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It may be pleasant to think that the economies that are “on top” now will stay on top forever, but it is doubtful that this is the way the economy of the world works.
Figure 1 shows that, for the Advanced Economies viewed as a group (that is, members of the Organization for Economic Co-operation and Development (OECD)), GDP has been trending downward since the early 1960s; this is concerning. It makes it look as if within only a few years, the Advanced Economies might be in permanent shrinkage. In 2022, the expected annual GDP growth rate for the group seems to be only 1%.
What is even more concerning is the fact that the indications in the graph are based on a period when the debt of the Advanced Economies was growing. This growing debt acted as an economic stimulus; it helped the industries manufacturing goods and services as well as the citizens buying the goods and services. Without this stimulus, GDP growth would no doubt appear to be falling even faster than shown.
In this post, I will look at underlying factors that relate to this downward trend, including oil consumption growth and changes in interest rate policies. I will also discuss the Maximum Power Principle of biology. Based on this principle, the world economy seems to be headed for a major reorganization. In this reorganization, the Advanced Countries seem likely to lose their status as world leaders. Such a downfall could happen through a loss at war, or it could happen in other ways.
[1] The major factor in the downward trend in GDP growth seems to be the loss of growth of oil supply.
In the 1940 to 1970 period, the price of oil was very low (less than $20 per barrel at today’s prices), and oil supply growth was 7% to 8% per year, which is very rapid. The US was the dominant user of oil in this era, allowing the US to become the world’s leading country both in a military way (hegemony), and in a financial way, as the holder of the “reserve currency.”
Data on year-by-year oil consumption growth is not available for the earliest years, but we can view the trend over 10-year periods (Figure 2).
With the rapid growth in the world oil supply in the 1940 to 1970 timeframe, the US was able to help Europe and Japan rebuild their infrastructure after World War II. The US also did a great deal of building at home, including adding electricity transmission lines, oil and gas pipelines, and interstate highways. It also added a Medicare program to provide healthcare for the elderly. The emphasis at this time was on building for the future.
In the 1960s, the Green Revolution was started, aimed at increasing the quantity of food produced. This revolution involved greater mechanization of farming, the use of hybrid seeds that required more fertilizer, the use of genetically modified seeds, and the use of herbicides and pesticides. With these changes, farming became increasingly dependent on oil and other fossil fuels. The green revolution led to lower inflation-adjusted prices for food, as well as greater supply.
The 1970s was a time of adaptation to spiking oil prices and declining growth in oil supplies. At the same time, wages were increasing, and more women were entering the workforce, making the rise in oil prices more tolerable. There were also advances in computerization, changing the nature of many kinds of work.
The 1980s marked a shift to an emphasis on how to get costs down for the consumer. There was more emphasis on competition and leverage (the euphemism for borrowing). Instead of building for the future, the emphasis was on using previously built infrastructure for as long as possible.
Also in the 1980s, the Advanced Economies started to shift toward becoming service economies. To do this, a significant share of manufacturing and mining was moved to lower-wage countries. Transferring a significant share of industry abroad had the additional benefit of holding down prices for the consumer.
[2] Oil consumption growth and GDP growth seem to be connected.
Figure 3 shows that oil consumption growth was higher than GDP growth up until 1973, when oil prices started to spike. This was the period of greatly adding to infrastructure, using the abundant oil supply, as discussed in Section [1]
After 1973-1974, GDP growth tended to stay slightly above oil consumption growth as Advanced Economies started to focus on becoming service economies. As part of this shift, Advanced Economies began moving industry to lower-wage countries. This shift became more pronounced after 1997, when the Kyoto Protocol (limiting CO2 emissions) was promulgated. The Kyoto Protocol gave participating countries (in practice, the Advanced Economies) a reason to hold down their own local consumption of fossil fuels, which is what is measured in Figure 3 and most other energy analyses.
Figure 3 shows that even after moving a significant share of industry to offshore locations, there still seems to be a significant correlation between oil consumption growth and GDP growth. Even with a service economy, oil consumption growth seems to be important!
[3] Prior to 1981, increasing interest rates were used to slow economic growth.
With the rapid growth in oil consumption in the 1940 to 1970 period, the economy often grew rapidly despite rising interest rates. After World War II, government loans became available to returning veterans to buy homes, helping to make the usage of oil affordable.
It was only as growth in oil consumption slowed and interest rates rose to a high level in the 1979-1981 period that high interest rates created a major recession. At such high interest rates, builders of all kinds were discouraged from building. Hardly anyone could afford a new home. Businesses couldn’t afford new factories, and governments couldn’t afford to build new schools. Few people could afford new car loans.
