#138: Inflexion point


Whilst much of the world seems to be fixated with the tragi-comedy of “Brexit”, here, at least, we can discuss something of greater, indeed of profound importance. According to SEEDS, world prosperity per person has now turned down.

From here on, we get poorer.

Whilst prosperity has been deteriorating for a long time in almost all of the advanced economies of the West, this has been offset by continuing progress in a string of important emerging market (EM) economies such as China and India. This balance has kept the global average remarkably stable during a very extended ‘prosperity plateau’.

Now, though, latest updates to SEEDS – the Surplus Energy Economics Data System – indicate that the pattern has broken downwards. The EM economies can no longer carry global prosperity in the face of deterioration in their Western trading partners.

The inflexion-point in world prosperity has profound implications, of which three seem most important.

First, the downturn is a complete game-changer for politics and government.

Second, the divergence between dwindling prosperity and a still-expanding burden of financial claims and commitments makes some form of extreme correction inescapable.

Third, we need fundamental changes in how we interpret and manage economic affairs.

For this to happen, those who decide policy and mould opinion need to understand what prosperity actually is.

What is prosperity?

For the individual or household, prosperity is simply defined. A person’s prosperity isn’t his or her income, but what remains of that income after essential or ‘non-discretionary’ expenses have been deducted. An individual’s prosperity, then, is ‘discretionary’ spending power, meaning the resources over which he or she exercises choice.

For the economy as a whole, the rationale is the same, but the definition is different. At the macro level, the over-riding essential is the supply of energy. This is the number one priority outlay, for the simple reason that the economy itself is an energy system.

Conventional interpretation continues in the mistaken belief that the economy is a financial system, within which energy is ‘just another input’. But a moment’s thought is sufficient to debunk this illusion.

Money is a human artefact, which we can create at will. But money has no intrinsic worth, and commands value only to the extent that it can be exchanged for goods and services. The real function of money, therefore, is to act as a claim on the output of the real economy. Creating more of these monetary claims adds nothing whatsoever to the quantity of goods and services for which they can be exchanged.

Everything – literally everything – for which money can be exchanged is a product of energy. In pre-industrial times, the energy basis of the economy was confined to human and animal labour, and the nutritional energy inputs which these outputs required, The harnessing of exogenous forms of energy, starting with fossil fuels, leveraged this equation without changing its fundamental dynamic.

Whenever energy is accessed, some of that energy is always consumed in the access process. The driver of prosperity, then, isn’t the gross amount of energy to which we have access, but the net or surplus quantity which remains. This is why the Energy Cost of Energy, abbreviated here as ECoE, is a critical determinant of economic performance.

For fossil fuels, which continue to account for four-fifths of energy consumption, ECoE has followed a parabolic curve, trending downwards over a very long period before turning upwards in the immediate post-1945 decades.

The factors which drove fossil fuel ECoE downwards were geographic reach and economies of scale. Once these factors had been maximised, what took over was depletion, the simple effect of having accessed the easiest (lowest-cost) resources first, leaving costlier alternatives for later.

Technology has played, and continues to play, an important role, first accelerating the downwards trend in ECoE and latterly mitigating its rise. What technology cannot do, however, is over-rule the physical characteristics of the resource set.

Compared with the upwards trend in the ECoEs of mature fossil fuel resources, renewable forms of energy continue to enjoy the benefits of expanding reach and scale. But, and vital though renewables are, we must not exaggerate their capability to mitigate, let alone to reverse, the upwards trend in overall ECoE – critically, the inputs required for the development of renewables remain derivatives of the fossil fuel legacy, which ultimately links their potential ECoEs to those of oil, gas and coal.

The prosperity narrative

The exponential rise in ECoEs is the key factor explaining the evolution of economic affairs in recent years. According to SEEDS, global trend ECoE rose from a barely-noticeable 1.7% in 1980, and 2.6% in 1990, to 4.0% at the millennium (and it has doubled since then).

This increase, though at first pretty gradual, had, by the late 1990s, reached a point at which the capability for further increases in prosperity began to peter out.

This trend, perceived (if at all) as a seemingly-inexplicable slowing in secular growth, was not acceptable either to a system of governance based on continuously rising prosperity, or to a financial system wholly predicated on perpetual growth. The response was to try to evade this reality using monetary expedients. These are described here as financial adventurism.

Initially, this took the form of credit adventurism, which involved making debt ever easier to acquire. Between 2000 and 2007, debt expanded by much more (+43%) than the underlying aggregate prosperity available to carry it (+13%). This ensured, first, that a financial crash would occur and, second, that this crash, being debt-caused, would have its greatest impact on the banking system.

Latterly, the emphasis was switched from credit to monetary adventurism, characterised by the creation of vast quantities of new money, and the slashing of interest rates to all-but-zero, meaning that real, ex-inflation rates have been zero, or negative, since the 2008 global financial crisis (GFC I). Like its credit predecessor, monetary adventurism makes a financial crash inevitable, but with the difference that this event (GFC II) will not be confined to the banking system, but will threaten fiat currencies as well.

The underlying story

To understand what is really going on, it’s imperative that we look behind the “growth” supposedly created by financial adventurism.

Comparing 2017 with 2000 – and expressing all values in 2017-equivalent PPP dollars – reported GDP expanded by $55 trillion (+76%) whilst debt escalated by $152tn (+125%).

This means that, globally, each $1 of reported “growth” since 2000 has been accompanied by $2.76 of net new debt. During the earlier, credit adventurism phase, which was confined largely to the West, the world ratio of growth-to-borrowing was 2.1:1. Latterly, in the monetary adventurism phase, and with ZIRP in place and EM countries joining in, the ratio has been 3.3:1.

The fundamental point, though, is that most of the recorded “growth” in the years since 2000 has been nothing more than the simple spending of borrowed money. In order to identify what has really been going on, SEEDS strips out this ‘credit effect’ to identify clean GDP, and the rate at which this number has been growing.

Comparing 2017 with 2007, supposed “growth” of $29.7tn equates to an increase of only $7.7tn in clean GDP. The remaining $22tn – accounting for 74% of claimed “growth” over the period – was the effect of pouring almost $100tn of additional debt into the system.

This interpretation necessarily has a transformative effect on the measurement of risk. Put simply, the debt ratio implications of a borrowing binge are damped down by the apparent (though unsustainable) boost given to GDP by the spending of borrowed money. Thus, though world debt stood at a reported 215% of GDP at the start of this year, it equated to 301% of the smaller, credit-adjusted measure of clean GDP. Likewise, the true scale of the world banking system, as measured using aggregate financial assets, is far larger than the ratio calculated using credit-inflated headline GDP.

Prosperity – where now?

Once we’ve arrived at clean GDP, the calculation of prosperity further requires the deduction of trend ECoE from this number. World prosperity, thus calibrated, was $83.5tn last year, an increase of 24% since 2000.

Unfortunately, two other things have happened over that period – debt has more than doubled (+125%), and population numbers have expanded by 22%. The former number means that, worldwide, people have 85% more debt now than they had in 2000. The population increase means that they have become only marginally (+2.4%) more prosperous over the same period.

The plateau in overall world prosperity per person since 2000 has, of course, masked starkly divergent regional trends. Whilst people have become 120% more prosperous in China, and 87% better off in India, the citizens of most Western economies have been getting poorer, typically since the early 2000s.

Prosperity in the United Kingdom, for example, was 10.2% lower last year than it was in 2003, whereas Americans have become 7.3% less prosperous since 2005. The average Italian is 13% poorer now than he or she was back in 2001.

From here on, the big change is that prosperity growth in the EM economies is likely to slow to rates which can no longer cancel out continuing impoverishment in the West. Essentially, what’s happening in the EMs is that, with ECoE continuing to rise, and with their Western trading partners getting poorer, trend growth in countries like China and India will slow. It might, of course, be possible to maintain the semblance of “growth as usual” for a while, but only at the cost of piling on ever larger amounts of debt. That is exactly what’s been happening in China.

And this, of course, leads us to one of the most important consequences of deteriorating prosperity – the inevitability of the world financial crisis known here as GFC II.


Comparing 2017 with 2007 – the year before GFC I – debt has increased by 57%, whilst recorded GDP has expanded by 30%. Where debt ratios are concerned, this apparent “growth” has moderated the effect, such that the 57% rise in the quantity of debt has lifted the debt-to-GDP ratio by only 20%, from 179% in 2007 to 215% now. Conventional interpretation states that, in a climate of ultra-low interest rates, this increase in the debt ratio is manageable.

But this, of course, is misleading, for a series of reasons. First, most of the GDP “growth” recorded since 2007 has been cosmetic, amounting to nothing more than a credit effect which would disappear if the supply of cheap and easy credit dried up.

Second, the debt figure itself disguises other adverse balance sheet effects, most obviously the emergence, courtesy of ultra-low returns, of huge holes in pension provision.

Third, the explosion in the quantum of debt since GFC I has created gigantic bubbles in asset classes such as bonds, stocks and property.

To be sure, there’s a theoretical argument which states that these bubbles needn’t burst so long as money remains ultra-cheap. The drawback with this is that, because we’ve piled monetary adventurism on top of the credit variety, debt and the banking system are no longer the major locus of financial stress – we need now to be aware of the threat posed to the viability of fiat currencies by a decade of monetary extremism.

Beyond the inevitability of GFC II – an event likely to be at least four times the magnitude of its 2008 predecessor – the broader implications of the downturn in global prosperity must be left for further consideration.

We can, though, conclude that, from here on, prosperity becomes at best a zero-sum game, stripping away the logic of ‘mutual benefit’ founded on the Ricardian calculus of comparative advantage.

This “transition to zero-sum” logically marks the start of three new trends -the retreat of ‘globalism’, the rise of more nationalistic politics, and a new and growing emphasis on redistribution. Beyond redistribution, the political emphasis now is likely to swing towards opposition to immigration, based on perceptions that this process dilutes prosperity.

None of these trends is either wholly new or entirely a matter of prediction rather than observation – after all, declining prosperity has been a feature of most Western nations for at least a decade, so we’re already witnessing many of its political symptoms.

Predicting that the era of the ‘liberal globalist’ elites is over is the easy part – the hard part is to work out what replaces it, and how the transition takes place.

Another issue which must be deferred for later consideration is that of how we can best manage the downwards trajectory of prosperity. We have many useful tools, not least the interpretations bequeathed to us by thinkers like Adam Smith and John Maynard Keynes. Forging a practical approach is likely to require, first and foremost, a recognition that, whilst our intellectual inheritance is invaluable, doctrinal extremism is a luxury that we can no longer afford.

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133 thoughts on “#138: Inflexion point

  1. Thanks Tim for another excellent analysis. I’m still at a loss to know how to protect wealthy as we turn the corner. How are others preparing?

