#145: Fire and ice, part two


Although it was something of a detour from the theme of fire and ice, our previous discussion about “Brexit” does have one point of relevance to that theme. Here’s why.

All things considered, there seems to be an utterly compelling case for intervention in the dysfunctional “Brexit” process by the “adults” in European governments. Yet, even at this very late stage, no such intervention has happened. Governments seem to see no alternative to letting London and Brussels – but mostly Brussels – make a complete hash of the whole process. Indeed, only now do the governments of the countries most affected (Ireland and France) seem even to be implementing contingency plans for an adverse outcome.

Of course, you might jump to the conclusion that irrationality reigns in European capitals, and especially in Dublin and Paris. But it’s surely obvious that this is part of a much wider process, one which we can think of as a form of shock-paralysis.

Essentially, the idea explored here is that governments around the world have been paralysed into inaction, not so much by fear alone as by a simple inability to understand what’s happening around them. Nothing, it seems to them, is happening rationally. They don’t really understand why so many amongst the general public are so angry – and they certainly don’t even begin to understand what’s happening to the economy.

I call this shock-paralysis “the juggernaut effect”.


The word “juggernaut” seems to derive from Sanskrit, and refers to an enormous waggon carrying the image of a Hindu god. The figurative meaning is of an irresistible force, flattening anyone foolish enough to stand in its way.

Rationally, you’d think that anybody standing in the path of a “juggernaut” ought to be making every effort to escape. But it’s quite likely that shock, fear and incomprehension will have a paralysing effect, overwhelming rational faculties, leaving him or her rooted to the spot.

That’s a useful way to describe the effects that current economic (and broader) trends are having. It doesn’t just apply to governments, of course, and it’s prevalent amongst the general public, too.

Just as the person standing in front of the “juggernaut” is all too well aware of its lethality, today’s leaders and opinion-formers surely know at least something about the financial, economic, political and social forces converging on them.

But they seem incapable of doing anything about it.

A big part of this paralysis is incomprehension – any problem becomes infinitely harder to tackle if you don’t understand why it’s happening. And there are reasons enough for policy-makers, and ‘ordinary’ people too, to feel completely baffled.

The irrational economy

You don’t need to be a committed Keynesian – indeed, you need only numeracy – to understand the basic principles of economic stimulus.

If economic performance is sluggish, activity can be stimulated by pushing liquidity into the system, either through fiscal or through monetary policy. If too much stimulus is injected, though, there’s a risk that the economy will overheat, with growth exceeding the sustainable trend. Rising inflation is one of the most obvious symptoms of an over-heating economy.

Here, though, is the conundrum, for anyone trying to understand how the economy is performing.

Since the 2008 global financial crisis (GFC I), the authorities have pushed unprecedentedly enormous amounts of stimulus into the system.

We ought, long before now, to have experienced overheating, with growth rising to levels far above trend.

This simply hasn’t happened.

This should have been accompanied by surging inflation, most obviously in commodities like energy, minerals and food, but across the whole gamut of goods and services, too, with wage rates rising rapidly as prices soar.

Again, this simply hasn’t happened.

To be sure, there’s been dramatic inflation in asset prices, and that’s both important and dangerous. But the broader point is that neither super-heated growth, nor a surge in price and wage inflation, have turned up, as logic, experience and basic mathematics all tell us that they should.

Pending final data for 2018, it’s likely that global GDP last year will have been about 34% higher than it was back in 2008. Allowing for the increase in population numbers, GDP per capita is likely to have been about 20% larger in 2018 than it was ten years previously. This isn’t exactly super-heated growth. According to SEEDS, world inflation stands at about 2.5% which, again, is nowhere near the levels associated with an over-heating economy. Far from soaring, the prices of commodities such as oil are in the doldrums.

Price (and other) data is telling us that the economy has stagnated. But the quantity of stimulus injected for more than a decade says that it should be doing precisely the opposite.

There can be no doubt whatsoever about the scale of stimulus. The usual number attached to sums created through QE by central banks is in the range $26-30 trillion, but that’s very much a narrow definition of stimulus. Ultra-loose monetary policy, combined with not inconsiderable fiscal deficits, have been at the heart of an unprecedented wave of stimulus.

Expressed in PPP-converted dollars at constant values (the convention used throughout this analysis), governments have borrowed about $39tn, and the private sector about $71tn, since 2008. On top of that, we’ve wound down pension provision in an alarming way, as part of the broader effects of pricing money at negative real levels, which destroys returns on invested capital.

Even if we confine ourselves to QE and borrowing, however, stimulus since 2008 can be put pretty conservatively at $140tn.

That’s roughly 140% of where world PPP GDP was back in 2008. You might think of it as the injection of 12-14% of GDP each year for a decade.

That’s an unprecedentedly gigantic exercise in stimulus.

And the result? In contrast to at least $140tn of stimulus, world GDP is perhaps $34tn higher now than it was ten years previously. Price and wage inflation is subdued, and the prices of sensitive commodities have sagged. The prices of assets such as stocks, bonds and property have indeed soared – but one or more crashes will take care of that.

By now – indeed, long before now – anyone in government ought to have been asking his or her expert advisers to explain what on earth is going on. Assuming that Keynes wasn’t mistaken (and simple mathematics proves that he wasn’t), the only frank answer those advisers can give is that they just don’t understand what’s been happening.

Questions without answers?

The utter failure of gigantic stimulus to spur the economy into super-heated growth (and surging inflation) is reason enough for baffled paralysis. But there are plenty of other irrationalities to add to the mix.

If you were in government, or for that matter in business or finance, then as well as asking your advisers about the apparent total breakdown in the stimulus mechanism, you might want to put these questions to them, too:

– Why has a capitalist economic system become dependent on negative real returns on capital?

– Why, since the shock therapy of the 2008 global financial crisis (GFC I), have we accelerated the pace at which we’re adding to the debt mountain?

– Why, seemingly heedless of all past experience, have we felt it necessary to pour vast amounts of cheap money into the system?

– Why have the prices of assets (including stocks, bonds and property) soared to levels impossible to reconcile with the fundamentals of valuation?

– Why has China, reputedly the world’s primary engine of growth, found it necessary to resort to borrowing on a gargantuan scale?

This last question deserves some amplification. Pending final data, we can estimate that Chinese debt has increased to about RMB 220tn now, from less than RMB 53tn (at 2018 values) at the start of 2008. These numbers exclude what are likely to be very large quantities of debt created in what might most politely be called the country’s “informal” credit system.

So, why does an economy supposedly growing at between 6% and 7% annually need to do much borrowing at all?  Put another way, how meaningful is “growth” in GDP of 6-7%, when you have to borrow about 25% of GDP annually, just to keep it going?

And this prompts several more questions. For starters, why are the Chinese authorities, hitherto esteemed for their financial conservatism, presiding over the transformation of their economy into a debt-ponzi? Second, can ‘the mystique of the east’ explain why the world’s markets are seemingly either ignorant, and/or complacent, about the creation of a financial time-bomb in China?

The juggernaut effect

Even these questions don’t exhaust the almost endless list of disconnects in our increasingly surreal economic plight, but they surely give us more than enough explanations for the paralysing “juggernaut effect” in the corridors of power.

Put yourself, if you will, into the shoes of someone trying to formulate policy. Two things are obvious to you, and either one of them would be a grave worry. Together, they’re enough to overwhelm rational calculation.

First, you know that there are some very, very dangerous trends out there. In the purely financial arena, you’re aware that debt has become excessive, whilst the system seems to have become reliant on a never-ending tide of cheap credit.

If your intellectual leanings are towards market economics, you’ll also have realised that pricing money at rates below inflation amounts to an enormous subsidy. Politically, that subsidy is going to the wrong people. If you came into government with business experience, you’ll also know that we’ve witnessed the destruction of returns on capital, which makes no kind of sense from any business or investment point of view.

You might know, too, that the viability of pension provision has collapsed, creating what the World Economic Forum has called “a global pensions timebomb”. If the public ever finds out about that, the reaction could dwarf whatever political travails you might happen to have at the moment.

Lastly – on your short-list of nightmares – is the strong possibility that some event, as yet unknown, will trigger a wave of defaults and a collapse in the prices of property and other assets.

Your second worry, perhaps even bigger than your list of risks, is that you don’t really understand any of this. Your economic advisers can’t explain why stimulus, though carried to (and far beyond) the point of danger, hasn’t worked as the textbooks (and all prior experience) say it should. If there’s anything worse than a string of serious problems and challenges, it’s a complete lack of understanding.

Without understanding, the policy cupboard is bare. You don’t know what to do next, because anything you do might have results that don’t match expectations, making matters worse rather than better.

It might be better to do nothing.

In short, you feel as though you’re making it up as you go along, in the virtual certainty that something horribly unpleasant is going to hit you, with little or no prior warning.

Welcome to “the juggernaut effect”.

188 thoughts on “#145: Fire and ice, part two

  1. Tim thank you for the clearly thought out post – yet would any of our politicians take any notice – or even be able to understand it (intellectually many would but I think their own disbelief – inability to accept what’s going on – would lead them to ‘not understanding it’)

    ‘Juggernaut’ is a good description and was used for a 1974 UK film of the same name where an a ferry with a bomb on board is used as a metaphor for the UK economy of the time (Strikes – social discontent etc)

    Although we’ve had stock markets falling there’s been no ‘big bang’ yet (I use this term to describe a cataclysmic event where current reality ends and – perhaps – a new one starts,

    I wonder what types of discussion we’ll be having on January 20th 2020?