On Figure 3, it is not surprising that GDP dipped at the same time as oil consumption shortly after 1981. The dip in oil consumption was larger because heavy users of oil, such as construction and manufacturing, were squeezed out by the high interest rates.
[4] Falling interest rates in the period 1981 to 2020, as shown in Figure 4, stimulated the economy in many ways.
The 1981 to 2020 period marked a time of generally falling interest rates, with short term interest rates typically being below long-term interest rates. Reducing interest rates tends to stimulate the economy in a variety of ways:
(a) As we all know, lower interest rates make monthly payments on new home mortgages lower. This means that more citizens can afford to purchase homes, leading to greater demand for new homes and their furnishings. Prices of homes tend to rise, partly because people with a given income can afford larger, fancier homes, and partly because more people in total can afford homes.
(b) Even on existing home mortgages, new lower rates can have an impact. In the US, mortgages are frequently set for a long term, such as 20 years, but they can often be refinanced at a lower rate if interest rates fall lower. In many other countries and in the US for business property, mortgage rates are set for a shorter term, such as 5 years. As the loans renew, the new lower rates become available. Borrowers are happy; there is suddenly a smaller monthly payment for the same property.
(c) With lower interest rates, there is demand for more homes to be built. This stimulates the construction industry and helps the prices of all kinds of built structures rise.
(d) A similar situation to (a), (b) and (c) exists for all kinds of items normally purchased using loans. New cars, new boats, and new second homes are affected, as are many kinds of business loans. Even loans taken out by governmental organizations become less expensive. It suddenly becomes easier to buy goods, so more goods are sold. Market prices can be higher because at the new lower interest rates, more people can afford them.
(e) There can be some benefit with respect to long-term bond holdings, if interest rates fall. Bonds generally promise to pay a stated interest rate over the life of the bond, say 20 years. If the market interest rate falls, the selling price of a high coupon-rate long-term bond increases because such bonds are worth more than a similar new bond with a lower coupon interest rate.
Financial institutions such as banks, insurance companies, pension plans, and endowment funds generally have long-term bonds as part of their portfolios. The higher value of bonds may or may not be reflected in financial statements, depending on the accounting rules applied. Sometimes, “amortized cost” is used as the carrying value until the bond is sold, hiding the gain in value. Conversely, if bonds are “marked to market,” then the higher value becomes immediately reported in financial statements.
(f) With mark-to-market accounting, insurance companies, banks and many other kinds of financial organizations can reflect the benefit immediately. As a result, for example, insurance companies may be able to sell policies more cheaply in a falling interest rate environment. (Of course, as interest rates start rising, the opposite is true. I believe that is part of the problem with the spike in insurance rates that the world has been witnessing in the past two years. But this is seldom mentioned because it is less well understood.)
(g) With falling interest rates, practically all kinds of asset prices rise. For example, the prices of shares of stock tend to rise, as does the price of farmland. Prices of office buildings tend to rise. People feel richer. They can sell some of their investments and profit from the sale. Tax rates on long-term capital gains are low in the US, further helping investors.
(h) If generally falling interest rates can be maintained for many years (1981 to 2020), gambling in the stock market starts looking like a great idea. Investment using borrowed funds looks like it makes sense. Buying derivatives seems to make sense. Adding more and more leverage makes sense. People rich enough to gamble in the stock market or the housing market begin to gain huge advantages over the many poor people whose wages remain too low to buy more than the basics.
These advantages tend to drive a wider and wider wedge between the rich and the poor. As diminishing returns become more of a problem, wage and wealth disparities become increasingly major issues. These disparities arise partly because of competition with low-wage countries for less-skilled jobs, and partly because of the need to pay higher wages to highly educated workers. They also arise because owners of shares of stock and of homes have tended to receive the benefit of significant capital gains as interest rates have fallen, for the reasons described above.
[5] Since 2020, interest rates have begun to rise in the Advanced Economies. It is difficult to see how a shift to higher interest rates can turn out well.
News write-ups about the rise in interest rates often say something like the following:
The Fed hiked interest rates a total of 11 times between March 2022 and January 2024, making borrowing more expensive for banks, businesses, and people in an attempt to curb rampant inflation.
However, Figure 4 shows that long-term interest rates (the blue line) started to rise much earlier than this–about the time the US started to borrow a huge amount of money to support the programs it initiated to keep the economy functioning at the time of the Covid restrictions in 2020.
This funding went back into the economy to provide income to would-be workers who were forced to stay home and to small businesses that needed additional funds to cover their overhead. Pauses in student loan repayments had a similar effect. At the same time, fewer goods and services were created because non-essential activities were restricted.
