#156. Actual fantasy


Everyone knows the quotation, of course, which says that “when it gets serious, you have to lie”.

Actually, when it gets even more serious, we have to face the facts.

I’m indebted to Dutch rock music genius Arjen Lucassen for the observation that the counterpart to “virtual reality” is actual fantasy – and that’s where the world economy seems to be right now.

You may think it’s imminent, or you might believe that it still lies some distance in the future, but I’m pretty sure you know that we’re heading, inescapably, for “GFC II”, the much larger (and very different) sequel to the 2008 global financial crisis (GFC).

SEEDS 20 – the latest iteration of the Surplus Energy Economics Data System – has a new module which calculates the scale of exposure to “value destruction”. This exposure now stands at $320 trillion, compared with $67tn (at 2018 values) on the eve of GFC I at the end of 2007.

How this number is reached, and what it means, can be discussed later. Additionally, potential for value destruction needn’t mean that this is the quantity of value which actually will be destroyed when a crash happens. Rather, it gives us a starting order-of-magnitude.

For now, though, we can simply note that risk exposure seems now to be at least four times what it was back in 2008. Moreover, interest rates, now at or close to zero, cannot be slashed again, as they were in 2008-09. Neither can governments again put their now-stretched balance sheets behind their banking systems, even if global interconnectedness didn’t render such actions by individual countries largely ineffective.

Finally – in this litany of risk – two further points need to be borne in mind. First, global prosperity is weakening, and has been falling in most Western economies for at least a decade, so any new crash will test an already-weakened economic resilience.

Second, and relatedly, any attempt to repeat the rescues of 2008 would be unlikely to be accepted by a general public which now – and, in general, correctly – characterises those rescues as ‘bail-outs for the wealthy, and austerity for everyone else’.

The high price of ignorance

It’s tempting – looking at a world divided between struggling, often angry majorities, and tiny minorities rich beyond the dreams of avarice – to think the surreal state of the world’s financial system reflects some grand scheme, driven by greed. Alternatively, you might feel that far too many countries are run by people who simply aren’t up to the job.

Ultimately, though – and whilst greed, arrogance, incompetence and ambition have all been present in abundance – the factor driving most of what has gone wrong in recent years has been simple ignorance. For the most part, disastrous decisions have been made in good faith, because thinking has been conditioned by the false paradigm which states that ‘economics is the study of money’, and which adds, to compound folly still further, that energy is ‘just another input’.

I don’t want to labour a point familiar to most regular readers, so let’s wrap up recent history very briefly.

From the late 1990s, as “secular stagnation” kicked in (for reasons which very few actually understood, then or now), the siren voices of conventional economics argued that this could be ‘fixed’ by making it easier for people to borrow than it had ever been before. This created, not just debt escalation, but a lethal proliferation and dispersal of risk, which led directly to 2008.

In response, the same wise people, those whose insights caused the crisis in the first place, now counselled yet more bizarre gimmicks, the worst of which was that we should pay people to borrow, whilst simultaneously destroying the ability to earn returns on capital. Nobody seems to have wondered (still less explained) how we were supposed to operate a capitalist economy without returns on capital – and that, by the way, is why what we have now isn’t remotely a capitalist system based on properly-functioning markets.

When GFC II turns up, it’s as predictable as night following day that the zealots of the ‘economics is money’ fraternity will come up with yet more hare-brained follies. We already know what some of these are likely to be. There are certain to be strident calls for yet more money creation (but this time with a label saying that “it’s not QE – honest”). Some will advocate ‘helicopter money’, perhaps calling it ‘peoples’ QE’. There will be calls for negative nominal interest rates, with the necessary concomitant of the banning of cash. Ideas even more barking mad than these are likely to turn up, too.

Ultimately, what’s likely to happen is that the authorities will respond to GFC II by pouring into the system more additional money than the credibility of fiat currencies can withstand.

We know, of course, that any new gimmicks, just like the old ones, won’t ‘fix’ anything, and can be expected to make a bad situation even worse.

So the question facing everyone now – but especially decision-makers in government, business and finance, and those who influence their decisions – is whether we abandon conventional economics before, or after, the next mad turn of the roulette wheel.

Put another way, should the creators of “deregulation”, QE and ZIRP – and the facilitators of sub-prime and “cash-back” mortgages, collateralised debt obligations and the alphabet soup of “financial weapons of mass destruction” – be allowed to introduce yet more insanity into the system?