    • Thank you, Donald.

      Putting this together, I felt almost sorry for those in government trying to do the best they can with situations which even their “expert” advisers are powerless to explain.

      I think it helps us if we understand the predicament of those in government. I don’t for one moment think they’ll take this on board, but it seems advantageous for us here to understand these things.

    • It’s almost as though these ‘experts’ do not understand basic arithmetic. I think we’ve discussed before that there’s a possibility that Governments do know – or at least have an inkling of what’s goin on – but see it as their job to project ‘normality’

      I’m due to get my state pension (and bus pass) in 2024 but I not convinced they’ll be provided


    • “I think we’ve discussed before that there’s a possibility that Governments do know – or at least have an inkling of what’s goin on – but see it as their job to project ‘normality’ ”

      I suspect that the minority that understand something of the dynamics driving things at present fall into the camp that see BAU as a bridge over troubled waters will we get renewable infrastructure assembled for our bright green future.

  2. By the way there’s a good article in the Telegraph (19th January) about the Government continually changing the goal posts when it comes to the method of calculating inflation.

    For example switching from RPI – to CPI when calculating pensions – tax thresholds and now investment rates on their inflation linked certificates.

    Of course the Government is trying to save money wherever it can – which I understand – so it’s now using indexes as another tool to do this.

    I know the US Government is always finding ways to lower the official inflation rate.


    • There’s lies, damn lies & statistics.

      We’re on a worldwide Minsky road to nowhere. And they won’t tell us because that would mean instant collapse.

  3. So we all know the US borrows money from China (and others) by selling bonds.

    But who does China borrow it’s money from? Itself by printing money?

  4. Yes, but if they did know what’s going on, what would they do? The answers aren’t in anyone’s job description.

    Note, in para starting, “and the result?, I think you mean 34 tn not 34bn

    • Another book is feasible, as I’ve accumulated a very large amount of material, as well as building SEEDS, since the last one five years ago. But it’s a huge undertaking.

      Projects outside this site could certainly be very interesting, and there ought to be plenty of scope. I’m already involved with one.

  5. My guess is that politicians, not being ‘statesmen’ see the role as just a job. Those in the current UK govt. show the lamentable quality that is actually running the country, so the fact that the ship is drifting rudderlessly towards a rocky coastline should come as no surprise. I don’t think the ones here are even misrepresentative of other countries either, it’s just more obvious because they’re being tested with such serious problems. Given they just want to stay in power to draw an excellent salary for as long as possible and the system is so broken that this can happen while performing disastrously, there is no pressure to change – the opposition are in that deal, whilst the populace don’t revolt because they can’t understand what’s happening. (or are overwhelmed by the scale of the problems they feel are totally changing their lives)

    Economists are under no pressure to raise their game because they all sing from the same ideological hymn-sheet, thus inadvertently protecting themselves from replacement. The rich puppet-masters who sit at the top of the social pyramid jerking everyone’s strings are benefiting from the status quo and will resist change right up to collapse, knowing that they can ride it out best. The stimulus that has only pumped up asset prices, just accumulated in the rich’s deep pockets, leaving them the dilemma of what else they can buy, so it never actually reached the real economy and so is effectively a helicopter (or yacht?) money policy for the rich. Should the 99% eventually revolt, they will just impotently trash the facilities in the areas they have to live in, before getting subjugated by the paid enforcers of the system; like we saw back in the last London riots.

    • What worries me more about politicians isn’t the rewards of being in office (which are pretty modest) but the gravy-train of ‘consultancies’ and ‘the lecture circuit’ in retirement.

      Leadership in the UK is pretty lamentable, but that’s hardly new. Indeed, I think Mrs May compares favourably with her predecessors since Mrs Thatcher. She’s at least trying to deliver what the voters, rightly or wrongly, voted for. I’m much more wary of anyone seeking to prevent that choice from being carried out. Given the attitude of Brussels, and the failure of European national leaders to see where their best interests lie and to intervene, her task is an all but impossible one.

      Some of the elites do seem to think that things will go wrong, but that a US$3.6 million bunker in somewhere like New Zealand will work if all else fails. That sort of ‘escape-route’ has a history of not working out as planned. Neither is using force to control the angry 99% a workable option. Regimes usually believe that money, intelligence networks and the security forces can keep the regime in power. Events usually prove them wrong.

      It’s far better to embrace change, and try to steer it, than having it forced on you.

    • I watched the videos of the London riots,and visited the area soon after: they were not a’ political protest’ by the ‘disenfranchised’ as the Left likes to maintain, but the usual lawless elements common to any large city, going on a looting and arson spree and I think the police are owed a debt of gratitude for having -eventually and moderately -dealt with them.

      The London police were not ‘supporting the system’ but civil order, and suffered severe provocation and humiliation, having their hands tied by the presence of so many minors and females in the mobs – just imagine if one of them had died as a result of the use of baton rounds or tasers….

      Thank God the arson didn’t cause more deaths!

    • “Some of the elites do seem to think that things will go wrong, but that a US$3.6 million bunker in somewhere like New Zealand will work if all else fails. That sort of ‘escape-route’ has a history of not working out as planned. Neither is using force to control the angry 99% a workable option. Regimes usually believe that money, intelligence networks and the security forces can keep the regime in power. Events usually prove them wrong.”

      The 2nd sentence of this paragraph caused me to wonder how many of the Roman villas constructed in Britain were intended similarly…

  6. Hi. Is it the case that we should now be looking at sufficiency economics rather than growth economics (with associated nation wide educational programmes) which highlight the need to live within the economic and ecological capacities of national economies. This might mean reorientation national policy towards recycling embodied material within economies and restructuring supply chains towards relocalisation and regionalism in association with a reduction in import dependancies so that national economies move towards greater internal sufficiency.

    This in my mind will help to create the national conditions for social integration and cooperation along with redistribution mechanisms in order to equitably distribute the pain of falling prosperity. I’d imagine more social integration would help to encourage more civic associationism so that there is less reliance on tax funded public services.

    Overall this sufficiency model would pay particular attention to the ecological capacity of national territories which would require the democratic management of population levels so that democratic choices can be made regard per capita prosperity. Ideally these choices would be first deliberated through citizens assemblies so that reasoned debate fosters greater mutualism.

    Thoughts anyone!

    • Unfortunately, the UK, -and all advanced industrialised economies – a vastly over-populated and resource-depleted island, has for long far exceeded ecological viability and carrying capacity.

      It must draw on the resources of the world to survive, maintain such a large population and manufacture anything at all.

      Once the industrial genie was let out of the bottle, the end-game was assured: ecological catastrophe and a vast die back in the humna population brought into being by science and industrialisation.

      In the legends, there is always a great penalty for accepting the genie’s offer of three wishes……

    • Xabier. Doesn’t really answer my point. Are you saying that the UK needs to continue with economic growth models or not. Similarly you ignored the fact that the UK has high levels of embodied materials within its economy and as such the UK has alot of embodied resources which are admittedly prone to the laws of entropy.

    • @SG, your comment makes 100% sense and is the only realistic option we have to survive now, so the faster we go for that the better our chances of making it; I fully agree with your conclusion. The problem I see for that ideal though is 2 great obstacles, the elite refusing to give up an iota of gatekeeping power until they have no choice and the capability of the electorate.

      Your message can’t compete with what the pop-up narcissistic populists offer, if you’re saying: work hard, live within your means sustainably, you can’t have everything now, you are responsible for your life and actions. Because they counter offer: you can have whatever you want and have it now, because we’re the richest country in the world, if we were not betrayed (by the treasonous citizens or robbed by immigrants/other unspecified vile foreigners wherever they may be) then you can have whatever you specifically want to change your life.

      On recent evidence, it consistently seems that roughly a third of the electorate don’t care enough to vote on their future and another third will vote for the best thing they hear with no guarantee, be that proof or collateral, just with blind faith.

    • SteveG,
      Yes, I do believe that you are right in that we need to re-orientate towards Sufficiency Economics as opposed to Growth Economics.
      However, your altruistic vision, is never going to happen,- at least not for another two or three generations.
      Our society today is fragmented along peer lines ; gender lines ; age lines ; ethnic lines and religious lines, so for a start you are not going to get the levels of cooperation among people that will be required.
      With the destruction of the atomic family unit through feminism and the promotion of lgbqt “rights”, it is even difficult to get cohesion within western families. While Immigrant families are still more tightly bonded, this may actually cause them to be targeted by others.
      And then we have the skills gap.
      Our children are good at two things – spending money and wasting time.
      These are not really the skills that will be necessary in future, and getting this to change will be a mammoth undertaking.
      We have very few STEMS graduates and an overabundance of Social “science” graduates.
      So while I believe that you are on the right track with your assessment, socially it will not work.
      People will need to suffer and suffer badly before they can understand that they need to change.
      The ingrained sense of Entitlement that most people seem to possess will not be easy to eradicate, in fact many of these people may just have to die off, and take their sense of entitlement with them, so that their children can see that if you want something then you have to put in some effort to get it.
      Things are going to get bloody and messy before we can get anywhere close to your Sufficiency Economy.