This combination of more wealth in the hands of citizens at the same time as a limited quantity of goods and services were being produced was precisely the right combination of actions needed to generate inflation. So, it was no wonder that there was an inflation problem.
Indirectly, high US borrowing has been, and continues to be, part of the inflation problem. Total goods and services produced in the world economy are not currently rising very quickly because diesel and jet fuel are in short supply, something I wrote about here and here. The US and other Advanced Economies keep issuing more debt in the hope that using this debt will help them purchase a larger share of the goods and services produced by the world economy.
It is not clear to me that this problem can be fixed since the US and the other Advanced Economies need to keep borrowing to support their economies and to fight for causes such as the Ukraine War. Note the downward trend in Figure 1!
One of the big problems with high asset prices and higher-than-zero interest rates is that farmers find that the cost of their land becomes too high to make it worthwhile to grow crops. This is especially the case for new farmers, who may need to buy their land using the higher-cost debt.
People often believe that farm prices will rise indefinitely, but Reuters reports that high borrowing costs and low food prices are cutting demand for farm equipment from John Deere, the world’s largest manufacturer of agricultural machinery. Without a flow of new farm equipment to replace that which is breaking or worn out, food production can be expected to fall.
Another issue is that apartment owners find a need to raise the rent on their units if the interest rate they are forced to pay rises or if the cost of property insurance rises. If they raise the rent of their units, this leaves renters with less income for other goods and services. Indirectly, today’s wage and wealth disparity problems tend to become greater than they were before the rise in interest rates.
In theory, if long-term (not just short-term) interest rates rise and remain higher, the many benefits of falling interest rates in Section [4] will be erased, and even reversed. The economy will be far worse off than it is now because of falling asset prices and defaulting debt. Financial institutions, such as banks and insurance companies, will be especially damaged because the true value of their long-term bonds will tend to fall. This can sometimes be hidden by accounting approaches, but ultimately unrealized capital losses will cause a problem as they did for Silicon Valley Bank.
The heavy use of debt and leveraging in the Advanced Economies makes these economies especially vulnerable to major financial problems if interest rates rise, or even if they stay at the current level. The bubble of debt and other promises (such as pensions promises) holding up the Advanced Economies seems vulnerable to collapse.
[6] The problem facing the people of the Advanced Economies is like the problem the biological world often faces.
The biological world is constantly faced with the problem of too many animals (for example, wolves and deer) wanting to occupy a given space with specific resources, such as water, sunlight, and smaller plants and animals to eat. In some sense, the world economy is an ecosystem, too, one that we humans have made. The Advanced Economies are already in a conflict with the less advanced economies, trying to decide which parts of the world will “win” in the battle over the resources needed for future economic growth.
The Maximum Power Principle (MPP) tries to explain who can be expected to be the winners and losers in an ecosystem when there are not enough resources to go around. I think of the MPP as an extension of the “survival of the fittest” or “survival of the best adapted.” The difference is that MPP looks at the functioning of the overall system, which, in this case, is the world economy.
The parts of the system (such as the individual people, the levels of borrowing, the government organizations, and the narratives governments choose to tell to explain the current situation) will be selected based on how well they permit the overall world economy (not just the Advanced Economies) to function. The goal seems to be to create as many goods and services as possible by dissipating all available energy in as useful a way as possible. In this way, the world GDP, which is a measure of the output of the useful work performed by the world economy, can stay as high as possible, for each time period.
Writings by scientists on this subject tend to be difficult to understand, but they may add some insight. One definition of MPP says that systems which maximize their flow of energy survive in competition. Mark Brown, professor emeritus at the University of Florida, says that under the Maximum Power Principle, “System components are selectively reinforced based on their contribution to the larger systems within which they are embedded,” and, “When resources are in short supply, they need to be used efficiently.” John Delong from the University of New Mexico says, “Winning species were successfully predicted a priori from their status as the species with the highest power when alone.”
I suggest that if these principles are applied to the competition between the Advanced Economies and the less advanced economies of the world, the Advanced Economies will lose. For example, the Advanced Economies have been falling behind the less advanced economies in industrial output.
In addition, the Advanced Economies of the world have fallen behind in the bidding for oil supplies:
Furthermore, the NATO allies seem unable to pull ahead of Russia in the Ukraine conflict. In theory, this should have been an easy war to win, but with limited manufacturing capability, it has been hard for the allies to provide enough weapons of the right kinds to win.