Before making this decision, there’s one further point that everyone needs to bear in mind. In 2008, financial gimmickry nearly, but not quite, destroyed the banking system. The only reason why this didn’t happen was that fiat money retained its credibility. But, whilst the follies which preceded the GFC imperilled only the credit (banking) system, those which have followed have put the credibility of money itself at risk.

This is perhaps the most powerful reason of all for not letting the practitioners of ‘conventional’ economics have another swing at the wrecking-ball.

I hope that, reflecting on this, you’ll agree with me that we can no longer afford the folly of financial economics.

Moreover, we need to say so, making fundamental points forcefully, and resisting any temptation to wander off into esoteric by-ways.

A scientific alternative?

If there can be no doubt at all that money-based interpretation of the economy has ended in abject failure, there can be very little doubt that a workable alternative is ready and waiting. That alternative is the recognition that the economy is an energy system.

This idea is by no means a new one and, though I’d prefer not to particularize, it’s been pioneered by some truly brilliant people. If those of us who base our interpretations on the energy-economics paradigm can see a long way into the future, it’s because we’re “standing on the shoulders of giants”.

Moreover, much of the work of the pioneers is rooted in solid science, meaning that, for the first time, there is the prospect of a genuine science of economics, firmly located within the laws of thermodynamics. This has to be a more rational option than continuing to rely on economic ‘laws’ which try to impute immutable patterns to the behaviour of money – something which is, after all, no more, than a human construct.

I like to think that my much more modest role in this direction of travel has been to recognize that, if energy economics is going to transition from the side-lines of the debate to its centre, it needs to tackle conventional economics on its own turf.  That means that, whilst as purists we might prefer to set out our findings in calories, BTUs and joules, we have to talk in dollars, euros and yen if we’re to secure a hearing. It also means that we need models of the economy based firmly on energy principles.

If you’re a regular visitor to this site then the basics of what I call surplus energy economics will be familiar. Even so, and with new visitors in mind, a brief summary of its main principles seems apposite.

Core principles

The first principle of surplus energy economics is that everything that constitutes the economy is a function of energy. Literally nothing – goods, services, infrastructure, travel, information – can be supplied without it. Even in the most basic aspects of our lives, everything that we need – including somewhere to live, food and water – is a product of the application of energy. The more complex a society becomes, the more energy it requires, even if this is sometimes masked when energy-intensive activities are outsourced to other countries. The idea that we can somehow “decouple” economic activity from the use of energy has been debunked comprehensively by the European Environmental Bureau as “a haystack without a needle”.

You need only picture a society even temporarily deprived of energy to see the reality of this. Without energy, food cannot be grown, processed or delivered, water fails when the pumps stop working, our homes and places of work become cold and dark, and schools and hospitals cease to function. Without continuity of energy, machinery falls silent, nothing can move from where it is to where it is needed, individuals lose the mobility that we take for granted, and, in a pretty short time, social order fails and chaos reigns.

Ironically, financial systems are amongst the first to collapse when the energy plug is pulled. People cannot even write learned papers telling us that energy is ‘just another input’ when their computer screens have just gone down.

The second principle of surplus energy economics is that, whenever energy is accessed, some of that energy is always consumed in the access process. Stated at its simplest, you cannot drill an oil or gas well, excavate a mine, or manufacture a wind turbine or a solar panel without using energy. Much of this energy goes into the provision of materials, of which just one example is copper. This is now extracted at ratios as low as one tonne of copper from five hundred tonnes of rock. Supplying copper, then, cannot be done with human or animal labour – and, of course, even if this were possible, the need for nutritional energy would keep the circular, ‘in-out’ energy linkage wholly in place.

Taken together, these principles dictate a division of available energy into two streams or components.

The first is the energy consumed in the access process, known here as the Energy Cost of Energy (ECoE).

The second – constituting all available energy other than ECoE – is known as surplus energy. This powers all economic activity, other than the supply of energy itself.

This makes ECoE an extremely important component, because, the higher ECoE is, the less surplus energy remains for those activities which constitute prosperity.

Four main factors drive trends in ECoEs. Taking oil, gas and coal as examples, these energy sources benefited in their early stages from economies of scale and expanding geographic reach. Latterly, though, with these drivers exhausted – and as a consequence of the natural process of using the most attractive sources first, and leaving costlier alternatives for later – ECoEs have been driven upwards relentlessly by depletion.

A fourth factor, technology, accelerates movement along the early, downwards ECoE trajectory, and then acts to mitigate subsequent increases. Mitigation, though, is all that technology can accomplish, because the scope for technological improvement is bounded by the envelope of the physical properties of the energy resource itself.