    • SG

      I believe your describing communism. Particularly Stalinism with a closed model. Essentially live within your means. As was pointed out the UK doesn’t have the resources to support its present population. This is true of the rest of the industrialized world. Frankly Brexit won’t happen because it can’t. The same is true of the protectionism being advanced by the present US president.

      The fall of the Soviet system was a collapse in oil production. Not having access to outside markets was the death of the command economy. The US had experienced a similar collapse 20years earlier however it found its way out through an open market.

      The bottom line is there is no way to reverse complexity without systemic collapse. The triggers are all in place and and near ready to be tripped.

      Take Shale Oil as a single reference. Wall Street is starting to realize that it’s a Ponzi scheme. Once they do the funding with dry up. With energy growth stagnant or shrinking the economy will shrink which will create massive debt defaults. Without the economic system in place there is no way to destribute resources efficiently. So a martial system will be necessary likely through UN. The problem is it won’t matter because as Tim has demonstrated the energy cost of energy is unsustainable. Beyond that without the markets in place the spare parts needed to maintain the power grid among other things or build a computer or cell phone and all the other infrastructures won’t be available. So the world becomes Venezuela with no place to run to. Or might say migrate to.

      Political will can’t solve a physical crisis.

    • I think the message is buy a new cell phone Laptop and PC while you can. (If you have the funds buy more than one of each)

    • Hi Steve

      That’s a very interesting post.

      I think there can only be popular support for economic policies based on the idea that this is “life after growth” when there is popular realisation that attempting to make real the appealing fantasy of long-term continuous economic expansion (such as though credit adventurism) is not only not working but actually making things worse (such as through housing bubbles and other malinvestment). I don’t think this realisation will come easily because the fantasy is so very appealing.

      If and when this realisation does happen though, the first challenge for sufficiency economics policymakers would be to try to quantify the entropy that acts on embedded energies in the economy. This would inform their decisions about how much energy to spend and on what to spend that energy in order to reduce that entropy in the energy system that is the economy.

    • To achieve your ideas we must reorientate the zeitgeist, from entitlement to altruism. People must understand that we need to cooperate and work hard to survive. This kind of attitude can only flourish in prolonged, dire circumstances. Maybe after the next world war…

  7. Dr. Tim,
    with regard to Chinese Debt:
    with the USA being in hock up to $21 trillion and the rest of the world equally up to their necks in it, might it not be so that the Chinese do not want to be the only ones whose account is in credit ?
    After all, when the world Debt bubble does Pop, then the Chinese will want to have something that they can write off too.
    As they say, “if you owe the Bank £100, it’s your problem and if you owe the bank £100,000,000 it’s the Bank’s problem !”
    Any thoughts ?

  8. Hi Tim

    Thanks for another incisive essay.

    Frankly I think even if TPTB understood what was going on (which some do but many do not) then there is a disinclination to do something about it. As I see it the reason is fairly simple: it’s just too uncomfortable. The situation you describe won’t be cured by tinkering at the edges; it will only be changed by radical reform and that will discomfort many of the people who benefit from the current chaos. As I see it the fact that the situation is unsustainable and the “juggernaut” is heading for the abyss is of secondary import; there is always the possibility of Mr Micawber whereas if you do actually tackle the issues then there will certainly be trouble; it’s a dead cert vs maybe getting away with it. This of course is a forlorn hope but we all tend to rationalise the benefits of doing nothing.

    This is not an economic issue; it is political.

  9. I agree that the elite can’t escape reality any more than the rest, being trapped on this planet too. History shows that either the rabble manage to level society to a failed state (like the territory formerly known as Somalia) or one faction of the elite are replaced in a subtle coup by another (post USSR Romania) by those within their class who realise they have to give a little to retain most of the national cake.

    The EU has no incentive to save the UK from their self-destruction resulting from a self-indulgent cat-fight in the Tory party that continues emanating to tear apart society at large. The UK was only ever a thorn in their side throughout their membership and they have enlarged to the extent that they have plenty communal power without us. They have already moved on and have their own existential threats to concentrate on; they definitely need major reform, but many peoples within the union trust their own national governments less, often with good reason on historical record.

    I seriously doubt the third of the electorate who voted to leave the EU did so accepting the cost to the country that the deal Mrs May is trying to bludgeon through will entail. She is in a difficult position because she made a series of mistakes to get to this point and because the populace at large is unclear what they want. Those blaming the EU because they don’t know what they want are solving nothing that way, it’s a continuation of refusal to accept the consequences of actions. There is a widespread culture of avoiding responsibility throughout society today, from the top down, but ultimately, no delusions can survive contact with the real world’s physical laws for ever.

    • On “Brexit”, I think there’s been (and still is) a tendency to take at face value the bland assurances from Brussels that they know what they’re doing, and it doesn’t much matter to the rest of the EU what kind of “Brexit” actually happens.

      I think they’re completely wrong – on both counts.

      Ireland, for one, is in no state to withstand a shock even of modest magnitude, whilst Mr Macron has enough problems already, without the economic consequences of a disorderly “Brexit”.

      Internal Tory divisions obviously have played a part in this, but so have mistakes at the top. David Cameron made two huge blunders, first in mishandling demands for “reform” from the EU (they gave him zilch), and then assuming “remain” would win any referendum easily (that worked out well, didn’t it?).

      Britain “is where she is”, needing either to enact what people voted for or risk their wrath by not doing so. The only people who can break this log-jam now are European governments, but they seem to be paralysed by the “juggernaut effect”.

      On your broader point – which others have mentioned too – the idea that the elites can somehow weather whatever crises are coming seems fatuous to me, and at least some of them surely know it.

      I think this needs an article to itself. But it’s usually (and in this case, definitely) better to engage with “the 99%” rather than trying to tough it out. Louis XVI (too isolated) and Nicholas II (seemingly just too stupid) found that out the hard way.

    • The over-confident, patronising , EU position – and I can’t really see that the Commission diverges from that of the leading states (27? what nonsense, it’s at best 6, and as we know when it comes down to it 1 – Germany) – has been built upon a misplaced belief in the reality and durability of the post-2008 ‘recovery’, which is now unravelling in pretty sharp fashion as the global economy turns down.

      They might indeed not realise it, but they do in fact have every incentive to help the UK out of this grotesque impasse.

      It is this global descent which will call their bluff, and make a damaged UK economy a serious problem to the EU at large.

    • ‘Because the populace at large is unclear what they want’ – Very true and that why getting to any sort of consensus is almost impossible.

      I watched Question time on Thursday and the only person to come out with any credit (in my view) was Anand Menon. Diane Abbott looked and spoke like she was totally confused.

      I see many of the hateful comments posted by readers and journalists on Newspaper websites as a reflection that they sense that something is wrong economically and are using the Brexit mess as a way of expressing their angers and fears.

      I feel the Telegraph has been doing its level best to stir up hatred and division.


    • Xavier,
      I am reading more and more in the German Media about calls to “cut the UK some slack”, German exporters are getting increasingly worried about losing their share of the UK market, and the effect that it will have on their businesses.

    • Thanks Johan.

      This makes perfect sense, and I’m sure is replicated in other EU countries. The big question has to be whether business opinion can persuade national governments to intervene in the short time remaining. Brussels has pinned the British into a corner, and business across Europe will suffer unless someone (which can only mean national governments) can break the deadlock.

    • As I’m sure you’ll have read in the news picking up a stray dog at taxpayers’ expense is far more important to Juncker than solving the present crisis.


  10. The Chinese came to the debt party relatively late, but have learned to play the game better, the increasing animosity of the ‘West’ towards them now is a reflection of the rest of us belatedly realising we’re being out-played. In a globalised world, if you’re forced to open up your economy and a US company can load up with debt, come in and buy up well-run companies then asset-strip them as happens here, then the country as a whole can be bled dry until the economy is trashed.

    If you engage in trade internationally therefore, you’re forced to an extent to copy vile and even destructive practices. China may know it’s bad to load up on debt, but if they do this while able to get away with it and then build up their infrastructure to an excellent level that will last their people for the next 100 years after the crash, then it’s better than not doing that, like in the US or UK.

    Basically they have gambled all on the ‘road & belt’ project, which is an all-in bet on the new trade (as well as advantages from soft power) resulting from all that new infrastructure at least covering the value of the debt. Being investment debt, it’s a lot better than speculative, like investing in your own education, business’s growth or home, vs just stock-picking or punts in the financial economy.

    • Good points: on the other hand, one could observe that spending on infrastructure is only really an ‘investment’ if – apart from short and medium-term returns from increased internal and international commerce, which for instance the canal and rail systems delivered in Britain – one can be sure of being able to maintain and replace that infrastructure as it decays.

      Much of what has been done in China appears to have been very shoddy indeed (not unique to China, look at new housing construction in the US and the UK) and there is the additional issue of ‘concrete cancer’, which sets a time-bomb inside every reinforced concrete structure.

      This will also apply to construction in the Cambridge- Milton Keynes-Oxford Triangle – which will probably only be maintained by virtue of deepening neglect of peripheral areas such as the North, far West, Wale, etc.