To me, this all points to the conclusion that in a conflict over scarce resources, the Advanced Economies are likely to lose. The conflict could come in the form of war, or it could simply be a financial conflict. Figure 1 shows that the Advanced Economies are already falling behind in the competition for economic growth, even with all the debt they are adding.
[7] There is a lot of confusion about what is ahead.
We don’t know what is ahead. The economy is a self-organizing system that seems to figure out its own way of resolving the problem of not enough resources to go around because of diminishing returns. The world economy seems to be headed toward reorganization.
I believe that the Covid-19 era represented one rather strange self-organized response to the “not enough oil to go around” problem. Figure 6 shows a clear dip in the amount of oil consumed in 2020, particularly by the Advanced Economies. Some of this reduced oil consumption continues, even now, because more people started working from home, saving on oil. Another helpful change was a huge ramp-up in the use of online meetings.
It is possible that new adaptations to limited oil supply may appear in as strange a way as the Covid-19 era did.
Another possibility is that the Advanced Economies, particularly the US, will encounter severe financial problems as the rest of the world moves away from the US dollar. Or the problem could be falling asset prices because of higher interest rates, causing many financial institutions to fail. Or the problem could be too much money being printed, but practically nothing to buy, causing severe inflation of commodity prices.
War may be a possibility because it is an age-old way of dealing with resource problems. For one thing, it becomes easy to raise debt to pay for a war. This debt can be used to hire soldiers and buy munitions. With the higher debt, the GDP of the economy can be expected to suddenly look better because of the stimulus given to it. The major “catch” is that picking a fight with a major competitor or two could prove to be disastrous.
Let us hope that our leaders make wise choices and keep us away from severe problems for as long as possible.
It is morally justifiable for the strong, the smarter, the richer to exploit the rest to the extreme, since it is better to concentrate all the resources to the most able in a utilitarian way
Unbelievable horrors and penury for most of pop, and unbelievable advances for the top, is how humankind enters the next level of civ.
I have talked about the Spanish Crown holding the greatest treasure of the world and the peasants among the worst of the entire world, and people in Andalusia live in 2000 like their ancestors did in 1492. That is how civ is advanced.
The ordinary people’s lives will stink. But the top will advance forever.
Habsburg Empire Strikes Back
https://www.politico.eu/article/habsburg-empire-viktor-orban-patriots-for-europe-hard-right-european-parliament-hungary-austria-czech-republic/
Although it is a tool used by Viktor Orban to further his reaches, it was a big, big, big f’kup for Woodrow Wilson to cheat the victories Germany won in the East, just because the two dead-on-arrival states called Poland and Czechoslovakia could exist.
It is time to cancel Czechia, reduce Poland to the borders of the Duchy of Warsaw, and cancel the joke countries of Central Europe which should never have existed to begin with.
“It is time to cancel Czechia, reduce Poland to the borders of the Duchy of Warsaw, and cancel the joke countries of Central Europe which should never have existed to begin with.”
if you’re going to daydream, at least you dream big.
Michael Hudson on Dialogue Works.
epic!
metaphorical earthquakes!
the world is going to change little by little every year!
Michael Hudson is very good, I should watch the video.
Busy today, had the first 18 minutes on in background(multitasking), first 18 minutes are interesting, goes back to the Roman times, Christianity some of the same problems as we currently see.
He has a section on oligarchies, creditors, etc. Very nice explanation.
Interesting section on sending daughters to intermarry, make peace.
We seem to be in a time of epic change, the trick will be to find the 20% which works and make appropriate bets.
Gail mentioned she likes Hudson, good enough for me; I keep saying this site is a general guide for me, it is approximately correct judging historically. For me close enough is good enough.
Dennis L.
“We seem to be in a time of epic change…”
I agree.
but even this epic change will probably unfold over a decade or two.
One thing Michael Hudson points out in this video is how different Christianity is from other religions. Christianity teaches that there is only one right way. This issue makes trade impossible. Instead, it is used as an excuse for conquering other groups, who are not Christian.
Reports Labour ordered ‘immediate North Sea oil ban’ a ‘fabrication’
https://news.stv.tv/politics/reports-ed-miliband-ordered-immediate-north-sea-oil-ban-fabrication-says-uk-government
A spokesperson for the Department for Energy Security and Net Zero said: “This piece is a complete fabrication – it invents meetings and decisions that have not taken place.
“As previously stated, we will not issue new licences to explore new fields.
We will also not revoke existing oil and gas licences and will manage existing fields for the entirety of their lifespan.
“We are working with the North Sea Transition Authority to ensure a fair and balanced transition in the North Sea.”
So the North Sea as an oil province is officially dead!