    • Thank you David.

      The short answer is that I wish I knew, and hope others have some useful suggestions to make.

      The slightly longer answer is that a mix of assets probably makes most sense. The general view seems to be that we needn’t worry too much about a repeat of 2008, because the authorities would simply pour money in again. This is why financial institutions seem so relaxed about systemic risk – they assume they’ll get rescued. I’m not at all convinced by that, and suspect the authorities might try bail-ins. If so, there’d be a threshold, so there’s a case for having cash balances in the bank(s), but only up to some level above which bail-ins might start.

      There’s no escaping the implication that asset prices are over-inflated and will fall. The way I think about this is that (a) it’s relative, and (b) what is the residual value? For instance, the price of a property might slump, but you would still own the property.

      The same logic might seem to apply to stocks but, if the price falls, what happens to the value? A lot of the most highly-rated stocks are predicated on growth, but the same event which sees prices tumble might kick the slats out of the growth story too, So, not only would the price fall, but the value might tumble as well.

      So I think this leads me to assume that paper losses are inescapable – pointless kidding oneself otherwise – but property, if owned without debt, will retain its value, if not its price, but some liquidity will be necessary as well, in immediately accessible form.

  2. Tim, another great article, it is amazing how good you are at boiling this down to short, very clear explanations. Would that others would take 15 minutes to grasp this illusion-shattering revelation.

    A question. You say that “the world ratio of growth-to-borrowing was 2.1:1. Latterly, in the monetary adventurism phase, and with ZIRP in place and EM countries joining in, the ratio has been 3.3:1.” If it is growth to borrowing, shouldn’t the numbers be reversed in those ratios – 1:2.1 and 1:3.3? Or perhaps just change the word order and make it “borrowing-to-growth.”

    • Thanks. I do try at all times to avoid jargon, and complication for the sake of complication.

      I use growth-to-borrowing because ‘how much has $1 or £1 of “growth” cost us?’ is a readily-understandable concept, more so perhaps than ‘how many cents of growth have we got by borrowing $1?’

      During 2000-2007, each $1 of “growth” was accompanied by $2.08 of new debt, so the ratio is 1:2.08, or more simply 1:2.1. Since 2007, $3.33 translates into 1:3.3. For the whole period since 2000, $2.67 becomes 1:2.7.

  3. topical post Dr Tim,

    on the Independent site they just posted ‘breaking news, dow drops 500 points’

    my take on GFC 2 is that instead of bail outs or bail ins it’s time for the govt. to splurge on buying up distressed assets,
    it’s a chance to buy back a lot of the family silver flogged off during the neo-liberal era for pennies on the pound,
    I see a State holding the capital assets of vital infrastructure whilst allowing private management teams to attempt to run them at a modest profit,
    if the management team succeeds they get rewarded, if they fail they step aside to allow another team to try a different approach,
    at all times the State remains in possession of the fixed capital assets and has at least a 51% control of the business,
    in the case of home owners falling into negative equity and being beaten up by rising interest rates the Local Authority is able to step in and buy out the distressed asset and add it to their social housing stock keeping the previous owners in situ as tenants at a realistic rent,
    if their original lender had collapsed and been bought up there could be a wiping out of the original debt absolving the insolvent borrower of bankruptcy and pursuit for the loss,
    you’d lose your house but not your home and you’d not be saddled with the millstone of negative equity and bankruptcy,
    something like this would allow asset price bubbles to burst but keep society functioning whilst everything settles to a new and rational equilibrium,
    I’m sure some ideologues will start screeching like autistic monkeys and try to label such a strategy with emotionally loaded labels such as ‘communism’ or ‘fascism’ but is there any other practical solution other than letting private wealth hoover up all distressed assets and ending up literally owning everything?

    anyway, just my take, I’m off to invest in popcorn!

    • You raise good points here, some of which I’m going to examine in the future.

      As things stand, we’re nowhere near a workable response to diminishing prosperity, not least because the powers-that-be neither understand nor recognise this process.

      Two of its most probable consequences are (a) declining tolerance of inequality and (b) increasing opposition to immigration. These are forces set in motion by the erosion of prosperity, and need to be taken into account when planning responses.

      Though energy is the ultimate determinant of prosperity, there’s no doubt that policy can exacerbate or mitigate the deterioration process. Neither the neoliberal nor the collectivist dogmatic approach can help, and what we need now, more than ever, is pragmatism – and this, I’m convinced, points to mixed economy solutions blending the best of state and private provision.

    • ‘we’re nowhere near a workable response to diminishing prosperity’

      Might I suggest that there is no effective response to diminishing affordable resources — the low hanging fruits have been picked… they are gone… and they were what build civilization as we know it.

      This world we live in cannot continue when the energy required to extract fossil fuels and other resources is so high.

      And we can already see what that looks like – declining prosperity — day after day month after month we are experiencing declines in many countries – the middle classes are being wiped out.

      And this in spite of the massive palliatives that are being applied to try to slow the bleeding.

      This is as good as it gets… every day we have to reach higher up the tree…. every day the legacy oil fields deplete — and we have to turn to the likes of shale….

      Pray tell how those running the show should respond to this? There really is not a lot they can do.

      They cannot replace the low hanging fruit that’s for sure.

      There is no possible way to revive prosperity.

      So what does declining prosperity look like?

      At some point the medicines applied by the CBs to delay outright global recession are going to poison the global economy …. and we are going to get an inescapable recession …

      Which will lead to a deflationary death spiral… debt will go unpaid … the system will cease to function … the financial system will implode…. and that’s all she wrote. We will be left scratching in the dirt with sticks … looking for bugs to eat

      What else could those pulling levers and pushing buttons do that could significantly extend BAU?

      No doubt they are furiously pushing and pulling … no doubt they are desperately trying to conjure up new magic tricks. The best minds they can pull together would be working around the clock on this.

      To think that we — who are seeing at best the tip of the tip of the iceberg in terms of what is being done to keep the Titanic afloat — might be able to offer suggestions that might be helpful….

      Is akin to us watching this from an armchair and saying — hang on mate…. you should have….

    • Hi Matt,

      If private firms/banks won’t loan currency at interest due to zero/negative growth then I see no other option than for governments to borrow the money into existence to be spent as it pleases. I think this aligns with what you’re saying in principle but I think the details will differ. My bet is that the government must prove value to foreign entities to prevent a domestic currency collapse – so i’d expect it to be spent on projects rather than purchasing people’s homes – but that’s just my guess. Kind of like what Japan is doing now (I think).

      I also think government becomes more technocratic as prosperity declines. One of the things I’ve noticed about “Brexit/UKwit” is that a lot of people are more concerned about prosperity rather than sovereignty. I’m not necessarily saying that’s wrong but would they be willing to accept a “Made in the UK” technocracy if it kept the train on the track a bit longer? Think back to 2008, the government clearly has no idea why the financial system was failing. Now that we’re going through an energy depression I see that they are equally clueless and may delegate key decisions to senior engineers.

      Of course none of this solves our way disparity problem so ‘treadmill economics’ will still be occurring in the back.

      All the best,

  4. Thank you Dr Morgan for another excellent and realistic view of the current economic situation which is not seen by the current politicians.

    You have provided an accurate, and realistic, quantitative model (SEEDS) of the economic situation.

    This quantitative view (SEEDS) is supported by a qualitative view of events such as increasing homelessness, lack of real gainful employment and poverty which can be seen all around us.

    Another area is the nervousness and tension surrounding the oil producing countries.

    • Thanks. I certainly believe that SEEDS helps us understand things that decision-makers and policy-influencers don’t get, making the four-plus years it took to build well worthwhile.

    • Things do appear to be crumbling, which is no great surprise when prosperity trends are understood. The “tech” sector slump is the latest example of optimistic assumptions colliding with the reality of deteriorating consumer prosperity.

  5. Bail-ins and a permanent (?) and substantial crash in asset values – we think immediately of real estate – would surely have a disastrous effect on the elderly care industry.

    It burns through savings and the cash realised from selling property at a phenomenal rate as it is: and, as we know in the UK at least, those who pay for their own care partly subsidise the destitute through higher charges.

    But what would be acceptable politically? The elderly vote is quite powerful, and those younger generations who would lose any chance of an inheritance would also be very angry indeed to see family wealth evaporate.

    I suspect one should be rather nervous as to any savings over the currently ‘protected’ limit, but my money is on bail-outs in some form. Politicians won’t want to take the bail-in route. Would they be forced to?

    • In 2008 we saw not the wisest, but the most convenient, ‘solution’ adopted (from the point of view of the owners of wealth, and the politicians who did not wish to see their parties damned forever – bail-outs of the naughty (in the Biblical sense -damned) old bankers.

      The truly awful medium-term potential consequences of this are now becoming apparent, so much as to have become a commonplace in the financial press: ‘ personal and state debt higher than ever’, ‘dangerous asset bubbles higher than 2008’, etc.

      Everyman and his dog seem to know that an even bigger crisis is almost upon us, and a real Crisis of Capitalism.

      ( I’ve certainly seen this with property valuations here, they have gone far beyond the already ridiculous levels of 2005-8, and I marvel at people -mostly young families still enthusiastically competing to buy).

      So I should say that, the world being as it is, and the wealthy and influential being as they are, we can expect that the most convenient approach will again be adopted when GFCII hits – ie bail-outs, regardless of the clear peril in which that would place fiat currencies – and some more than others, did anyone mention £ sterling?

      This will surely also be accompanied by drastic ‘austerity’ on a scale not yet implemented, erosion and failure of much public service provision , and tax hikes across the board.

      Politically, calls for the redistribution of wealth will be impossible to ignore, and more likely to gain public acceptance than bail-ins – even to be seen as an ethical policy.

      The globalist capitalist project will have truly hit the rocks.

    • My take on this is that capitalism, in the sense of the competitive market economy, was abolished in 2008, when the authorities allowed a string of businesses, including banks, to circumvent the usual price of failure. As well as allowing the reckless, the incompetent and the simply unlucky to go under, the market requires positive real returns on capital. Neither condition has prevailed since GFC I.

      What we’ve had instead has been a time-buying operation based on nothing more than the hope that ‘something [good] will turn up’, which, of course, was never likely to happen, and hasn’t. Cheap money policies always create inflation, and this has been no different, except that inflation has been concentrated in asset markets, not consumer prices.

      Of course, both credit adventurism and monetary adventurism have been extreme follies. What I try to do, using SEEDS, is to explain why we embarked on these reckless exercises in the first place, which was the loss of the upwards impetus in prosperity. Once that is understood, everything that has followed has had its own grim inevitability. Put another way, we here have an accurate narrative, which I doubt is something that policymakers, in government or in business, can claim. Only with an accurate narrative of the present and recent past can you create an effective map of the future. Lacking this, decision-makers are ‘making it up as they go along’. That seldom ends well.