    • I do admire the Chinese for their diligence and intellect. I also admire that very Asiatic trait of patience.
      So I would have been surprised if there was simply no strategy at all behind their pile of debt.
      As with Chinese Water Torture, they are continuously and relentlessly adding to their physical Gold reserves, as are Russia. No doubt there will be also be a plan behind this. They must have realised by now that all their US treasury bonds will never be repaid in full, so they will try to preserve as much of their wealth as possible. Losses will be inevitable, so the plan is loss mitigation. Their plan now must be to convert as much of their paper wealth into real tangible resources.

  11. On a broader point, force can work very well to maintain order in a society and secure an unpopular regime: it really depends on the ruthlessness of those in charge, the retained loyalty of the security forces and judiciary, etc.

    It worked very well for Franco – few people outside Spain understand the violence and more importantly the threat of violence, that underlay the dictatorship – for instance, and any number of totalitarian regimes before and since.

    The Franco dictatorship was not defeated, it transformed itself to take advantage of democratic mechanisms,, and the ideology is now coming into the open again.

    • Agreed. You need to have lived under dictatorship to truly understand the hold of power it has over people and the effect can last generations. The UK hasn’t been as bloodthirsty as Spain towards its Celtic periphery for a very long time now simply because they don’t have to. Those smaller nations are basically vassals now and assimilated to the point where they have little to no fight left in them vs the Catalans and Basques who live with bitterness even today of memories of the atrocities perpetrated against them by the state in living memory.

      That is why I can’t see any successful unrest in the UK by the angry poor who will be disappointed no matter the outcome of the current political fiasco, simply because they were promised something no government can deliver and chose to believe it out of desperation for improvement in their lives. In the last surprise riots, the state quickly broke their own laws in savage retribution, like handing out 6-month prison sentences for stealing a bottle of water, to discourage more dissent. They didn’t escalate savagery only because there was no need, the angry poor excluded from societal advantage were sufficiently cowed and backed down first.

      Those most likely here to riot are poor and young, so they are most likely on minimum-wage insecure employment working all hours available, or unemployed and easily controlled via the banal cruelty of the new payment regime. This cleverly already pre-emptively sets the price of effective protest at imminent destitution level, so far too high for most.

  12. Two data points from the US, both from the medical field. As background, medical care has been by far the largest growth factor in US GDP since GFC-1 and the major source of employment increases. 86 percent of medical care dollars are now devoted to chronic diseases.

    *Holden Thorp was the President of the University of North Carolina. He was fired when an embarrassing scandal was exposed in the big-money athletics department. The people he was supposed to have been supervising made salaries which were multiples of his. If he had meddled in their business, they would have handed him his head.

    Now he is at Washington University in St. Louis, Missouri. A good job but not the CEO. He has co-authored a book about the crisis in Colleges and Universities. In a nutshell, they have few plans to deal with new economic realities, changing student bodies, and new ways of learning. Most are financially insolvent. (Rather like Britain or the US governments). Holden notes that, 20 years ago, Fortune 500 companies dominated the cities which are now the home to Big Medicine universities. In St. Louis, McDonnel-Douglas was the largest employer. The largest employer in the state of Missouri is now Barnes-Jewish Hospital in St. Louis, co-located with Washington University and in a tight partnership with the Wash U medical school. Holden suggests that the medical schools are complicated financial entities, but that the survival of the larger university is dependent on moving the profits from certain parts of the medical school around to subsidize the losing parts (such as basic research and academic departments which can’t be monetized).

    In the meantime Valter Longo, MD, at the University of Southern California has developed a fasting method which reverses aging. Longo said in an interview a couple of weeks ago that the fasting method alone can completely solve the diabetes problem. There are now about 30 clinical trials in progress or in the planning stage which will demonstrate its efficacy in many other disease treatments. Cancer is the only chronic disease that Valter does not think will succumb to diet alone…but the fasting coupled with chemo has been shown to greatly increase the efficacy of the treatment…and the treatment is now FDA approved.

    So if we step back and take a good look at the Universities, we find them placing an enormous bet on the notion that fasting won’t work, or that people won’t do it…and that governments will not support it because it would knock the props out from under GDP and employment. I’ll leave it to your imagination to put those pieces together.

    *Zach Bush, MD has been creating a stir in the US with some very straightforward, and therefore astonishing, claims. One key to restoring health and eliminating chronic disease is to ban glyphosate and any replacement herbicides which work on pathways essential to our microbes. Humans evolved from and with microbes and our fates are completely intertwined. An agricultural strategy which involves killing microbes is suicidal.

    I won’t go into the details of everything he says. Many, many you tube videos have appeared over the last few months, so you can search them out if you are interested.

    I will comment on one thing he said to an interviewer in December. He remarked that he had the flu twice in the last 10 years. Like a knowledgable doctor, he went to bed and waited for the infection to work itself out. He remarked that the spiritual progress he has made in the last 10 years was largely a result of having to stay in bed and contemplate where his life was headed.

    Can you imagine a multi-billion dollar medical school funding a study on ‘meditating about your life’ as the principle thing to be done if you have the flu?

    Neither of these problems, which are clearly apparent if on the smaller scale of a University or a single human, are similar but also dissimilar to what faces governments. Governments can refuse to face the problems because they think they can print money, put tanks in the street, and fool enough of the people all of the time.

    Don Stewart

    • A very thoughtful comment and much appreciated. Indeed, at some level, even if only deep down, we all really know the answers to our problems, no matter the superficial denial we project or how much we lie to ourselves. The reason we don’t undertake the solutions to fix these things is because we don’t like those answers, so procrastinate as much as possible to play for time in the selfish hope that fate will intervene to save us the pain/discomfort.

      At some point though, we’ll run out of metaphorical procrastinary road and then be forced in an evolutionary bottle-neck to make changes towards sustainability, or die. This is what nature has always done and we are still animals, so not immune to the basic universal rules, no matter how exceptional certain peoples or nations may feel, based on the fumes of past glories.

    • Tim – you almost feel that people can sense something is wrong with the economy and making do – not just because of their own squeezed incomes – but because they want energy saved for essentials – food – heat etc,

    • Collectively, “ordinary” people (and I never use that term disparagingly) seem to have a great intuitive sense of where things are going. This sometimes enables the public to make an “intuitive leap” to understandings which ministers and experts have yet to reach. I think that’s the case now.

  13. Best of times/ Worst of Times

    Dale Bredesen, MD
    ‘Of the currently living 320 million Americans, 45 million will develop Alzheimers…And the fact of the matter is, this should be a rare disease…We can prevent this, we can reverse it.’


    The worst of times is Business as Usual…whether we are talking climate change, soil degradation, or chronic disease. But it doesn’t have to be that way. How can we produce a gymnast the likes of which have never been seen before, and dumbly accept the projections on Alzheimer’s and other chronic diseases?

    Don Stewart

  14. They know exactly what the problem is — we are not finding any cheap to produce oil (along with other resources)

    For instance, diesel production has become a problem — they have reacted — by imposing taxes on diesel — the masses are reacting — as was the plan — by not buying diesel vehicles.

    Zirp has made shale oil possible — that is part of the plan

    Easy credit is a response to resource induced inflation — that is part of the plan. You can either sit on your hands and watch a deflationary death spiral happen —- or you can try to offset deflation with stimulus. They have obviously chosen door b.

    They delay any firm decision on Brexit because they know it cannot be allowed — if the UK goes —- Italy goes…

    So as I have said for 2+ years — they will just continue to delay. Of course they know run the risk of Yellow Vests flooding onto the streets of the UK. Yellow Vests will not be allowed to take the global economy down — I expect live ammunition if it gets too serious.

    Speaking of serious … Jean-Claude Juncker: ‘When it becomes serious, you have to lie’

    It is very serious now — expect more and bigger lies.


  15. Tim, thank you for another excellent piece that hits the nail firmly on the head.
    My experience of national politicians locally is that many of them have very little grasp of economics. Casual observation and interaction with some of them leads me to conclude that they form their view about the state of the economy from press releases issued by central office. If GDP is growing, employment increasing and price inflation relatively low then things are fine.
    There are three stories I would like to relate, if I may, that illustrate our plight.
    The first is the governing political party locally pushed leaflets through doors claiming that people were £1200 better-off over the last 8 years due to cuts in tax. I challenged the assertion by pointing out that the total tax burden as measured by Tax Freedom Day, which I accept is a rough and crude measure, had gone from mid-May to the end of May; and that while people may be better off in income terms this over-looked the increases in VAT, Insurance Premium Tax and Airport Passenger Duty etc. Selective focus means that politicians are failing to grasp the reality of people’s lives.
    The second story relates to a figure in H.M. Government who is a local politician and was quoted in the local press as having said: “With so much economic growth, it is time for the government to consider a Department for the North of England with its own Secretary of State.” The belief among many leading politicians that we have recovered successfully from GFC1 is surely very troubling, and all the more so when ‘growth’ is not translating into improving prosperity for the majority.
    The third story is the evidence given last week by the Governor of the Bank of England and his officials to the Treasury Committee that high-lighted the reliance, and hence vulnerability, of the United Kingdom to the ‘kindness of strangers’ funding the current account deficit. We are very reliant on foreign investors buying our assets and debt in order to continue consuming more than we produce. The unspoken fear must be that if the impulse were to falter, or heaven forbid stop, then a full-blown currency crisis would be on the cards. This is a point that you have made repeatedly, and now being voiced in official circles.
    We have, I fear, a set of national politicians who swim around the gold fish bowl once and think they’re in a new place. they are failing to grasp that fact that the United Kingdom is really and truly in very deep economic trouble, although the citizenry at large would not be aware of this by consuming the generalist mainstream media.