Lastly on this, because the four factors driving ECoEs – reach, scale, depletion and technology – all act gradually, ECoEs evolve, and need to be measured as trends.

Application – the money complication

With the basic principles established, and the role of ECoE understood, it might seem that, to arrive at a measure of prosperity, all we need do now is to subtract ECoE from economic activity. That would indeed be the case – if we had a reliable data series for output.

But this is something that we simply don’t possess, least of all in reported GDP. Essentially, GDP has been manipulated for the best part of two decades, and, arguably, for even longer than that.

By manipulation, I’m not referring to tinkering at the production boundary, or understating the deflator necessary for making comparisons over time.

The kind of manipulation I have in mind is the simple matter of pillaging the future to inflate perceptions of the present.

Expressed in PPP-converted dollars at constant 2018 values, reported world GDP increased by 36% between 2000 and 2008, and has grown by a further 34% since then. During those same periods, though, world debt increased by, respectively, 50% and 58%. Each $1 of incremental GDP between 2000 and 2008 was accompanied by $2.30 of net new borrowing, a number that has increased to more than $3 in the decade since then. Sustaining annual “growth” of about 3.5% in recent years has required annual borrowing of about 9% of GDP.

In short, GDP and growth have been faked by the simple spending of borrowed money. This exercise in cannibalising the future to sustain the present would look even more extreme were we to include in the equation the creation of huge holes in pension provision.

In this context, we need to answer two questions before we can calculate a useful output metric against which ECoE can be applied.

First, what would happen now, if we stopped piling on yet more debt?

Second, where would GDP be today if we hadn’t embarked on a massive borrowing spree?

You’ll understand, I’m sure – with government, business and finance still hamstrung by the failed economic methodologies of the past – why I won’t go into details here about the SEEDS algorithms which provide answers to these questions.

What I can say, though, is that, in the absence of further net borrowing, growth in world GDP would fall from a reported level of around 3.5%, to about 1.2% now, decreasing to just 0.6% by 2030.

On the second question, setting growth since 2000 of $61tn against borrowing of $167tn over the same period puts in context quite how far reported GDP has been inflated by the spending of borrowed money – and, if this borrowing binge hadn’t happened, GDP now would be 30% below the numbers actually recorded. Instead of “GDP of $135tn PPP, growing at 3.5% annually”, we’d have “GDP of $94tn, growing at barely 1%”.

Prosperity – the ECoE connection

When we set growth in real, “clean” GDP (C-GDP) of 31% since 2000 against a global trend ECoE that has risen from 4.1% to 7.9% over the same period – and stir a 23% increase in population numbers into the pot as well – you’ll readily understand why people have started to become poorer.

This is set out in fig. 1. In the left-hand chart, the gap between reported GDP (in blue) and C-GDP (black) represents the compound rate of divergence in a period when debt of $167tn has been injected into the system, together with large amounts of ultra-cheap liquidity.

If we were now to unwind these injections, GDP would fall to (or below) the black C-GDP line, over whatever period of time the debt reduction was spread. The gap between C-GDP (black) and prosperity (red) shows the impact of rising ECoEs, and illustrates how the worsening ECoE trend is set to turn low (and faltering) growth in C-GDP into a deteriorating prosperity trend.

The middle chart adds debt, to set these trends in context. In the right-hand chart, per capita equivalents illustrate how the average person has been getting poorer, albeit – so far – pretty gradually.

Fig. 1

#1567 Global

Comparing 2000 with 2018 (in constant PPP dollars), a rise of 31% in C-GDP has been offset by an ECoE deduction that has soared from $2.7tn to $7.4tn. Aggregate prosperity has thus increased from $69tn ($71.9tn minus ECoE of $2.7tn) in 2000 to $86tn ($93.5tn minus $7.4tn) last year.

This is a rise of 26%, only slightly greater than the increase (of 23%) in world population numbers between those years. In fact, SEEDS indicates that global prosperity per capita peaked in 2007, at $11,720, and had fallen to $11,570 by last year.

On the cusp of degrowth

This, to be sure, has been a very small decrease, essentially meaning that per capita prosperity has plateaued for slightly more than a decade. Before drawing any comfort at all from this observation, though, the following points need to be noted.

First, the post-2007 plateau contrasts starkly with historic improvements in prosperity. The robust growth of the first two decades after 1945, for instance, coincided with a continuing downwards trend in overall ECoE, as the ECoEs of oil, gas and coal moved towards the lowest points on their respective parabolas.