      The props are now being knocked out of the edifice. For instance, waning prosperity is eroding the consumer “growth” assumptions hitherto sustaining high valuations in “tech” stocks, whilst the use of cheap debt to buy back stock is proving to have been damaging (there are many examples of this now, especially in the US).

      What’s likely to happen now is that two of the fictions of the last decade and more will be exposed. The first is the idea that you can drive “growth” higher using cheap credit – we here understand this, but I suspect that this revelation has yet to hit policymakers. Second, the idea that you can pour cheap money into the system, without creating a bubble-and-bang, will be exposed, yet again, as a fallacy.

      The really frustrating thing is how obvious all of this is, and ought to have been all along.

    • Back in 2008 I had a real hate on for Ben Bernanke and the others who I perceived as venal/stupid/ill-informed….

      I believed that they were running the global economy into a wall …

      But then I came to my senses…. I began to ask myself the obvious question — WHY? — why would those who control the levers and buttons slam us into a wall at 250km per hour?

      Does it make sense for them to enrich themselves… knowing full well where such policies will lead us… and make no mistake — there are reasons that they understand for not encouraging the moral hazards (on an epic scale) that they have…. they know where all of this leads…. it leads to carnage…

      It’s worse than picking up dimes in front of a steam roller….

      Then it dawned on me — they must FEAR something …. they must have peaked behind a curtain and saw a horrific beast…. a monster that could not be controlled… a monster than needed to be kept behind that curtain for as long as possible … because once it emerged … there would be no putting it back…..

      The Lehman moment gave them a chance to have a really good look at the beast…. a really really good look. If there was any doubt about the wicked power of the beast that put an end to the debate….

      So what did the CBs do after Lehman? The upped the ante… they did all the things they were doing to keep that curtain closed pre GFC….. more debt .. more stimulus… more whatever it takes…

      One can be forgiven for thinking that what they have done is insanity … a death wish even…. because if one observes the rules of the game — particularly if one has been trained… and spent years with the system governed by these rules —- it can be difficult to see why the rules no longer apply…

      The CBs are literally fighting for our lives…. the fight is desperate … they fight like men who understand that losing means horrible suffering … and death for them… for everyone.

      So they are doing absolutely everything and anything to keep that beast shackled and behind the curtain …. screw the rules… the beast doesn’t observe the rules… he slashes and hacks and burns…. he will have us all given the slightest chance…

      Our following the rules would only release the beast sooner…. not running up debt not buying back the markets not pumping out more stimulus… would weaken us … and strengthen the beast….

      The CBs understand this — they understand that these are their only weapons….

      They also understand the limitations of these weapons…. this is a losing battle. This is a brave last stand…. the beast will win …. and when we watch with horror (when the power goes off) as the beast busts free and tears down the curtain …. some will realize that the CBs were heroes… they kept the beast off of us for over a decade….

      Remember when Bernanke stepped down — he said something to the effect:

      ‘I know a lot of people hate me for what I have done …. but when they some day realize why I did these things – they will thank me’

      Thank you Ben … and Mario … and Janet… and the PPTs … and all the others who have kept the beast off of my neck for all these years…. you have been magnificent!

    • GFC 2.0 will be the end of civilization.

      The CBs very obviously understand this — as evidenced by them going to the most extreme measures to fend off GF C2.0.

      I would expect that they will go much further before this plays out — they will do absolutely anything … if it buys another month … another week… another day… another hour…

      Just as a mouse put into a jar of water will fight to the very last breath… so till will the CBs….

      When they fail it will not be for want of trying – or creativity — they will use every trick in the book… they will scratch and claw and bite and stab… they would burn babies on pyres if they thought that would help….

      So there will be no reset — as some are suggesting — when GFC 2.0 strikes…. the CBs will be in the castle…. out of bullets… out of food … out of water….. and the hordes will pour over the walls… and batter down the gates…. and they will take no prisoners…

      We are in a very dangerous place right now … it looks as if the CBs are very low on ammo….

    • Of course in the EU, of which we may still be a member when all this goes up, the rules say a bail in. However, like you, I think this rule will not be applied and we will get bail outs. If ordinary folk or, more likely, small businesses have to take a hit on money simply parked in a bank this will utterly undermine fiat currencies.

      What might be a better idea is to scalp the shareholders and bond holders completely as they are investors and then provide a bail out for the rest (the parkers).

  6. Tim, on what constitutes a useful approach to preserving wealth and sustaining prosperity, I’d highly recommend David Fleming’s “Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy”, and its associated larger work, “Lean Logic”. It majors on what to do next, and takes as a given, the conclusions that you come to in this excellent blog. More info here: http://bit.ly/2vO2g4g

  7. Prosperity – where now?

    Well….. at some point the machine seizes up … the financial system collapses… the JIT supply chain grinds to a halt….

    That will result in the grid going down — the shops emptying — the petrol stations running dry… permanently.

    Then violence will kick off as the masses recognize that their comfy lives are gravely threatened…

    Epic disease will roil the planet as clean water is no longer available … this will be compounded by starvation ….

    I expect that once the canned beans are all eaten … and the organic farms found and denuded … that there will be a fair bit of eating each other…. but that won’t last long … it’s kinda like a reverse ponze…. the edible humans drop off precipitously as the strong keep eating the weaker members…

    Then of course there are 4000 spent fuel ponds waiting… to boil … and catch fire… poisoning the planet….

    And this panacea will be what gets those primitive people who will be one day going about their business scratching in the dirt for bugs with pointy sticks…. oblivious of the global catastrophe playing out…. and sudden horrible sickness…. that comes from ingesting some terrible poisonous molecules… that have drifted into their food, water and air supplies….

    Don’t fret too much — this will all be finished up with a week or two of the power going off.

  8. This is an excellent summary of the situation. Yesterday George Monbiot pointed the finger at the who behind it, which he describes as the oligarchy:
    IMO these are the barrier above all to a safe reckoning of the near future. My only quibble with your article is that you don’t yet “get” MMT. Since MMT is a descriptor of the macro economy, and not an hypothesis, what it tells us is that the oligarchy is distorting the economy as we know it can be in order for it to be plundered at every opportunity. I myself have written before that this distortion of the macroeconomy accelerates our path to destruction, or GFCll as you call it. MMT is not a solution to our energy issues but it can alleviate the fall. For example pensions can all be paid as promised because they do not drain existing savings. Now they do in the private sector but they will have to be subsumed into the federal sphere, where pensions count as wealth for the economy and not a burden, or very little burden. There is NO debt associated with paying pensions by the central governments themselves, but the added spending power in people’s pockets will impact the ECoE .

    • Isn’t the problem this: that if a state were to attempt to run things explicitly on an MMT basis, and say in effect ‘Hey, don’t worry about the government liabilities, welfare, pensions etc, it’s not liabilities, it’s actually wealth!’ external investors would conclude otherwise, and the currency would be toast?

    • Yes – a couple possibilities in broad strokes. Governments could theoretically money finance oil extraction. This would work until the FF industry involves a chain of so much productive capacity that other sectors of the economy falter. Or perhaps it concentrates wealth in an obvious way in FF industries. It starts to look like a centrally planned economy which is anathema to many (a practical, not scientific problem). As a second possibility, consumption could be subsidized in a variety of ways (I prefer Keen’s suggestions). My prediction on this is higher inflation, and from our previous talks you know I’m not worried about that. The logical limit is production – but the practical limit is psychology. Consistent increasing inflation would result in the destruction of the concept of savings. This on paper is infinitely preferable to collapse – but I think the “moral” foundation of our current system relies on significant delusions about the creation of money which our social system could not survive.

      Reducing renteerism seems like a sound idea to me. Then we’ll see if the increase in demand/consumption by less debt burdened citizens can be met by the productive capacity of the economy at a level which can be supported by underlying resources.

  9. The problem is not ‘the oligarchy’ – that is a false moral and ideological reading of the situation, a politicised one.

    The predicament in which we find ourselves is the human desire to make ourselves, -individually, and collectively through industrialised welfare states (Europe) , or aggressively capitalist and individualist ones (US) and every shade in between – far more comfortable than the ecology of this planet and its natural resources will allow.

    As much as oligarchs like to feel the illusion power that immense wealth brings, peasants when they could finally migrate en masse to cities to enjoy electricity, TV’s and evenings and holidays when there was more to do than stare at a goat’s backside (something only middle-class ecologists like Monbiot wax lyrical about) did so with enthusiasm.

    And the migrants from Latin America, Africa, and Asia want just the same thing as the move to the centres of global exploitation, to get their share if they can

    Get rid of oligarchs, financiers, great global corporations, and the predicament of humanity remains, with the terrible consequences which are unfolding – quite rapidly now – of industrialized resource extraction and degradation to provide the unambitious common man with his comfort and entertainment.

    • You demonstrate a very small level of understanding about what you write here. The oligarchs have already done irreparable damage to our future but the longer they control the levers of power and privilege the faster we will succumb to chaos. As Tim says immigration will be stopped.
      As to your comments on MMT they are beneath contempt.

    • Hey John … I am all for MMT … I keep checking the post box for the first cheque to arrive so that I can stop working … but alas… it is never there…

      It’s all my neighbours can talk about when I see them at the pub …. they all want to retire early too.. some want to spend their time trout fishing… one has horses and he and his wife would like to be able to ride everyday….

      Is there some sort of application form I need to fill out?

    • Human nature has both competitive and co-operative aspects, and my belief is that we’ll need to de-emphasise the competitive and re-emphasise the co-operative if we’re to make the best of things moving forwards.

      Ideas will need to change, and so will social norms of what is and isn’t acceptable -and an ideal would be to discredit greed, just as we’ve discredited (for example) drink-driving.

    • Discredit greed? Or… we can vote for people promising to “make us great again”. Or vote for people who wants “change”, or “exit” impoverishment.

      Nobody thinks drinking and driving, alcoholism etc is great. But every cell in your body wants to eat and replicate. Changing this behaviour is about as likely as changing the laws of gravity.

  10. I seem to have touched a raw nerve! To which my answer is: ‘Sticks and stones’.

    Actually, I should be delighted to find that the MMT people were right – but they do seem to be talking mostly to themselves – like radical Left revolutionaries, and,may I say hard-core Capitalists.

    I suspect most adherents of MMT are those who desperately hope their pensions will be paid….

    Is it a valid theory, more than a sectarian belief, or merely a religion born of self-deception?

    The question remains valid: what would be the consequences, on international markets, for its currency, were a state to apply MMT ? Wouldn’t it just become toilet paper?