    • Kevin

      I, and I’m sure many others, agree that the quality of political leadership is poor, not just in Britain but in many other countries too. In fairness, it must be said that our system requires ministers to rely on “expert” advice, leaving them scuppered when that advice fails them, as clearly is the case now, where the economy is concerned.

      This article about “shock-paralysis” isn’t meant to be sympathetic towards politicians, but it does aim at understanding their predicament – I think that, if we can see things from their perspective, it enhances our own understanding of situations and prospects.

      The UK economy is indeed in deep trouble, something which is indeed kept from the public, though I think the media may themselves genuinely not understand the real processes involved.

      We here understand the prosperity process, and it’s a tragedy that this same interpretation doesn’t inform the advice given to ministers.

    • Many politicians in Spain also believe that a full recovery has been made from GFC I…..

  16. Another fantastically concise essay Tim. You are putting into words many of the points I am arguing with others. Passing your work on to them is definitely giving them a clearer perspective than I have been able to illustrate. Many thanks

  17. We tend to think that it’s only the politicians that are messing things up, but I believe the general public have a pitiful understanding of the energy issues.

    I had a discussion with a qualified marine engineer over the energy issues and in his opinion there would no future problem. “Electric cars will be made with solar panels on the roof that will supply all energy and navigational requirements” was his opinion!

    I didn’t know if I should laugh or cry. This was an engineer responsible for marine engineering – so what about the general public.

    The situation with the nuclear plant at Wylfa Newedd in Wales is quite serious for future needs – and the Government can’t find the finance!

    • As I see it, we are describing a picture of confusion at all levels, which is really what I’m aiming to describe here as “the juggernaut effect”.

      Politicians can’t admit to not knowing what’s going on, and their advisers can’t admit to being baffled. Public bafflement is manifesting itself in anger and suspicion.

      In this situation, it’s hardly surprising that there’s a lack of reference-points for setting priorities. The HS2 plan seems bizarre, but if you don’t know how to set priorities, what do you do?

      With the understanding of the situation that I think we have here, our priorities within transport would be very different. With car sales slumping everywhere from Bolton to Beijing, we surely need more and better public transport now, not some glitzy new super-train decades in the future.

      What should be happening is an integrated process of re-design, including homes and work as well as transport. It might be worth dedicating a discussion to this, though I already have a long ‘to-do list’.

    • Sounds like a very 80’s headline Tim ‘With car sales slumping everywhere from Bolton to Beijing’

      Perhaps with the need to distract the general public from our economic woes another World War 2 bomber will be found on the moon. (I remember them arguing about the exact type – not how the heck it got there)


  18. I wonder if the sudden popularity for grey painted cars is a reflection on how people feel inside. Dealers are charging a premium for them –


  19. @Johan, Re: the Chinese playing the long game, they said on the Keiser Report about a year ago I think, that they reckoned the Chinese strategy was to use their credibility now to borrow as much as possible in Fiat currency before that became worthless and convert it to resources of real value. Because if they could beat everyone else at that, when worldwide debt default happens, they will have won the only worthwhile action of obtaining the maximum remaining resources in our world.

    It was postulated that they had realised that the current debt levels and trends of all debt worldwide meant that it can’t be repaid, so you might as well go all in borrowing as much as you can get away with and use it to transition to sustainability for when the dust settles and a new system has to begin. The plan is that other nations with no unity, patience or sense will then be reduced to beggars while you now can lead the new world. Russia is buying up gold as fast as possible and ramping up their production so that apparently they’re now the No. 2 in the world – behind? China, who’re also buying at full speed. So if paper money collapses tomorrow, both could segue to using gold with relatively little chaos compared to those for whom it isn’t an option.

    Compared to Russia, China, is really going for it, building resilience in many ways, educating their people highly by sending them to universities all over the world, trying to build their infrastructure to last as far as possible into the future, rehabilitating their degraded land, conserving and redistributing water resources, diversifying energy production while trying to shift to sustainable. As important in a subtler sense is the international, massive, building cooperative projects, because of the soft power that will yield in royalties for generations after; international goodwill is underrated because it’s an abstract resource. Yes, some of this will not be successful, but they seem the only nation with a clear plan, who’re trying hard to make it happen and they don’t have to be a total success, just beat the rest of us; which is not hard given our abject performance comparatively.

    • Sounds like a very good plan – surely at least some of our Government’s economic advisors must be aware of what’s going on – or perhaps those in the US?


    • A significant problem is that politicians are guided and instructed entirely by the electorate. That’s democracy and fine as long as the electorate is clued up, streetwise and know exactly how the world works. When the electorate loses its way the politicians follow, blindly. That problem is showing itself in the Bexit negotiations.

    • The point of representative democracy (rather than the direct kind) is supposed to be that voters choose between policies crafted by politicians and their expert advisers.

      This can’t work, though, when the experts don’t understand what’s really happening – especially if the public has made what I call an ‘intuitive leap’ which puts their understanding ahead of the people who are supposed to be leading them.

    • I often see only Chinese graduate students as I cycle by the new West Cambridge residence blocks, and the Physics labs. Combined with mass tourism from China, it can provide some surreal experiences!

      The British long-term plan, which certainly exists , seems to be to throw everything into certain growth hubs, most notable being the Milton Keynes-Cambridge-Oxford triangle, where the plan is to build some 1 million housing units,and associated business parks, all devoted to hi and biotech research and commercial spin-offs.

      Is it enough?

    • China was the World’s largest economy for hundreds of years. It has only been surpassed by others in the last two or three centuries. At the beginning of the fifteenth century they were streets ahead of any other country any many fields.
      China’s leaders are aware of all this and may believe that the resurgence seen in the last thirty years is simply the first stage in taking them back to where they belong – at the top.

      As I see it the biggest problem is political. A communist system, or more broadly a state controlled system, curtails freedom but, in my view freedom is essential for progress. Progress by definition means moving beyond the present but moving beyond the present implies the ability to dissent. If you restrict political freedom you restrict the ability to progress. The question is: which path will China take? Recent changes seem to imply that it is going down the route of more control and, if this is maintained, it may ultimately prejudice growth prospects in years to come.

      One of the major advantages of countries like the UK is they do allow dissent and a large measure of individual freedom and I can’t help feel that this political and social structure has been a major factor in our development from the eighteenth century onwards.

  20. @Wally
    ‘politicians guided by electorate’
    That is not true in the United States. Research has shown that public attitudes have very little to do with what politicians actually do. It is true that campaigns are designed by advertising methods to appeal to the public. But how politicians actually behave is usually a function of what the wealthy people and corporations want.

    Don Stewart

  21. @Norfolk
    Russia has a very conservative central banker. She was on the Keiser Report (or else maybe they just talked about her) She believes in ‘hard money’. Putin gave a talk several years ago in response to all the propaganda coming out of the US and the EU about ‘Russian aggression’. He described flying from St. Petersburg to Vladivostok, and looking at the enormous terrain down below. He said ‘we have all that we and our grandchildren can use, why would we want to fight someone else for what they have?’ As a first approximation, I would say that the Chinese leadership looks at their crowded land and looks for opportunities outside China, such as Africa. Russia sees plenty of opportunity at home. Russia is able to earn a positive return in global trade, while China is now slipping. See this speech, which has now been censored:

    Russia needs a lot of gold to somewhat insulate it from hostility in the West. Without alternatives to the US dominated SWIFT system, Russia is vulnerable to geopolitical maneuvering. China has gambled everything on debt and global trade. Internally, it has encouraged both state run and private enterprises to accumulate debt. As you will hear in the speech, there is now talk of ‘re-communizing’, which would eliminate the debt held by Chinese citizens. Whether that works, and the wealthy are left without their claims on the future production of the real assets, and their society still holds together…your guess is as good as mine.

    Don Stewart

    • Agreed, power corrupts as they say and absolute power corrupts absolutely, so it’s no surprise that Putin is dictatorial and corrupt at least to an extent, but who at that level isn’t? I’m not saying that that makes it Ok or that he’s good, just what is. The reason he and Trump get on so well is that they’re both narcissists, so basically psychopaths who crave attention, but the difference is that Putin is very intelligent. This can be seen in just one example, where he played a poor hand in Syria so cleverly he beat all the others at the table with far better cards. Whether he’s the best option for ordinary Russians at the moment is another question and for history to judge.

      Certainly, like China, he knows how to play the world-domination/survival game using Russia’s strengths. (it reminds me of the board game ‘risk’) It’s an unpleasant irony as a ‘westerner’ to acknowledge that ‘we’ who secretly like to think of ourselves arrogantly, as the so-called ‘democratic-civilized ones’ in comparison are losing badly because our leaders are more corrupt. Worst of all, if we’re capable of honesty, we can see that we hugely enable that by being good conformist consumers chasing baubles for status, so are easily manipulated by even half-wits, who understand our faults.