The important statement that seems the most relevant to me is this one: “As previously stated, we will not issue new licences to explore new fields”.
The decline without new licenses and new possible deposits to discover will be drastic!
there is a near zero chance of discovering any “new possible deposits” that would be economical to produce.
the drastic decline of the UK is certain.
Throughout history, only the top 0.5% or so lived well, the next maybe 4.5% lived kind of OK and the rest lived like animals.
The 80-20 theory is bunk, proposed by Joseph Juran in 1941 with the realities of these days, not applicable now.
Civilization advanced precisely because the bulk of population was disenfranchised, and had no say over how things ran.
With only a smaller portion of pop consuming, more energy and resources were available for advancing civilization, and little being frittered away to prop peoples unlikely to contribute anything to advancement of humanity.
The WEF’s plan was a last gasp attempt to recreate such situation so civilization could break the barrier ,although that would probably have left maybe 99.9% of humanity behind.
The resistance was too much, which led to an inexorable fall, which we are all witnessing, no matter what delusions some people want to cling on.
It is back to tenements and typhoid fever, not to starships and other fancy toys which are too little, too late.
It is hard to have much surplus energy, when most energy comes from burning biomass or from slave labor. Caesar had an amazing palace, but most others did not.
that was because the top 0.5% owned the basic energy resource—which was land
the correct name for what you describe is feudalism, which what we will return to.—if we have any form of society at all
Good point. There were economies of scale, which enabled this process. There was also a little bit of government that enabled this process. About all that the economy could afford. The land owners likely needed credit at the beginning of the crop year. A local king or lord could provide that. But there needed to be frequent forgiveness of these debts because crops didn’t always turn out as planned. Debt could not be resold or used as an asset, as far as I know.
I remember reading that slave ownership in the United States was financed by UK bankers. IIRC, the US civil war took place when the slaves were no longer providing enough value to their owners to repay this debt.
Maybe true in the cities but in the country hunting, fishing, and small scale planting were a pleasant life.
Ed,
Wasn’t there, don’t know. I see the country, it is a different life and it is not easy.
Dennis L.
The Robot Lie Detector.
Soon every home will have one.
https://www.facebook.com/reel/824505882646187
What if the robots lie?
“When people think of usury, they often imagine loan-shark type characters charging exorbitant rates of interest. But this is only what an amateur usurer does, since it quickly bankrupts a victim. A professional usurer – and the modern banks are the elite among the pros – sets an interest rate which is just low enough that the victim – in this case, the tax-paying public – will continue to pay… even as project delays cause the loan to be rolled-over time and again. Thus, for example, while the anticipated end cost of HS2 was around £108 billion, the interest (if funded via government bonds) at, say, 4% over thirty years will provide a return to the banks of some £237.6 billion (far more if loaned directly by the banks)… so, obviously, there is no incentive on the lenders to have infrastructure projects completed on time and within budget.”?
https://consciousnessofsheep.co.uk/2024/07/11/what-would-xi-do/?fbclid=IwZXh0bgNhZW0CMTAAAR2uB8Mx8dPD6YBlrTlv4d704CKqed_zPLWnFlo81aBzTQ63luJ8XyCLbIg_aem_2LMl-hYJZqYlefgcn6nWgg
This whole post about the UK’s infrastructure, and the problem of keeping it repaired. Tim Watkins doesn’t say much about the energy problem involved–more about corruption, interest rates, and other such things.
There is a huge difference between borrowing money to build:
1. A totally new intercontinental railroad or highway that will permit travel and transport of goods, where none was available before.
2. Maintenance of existing infrastructure, or replacement of existing infrastructure by a different kind that is now viewed as more politically correct (wind turbines instead of nuclear power, for example) or supposedly saves on pollution.
The first type of borrowing can be expected to ramp up the amount of goods and services the economy can produce over time; the second type is simply aimed at preserving the status quo. There is a good point to borrowing money for the first type of infrastructure change, especially if it can be built at reasonable cost. Borrowing money for the second type of infrastructure change simply adds costs. It should be covered out of regular revenue.
An interesting post by Jean-Marc Jancovici which I translate here (thanks deepl). He argues that “the economic contraction [in Europe] has now been going on for over 15 years”.
“Legend has it that Franklin Roosevelt, during the New Deal (just after the Great Depression of 1929), assessed the recovery of the American economy by counting the number of freight trains in circulation (well, probably not him directly!).
Back then, there was no GDP to track activity: it was only embryonic in the minds of a few people, but was not one of the indicators tracked at national level.
And, in fact, a good proxy for the state of production (and therefore of the “real” economy) was the number of trains used to transport goods, since the producer and consumer of a good are only exceptionally in the same place.