    • I suspect you are right… desperate/lost people are prime targets for cult membership…

      The question has been asked before… if the government is going to pay me to do nothing … then why would I do anything?

      Under MMT – we are all welfare bums!

    • Rampant ignorance always touches a raw nerve.Commenters should display some knowledge. To your query the answer is that MMT describes the EXISTING ECONOMIC SYSTEM. So if you think it will be destroyed, you are saying already it will be destroyed – in your belief. MMT won’t save it. What MMT will do is give us some space to lessen the worst effects. Pensions can be met as long as one understands that the possibilities are already in place. So instead of acting like headless chooks. which is the standard line today, MMT says they can be met. Do your research before spraying.

    • With MMT everyone gets a ‘pension’ because everyone gets to retire because the gubbermint will give them free money for doing nothing.

      The best ideas are often the simpleton-est ones!

    • Clearly there is more than one ignorant person infecting this site, hiding behind one of several nom-de-plumes. It can’t hide your cluelessness. I suggest you do research before spraying misinformation.

    • MMT has always struck me as an excuse for politicians (of all stripes) to engage in excessive deficit spending just to garner votes (and as the consequences are so far down the line they’ll be long gone when the SHTF)

      Whatever monetary system we use at the end of the day it’s ‘real stuff’ (food fuel water etc) on which life depends and that is disappearing fast

      Unless we can somehow hit the jackpot with nuclear fusion I see no way out of our predicament without untold pain

    • Best move to a country with there is plentiful scope for solar and wind energy. If the worst came to the worst in the UK I’m sure using coal again would be considered as we still have plenty.


    • We already live in the MMT world. All the laws about money creation are there. The politicians are among the last to see that. MMT is the antidote to neo-liberal austerity policies which see government cutbacks to entitlements, while spreading largesse onto the 0.1%.. Contrary to ill informed, and usually badly intended, commentary that you express, MMT is not a free-for-all. The constitution already allows the Federal government the sole right to create the currency which it does by buying debts, not by taxation. The rampant ignorance expressed by those who see it as a way to perdition are playing into the hands of the super rich. You are a pawn of the super rich. If that’s OK by you you should acknowledge it, But its not a defence.

    • As an ex-matelot our colleagues in the RFA were charged with supplying us all three (fuel food and water) plus a fourth ingredient, ammunition but it was very much in that order

  11. If one takes the longer perspective, which is the only valid one, it is the capacity for mass organised effort (however arrived at, (whether compulsion by oligarchs and kings or something more communal and egalitarian) tool-making; and information preservation and dissemination – all accelerated by the use of first the printing press and expanded education, and then an abundance of cheap fossil fuels, releasing the mass of mankind in the advanced economies from the hard, severely limiting, laws of Nature for a century or so – which have landed us where we are: facing a devastated ecosystem and ever-scarcer resources, of all kinds not merely energy, per capita.

    The devastation is such that a new morality simply won’t help much, as it addresses the wrong question, which is fundamentally physical, not moral and political.

    In other words, a hard rock, into which we are crashing. We can all become saints, but it won’t change much except that maybe day to day it will feel less hopeless. But do people truly become nicer when resources are scarce?

    The oligarchs are merely the ones who have profited most, (and no doubt many are despicable) but many a descendant of an over-worked miner, peasant, fisherman, serf, now lives in a state of comfort and ease which their grandparents could not dream about.

    And, what’s more, they want to keep on getting it! Hence ‘Populism’ – in essence, the demand that the gifts of the fossil-fuel boom (and social reforms) post- WW2 should not stop. Not that see that it was a product of that unprecedented boom in energy.

    They are eating out in restaurants in their retirement even as I type, or on holiday somewhere. I could go to the pub in the neighbouring village and it would be packed with the white-haired, merrily stuffing themselves.

    They are going to be disappointed, but haven’t the faintest idea what the true situation – as outlined here – really is.

    Nor do the young, who, rightly wary of Capitalism as an ideal, are being promised that ‘Marx was Right’ after all, and all that one has to do is sweep the wicked aside and the reign of plenty -as pre-2008 – will resume.

    It won’t.

    And they are also being educated into hopeless ignorance as to the realities of energy in our economies: ‘Leave it in the Ground!’ etc.

    Politically, and socially, this is all explosive stuff…..

    • ‘But do people truly become nicer when resources are scarce?’

      For anyone who is unsure…. gather 5 random dogs… put them in a pen…. throw 100kg of meat in the pen …. observe…

      Once they have eaten the meat… wait a few days … then throw 1kg of meat in the pen … observe.

      Oh… when you throw the meat in make sure to mind your fingers….

    • My current plan is to look at two probable consequences of the prosperity downturn in the next article – a financial crash, and fundamental political change. I hope this will set the context for a consideration of policy options.

  12. Dr. Morgan,

    After quickly scanning your post yesterday morning, I went off to do some chores, including filling my 4000 lb. metal and petro-chemical personal transport device with 14 gallons of $2.55 cent regular gasoline. As I was filling the tank at the gas station, and watching the hundreds of cars speed down the road carrying folks off to early holiday shopping, I could not help but think about how incongruous the scene was with coming events suggested by SEEDS. Then I hung up the gas pump and drove off to do some other chores….

    Re-reading your post this morning, and reflecting a bit further, it is astonishing to truly consider the fairy-tail land we live in (particular here in the U.S.), and the surplus energy that (still?) exists to support it. This all changes at some point, but for now, we Americans are scurrying about in our 270 Million cars and trucks, shopping on credit, ordering more takeout food than ever….Happy Holidays.


    • There are times when I think it’s useful to reflect on a few fundamentals – it’s what I do, anyhow, and here are some questions I ask myself:

      – Is it true that the economy is awash with cheap debt and cheap money?

      – Is that reflected in huge premia of asset prices to underlying worth, i.e. bubbles?

      – Hasn’t a decade of a negative real cost of money been an aberration?

      – Are we deluding ourselves with the scale of collective promises we’ve made ourselves, including debt and pensions?

      – Is it true that we can’t turn the aggregate values of stocks, bonds and property into cash by selling them to each other?

      – Is it true that the trend cost of accessing energy has risen sharply?

      I find myself answering ‘yes’ to all of the above. This reflection acts as an anchor to reality.

    • And for those concerned about global warming…. their dream will soon become true…. when the power goes off… the skies will be crystal clear blue…. and they can enjoy that … lying on their backs in a field gazing upwards… as they slowly starve to death (and yes… the birds will be chirping… and the crows will be getting ready to peck out their eyes…)

      It will be a good day … when humans go extinct… a very very good day indeed.

      Mother E will definitely be pleased that the aberration is gone… she’s suffered us long enough.

  13. Tim an extract from Ambrose’s article from the Telegraph – he’s rather less than pleased with May’s deal.

    ‘The eurozone’s V-shaped catch-up spurt in 2017 has fizzled, as it was bound to do once the low-hanging fruit had been picked and the output gap had been closed. The old pathologies have returned.

    It remains a slow-growth zone that missed much of the IT revolution of the last quarter century. It is still wedded to the Precautionary Principle – otherwise known as a racket for the defence of vested interests – and which the UK must accept in the text of the political declaration.

    As a matter of realpolitik you can argue that the EU remains cursed by its dysfunctional monetary union and will lurch back into crisis when the next global downturn hits in 2019 or 2020, and therefore that there is no point in rocking the boat over Theresa May’s Brexit plan.

    Whatever the documents say about the Irish backstop or the perpetual customs territory, the denouement of the QE debt bubble will change Europe’s circumstances in ways that we cannot predict.

    The next recession will come when EMU interest rates are already minus 0.4pc. Monetary policy is near exhaustion. Budget stimulus a l’outrance is forbidden by the Fiscal Compact. The eurozone will slide into a deflation trap. This in turn will cause Club Med debt dynamics to spin out of control. They are stuffed.

    Yet that is to stake Britain’s constitutional future on the vagaries of markets and timing. The larger fact is that the Prime Minister’s agreement is unacceptable on any terms, ever. We go from being legally sovereign as an EU member, entitled to exit unilaterally under Article 50, to non-sovereign status as a legally-captured adjunct to the EU’

    He does accept that will face some turmoil if we leave with an agreement but that things will eventually settle down.

    • One of the more remarkable features of the whole “Brexit” saga is that the EU has portrayed itself as the strong, stable and reliable player in the talks, with Britain as the weaker player, and a supplicant for generosity. It’s not too surprising that Brussels has pushed this line – but it IS surprising that both Britain and the consensus or ‘commentariat’ have fallen for it.

      It might be a good idea to put the Euro Area through the SEEDS process.

    • I’m not sure even if Johnson has been in charge that we would have got a better deal. In my mind the 27 EU countries were not going to budge and we might have ended up in a complete impasse and a no deal scenario which many UK firms are not ready for.

      The deal isn’t a great one but I’ve read so many pros – cons about Brexit that I really don’t know what is best for the country. Perhaps if the EU does implode somewhat we’ll be in a stronger position for the next round of negotiations.

    • As many have said this deal for, which we are paying £39bn, is actually worse than staying, which, if you think about it, is a remarkable achievement.

      In all honesty I think little else was to be expected of the EU considering how they have treated the “errant” in the past; if you are a member it is “stay with the programme” and have little say or, if you are a recalcitrant and wish to leave, it’s “stay with the programme” and have no say.

      I believe we should exit on a “managed” no deal and pocket the money. It would be uncomfortable for a period, maybe two years, but this deal guarantees discomfort for many, many years.

      Having said the above I think the EU will gradually disintegrate in the coming years. The Italian situation is kabuki and will remain so until the EU Parliament elections in May at which time I expect much more populist representation; this will up the pressure on BAU.

      The other deus ex machina would be an economic downturn and financial crash which might well mean the end of the Euro and if this goes so does the EU.

      I have said before Brexit is a sideshow.

    • This whole thing is bizarre. Four questions:

      1. Does the EU think that making things hard for the UK won’t harm their own economy?

      2. Do the Brits think they’d escape unscathed from some kind of crisis in the Euro Area?

      3. Does neither side see the need to work together, constructively and with good will?

      4. Are both Brussels and London run by idiots?

    • I agree with some others here, that “Brexit” is really a side-show.
      The UK is on a path leading to some unknown ( and not too hopeful ) future, and whether it goes down the road of Brexit or not, it is heading towards the same place regardless.
      That said, I can hardly believe the complete and absolute shambles that this Brexit negotiation has become !
      The same is almost true of the EU.
      My view is that the EU will not last in its current form. It should have stayed as a Common Market. What we needed was free movement of goods and services across sovereign nations. Forget the Liberal ideology stuff.
      The Euro should never have been born.
      However it was born, and it was born out of the need to prevent bankers from screwing everybody into the ground, by skimming off profits from every cross-border exchange. All we needed was market regulated exchange rates and commission free transactions between member states. It was mistrust of Bankers that led us to where we are with the Euro, but Alas, bankers being bankers, they will always find a way to shaft the public if they are allowed to.