  22. Well, as Churchill shrewdly observed, the worst conceivable system, except for the alternatives…

    But what we do see today, and it’s a worrying trend, is a tendency to view the results of an election or referendum as the start of a bitter fight between power-blocs, something to be rejected and over-turned if at all possible if it’s not to your taste.

    Trump is not ‘legitimate’, the choice of ‘deplorables’; Brexit is the choice of ‘poor white left-behinds’; the elected government of Hungary is not acceptable to Brussels, and so on.

    This is like Africa, where the election is so often just the start of the struggle, and it can so easily descend into chaos and violence, even civil war.

    Those who seek to over-turn the Brexit referendum result – the EU, but above all those within the UK, are inflicting a grave wound to British democratic traditions.

    If a vote is fair, transparent and not corrupt, then one has to acquiesce: this has been a hard lesson to learn, and one vital for orderly change, excluding the use of force.

  23. The transport policy of the UK is of course pretty dire; there was a piece in The Guardian a few days ago about a town in Lincolnshire which is, in common with much of Eastern England, getting several thousand new homes, (maybe 7,000?) but having the already exiguous – not running after about 6 or 7pm – bus service cut completely!

    With the removal of banking, supermarket and other services from many towns this utter lack of co-ordinated planning is disastrous, not lest with the ever-growing population of elderly unable to drive anymore.

    Would banging heads together do any good, when there is clearly nothing in them in the first place?

    • When I lived in the East Midlands, the last bus into town got there at just after 9pm, and the last bus out of town left just before 5pm – useless for anyone to get to or from work. I experienced similar in Norfolk. I simply don’t know why the UK doesn’t take buses seriously – because, here in Spain, the buses are excellent.

  24. @Norfolk
    Putin and Russia, under the stern eye of their chosen central banker, are not playing the debt game. Consequently, their performance doesn’t look good to the superficial eye. It looks much better in terms of Dr. Tim’s measure of prosperity. It’s easy to look good and feel good when one is accumulating debt. The explanation I have seen for Putin’s recent fall in the popularity polls in Russia has to do with the increase in the retirement age. That is just recognizing reality and doing what needs to be done.

    Whether China can build a physical empire on the back of lots of debt, which obligations are then seized by the State and either eliminated or reduced to a small fraction, is an interesting scenario but I doubt they are seriously considering it. Max and Stacey have commented several times that by simply turning dwellings over to the occupants, the Russian state was able to emerge from the Soviet debacle in pretty good financial shape. Dmitry Orlov has shown pictures of redecorated, but not rebuilt, soviet apartment blocks which look like pretty attractive places to live. The trick is whether the state can entice the rich to finance a physical infrastructure which they never actually get to monetize. There are too many moving parts in that strategy for my taste.

    I think that Putin and Russia are on the right track with ‘hard money’ at this point. Of course, George Soros might get a revolution started tomorrow…who knows?

    As for Putin’s personal ethics, I have found that trying to discuss them with Europeans is fruitless. I recommend looking at Albert Bates description of what happened in Syria. Try to reconcile the facts that Bates puts forward in terms of the Assad family with the propaganda coming out of the mainstream media in the US. And Britain and France always want to be in the front of the ‘bomb them now and ask questions later’ line.


    In this age of the Internet, truth has never been more slippery. Can you reconcile Assad being married to a Sunni, and the non-fundamentalist beliefs of the Alawites, with the propaganda coming out of all the official mouthpieces in the US? Can you explain how a leading US commentator called Senator Rand Paul of Kentucky a ‘Red Senator’ for supporting US withdrawal from Syria?

    Don Stewart

    • @ DS, agreed, Putin is just a much higher level in playing politics and crucially I’d say he understands the others, whereas we arrogantly continue to underestimate him no matter how much evidence piles up in front of us that he’s onto our tactics. He’s out manouevered his opponents in Europe generally as well as the west as a whole over the annexation of Crimea say.

      All parties in Syria regardless of the side they’re currently on would take Russia at their word in negotiations, since they’ve proven they’ve stuck to it, vs the west selling out the Kurds asap., to kowtow to Erdogan’s bullying. As for our ‘freedom’ in the developed countries formerly known as ‘the west’, it’s just an illusion, remarkable only for the fact that so many still believe it; (which tells you more about the infantilisation of our people) whatever we vote into govt. still takes orders from the bankers. That’s kleptocracy.

  25. Re: research shows politicians don’t represent citizens, see “Testing Theories of American Politics:
    Elites, Interest Groups, and Average Citizens, Martin Gilens and Benjamin I. Page, Princeton University, https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf . The overview at the beginning states:
    “Each of four theoretical traditions in the study of American politics—which can be characterized as theories of Majoritarian Electoral Democracy, Economic-Elite Domination, and two types of interest-group pluralism, Majoritarian Pluralism and Biased Pluralism—offers different predictions about which sets of actors have how much influence over public policy: average citizens; economic elites; and organized interest groups, mass-based or business-oriented. A great deal of empirical research speaks to the policy influence of one or another set of actors, but until recently it has not been possible to test these contrasting theoretical predictions against each other within a single statistical model. We report on an effort to do so, using a unique data set that includes measures of the key variables for 1,779 policy issues. Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial
    independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.”

    It seems that the Gilets Jaunes have grokked this, rejecting as they have the Hillary Clinton style listening tour/ town hall gambit, and out there every weekend with fresh disruptions. The theory of representative government is that it is supposed to represent the people, but somehow it is the people’s fault if it does not actually do this? The people need to work harder to elect the right representatives, even though all representatives are supposedly tasked with representing the people? While admittedly somewhat abstract, presumably “the people” does not mean “the multinational corporations and billionaires.” Classic blame the victim, abusive relationship.

    This study needs to be talked about regularly by as many people as possible until it’s meaning sinks in, and people stop wasting time, attention and energy on electoral politics, who’s running, their wonderful life stories and identities, and what they “stand for.”

    I consider the Gilets Jaunes movement the most significant development, and the more significant development, since Occupy Wall Street. So far, the top sociopaths (I refuse to call them the “elites”) have failed to co-opt them or buy them off. The French are modeling, for the world to see, a form of resistance that is very hard to deal with short of very serious repression. They have figured out that the cities are not independent dynamos they are claimed to be. They are, as Steve Ludlum has pointed out, “sinks.” They are just focal points for consumption of all the flows going into them from the much-derided hinterlands. The French have figured out that you just disrupt these in-bound flows and you expose the Achilles’ Heel. Shut down the highways, shut down tolls and disrupt the tax revenues, shut down the shopping districts at Christmas time and cause hundreds of millions in losses. In short, the effort to maintain the “status quo” for the metropolis by withdrawing support for, and shifting ever more costs to the periphery, has a fatal flaw. https://www.spiked-online.com/2019/01/11/the-gilets-jaunes-are-unstoppable/

    • The Hi-Viz jacket protests in France conform in a remarkable way to the pattern of pre-Modern popular revolts in France; anti-tax, anti-aristocrat/patrician bourgeois.

      Hopefully it will all be crushed or appeased soon, without any further pointless casualties, as public disorder allows very ugly elements to grow and nourish themselves.

  26. Fixing the World; NordStream; GMO grain; Sanity
    A team of 30 scientists identify the diet that can fix the world:

    (The Lancet is the leading British medical journal)

    Take a look at the weight and the calories. I call your attention to the recommendation of 232 grams of whole grains yielding 811 calories per day, as compared to the total of tubers, veggies, fruits, legumes, and nuts with a total of 675 grams yielding 809 calories per day. The grains are typically processed and dried and shipped in a non-refrigerated container. A sailing ship can do it respectably well. The veggie group is typically consumed fresh or at least kept in comfortable temperatures. What this diet implies is that Britain would do well to focus on the traditional small-holder farm products, and import grains from the grain growing regions of the world…and that would include Russia which has become a prime exporter of non-GMO grains. So cultivating a good relationship with Russia to secure grain supplies makes sense. Threatening Russia with invasion strikes me as suicidal.

    As for the ’no economic justification’ of the NordStream pipeline. Let’s just hypothetically suppose that the days of European dependence on diesel for powering trucks are limited in number. What is the alternative. We can talk about railroads and barges and electric powered trucks using fusion power plants, but what is ready to be deployed right at this very moment are natural gas trucks (such as made by Volvo) using natural gas from Russia, central Asia, and the Middle East (notably, Iran). If Europe does convert to natural gas powered trucks, then its consumption of natural gas will go up several multiples. If you were a sane and sober European leader, would you want to entrust the tap to the government in Kiev? Or Warsaw? I wouldn’t. I would want pipelines from a diversity of places, including Russia. I wouldn’t entrust the tap to Poland or Ukraine or Turkey. I wouldn’t want to be completely dependent on Russia, either. LNG is never going to provide what would be required for massive conversion of the truck fleet to natural gas. So the NordStream is the first step in a rational process. The mud-slinging at Russia that is endemic in western Europe is insane.

    If you believe, as I am convinced, that poisonous substances used to produce the grains you want to import is also insane, then Russia makes sense as a primary source.

    I rest my case….Don Stewart

  27. In Addition
    Relative to food. The unprocessed grains sells for about 2 or 3 US dollars per pound (sorry to infuriate all you metric people). The small farm products sell for around 6 dollars per pound. So the ‘value added’ is preponderantly in the small farm products. This is an important consideration for an island without a lot to export to earn currency.

