oil and gas leases during an auction. His bidding drove up the prices of several auctions and he won an estimated $1.8 million worth of leases. He has no intention of paying for the leases and said it was a way for him to protest the auction.

    Nothing can stop progress

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