    • Hi Tim

      I’d answer your questions as follows:

      1. The EU (in this case I mean Brussels) seems to be turning into a religion and what matters is the sanctity of the “programme” and not its consequences.

      2. This to me is the real risk; an EU crisis even without a break up will bring the pains on mightily to them and us.

      3. Well, under international law these sorts of negotiations should be entered into in “good faith” and I think it is highly questionable that the EU has acted in this way, but, again, it is the “programme” which takes precedence and not good manners.

      4. Seemingly.

    • Japan has been remarkably lucky so far, getting away with monetizing debt without the currency coming under the hammer. The market in JGBs has become almost non-existent, the only buyer of any significance being the BoJ. They seem now to be exiting Abenomics, in a stealthy way, without paying much of a price for it.

      Will other economies be this lucky? Will Japan’s luck run out? Or will the denouement of the Chinese debt-financed ‘growth’ binge hit Japan hard? Time will tell.

    • China will escape because – thanks to technology – it has a new currency – the currency of obedience

      By denying those who don’t ‘behave’ certain privileges it can reduce ‘claims on the future’ from a large part of the population.

      Coming to a town near you soon.

  14. Hi, Tim. Thanks for your work. I do find your articles fascinating (and sometimes horrifying).

    You state that you expect GFC II to be an event four times the magnitude of GFC I. I’ve read many of your articles but not all. Is there a piece that details your reasoning for this?

    • I’ve not written about that in detail. However, here’s how I get to it.

      As this article reiterates, I draw a distinction between (a) money as a “claim”, and (b) the quantity of goods and services against which the aggregate of those “claims” can be exercised.

      This creates the concept and metric of “excess claims”. Another way of thinking of this is as “promises that cannot be honoured”.

      Over the last 20 or so years, we’ve created claims far in excess of the things for which those claims can be exercised. The cumulative number I have now for “excess claims” is well over $400tn. The number on the eve of GFC I was just under $100tn (at 2017 values).

      These, to me, are numbers quantifying downside exposure.

      When considering these numbers, it’s useful to draw a distinction between “notional value” and loss exposure. For instance, say you have a stock priced at $100, which then falls to $60. This creates a notional loss of $40. This is “notional” because it’s a purely book-keeping loss. The $40 hasn’t left your bank account. You still own the stock.

      However, if you bought that stock using $70 of debt, you now have a “real” loss exposure of $10, against the new price of $60.

      This real loss exposure is the hazard within the $400tn+ excess claims number.

    • It’s probably safe to assume nobody will be able to make an “excess” claim. Same for all the insurance scams representing the world’s FIRE sector nominal wealth. They will all be just set aside.

  15. Tim,
    In addition to increasing nationalism/anti-globalism and anti-immigration as societal responses to declining prosperity, i would suggest that another dynamic, within a society, will be increasing polarization and antagonism of the countryside and cities, as decreasing prosperity manifests by withdrawal of support for the countryside

    This article on the current protests in France provides a good illustration.


  16. In everything being published on the current protests in France, one thing seems very clear: they are against the steadily-declining prosperity of ordinary people, as well expressing a gulf between the perceived liberal, Green, urban v. distressed rural and peripheral urban areas

    Higher taxes in general (pensions, inheritance), fuel costs (more tax again) and against a disconnected and indifferent political class. And low wages in general.

    Disenchantment with all the parties, with a tendency to vote National Front in order to send a message to the Establishment.

    It seems that state workers, functionaries, seem to be doing appreciably better though, which might be a hint to the wise regarding the future. Just the same in Spain: all my immediate family are functionaries (or trying to be) and politicians, and feather-bedded.

    When ALL parties are despised, and no one party seems to offer hope and a valid -rational – ideology, a democracy reaches a very dangerous point. as the 1920’s and 30’s demonstrated.

    A comment which comes up quite frequently is ‘I’m neither Left nor Right’.

    • @Xabier

      I don’t get the impression it’s just down to prosperity but rather more inchoate feelings of: not being listened to; feeling powerless; the World changing too quickly; general feelings of uncertainty about the future.

      What is notable is that most societies do face considerable challenges in the coming decades and yet the political structure seems unable to escape its incrementalistic approach to issues and an inherent tendency to lie and obfuscate and frame everything interms of BAU. That great bon viveur and autocrat manquee, Jean Claude Juncker, once said that when it becomes serious you have to lie; but that assumes that everyone lies and if you don’t you lose. However, if all politicians signed the pledge there would be no reason to lose other than by having an inferior argument. But that of course is far too much to expect.

    • I suspect that Macron’s rather pretentious and somewhat arrogant presidential style has helped to accelerate his decline in popularity and reinforce the sense of ‘not being listened to’ or esteemed.

      It’s hard to judge these things from outside the culture, of course.

      Hollande’s awful patronising jest about the poor in France being ‘les sans dents’ has probably not been forgotten…..

      Hollande replaced by Macron, Cameron by May do any of us really deserve this?

  17. Inflexion or discontinuity?
    It seems to me that many of us are unsure whether the deterioration in the quality of our industrial energy sources means a simple change in trend from upward sloping to downward sloping, or, alternatively, a collapse of society similar to the collapse of the Soviet Union around 1990. Nafeez Ahmed wrote about a Finnish study prepared for the UN:

    “More expensive energy doesn’t necessarily lead to economic collapse,” Järvensivu told me. “Of course, people won’t have the same consumption opportunities, there’s not enough cheap energy available for that, but they are not automatically led to unemployment and misery either.”

    I think we can all agree that deflation in Wall Street is likely. Zero and negative real interest rates coupled with sky high price/ earnings multiples likely won’t survive. Which means that the One Percent won’t be nearly as rich. But what about the 99 percent, or more precisely, the bottom 90 percent? Are we talking about another Great Depression, only maybe worse? Or are we talking about Americans having to live on the energy budget of, say, Greece? If our future is Greece, then do we have a political system which can survive the transition? Could the political system assist the transition, or will it continue to be a barrier to progress?

    Any thoughts appreciated….Don Stewart

    • These are the issues that I’m looking into for the next article here.

      The easier part, I think, is the purely financial. Asset values and debt are predicated on perpetual growth, something which is no longer a tenable assumption. I’m in little or no doubt that we should prepare for collapses in asset values and a wave of massive defaults. This might suggest we have to reboot or redesign the financial system. This wipes out most of the (paper) wealth of the top 1%.

      Second, I anticipate two major political trends being (a) demands for redistribution, and (b) opposition to immigration. As people become poorer, their tolerance either of inequality or of labour competition drops off a cliff. This seems to imply more nationalism and less globalism, as a form of retreat behind national (?) barriers.

      We don’t, as yet, have intellectual interpretations of economics or governance capable of handling these changes, and we’re not going to arrive at these whilst we remain in the denial mind-set based on ‘perpetual growth’.

    • Well during the 2nd World war and for some time afterwards there was a spirit of ‘make do’ si I think the UK would at least muddle through with hopefully a better sense of community.


    • No growth is death the the fiat fractional reserve banking system which has been in place since 1971

    • The fractional reserve banking system was wound up years ago. Banks are free to create loans without such limits. All they have to do is remain solvent. No reserves are touched to make loans.

  18. It would be nice to think so.

    Against a possible revival of the ‘Blitz Spirit’ we have; the moral and mental corruption which has come with decades of mass consumerism and luxury (in historical terms, for nearly all); physical softness from universal central heating and mass car ownership; general weakness of the authorities – above all the police who now frighten no one at all (what is it, 10%, the chance of going to jail for even a short term?); the spread of some very nasty and well-organised – international – criminal gangs throughout the UK due to free movement; and widespread drug-taking – in my view much worse than the old alcoholism for social order and basic decency. I don’t think anyone ever broke into a old lady’s home to get beer money, but for drugs money……

    Just look at the crime statistics! Even here, in Cambridge, notorious crime spots – most notably the big Council estate area, are going more or less un-policed (too dangerous for them, and they plead as ever ‘no manpower’) and we’ve seen fatal stabbings in the centre.

    The police reaction to a gypsy invasion of the neighbouring village was as limp as one could imagine.

    A family who were shot at night with an air rifle having dinner in their kitchen, were told it was their fault for not having the blinds down!

    None of this inspires me with confidence about how a Crisis Britain might shape up.

    Gosh, I’m sounding like the Daily Mail – I have to emigrate. 🙂

    • Yes you’re right about mass consumerism. Personally I think they’re going to have to increase police numbers because it’s going to cost more in the long term if they don’t.

      I have been horrified to read about elderly people being savagely beaten in their own home. We’ve created a generation that doesn’t know right from wrong so anyone is considered a ‘fair game’

      Police officers are now being attacked and may have to avoid trying to arrest violent criminals without massive backup. On a positive note they have now been given permission to ram moped riding gangs which is at least something.

      The Home office said that there is currently not enough evidence to link the increase in crime to reduced Police numbers…………….

    • We would need an entirely new force (like the Guardia Civil) our current police are too politically correct having been infected by common purpose years ago

  19. An article in the American Conservative on 11/23, “The Bright Yellow Line Over Globalization in France,” describing the dynamic behind the current protests in France of the “left behind” rural areas vs. the thriving metropolises, an illustration of Tim’s identification of a growing trend of emphasis on “redistribution”. I can’t vouch for the accuracy of the article, but its existence clearly indicates a growing trend in the meme. From the article:

    “Last Saturday, roughly 300,000 vest-wearing protesters blocked roads and tried to disrupt normal activity throughout France. They were protesting a proposed rise in gasoline taxes and plan to continue this weekend and the next. Raising carbon taxes might make sense if you want to raise revenues and mitigate climate change, but it’s going to fall most heavily on those with tight budgets who depend on their cars to get to work every day. That sets up a stark confrontation between what the French sociologist Christophe Guilluy calls “la France périphérique” and those major cities that have grown more prosperous even as the working and middle classes have declined.

    Guilluy has built his arguments around the growing divide between the winners of globalization—Paris, Lyon, Bordeaux, and other major cities, which host industries able to produce for the global market—and the French periphery, smaller cities and rural areas that are failing to keep up. The major cities are home to France’s major corporations, banks, and culture organizations. Demographic changes in and around those cities have intensified the divide. Low-paying service jobs—minding the children, cleaning up at restaurants, trimming the hedges of the new bourgeoisie—are increasingly held by immigrants.