    Don Stewart

    • Brilliant remarks, Don.
      Oppo to Russian sources of NatGas is not based on optimal management of scarce resources but on making sure the right oligarchs control limited monopolies of distribution and are enriched. Russia cannot be controlled as a puppet regime run to enrich Western oligarchs, ergo it must be demonized as an enemy.

  28. Yves at Naked Capitalism does a really nice take down of BlackRock CEO Larry Fink’s solutions to the world’s problems. Fink’s letter is a good example of the blindness of the world’s squillionaires to its problems. They can’t stop talking their book long enough to begin to perceive the real issues. It’s all about perception management, because social reality is reality.

  29. Johan’s
    “With the destruction of the atomic family unit through feminism and the promotion of lgbqt “rights”,”

    made me recall the correlation of the issuance of radio licences with admissions to mental institutions in the early nineteen twenties.. very high.

    99% of statisticians would suggest correlation is not sufficient for causation.

    For me the atomisation of family culture is afforded by the growth in the use of the motorcar- we simply live further apart. Falling household size is the same phenomenon, as are the ‘rights’ of sexual liberation and orientation – but these developments (progressions!) are themselves also the product of surplus energy..which is now so dangerously constrained by the triumph of entropy over technology. Surplus energy embodied in technology accelerates material flows through culture as ‘economic growth’. Gail the actuary suggests such dissipative phenomena, like nature’s flowers and hurricanes too, reach ultimate expression and then die away.
    Families will soon rediscover that the bonding patterns underpinning the more successful division of (human) labour and reproduction trump the vagaries of genital difference and play.
    Mucking about with ones’ bits (whatevs) might well be a useful campfire distraction where the kindness of strangers is needed to maintain the pace of evolution, and incest is more of a threat to the family.

    • “For me the atomisation of family culture is afforded by the growth in the use of the motorcar- we simply live further apart.”

      Maybe so, but bicycles were apocryphally very good for the gene pool in rural Britain!

    • When attempts were being made to introduce railways into Persia, in the early 1900’s, the usual reaction of the tribal chiefs was ”I don’t like the sound of that: all my people – and all the women – will run away!’

      Which offers an interesting, unsentimental perspective on the realities of pre-modern family and community life….

      That excellent window into rural life ‘Akenfield’ implies that incest was the rule, not the exception, among the cottagers of rural Suffolk until very recently indeed. It’s a naughty book, but I suspect quite true to life.

    • JeremyT,
      my comment was intended to be more focussed upon the fact that Western families are fragmented, as opposed to the reasons why they are fragmented. What I was alluding to was that in the next crisis, there will no longer be that same camaraderie and “we are all in this together” approach to things, as there was for example during the war years of the 1940’s.

  30. Thanks to everyone for their comments regarding sufficiency economics.
    The only acedemic institution looking at the same issues as being raised here is

    However degrowth acedemics are similarly concerned, especially regarding ecological limits of economic growth

    FOE Europe have produced a report regarding sufficiency

    Entropy is indeed an important factor

    Lastly surplus energy economics from the perspective of energy returns on energy invested

    Sufficiency I think can be implemented through various economic models as long as ecological limits are imposed whether through planetary boundaries frameworks or safe operating space frameworks

    Thanks again

    • Thanks for the links.

      As for sustainability: restrictions on the age of marriage, infanticide, disease, famine and constant war are all that is needed to keep Man in check, within the ecosystem.

      Bitter medicine, but effective.

  31. Hi Tim

    What do you think about Richard Duncan’s explanation for the lack of retail price inflation? See https://richardduncaneconomics.com. Richard believes that the main reason that QE didn’t trigger price inflation was globalisation. That is, because corporations were able to export manufacturing (and some other) jobs to low-earning economies like China, prices in the developed economies were lower than they would have been were this not the case. Of course we have seen asset price inflation that would seem to have been caused by QE. Perhaps controversially, Richard believes that a global labour market means that inflation would continue to be low even in the face of further QE.

  32. I trust everyone has enjoyed the simply delicious cynicism of Donald Tusk, who claims that he took Cameron to task over calling the Brexit referendum:

    ‘ Why did you have to do it? ! It won’t be the first time that an election promise hasn’t been fulfilled?’

    Pretty shameless stuff!

    • They do live in a World of their own blissfully unaware of the economic dangers we face – stray dogs come first remember.


  33. This video makes a great job of contextualising the Exponential growth in Debt.

    This Graphic does an even better job

    Courtesy of: The Money Project

    whilst the feds balance sheet salvaged the banks, banks have not leant to SME’s and the size of the real economy in relation to the financialised economy is very small and staved of Cash.

    At the most simple level, the Money supply is a Flow and not a Stock and The Neo-CLassical, IS-LM , model does not capture dynamic flows.
    January 18, 2019 Lars Syll


    • Thanks for link about Hydrogen. I’ve seen pros and cons about using it to power transport but if economies of scale make it truly viable it could be the way forward.

      A 300 mile range is very good seeing that refilling is relatively easy


  34. Christopher Lasch: The True and Only Heaven; Progress and Its Critics

    Lasch wrote the book in 1991, and it has been reprinted in 2019. I find Lasch’s section ‘What Progress Really Means’ on page 47 of the 2019 printing to be thought provoking. ‘The idea of progress never rested mainly on the promise of an ideal society—not at least in the Anglo-American version…The modern conception of history is utopian only in its assumption that modern history has no foreseeable conclusion. We take our cue from science, at once the source of our material achievements and the model of cumulative, self-perpetuating inquiry…’

    *Science has no end…ever evolving toward more human mastery of Nature.
    *Technology resulting from science allows humans to have more and more of whatever it is that they want superficially…robot sex, but maybe not True Love.
    *Unfettered Capitalism is the best way to simultaneously exploit science and technology. In the unlikely event that some particular collateral damage must be dealt with, the solution is to enclose the problem and entrust the solution to subsidized corporations.
    *Notions of ecology and biology which indicate that humans are merely part of Nature are influenced by Satan (or at least Vladimir Putin). See Stronberg:
    *We can understand the enormous resistance to Limits to Growth…it challenges the notion that perpetual progress can be achieved by secular means.
    *We can see the appeal of ‘return to religion’ if secular progress is not achievable. (Obituaries in the midwestern US routinely describe the deceased as ‘having ascended into heaven’)
    *When science points clearly to painful collateral damage (e.g., climate change; rising ECoE; soil and water degradation), the reaction will be, first, to find a scapegoat. See Stronberg. It is so convenient that EVERYTHING can be blamed on Vladimir Putin!!!
    *If science indicates that the choices being created by Science and Technology, coupled with privately created money and debt, coupled with the free choices of the population, are creating the painful collateral damage…we get cognitive dissonance.
    *Science also indicates that humans have a capacity to resist temptation and to feel empathy for others. However, these capabilities are subject to exhaustion. That is, the more temptation I resist today, the weaker my ability to resist temptation becomes.
    *Consequently, a barrage of advertisements offering me every superficial shot of dopamine anyone could reasonably want will wear down the ability of the population to actually choose those things we want at a deeper level rather than superficial shots of dopamine. The same mechanism works on empathy…how many poor African women farmers can you truly empathize with?
    *Laws and the Rule of Law can circumvent the limitations on resistance to temptation and empathetic actions. The general population CAN support severe public sanctions on those who kill someone while engaged in armed robbery….even though most of us will never know anything about the circumstances, the criminal, nor the deceased. We can engage in a ‘one and done’ decision in general terms….but then we must create a bureaucracy to fine tune the law and administer it. The more things we turn over to bureaucrats, the less likely we are to see the actions of the bureaucrats as ‘fair’.
    *Progress mostly denies that coupling Technology and Superficial Wants with privately created money and debt can create deadly collateral damage. (One recent naysayer is Dmitry Orlov, who has written about the dangers of TechnoUtopia.)
    *Another predictable response to the discovery of painful collateral damage is to socialize the costs for the privatized gains. For example, politicians in Texas and Florida are all in favor of public funded sea-walls to protect them agains the climate change they deny is happening. (See Stronberg)
    *It is hard to imagine a solution which is elegant. A hodgepodge of laws and customs and court cases based on English Common Law were successful in terms of curtailing tobacco use in the US. Unfortunately, the English Common Law bases for lawsuits has been severely eroded in the US. Which takes the decisions out of common sense and decency and into the realm of big money politics.
    *The only ‘elegant’ solution I can think of is Collapse combined with the notion of a Remnant which survives due to being a lot wiser than the average of the 8 billion of us here now. But that has its own problems. Maybe Guy McPherson is right.

    Don Stewart

  35. Properly speaking, it was the Soviet idea of progress that envisaged an ideal society, and a new kind of human being: Soviet Man/Woman. And, in a way, Nazism, was similarly idealistic and aimed at another ideal of perfection. Dark and dangerous waters….