Nowadays, it’s not the train that carries out the bulk of physical exchanges, but the truck. With a few rare exceptions, any product purchased by a “final” consumer (households, but also companies and public authorities for their own use, and not to incorporate the good into a sold production) will pass through a wheeled crate.
Following Roosevelt’s example, we can therefore say that the state of the “physical” economy is better reflected by the number of tonnes loaded onto trucks than by GDP, which is now calculated with so many conventions and approximations that it is increasingly difficult to interpret its variations.
And then, surprise: these tonnes loaded on trucks – which also include intermediate goods – have been falling since 2007 in our country, i.e. roughly since the peak in conventional oil production worldwide, which marked the start of the sudden drop in Europe’s energy supply. The peak (in tonnes loaded) also occurred in 2007 for Europe as a whole.
This physical indicator comes on top of others (m2 built during the year, or kWh of available energy) which argue that, in physical terms, the economic contraction has now been going on for over 15 years.
Whatever the monetary indicators say, and whatever the economic mechanism that translates them into, the physical reality felt by a growing fraction of the population is that access to kg of food, m2 of housing, or kg (or m3) of manufactured goods is increasingly restricted.
It’s only a short step from there to considering that the vote we’ve just witnessed is logical. Some would say that all we have to do is “raise” the physical level of production. Except that’s exactly what politicians have been trying to do for decades, and it’s not working, precisely because physical flows come up against… physical limits.”
There is also a nice chart here: https://www.linkedin.com/feed/update/urn:li:activity:7217077404614205440/
I quibble with this metric because after conventional oil peak the economy adjusted to carry more by ship and train and less by truck. Ships are 10 times less expensive in terms of energy per kg km than trains, and trains are ten times less expensive (money) than trucks. It costs less to ship something from Italy to yokohama, than from Italy to Warsaw. It is normal that after 2007 traffic shifted to cheaper forms of transportation.
drb , Theirry’s post and Jancovic’s observation is correct . In the modern world and logistics it is trucking that matters and parts ( lets call it stuff) spend more time on the road than on water or air . Air and water transportation is inflexible and always ” the last mile” is done by road . In landlocked massive countries with a good road network ( e.g Europe , USA. China etc) road wins hands down . The EU has been trying to shift the traffic from the road to the rail because it is cheaper and of course saves on diesel but has made very little headway in the matter .
One has to checkout the full cycle— from the farm or factory floor to your table or doorstep .
Not sure this is right. Factories are moving all the time, to Vietnam and Mexico for example, where you will have another type of infrastructure. That guy in China has a new video up that explains factories in China have been moving inland. Presumably new factories will be closer to railways and we are in the 2.0 phase of industrialization. I will take energy consumption as an economic proxy but this is too partial.
rereading the original post, this is only for Europe. So you are probably right that for Europe this is a viable metric.
This sounds very plausible – and not just for the EU.
Nominal GDP growth is deflated by estimated inflation to give real GDP growth.
So, if Nominal GDP grows by say 4% and official inflation is 2%, then real GDP has grown by about 2 %.
All it takes is for the real inflation figure to be over 4 % in this example and there we are real GDP is falling.
If you think that real inflation is underestimated, then the implication is that real GDP is lower than the official figure.
This is a link to the trucking shipment indices for the US produced by Cass.
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/cass-freight-index
According to the “shipments” chart shown (first), there was a peak in shipments in 2018. There was a big drop, which was continued during the covid problems of 2020. Shipments were high from mid-2021 to mid-2022, but have fallen off very substantially recently. They are as low as they were as we entered the covid crisis.
This looks like a recessionary indicator.
This is a railroad shipment index I found for 2022, 2023 and 2024. 2024 year to date is down relative to the prior two years.
https://www.aar.org/data-center/rail-traffic-data/#!
There are great problems that western culture are facing at the moment and this problem is expecially severe in Europe, I don’t know in US.
Those problems are paradoxically ironic.
This is expecially evident in Europe now that leaders are trying to push again on the importance of a strong army and of becoming soldiers.
The EU societies have destroyed the concept of nation, additionally, nationalism have become something dangerous.
The EU societes have been also destroying through the years the classical key elements which constitute being a male and being a woman.
Leaders have been creating ‘fluid’ concepts about sexes through the years, so that now they have no males wanting to become soldiers, to become heros, to show their courage, their strongness.
Males represent in fact the main percentage of every army..