    The white working class, which used to inhabit the Paris suburbs, what was once called the Red Belt, has shrunk in numbers as French manufacturing has declined. Formerly white working-class suburbs, like the towns of Seine-St.-Denis, are now largely populated by immigrants and increasingly dominated by Islamist Muslims. The public housing built in the decades after World War II to house a growing working class has seen a massive flight of native French people. In today’s Paris suburbs, riots and “car b q’s” erupt with some regularity and low-grade ethnic tension is a constant. In one of Guilluy’s previous works, he describes the “battle of eyes” that takes place in the lobbies and elevators of French housing projects. If a white native French person moves into public housing, he finds himself perceived as having intruding on a Muslim space. The battle is over who—the Frenchman or the immigrant’s son—will drop his gaze first.

    Not surprisingly, few French people want to live this way, however abstractly they might be committed to coexisting in a multicultural society. So increasing numbers of working- and lower-middle-class white Frenchmen have evacuated the suburbs, usually for exurban areas. Meanwhile France’s urban-dwelling, knowledge-based bourgeoisie benefits from what Christopher Caldwell caustically describes as “taxpayer subsidized servant’s quarters”—the public housing close to Paris, with its heavily funded and quite efficient public transportation networks.

    Over the past 20 years, the French central government, spooked by riots and terrorism, has moved piles of money into these immigrant suburbs, seeking to ensure that new immigrants will become normally assimilated into French life. Such efforts have not been particularly successful. (A new book on Seine-St.-Denis called Inch’allah, directed by two veteran reporters for Le Monde, chronicling the Islamization of Paris’s close-in northern suburbs, illustrates the failure of successive governments to bridge the moral and cultural gaps between immigrants and Frenchmen. I will write about this book, and its reception, in a future post.) But the immigrants do at least have housing near jobs and transportation networks, while the whites who have left Seine-St.-Denis and other suburbs do not.

    So now progressive France plays the environmentalist card on those who have been pushed out. Why are they still driving around in their stupid diesel-guzzling automobiles? What was not long ago the world’s most politically conscious and economically protected working class has been whittled away, to the point where it is hardly considered a necessary part of any left-of-center political coalition. Meanwhile French cities built around manufacturing and agriculture are hollow shadows of what they were a generation ago, redolent of towns in America’s Rust Belt.

    This is the structural underpinning of the gilet jaune protest.”

    The “rural vs. metropolis” dynamic was also identified as a dynamic that propelled Trump into office shortly after Hillary’s historic defeat. At the risk of being a broken record, and the last time I will mention it, I will say again that Steve Ludlum’s take on this is essential reading to grasp that, if we don’t come to a new understanding of what our economy really is, and understand that we need to transition to a different idea of what an economy is, “redistribution” arguments will lead nowhere good. They are a dead end because our economy is a dead end.

    Here’s Ludlum dissecting the rural vs. metropolis dynamic with respect to Hillary’s defeat, in “King Trump the Irrelevant.”

    “[Quoting a Brookings Institute analysis: ‘Another Clinton-Trump divide: High-output America vs low-output America]

    ‘Last week, as my colleague Sifan Liu and I were gnawing on some questions asked by Jim Tankersley of The Washington Post, we happened upon a revealing aspect of the election outcome. While looking at number of influences on the presidential vote outcome, we found that in a year of massive divides, one particular economic split stands out.

    Our observation: The less-than-500 counties that Hillary Clinton carried nationwide encompassed a massive 64 percent of America’s economic activity as measured by total output in 2015. By contrast, the more-than-2,600 counties that Donald Trump won generated just 36 percent of the country’s output—just a little more than one-third of the nation’s economic activity.
    Candidates’ counties won and share of GDP in 2000 and 2016. [Chart omitted]

    Here you can see very clearly that with the exceptions of the Phoenix and Fort Worth areas and a big chunk of Long Island Clinton won every large-sized county economy in the country. Her base of 493 counties was heavily metropolitan. By contrast, Trumpland consists of hundreds and hundreds of tiny low-output locations that comprise the non-metropolitan hinterland of America, along with some suburban and exurban metro counties, as Indeed Chief Economist Jed Kolko pointed out in a tweet … ‘

    “The foundation of Brooking’s argument is breathtakingly false, yet is so fashionably rendered anyone looking at it uncritically would take the authors’ premise at face value: that the metropolitan areas who fell to Clinton ‘produced’ greater ‘output’ than the backwards redneck promised lands that supported Trump. By way of Brookings’ logic, the consumption that takes place in cities is ‘productive’ because the various banks magically output ‘money’ to pay for it.

    Cities are sinks not sources, their actual output is little or nothing but waste. The backwaters of America don’t ‘produce’ either, they extract our nation’s wealth — our non-renewable resource capital — and speed it to its death. Soil fertility, water, oil, gas, coal, metallic ores along with the lumpishly unfashionable activities that require labor, skill, difficulty … all these and more are sucked out of our towns making stops at Hillary Clinton’s capital-annihilating colonias on their way to the landfill. Retail sales and speculation are measured as production by Brookings’ economists and the banks which fund the process, lending abstract ‘wealth’ into existence using the wasting processes as collateral. Given four- hundred-plus years of mechanized pillaging the flyover counties have been emptied out with the extractive returns captured by well-positioned rentiers. The locals cry, “where’s our cut?” The fact of the question itself reveals the answer …”

    • Devastating breakdown of the data. Thanks, but nothing I read above or in any of the comments elicits much hope.

      I live in Wyoming, a state in the US, and it is a microcosm of the entire planet. It is a Petro State that overspent during the boom years and continues to “believe” there will be another boom and that Wyoming will break the “energy habit” bust next time.

      We are watching the developed world make choices between the succor of the aged vs the education of the young which occurs on public funds. Wyoming is forced to face the same scenario as its Constitution requires education to be funded equally across the State so it has state wide funding for public schools. This is a great thing because that requires each school to be funded equally or to a point where each child has the same opportunity for education across the State. However this comes at a price as the cost to educate each child in Wyoming is 18k/yr per student, which is double of most school districts. So the war between competing parts of the State budgets will play out as the decline of prosperity takes hold as the US can finance or mitigate it problems on a National scale easier than each State can manage the war between, Roads, Jails and other State services get stretched thin.

      The USA is not France yet, but it is a lot closer than people realize and I am unsure if there will be voices that can understand past mistakes and organize the world going forward, without avoiding a catastrophic outcome. No more than we deserve for sure, but depressing none the less, for those that can see a different path.

      I hate to be F.E. but I cannot believe a contraction on a world wide scale can be mitigated or orchestrated.

    • Although the federal government is monetary sovereign, It only applies to it. However it need have no compunction in bailing out states if their needs fall too far behind the minimum needed to equitably fund its obligations. Wyoming just needs to front up to the Federal gov’t and request the needed funds so they can discharge their duty.
      The additional debt that would normally apply to Wyoming gets written off by the act of paying the bill so the money will come to Wyoming without debt attached. Neat!

      This sort of remedy will be enacted in great numbers as the population ages, the resources become scarcer and the risks of spilling blood in the streets from massed “pitchforks” becomes very real. The federal government can pay without limitation UNTIL resources get scarce and there’s not enough to go round. Since that’s not the case just yet, at least get the economy in order so we can better sort out some remedy. It won’t stop the eventual downfall but it will buy time.

    • Greg:

      It might interest you that I recently conducted an examination of growth in the US economy over the last ten years.

      The breakdown of growth was as follows:

      – NO overall growth occurred in manufacturing, construction, agriculture and extractive industries, taken together.

      – 7% of growth came from increased net exports of services

      – The remaining 93% of all growth came from internally consumed services, such as FIRE (finance, insurance, real estate), etc..

      Taking this together with debt and monetary data, a comprehensive picture emerges.

      – “Growth” is manufactured by pouring cheap credit and cheap money into the economy.

      – This shows up as activity where Americans sell services to each other. (It also shows up as asset price inflation).

      – Activities such as manufacturing and construction do not participate in this “growth” – indeed, they do not even expand in a ‘normal’ way in line with population trends.

      Politically, those nearest the conduits of cheap debt and liquidity benefit most from it. But, where this inflow meets the periphery at all, it does so only as low-paid service jobs.

    • John

      Yes, the supply drop makes sense to me. If you’re a pessimist about the economy, though, you’d see a strong likelihood of demand falling too.

    • John

      Having spent much of my City career as an energy analyst, I’m often tempted to post an article here about the outlook for oil supply, prices and so on. For now, though, just a few thoughts.

      1. I have never believed that we would “run out of” oil. Rather, we’re likely to reach a point where the oil that remains can only be produced at costs that are prohibitive for consumers. Whether we call this ‘peak oil supply’ or ‘peak oil demand’ is purely semantics – it describes the same situation, where the industry can no longer supply oil in the quantity and at the price that consumers require. In other words, it’s not a quantity issue, it’s a cost issue (ECoE).

      2. Conventional oil supply has peaked, and – depending on how tight is your definition of “conventional” – did so between 2005 and about 2012. Since then, we’ve been relying on unconventionals, most obviously shales, to (a) replace declining conventional supply, and (b) meet growth in demand. This is a matter of “scraping the barrel”. We wouldn’t be using shales etc if there was abundant conventional oil.

      3. Most shale production is loss-making, meaning that its cash flow isn’t enough to fund capital costs. Shale wells are characterised by ultra-rapid declines in production after start-up. The stimulation sequence used in conventional production is not applicable to shales – they cannot move from primary to secondary, tertiary and EOR because they start at the end of that sequence. Rapid decline rates mean that constant drilling is required to maintain or increase output. Cash flow from production cannot finance this “drilling treadmill”.

      4. Why, then, is so much shale liquids produced? It is subsidised by investors. Some bought into the hype but, more importantly, this cash-burn sector has been sustained by cheap money. It’s not too much of a stretch to see higher interest rates killing the shale sector.

      5. Demand for oil continues to grow, not least because oil powers 97% of all transport, with electric rail the only significant exception. Optimists believe that demand for oil will be reduced by the switch to EV, but do not have a convincing explanation for where the power for this is supposed to come from. ECoE interpretation suggests to me that, if a switch to EV does happen, the primary sources of supply will be coal and gas.

      6. Market forces operate imperfectly in oil, because responses to price are very slow. If prices rise, for example, consumers do not immediately use much less, and neither can suppliers rapidly increase production. This slow response process creates both shortages and gluts, over a cycle anywhere between 7 and 13 years in duration. Both shortages and gluts can be protracted. We’re in a glut now, mainly because (a) cheap money has fueled the shale boom, and (b) economic deterioration is impairing demand.

      7. To understand the demand process, we need to see real economic trends behind credit-inflated activity. We do this here, but most observers ignore the credit/consumption equation, and thus are over-optimistic about economic “growth”.