Second, the deterioration in prosperity, though gradual, has taken place at the same time that debt has escalated. Back in 2007, and expressed at 2018 values, the prosperity of the average person was $11,720, and his or her debt was $27,000. Now, though prosperity is only $140 lower now than it was then, debt has soared to $39,000.

Third, these are aggregated numbers, combining Western economies – where prosperity has been falling over an extended period – with emerging market (EM) countries, where prosperity continues to improve. Once EM economies, too, pass the climacteric into deteriorating prosperity – and that is about to start happening – the global average will fall far more rapidly than the gradual erosion of recent years.

Fourth, as these trends unfold we can expect the rate of deterioration to accelerate, not least because our economic system is predicated on perpetual expansion, and is ill-suited to managing degrowth. In a degrowth phase, in which utilization rates slump and trade volumes fall, increasing numbers of activity-types will cease to be viable (a process that has already commenced). Additionally, of course, we ought to expect the process of degrowth to damage the financial system and this, amongst other adverse effects, will put the “wealth effect” – such as it is – into reverse.

The differences between Western and EM economies is illustrated in fig. 2, which compares the United States with China. On both charts, prosperity per person is shown in blue, and ECoE in red.

In America, prosperity turned down from 2005, when ECoE was 5.6%. In China, on the other hand, SEEDS projects a peaking of prosperity in 2021, by which time ECoE is expected to have reached 8.8%. The reason for this difference is that complex Western economies have far less ECoE-tolerance than less sophisticated EM countries.

As a rule of thumb, prosperity turns downwards in advanced economies at ECoEs of between 3.5% and 5.5%, with the United States far more resilient than weaker Western countries, most notably in Europe. The equivalent band for EM countries seems to lie between 8% and 10%, a threshold that most of these countries are set to cross within the next five or so years.

Where China is concerned, it’s noteworthy that, with ECoE now hitting 8%, there are very evident signs of economic deterioration, including debt dependency, increasing liquidity injections, and falling demand for everything from cars and smartphones to chips and components.

Fig. 2

#1567 US vs China

The energy implications

In conjunction with the SEEDS 20 iteration, the system has adopted a new energy scenario which differs significantly from those set out by institutions such as the U.S. Energy Information Administration and the International Energy Agency.

Essentially, SEEDS broadly agrees with EIA and IEA projections showing increases, between now and 2040, of about 38% for nuclear and 58% for renewables, with the latter defined to include hydroelectricity.

Where SEEDS differs from these institutions is over the outlook for fossil fuels. Using the median expectations of the EIA and the IEA, oil consumption is set to be 11% higher in 2040 than it is now, gas consumption is projected to grow by 32%, and the use of coal is expected to be little changed.

Given the strongly upwards trajectories of the ECoEs of these energy sources, it’s becoming ever harder to see where such increases in supply are supposed to come from. With the US shale liquids sector an established cash-burner, and with most non-OPEC countries now at or beyond their production peaks, it may well be that far too much is being expected of Russia and the Middle East. The oil industry may, in the past, have ‘cried wolf’ over the kind of prices required to finance replacement capacity, but we cannot assume that this is still the case.

The implication for fossil fuels isn’t, necessarily, that worsening scarcity will cause prices to soar but, rather, that it will become increasingly difficult to set prices that are at once both high enough for producers (whose costs are rising) and low enough for consumers (whose prosperity is deteriorating). It’s becoming an increasingly plausible scenario that the supply of oil, gas and coal may cease to be activities suited to for-profit private operators, and that some form of direct subsidy may become inescapable.


It is to be hoped that this discussion has persuaded you of two things – the abject failure of ‘conventional’, money-based economics, and the imperative need to adopt interpretations based on a recognition of the (surely obvious) fact that the economy is an energy system.

Until and unless this happens, we’re going to carry on telling ourselves pretty lies about prosperity, and acting in ways characterised by an increasingly desperate impulse towards denial. Many governments are already taxing their citizens to an extent that, whilst it might seem reasonable in the context of overstated GDP, causes real hardship and discontent when set against the steady deterioration of prosperity.

Meanwhile, risk, as measured financially, keeps rising, and the cumulative gap between assumed GDP and underlying prosperity has reached epic proportions. Expressed in market (rather than PPP) dollars, scope for value destruction has now reached $320tn.

Only part of this is likely to take the form of debt defaults, though these could take on a compounding, domino-like progression. Just as seriously, asset valuations look set to tumble, when we are forced to realise that unleashing tides of cheap debt and cheaper money provides no genuine “fix” to an economy in degrowth, but serves only to compound the illusions on which economic assumptions and decisions are based.