Leaders have destroyed these concepts from the basis, dismantling every reference. They have taught for instance that eating meat and hunting were terrible shames of the past, they have taught that male could give birth, they have taught that it is not necessary to have a classical father and mother in a family, but we can have ‘parent 1’ and ‘parent 2’, very fluid between nr. 1 and 2.
The additional problem is that the only two cultural-religious, ideological mindset present in Europe going on presenting a traditional male figure are the Muslim culture and the Christian Orthodox culture.
The Catholic brench has preferred to follow the distruption of the differences and the distruption of nationalism or of ethnic cultural defence.
So now European leaders are ranting that we all need to prepare to fight the Russian bear and the Chinese dragon, but they are trying to build a wall without bricks.
While all the young males are looking on smartphones how to become chefs or singers on a tv program.
Agree. It has been known for thousands of years, you can not wage war inside and outside at the same time. All states become more social democratic and pro family at times of war. A famous Russian general stated that we need to worry about the home front, so that the soldier would have loved ones at home to fight for. None of these exist in the West.
All this makes me optimistic that the end game is feudalism in the West while the global south continues its resource consumption as long as possible.
There is more of this kind of belief in the states that traditionally vote Democratic than in the states that traditionally vote Republican. Thus, this kind of belief is strong in the US Northeast and in the West.
Many of you are aware that my daughter is married to another woman and lives in a suburb of Boston. My daughter is the birth-mother of a 2.5 year old boy, conceived by artificial insemination. I think part of the reason they live there is because this arrangement is more accepted in Boston than in Atlanta.
My daughter and her spouse are now very conscientious parents of their little boy. They have a lot of get togethers (play dates) with other parents of similar-aged children. These couples are nearly all heterosexual. Also, they get togethers with some heterosexual couples they know who chose not to have children.
As I see it, part of the problem with marriage to men comes from ambitious women clashing too badly with ambitious men. Another problem is that the pool of men available for marriage shrunk in recent years because so many men are autistic, or depressed, or substance addicted. Women who have looked at the situation realistically have said to themselves, “If I partner with another woman and have artificial insemination, I can have a family, with or without a man.”
I can tell you that from all the recent transformations of western society, I don’t consider dangerous that two women grow a child, but I consider extremely dangerous if two men grow a child.
Some friends of mine with ‘open minds’, say to me that it is the same thing, but I think that a man cannot be a mother, while a child can grow without a classical father.
In past centuries it is full of examples of children grown up by a mother and a aunt or a mother and a grand mother or alternatives of that, but no good examples of children grown up only by men.
It is an experiment without success in my view.
Additionally I can tell you that I have two neighbors who are a couple of women.
My wife and I are good friends of them.
I agree that it is a little bit complicated now to find a good male mate for a woman, now that western societies have been destroying the character of being a male, without creating a good alternative.
The problem for modern western societies in the current situation is that men are useful to fight and we don’t have them.
Middle east, Russia, Caucasian Countries, Balkan Countries, among others, on the contrary, have them.
My daughter’s spouse takes on the traditional male role, while my daughter is quite feminine and the birth mother. Her spouse is a chemist who goes off to the laboratory to work every day, making a reasonably high salary. She is overweight and dresses ambiguously–pants and T-shirts or plaid shirts. She is not very outgoing, and my daughter helps make up for that.
I also have a sister in Seattle who was married to another woman until the other woman died last year. My sister has never been very feminine, and neither was her spouse. (My sister won the football “Kick, pass and punt” contest in grade school, but the school refused to give her an award because the contest was only open to boys.) My sister and her spouse joined a church that was accepting of gays. They seem to have a lot of gay friends. They did not have children. Note that they chose to live in Seattle–another city very accepting of gays.
ChatGPT is great for examining societal blind spots as it perfectly summarizes or encapsulates all the data it has been trained on. But it’s amazing what it “knows”.
Here’s the “commenter leaderboard” according to chatGPT:
The most frequent commenters on “Our Finite World” website often engage deeply with the topics of energy limits and economic implications. Here are some of the most active commenters:
1. **Gail Tverberg**: As the author of the blog, Gail frequently responds to comments, providing additional insights and clarifications on her posts.
2. **Ed Pell**: Ed regularly contributes detailed thoughts on the implications of energy constraints and economic policies.
3. **Fast Eddy**: Known for a critical and sometimes provocative style, Fast Eddy frequently comments on the potential societal and economic impacts of energy depletion.
4. **Norman Pagett**: Norman often provides historical context and comparisons, particularly relating to energy use and societal changes.
5. **Robert Hirsch**: Robert engages in detailed discussions about energy policies and the feasibility of various energy sources.