      8. So right now we have a glut, but that’s unlikely to persist more than, say, two more years unless the economy really slumps. That’s actually pretty likely.

    • It’s just that this graph in particular differs from others I’ve seen to date, Tim, in having a sharp drop off edge about now, without a gentle rounding down common to the others.
      It doesn’t look like a glut scenario unless it stops sharp now.
      With my interest in modern economics. The drop off can be addressed by subsidising production to keep it affordable for the public. There is no way the private sector can manage that, so the Federal governments can keep us open for business. We just don’t know for how long.

  20. France is an interesting microcosm of broader trends.

    Here are two stats, from SEEDS, which I think cast light on this:

    1. Prosperity is in a long, fairly shallow decline. In euros at 2017 values, it peaked at 29,350 per person way back in 2000. Last year it was 27,250, a deterioration of 7% from the peak.

    2. Comparing 2017 with 2000, GDP increased by EUR 433bn (+23%). But, over the same period, debt expanded by EUR 3,070bn (+86%). So EUR 7.09 was borrowed for each EUR 1 of “growth”.

    “Growth”, therefore, has been a function of pouring cheap credit into the system. This credit is poured in centrally, benefiting those at the centre, and with little if any of the ensuing “growth” reaching the periphery.

    These trends resulted in the collapse of support for traditional parties, none of whose candidates reached the second round of the presidential election. M. Macron’s campaign presented him as a populist, a new force which was neither FN nor the traditional parties. Some suspected that this was an exercise in spin, and that Macron is both an establishment figure and a proponent of neoliberalism. If this critique was true, he would eventually appear in his true colours, thereupon losing support.

    • I see Trump has pronounced and that is a severe blow to May.

      The EU, as expected, has presented a stolid front about this so far. But the EU itself will lose mightily if this deal is voted down and “no deal” becomes a real possibility. They stand to lose just as much as the UK and the events in France may be a harbinger of trouble spreading beyond the populist fringe and into mainstream Europe.

      Sooner or later the penny will drop.

  21. A masterly summary of the oil situation and the delusional nature of shale as a long-term energy saviour ( let’s not even think about the ecological impact), and of the so-called Transition to ‘clean’ energy; but, turning to the thumbnail sketch of the French problem according to SEEDS, we can see how this illuminates and explains the recent protests and the reported comments of those taking part.

    Add further taxation (diesel, pensions, inheritance tax, etc) to a scenario of steadily declining real prosperity, taking further bites out of what is already perceptibly shrinking,and mass discontent, embracing all parties will grow.

    In such a context, it is difficult for governments to increase either taxation or public spending if they wish to be re-elected (please note Corbyn & Co.)

    SEEDS explains why the French – never slow to take to the streets of course – are starting to snap, when a purely conventional GDP – ‘growth’ since 2000 – analysis fails.

    • These are the issues to be addressed in the next article. Essentially, “populism” isn’t a fad, it won’t be fixed by “growth” (because, properly understood, there isn’t any), and the seemingly inevitable financial crash is going to be a catalyst.

  22. Apropos civil and moral decline, it must be said that Spanish cities – the ones I know best are Bilbao and Pamplona, – are experiencing many of the same problems as Britain: widespread foreign gangs, drug wars, dreadful attacks on the elderly both on the street and at home, lawless gypsies – despite the traditional willingness of the Guardia Civil to beat the crap out of people who come into their hands.

    Of course, they claim to be under-funded too….

    But there is, as in Britain, much PC protection of criminals, if they come from ethnic minorities: anyone thinking of buying a 2nd property in Spain should be aware that if gypsies get in, it can take a very long time indeed to get them out (maybe even a year) by which time it will have been gutted and trashed – the police will do nothing and the courts are very slow in such cases.

    There is quite a lot of talk about vigilante action to deal with this, which is a very sorry state of affairs.

    • I’m beginning to wonder if it is worth owning any property anymore. Cash it all in and go live on a beach in the pacific or Indian ocean (just not the Andaman Islands) is the way to go I reckon

    • There is no safer place than to have federal government bonds. liquid too. The Fed guarantees them [it has no reason not to] and pays interest, usually not less than the market rate [after all they want them taken up by investors].You are guaranteed to get the bond capital back at maturity, plus interest.
      The talk of banks taking your savings is out there but the government has no use for the money as it deficit spends its own money for whatever it needs.

    • Well I just hope the UK Government sees it that way . Incidentally they’ve just been very naughty and changed the way the interest is calculated on their inflation linked bond meaning less for investors.


    • All laws are made to be broken, I suppose. But right now it is illegal for a bank to touch deposits, which is far from saying bonds sold for revenue are untouchable, because they are loans to the bank which bought them. Bonds from the fed are just offsets to match any deficit spend by government. Nobody gets to spend them.

  23. I think someone else may have already posted this, but a recent article on Ugo Bardi’s blog focuses specifically on the recent rapid decline and coming shortage in diesel, which is of course the workhorse of the entire industrial economy. The author goes so far as to say this is what motivates the taxes on diesel cars of consumers in France; it’s government’s way of allocating the remaining diesel to necessary or critical functions. I don’t know about that, but if the article is correct about the outlook for diesel production, it is likely to be a better harbinger of, and bigger catalyst for, a phase change in the economy that you won’t see if you just watch “oil” production.

    • @tagio
      Something like 98 percent of the weight moved by petroleum is moved by diesel or equivalents such as kerosene or bunker fuel. The weight moved by gasoline automobiles and light trucks is mostly just humans. (the weight number excludes the weight of the vehicle.) So it’s our ability to move weight that is at risk…otherwise known as doing work.

      Don Stewart

    • There could be a run on relatively cheap second hand electrical cars if diesel and petrol prices start rocketing .

      My current car is coming up to 6 years old and I can’t envisage buying another vehicle with an ICE again.

      This highlights the Conservatives woeful policies in letting bus service decline by reducing subsidies and allowing private bus companies to cut services where the profit margin is not quite high enough.

      I would suggest that lift request websites will flourish in a few years time.


  24. Hoophouses as a survival strategy

    On his website, Dmitry Orlov gives an interview which relates some of the reasons Russia was able to survive the collapse of the Soviet Union and, after about 10 years, begin to thrive again. One of the reasons he cites is the historical reliance of Russians on kitchen gardens.

    Here is a North American book on hoop houses, which did not really exist back in 1990. There were commercial greenhouses, but they were expensive and clunky. Hoophouses really came into widespread use here in North Carolina around 2005. Briefly, there is a metal frame with one or two layers of poly covering it. Two layers are recommended for places with cold winters, such as Zone 6 and below. You can search on
    newsociety.com books The-Year-Round-Hoophouse Pam Dawling
    and come up with a description of Dawling’s book. Dawling has been farming in an intentional community in Virginia for a couple of decades….and knows an awful lot about gardening and market gardening.

    I am sure there are similar books in Europe. The advantages of a hoop house are multiple…protection from wind damage and desiccation, protection from cold for the plants and the gardener, controlled water (you need irrigation because it never rains inside a hoop house), intensive horticulture rather than extensive horticulture, protection from excessive heat, and other benefits. In short, very well adapted to a climate change chaos world.

    If you are serious about survival, and have perhaps a sixteenth of a hectare, you should investigate getting a hoop house before there is any collapse of the food system.

    People in Britain always immediately tell me that hooligans and the desperate are sure to destroy them. All I can tell you is that, as Orlov says, the kitchen gardens were lifesavers for the Russians in the immediate post-collapse era. If Britain is that unstable, you may want to think about moving somewhere else.

    A community hoop house with one or two hired young people to grow produce for the community before there is any collapse seems to me to be an excellent idea.

    Don Stewart

    • Excellent stuff, Don.

      I’m afraid vandalism is pretty common in the UK (despite all those surveillance cameras) and the very lowest strata of society who do that sort of thing quite obviously have no conception of community living, and would not see a hoop garden as a valuable community resource.

      At the very least, anything not secured as in Fort Knox would be stolen. This is quite apart from the gypsies who do this sort of thing for a living.

      This is why I’m planning to move, and am also taking a very close look at how young people are behaving in the mountain valley I’ve identified as desirable – if they too get sucked into drugs in appreciable numbers, then one would have just the same problem.

      On the other hand, people in the valley are more likely than not to be armed as they would not be in England: hunting rifles and shotguns, handguns, and of course, Basque axes. The women can be quite terrifying too……..

    • A tiny remote island off the coast of Scotland. A gun – fishing tackle – small wind turbine (with 3 backups) – vitamin pills – dried food – calor gas – flint – lighters – boat – sealed detergent container – knives – small sealed living unit -100 terabytes of storage containing entertainment and books.


    • Sounds almost romantic… a bit like Robinson Crusoe…

      Might I suggest you try it for a month … how about a weekend… how about a day?

      It’s always good to have a dry run at these things…. just to be sure you didn’t forget something… while the shops still have stuff on the shelves…

      I suggest printing this out… and staying away from the dots … when the power goes off

      Hmmm… I see… that’s quite difficult…. perhaps you could approach a metal works and have them fashion you a coffin made of lead? You could stay in there most of the time reading books on the kindle and only emerge Vampire-like… to catch and cook some fish…

      Oh right … the fish will be laced with Cesium….

      Parades and rain … most unfortunate

    • You cannot ‘shut down’ a spent fuel pond. A spent fuel pond is what you do with the fuel — when you shut down a reactor.

    • I’m talking about staying on an island but not in a post apocalyptic world. The UK would still be functioning – but at a reduced level with soaring crime.


  25. Rural Conservatism; Populism; Commons; Survival
    ‘I was particularly captivated by two I heard. The rural sociologist Loka Ashwood walked us through the results of her years of patient listening and careful research in rural Georgia, all of which emphasized something that every honest localist, probably already knows: namely, that rural America’s politics is driven by, more than anything else, the fear of and frustration over economic dispossession, meaning the capturing of land–the very thing that most crucially defines a person’s choice to live and stick with a rural life–by both state and corporate actors. That fear and frustration entrenches an attitude which can be easily appropriated by anti-state and conservative movements, but is more properly understood as an agrarian version of anarchism, a desire for statelessness, a wish to preserve that which should be a local resources and be subject to local stewardship, rather than distant ownership.’

    The quote can be found in the current edition of Resilience.org. I want to talk about the ‘agrarian version of anarchism’ angle. When one is pursuing a practice of simple living and self-sufficiency, one is by definition NOT maximizing taxes paid and NOT maximizing expenditures and NOT maximizing debt to the limits of the ability to ‘service’ the debt. Therefore, one is the enemy of all the powerful actors in the NeoLiberal economy. And yet, in my opinion, it is simple living and a large degree of self-sufficiency that will enable one to survive the collapse of the financial ponzi scheme. and reduced energy availability.