    • @Xabier
      Lasch discusses how the notion of a perpetual upward trajectory in human well-being, simply by everyone looking out for Number 1, was a new idea. They rejected Christian and Stoic and Republican orthodoxy about the improvement of the human. There was a lot of discussion among the intellectuals in the 18th and 19th centuries about what was being lost when the notions of frugality and good citizenship were lost. But ultimately, the Liberal conception that no sacrifices were required and no adjustments to human nature were needed won the day. Two escape valves were proposed:
      *Send the young men to fight the infidels. The experience would build the Roman virtues.
      *Emphasize home life. A businessman was not supposed to be only greedy…he was supposed to work hard to make a good home for his wife and children. And the women would temper the hard edges of the men.

      The question that we need to pose now is whether a world that is forced to live within limits can survive with a Liberal outlook. Certainly the leading lights in the Climate Change discussion have stoutly maintained that no sacrifices or adjustments to human nature are needed….just look at how cheap solar panels are, etc. I think one source of the disconnect in terms of Climate Change is that the people are not fooled…they see that sacrifices WILL be required. How can a man with a 45 million dollar house and a private jet lecture them about Climate Change?

      I recommend reading this section of Lasch’s book to see the discussion that happened a few hundred years ago. For better or for worse, we are living with the triumph of the Liberal notions. Could Christian notions of poverty or Roman notions of Republicanism or the very practical philosophy of the Stoics be resurrected? Could parts of them be useful?

      Don Stewart

  36. @Xabier
    Nafeez Ahmed has written a long and complicated analysis of our Liberal predicament (infinite growth on a finite planet featuring atomized individuals looking out for Number 1).
    View at Medium.com

    ‘It is now clear, however, that dominant moral behavioural categories associated with the prevailing paradigm of social organisation are dysfunctional. They are in fact reflective of behavioural patterns which are contributing directly not just to the destabilisation and destruction of civilisation, along with the extinction of multiple species, but potentially to the very annihilation of the human species itself.

    If we take a moral or ethical value to be indicative of a particular mode or pattern of behaviour, we can conclude from our current civilisational predicament that the predominant value-system premised on self-maximisation through endless material accumulation is fundamentally flawed, out of sync with reality, and objectively counterproductive. Conversely, values we might associate with more collaborative and cooperative behaviours appearing to recognise living beings as interconnected, such as love, generosity and compassion (entailing behavioural patterns in which self-maximisation and concern for the whole are seen as complementary rather than conflictual), would appear to have an objective evolutionary function for the human species.’

    I won’t try to comment on it, because it would take us far afield from Dr. Morgan’s blog.

    Don Stewart

  37. Extracts from an article by Ambrose in today’s Telegraph which is noting a supply crunch due to under investment (although all the investment in the World would help a field with a poor EROEI)


    Vicki Hollub, chief executive of Occidental, said the Permian was an astonishingly prolific basin with multiple layers of rich resources. Seismic imaging, multi-pad drills, and longer lateral bores have radically changed the economics of the industry.

    “We’ve driven down the breakeven price of much of the Permian to less than $40, and in some cases even to $30, so there is still going to be a lot of opportunity to grow,” she said.

    r Birol said it was perfectly plausible that the US would raise output by a further 10m b/d over the next decade. This would entirely change the geopolitical prospects of Russia and the Middle East.

    John Hess, founder of Hess Petroleum, said the US would keep growing to 15m b/d but then start to hit all kinds of constraints. “Shale is about 6pc of world oil supply now, and it probably will go up to 10pc by mid-decade. Then it flattens out,” he said.

    “Resources start to degrade. Eventually you get to locations that aren’t as attractive as the ones we’re drilling right now. So shale is not the next Saudi Arabia but at the end of the day it is an important component of short-cycle supply,” he said.

    Supply shortfall

    Mr Hess said the problem was that global spending in conventional long-term projects had collapsed. This is setting the stage for a serious crunch in the future.

    The world needs new capex investment in oil and gas of $580bn each year to stand still. It spent just $350bn in 2016, $370bn in 2017, and $410bn in 2018. The effects of this shortfall are not yet visible in world supply. They soon will be.

    Majid Jafar, head of Crescent Petroleum in Dubai, said natural attrition was relentlessly eroding future supply. “There is chronic under-investment and a natural decline of 3m to 4m barrels a day. We need to add a new Iraq each year,” he said.

    Mr Jafar warned of a coming supply crisis within five years. The paradox of oil today is that even though the spot market is well supplied and Opec is holding back output, spare capacity is actually at wafer thin levels.

    This is an accident waiting to happen and there are geopolitical stress points all over the world. Venezuela’s Maduro regime is now in its final agonies, raising a lot of questions about $50bn of debts to China and $17bn owed to Russia.

    Venezuela has slashed output by two thirds to 1.1m b/d. “It is the biggest drop in the history of the oil market for a medium producer,” said Dr Birol.

    Mr Jafar said that ultimately the global oil industry should be grateful to Texas frackers. “We don’t see US shale as a threat at all. It is has debunked the myth of peak oil supply,” he said.

    That of course has reduced the economic urgency of renewable energy, which is what the Mid-East producers fear even more. It is why environmentalists view shale with such deep suspicion.


  38. @Xabier
    This section of Lasch’s book is directly relevant to the problems identified by Dr. Morgan. On page 69 of the 2019 print, he talks about a ‘widely praised’ book by Simon Patten: The New Basis of Civilization. ‘the emergence of a pleasure or surplus economy has effectively nullified the ancient tragic model of civilization and decay. ‘ Patten foresaw ‘a vanishing age of deficit’. So while Marx was all about the glories of production, Patten and the latter half of Roosevelt’s New Deal were about consumption. John Maynard Keynes had picked up on the ‘age of surplus’ concepts, which the New Deal paid a lot of attention to.

    Work, particularly in the machine age which put the artisan out of business, was bleak and meaningless. It was merely what was necessary to get to the weekend, which was a feast of consumption. In my opinion, people for the last few decades have been told that working 60 hour weeks now will entitle them to a glorious retirement in some tropical paradise. But it turns out that the retirement accounts have been decimated, and the tropical beaches are littered with plastic and red tide.

    Personally, I have the disposition of the conservative peasant: best to save some seed corn because tomorrow may be hard.

    At any rate, it is interesting to read about these very fundamental discussions from a century ago.

    Don Stewart

    • ‘ Tropical beaches are littered with plastic and red tide’ We could always pick the litter up – I do on many of the hiking paths I use in my county,


    • Beware the Fogs of Fiat, dear Don.

      What isn’t there, aint there. Period. Especially with 7 billion people on a finite planet and a financial system that seems to ignore all of of it.

      Its not that difficult, we WILL suffer.

      You too.

      All of us.

    • Neo-Liberalism looks ever more delusional and dishonest, and never had true popular support, and Marx ever more irrelevant and naive.

      Ever since I read ‘Beowulf’, I’ve felt that the tragic conception was most accurate; but the Basque proverbial saying ‘Harri eta Herri’ – ‘the people (as hard as) a stone’ has much to recommend it for times to come.

      And in Homer, the assembled Greek warriors are rather pleased when they believe that a duel between heroes will settle the whole matter after years of war; they don’t want to be heroes themselves anymore, and would rather go home to feast, drink wine, hunt and have women.

      The idea of the virtue inherent in endurance (even if you’d rather avoid it!) does seem to have been lost along the way in the consumerist societies: understandably as they are urban, pampered and naturally alien to the virtues of warrior, peasant, nomad.

      Of course, the most recent leaders of modern states to attempt the revival of ancient notions of national, tribal, cohesion exalted by the shedding of blood failed dreadfully after making a gruesome splash 70-odd years ago.

      What does seem to be emerging now is a new Utopian delusion, located not in some experimental – but real – revolutionary state, as the USSR beckoned to progressives in the 1920’s, 30’s, and 40’s, but in the implausible paper promises of the ‘New Green Deal’: more equality, abundant jobs, tech toys and a healthy planet. I wonder when that idea will be exploded?

  39. Article discussing the tactics used to stop the Gilets Jaunes protests, including maiming of protestors by shooting them with “flashballs.” “Jacques Pezet is a factchecking journalist for Liberation and found 94 cases of severely injured Gilets Jaunes by January 14. His count was only those that could be verified with complete certainty. The campaign group Desarmons-les and the journalist and documentary maker David Dufresne have counted more.”

    “Macron’s response suggests what other leaderless protest movements across Europe will face as systems continue to collapse.”


  40. I know that some readers of this blog, unsatisfied with “mainstream” economics, were in favor of MMT (Modern Monetary Theory), while Dr. Morgan seemed to be sceptical, but didn’t discuss it in detal – perhaps because it’s pretty strange and the relationship between MMT and phisical reality is unclear. I found this article interesting: https://mises.org/library/upside-down-world-mmt (it argues against MMT).

  41. @houtskool
    Scott Fitzgerald wrote in Scribner’s Magazine in 1931:
    ‘Now again the belt is tight, and we summon the proper expression of horror as we look back at our wasted youth.’

    Don Stewart

    • “I get the feeling that we’re in a completely self-organized system that follows simple thermodynamic rules and that people are about as conscious as blades of grass in a lawn that get their heads chopped-off every week by the lawn mower and yet they can’t stop growing. They are evolved to convert readily accessible rewards into waste and there is no innate governor to retard that process. This time the lawn turns brown and dies.”
      Comment from James on megacancer.com

      I agree


      el mar

  42. Well, many mystics would agree with James: ‘Mankind is asleep and needs to wake up!’

    As far as the way our brains seem to function, he is quite right….

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