These commenters contribute to a robust and ongoing discussion about the complex interplay between energy resources and economic stability, reflecting a community that is deeply engaged in understanding and preparing for potential future challenges.
There might be some hallucinations there, (what about daveinamillionbillionyears?) but still pretty impressive.
Interesting. A commenter can be dead for quite a few years, without ChatGPT making note of it.
Are you talking about Norman?
What about Sasha and Chucky contributing indirectly?
Don’t know about Sasha and since all references about Chucky came from me it should revert to me.
okay tomorrow is the last (half) day.
no black swans for a long time.
this BAU thingy in IC could go on for quite a while longer.
BAU stops not for everybody all at once, but perhaps one town or one individual at a time.
You may still be surrounded by BAU. I may still be surrounded by BAU, but BAU has already ended for many, and is concluding for others as we read here.
I recently read ‘Deep South’ by Paul Theroux. It recounts a series of trips he took through the rural US South in 2012 and 2013, mainly in Alabama, Mississippi, Louisiana and Arkansas. BAU was finished there then – more than ten years ago.
How did you go broke? A little at first……
Sorry David I don’t want to rain on your parade but I’m not sure you are adding up the signs. When economic growth stops things get interesting fast … Germany comes to mind . Japan , Italy. Spain
yes!! you are seeing some of what I’m seeing, that Europe and Japan are in big trouble.
in a few years, after their decline has accelerated, then the decline will begin to accelerate in The Inner Core.
quite probably in the 2030s.
while I’m not 100% sure, I’m not worried in the short run.
in the long run, we’re all dead.
Sorry to say you are wrong on Alabama. Manufacturing is booming and the unemployment rate is below 3%. Yes, the rural south has poverty, but that also contrinute to a lower cost of living.
Modern slavery in the background of the technology progress
https://youtu.be/VPSZFUiElls?si=yx0_RPDHMEMDNUUi
That is how the world works.
Without exploiting people for next to nothing, civilization cannot advance
of course humans have been enslaving each other for many thousands of years.
slavery is natural.
On one hand, thankfully ASI and robots will end the use of human slaves. On the other hand, ASI and robots will end the use of humans.
Except people need human companionship. And made-made devices frequently fail.
High-level politicians are usually very concerned with “optics”, or how they and their policies “look” to the people.
The U.S. Federal Government currently sets the minimum wage at $7.25/hour. It has not been increased since 2009.
Biden press conference is delayed. Should have started at 6:30pm ET / 3:30 Pacific.
My impression was the Biden did fairly well–lots of stimulants before the talk and Q/A. It ended with Biden saying that the only way he would drop out is if the actual polls (which don’t start until September or so) show that he cannot win.
I agree, his body double did well.
Thanks for the summary.
Dennis L.
If they leave Biden in place, it probably means that the deep State is making or has already made agreements with Trump side.
At this moment my impression is that for Trump is enough to stay and watch (if legal battles against him stop).
So, if legal battles against him stop or even reverse, it means that something has happened behind the scenes.
Dem side probably thinks that it is too late to build a candidate, so the process of finding one will probably start after an official defeat.
My old sailing teacher used to say that when one is asking “who is going to steer the boat?”, most of the time it was his/her time.
I found interesting that George Clooney said that ‘we need to find a new candidate’, I think it means that everyone will say in the next years ‘please take the helm’.
He has a fake Iranian wife who is against the current regime, so he is surely on the good list.
US already had an actor as President, it is probably the best background considering the current way of ruling.
You are thinking of the deep state as a monolithic structure, perhaps with clear hyerarchy. It is nothing of the sort. It has factions, modest or non existent cohesion, and holds together under the threat of punishment. slow walking everything, or passive resistance, is just around the corner.
I’m not thinking as a monolithic obviously, the above it is probable about the main current factions.
I cannot specify everything, come on drb.
By the way today in US there is Orban talking with Trump after his trips to Ukraine, Russia, China.
In my view US is considering seriously that it will probably have Trump as President and it is making the counts about that.
That is the point.
I was making the point that paralysis has been evident for many years now, going back to Trump the first. Some people in DC are preparing to exit Ukraine and enter Taiwan, and some others are preparing to oppose and sabotage that move.
Joe Bidet thanks Vice President Trump. 🤪
https://x.com/JordanUhl/status/1811545829595054545
A small mix up.
A small mix up in his noodle. That what happens when he praises Ukrainian President Vladimir Putin. It’s good to know he’s doing the “goodest job he can”. He’s now following the advice of his commander and chief.
I say this comedy show needs another 4 years.
Another 4 years of this comedy show and USA would no longer be that dominant over the world.
GOOD
Is that real or AI 😬