    Those contemplating political activism need to understand this….Don Stewart

    • Absolutely, Don. This is why I have highlighted James C. Scott’s work in the past. His books, esp. “Against the Grain,” and “Seeing Like a State” make it clear that state organization and power depend on having an appropriable relatively non-perishable surplus – specifically a grain surplus, and land and monocrop “legibility,” i.e., that the authorities can see and easily calculate the production output. As Scott notes, grains, as opposed to tubers, e.g., are particularly suited to this. As Scott notes, all states are grain based, there are no “cassava- or tuber-based” states. The harvest of grain is predictable and the authorities can show up at that time and take it. Potatoes and such, on the other hand, are not easily countable and can remain in the ground a long time until needed.

      As such, a permaculture approach to food production, away from grain monocrop agriculture, in and of itself destroys “legibility” and diminishes the surplus that the priest/political class can live off of, ergo, of their power, is a “revolutionary” act and will be perceived as a threat. Nevertheless, it is likely the only way forward.

      Btw, I find our advice about taking collapse in stages, like, starting with simple hoop houses, is invaluable, because it diminishes the panic and hopelessness associated with the idea that ppl have to do everything at once in order to mitigate the problem.

  26. Long term alternatives to hoop houses

    One might object to hoop houses as a survival mechanism because, in the long term, they depend on a reliable supply of poly and drip irrigation systems and gravity forced water. IF the collapse follows the initial path of the Soviet Union, then those concerns should not be insurmountable over the first decade, if one goes into the collapse with a functioning hoop house in good soil. It will also be immensely valuable if one is able to make it a community project rather than a single individual or nuclear family.

    Over the longer term, one needs to invest in passive infrastructure. That is way too big a topic for here. But check out the Parisian market gardens of 150 years ago and you will see large walls which absorbed, retained, and radiated solar heat during cold nights. You can also find current examples of Chinese greenhouses built into hillsides, so that they have southern exposures and the temperatures are moderated by the soil. There are also examples of sunken greenhouses. Exactly what one builds depends on a myriad of details about what is available and what is happening to the weather (it is weather, not climate, that determines whether your crop freezes, and whether the drought kills your plants).

    My point is that one first needs to survive an initial collapse, and then take stock and do what may be necessary in terms of harder infrastructure for the long term. Of course, anything you do runs the risk of being too little, too late, or just wildly not useful. If the collapse results from global thermonuclear war, forget it.

    If there really is no collapse, just a steady degradation in living standards, then having a community hoop house is a very good way to adapt. Anyone who becomes unemployed can readily find work in the hoop house, for example. And fresh green leaves are some of the most expensive plants you can buy, when shipped from a distance.

    A hoop house is even useful as a defense against Donald Trump and American Imperialism. When Trump claims that the UK will be a captive of the EU, my guess is that what he is referring to is the EU’s agricultural and other standards. Big Ag, American style, hates those EU regulations. And we know that Trump listens eagerly to US corporations trying to break down environmental and labor standards. If you have a community hoop house, you can grow plants with a full complement of carotenoids, flavonoids, and alkaloids. You don’t have to be stuck with the glyphosate soaked junk food Big Ag wants to sell you.

    Don Stewart

  27. One can indeed almost see the foam flecking the jaws of Big Ag at the thought of the British market being freed from those tiresome EU restrictions weak as they are in some cases). Anything that Trump & Co. dislike has to have something to recommend it….

    But how few people can see that the Free Trade nuts who are really behind Brexit do not give a fig about such issues.

    Even Michael Gove, the minister who is trying to ensure high food standards and soil reclamation and improvement – perhaps a doomed attempt to remedy 70 years of abuse with chemicals and heavy tractors – after Brexit, is very luke-warm about organic production, because of lower yields.

    • @Xabier
      The issue isn’t really ‘organic’, although that legal label does give certain information. The real issue is the culturing of the soil microbial life such that photosynthesis is maximized (to perhaps oversimplify). Just as human microbes cannot be cultured on a diet of junk food and antibiotics, soil microbes cannot be cultured on a diet of synthetic nitrogen and excessive phosphorus and applications of the antimicrobial called glyphosate. If you want to see what happens when the best microcrobial practices are used, search on
      David C. Johnson soil health
      Some amazing yields and healthy crops in Ag School soil which was pretty degraded, along with some sandy desert soil.
      Don Stewart

  28. Brian Davey of FEASTA with some sage observations

    If we, collectively, are somehow smart enough to send the PTB over the cliff (watch the first very short video clip) and save the world from utter destruction, and if it turns out that increasing ECoE implies steadily reducing energy use but not a fall over the cliff for the 90 percent in Europe and North America, then Davey’s suggestions at the end make sense. There are several billion people living with far less energy than Europeans and North Americans.

    I heard two doctors talking yesterday about the fact that studies frequently show clusters of health indicators in families or in close-knit communities. One of them, with experience in the third world, noted that women in villages frequently cook together in a communal kitchen and take the food home to their families. So…rather than everyone have a 30,000 dollar kitchen, there is a single 5,000 dollar kitchen serving perhaps a dozen families.

    Stated that way, it doesn’t sound too awful, does it?

    Don Stewart
    PS What would be awful would be 10 billion people trying to cook meals individually on wood stoves. That’s complete collapse but before the starvation solution kicks in.

  29. It would be interesting to know your thought on this “yellow vest” movement in France and Belgium.

    • There are general and specific issues here. The specific is that Mr Macron does not impress. Though his campaign had a populist flavour, emphasising his differences from established parties, his economic policies look like the same old failed neoliberal prescription.

      More generally, and more importantly, the tightening energy equation (as modeled by SEEDS) has two relevant characteristics here.

      First, the squeeze on prosperity is a bottom-up phenomenon, affecting the poorest first. We’re at the point now, in many Western countries, where the impact is being felt by many ‘ordinary’ people not traditionally considered “poor”.

      Second, rises in the energy cost of energy (ECoE) are experienced first in the cost of household essentials.

      It’s interesting that UK government has moved into capping the price of electricity despite their ideological objections to doing so. Meanwhile, increases in fuel duty have become a no-go area for British politicians. In France, the issue is whether Macron has the humility to back down on increasing fuel taxes. The broader context is that deteriorating prosperity will exert growing political opposition to indirect taxation, starting with levies on fuel but moving on in due course to sales taxes such as VAT.

    • I would like to see a breakdown of what the poorer people use their vehicles for :

      Transport (including commuting – getting the kids to school) – because there is no bus or trains service – or limited services
      Work – getting to customers – transporting goods around
      Leisure activities (if any)


  30. Yellow Vests; SEEDS; Quantum Biology

    The Yellow Vest demands (more properly, desires) make perfect sense in a world of GDP or SEEDS. My argument here is that a SEEDS analysis only scratches the surface of what is wrong.

    Pedram Shojai is currently running a docuseries titled Interconnected. The series is overwhelming evidence of sickness in the American population. The Atlantic magazine currently has an article on The Sex Depression in the US. Relative to sex, I’m 78 and I’m having a lot more sex than people 50 years younger than me. The fertility rate in the US has fallen well below replacement.

    Alessio Fasano, a leading medical researcher, notes in a gloomy conclusion to his interview that in the next generation of American boys, 1 in 4 will be autistic. A different commenter projects the total collapse of the US in the next couple of decades when 1 in 3 people will be autistic, and it takes 2 people to take care of each autistic person. Meaning: We will be fully employed and generating GDP by just taking care of our autistic population.

    The gist of the docuseries is that we have, for a couple of decades now, been experiencing hockey stick increases in many chronic diseases, but that perhaps the discovery of the role of the Microbiome offers us an escape route. My reading of the tea leaves after listening to a lot of the experts talk is that we shouldn’t count on the microbes for any near term salvation. For example, a professor at the U of Minnesota is actively investigating soil microbes:

    Kinkel has a chart on her office door that helps illustrate the mind-boggling interactions of billions of microbes, competing.

    “Look at this,” she said, “[Microbe No.] 18 can make 17 produce antibiotic that kills 16, and 16 can kill 18. So, you realize that these interactions are two and three and four levels. It’s not simple.”

    Back to me. Any accounting system which treats hockey stick diseases and the monetary exchanges they enable as a ‘good thing’ is wildly wrong. Likewise, any accounting system which treats synthetic and degrading sex enabled by the internet as a ‘good thing’ is wildly wrong.

    Don’t get me wrong, SEEDS is a valuable tool. But it doesn’t go far enough.

    I have written on this subject previously, so I will try to be very brief here. Humans are here because of two enabling factors: the Big Bang and the fact that Quantum Physics actually works. Hydrogen was created in the Big Bang and all of the heavier elements were created because quantum physics works….despite the fact that quantum physics doesn’t make sense to us.

    Animal respiration and plant photosynthesis are extraordinarily energy efficient systems which are efficient because quantum physics works. Go out in the sunshine and touch a green leaf. Is it hot, like a steam engine? No, it is cool. So Nature, using quantum physics, is making carbohydrates at room temperature. If you take a look at Charles Hall’s book Energy Return on Investment yesterday. (I haven’t truly studied it, so buyer beware.) The mistake is that he assumes that thermodynamics is all there is…heat engines. If Charles had studied Quantum Biology (which didn’t exist when he wrote his dissertation back in 1970), he would at least be aware that Quantum Biology is nothing like a heat engine. McFadden and Al-Khalili write that the world can be envisioned in 3 layers. On the top is the familiar world of Newton (with Einstein on top of that, if you want to be picky). Below Newton is the world of randomly jiggling heated particles…the world of thermodynamics. And the bottom layer is Quantum Physics. What we need to do is connect our Newtonian world not only to the jiggling particles but also to the bedrock of Quantum Physics. When we rely on respiration and photosynthesis, we are connecting directly to the Quantum layer.

    There is emerging research that the way our minds work is also a function of Quantum Physics. I won’t chase that rabbit here. Suffice to point to the chapter in M and K and also to Michael Pollan’s book How To Change Your Mind, which explores LSD. Anyone who has ever made a baby that they would be willing to die for knows that old paradigms can die and be replaced with new ones by mysterious rearrangements in the Mind. It would be naive to think that Quantum Physics is not involved.

    So where are we? Fossil fuels have enabled humans to live in ways we are not designed to live. Can we identify some specific Black Hats that pushed us into hockey stick territory in the last few decades. One likely suspect is glyphosate. Does it make any sense to soak wheat with an anti-bacterial substance in order to dry it, and then eat it as food, to feed our mitochondria, who are microbes? But there are pages and pages of likely suspects.

    My point is that we have no accounting system worthy of the name which can lead us toward consideration of the real issues.

    Don Stewart

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