391 thoughts on “#156. Actual fantasy

    • It doesn’t tell us, for one thing, how much would be “enough”. Does anyone really think we’d stick to an artificial limit, like 3% of GDP? Larry Elliot is pretty good, but this idea isn’t.

    • I suppose that much like Quantitative Easing, the important measure of helicopter money would not be the quantity of the input but the quantity of the output. When helicopter money fails to make the economy more productive then its advocates will argue that more is required.

  1. First requirement is thinking straight
    Vladimir Putin in an interview with some arabic language media:

    “A renewed arms race between the US and Russia would be bad for the world but Moscow won’t be dragged into excessive military spending, as it has already developed next gen weapons of “unmatched” capabilities, Vladimir Putin said.

    The reason for Russia obtaining those state-of-the-art weapons, despite being only sixth globally in terms of military spending – behind the US, China, Saudi Arabia, UK, France and Japan, is “focused research on priority areas,” he explained.”

    In the US, the political class undoubtedly sees a renewed arms race as funneling ever more money (tax or debt based) into the various political subdivisions of the country and thus a ‘good thing’. The extent of the delusion is almost unbelievable.

    Don Stewart

  2. Hello Dr Tim. Another sterling post.

    Just a thought but have you considered introducing a house rule limiting the number of replies a person may make? 3, 6 10?

    • Yes, I have considered this, and thanks for raising it. This sort of thing can discourage others from joining in.

      Over at Wolf Street, people are asked to ensure that they are not the authors of more than 5% of the total of comments on any article. That makes sense to me.

      I’m also keen on brevity, and, above all, relevance to the subjects of energy, economics and finance.

      I don’t want to be too rigid, but I’d like everyone to restrict their number of comments to a reasonable proportion of the total; not to let comments exceed, say, 30-40 lines; and not wander too far from our three core subjects. The economic situation is, in my view, serious enough to make wandering into side-lanes something we can really do without.

      If these requests don’t get results, I’ll think about placing some commenters into automatic moderation, and then approving only those comments meeting the above criteria.

      Any thoughts welcome.

    • My thoughts: I fully agree with Tim’s remarks about replies. Some ‘replies’ are getting to be far longer than the original article and also wander far off the original topic. Also when I see long, long lists of cut and pastes of other webpages and youtubes I simply skip over them.
      I am interested in comments on Tim’s articles, not other people’s blogs.

    • Thanks Trevor.

      If we’re to do what we do best, we need brevity and relevance. I agree about youtube and links, too. It may become necessary to delete these, if they are less than relevant to what we discuss here.

  3. So, Dr Tim, what to do?

    As a financial adviser, I’m constantly pointing out to clients the risks that abound in the hunt for income. I have always believed that “the purpose of making an investment is the purchase of an income”, but this is becoming near-impossible today, for the reason you explain, that there is little return on capital.

    Pension annuity rates are at all-time lows, yields on fixed income are paltry and dividends will surely reduce in the future as the market “corrects”. Most “investment property” is mortgaged and now increasingly unattractive from a UK taxpayers point of view. Cash offers reducing capital, guaranteed.

    The best performing investment ‘sector’ over the last year or so has been index-linked gilts, for goodness sake!

    Caught between the devil and the deep blue sea, I am, as a practitioner who likes to tell the truth! But, in truth, I’m beginning to tell people to draw down capital and “wait and see” – folly, perhaps, but, what to do?

    • I’m not permitted to advise and, not having had a need to look for these things, I can only imagine how low annuity rates are now, compared with pre-2008.

      In general terms, I think the best bets are things people “need” rather than “want”. Since I’m deeply unimpressed by things “loved” by the markets – example: unicorns and tech – I wonder about UN-loved sectors.

    • Thanks; it was really a rhetorical question. I feel a bit like a crewman on the ancient HMS Skate on Atlantic convoy duty!

  4. Hi Tim

    Thanks for another insightful and thought provoking post.

    Looking at the conventional way of defining growth it is: population increase plus productivity. Looking ahead the increase in population seems in the region of 1%. Looking at productivity the historical situation has averaged 1.8% giving future growth of 2.8%. McKinsey did a study which said that the figures for the last fifty years were 1.8% (productivity) and 1.7 % ( labour growth) which is consistent with your 3.5 %.

    Given the rise in population (1% per annum) your future growth projections must therefore see major effects on productivity due to energy depletion ( down from 1.8% to 0.2 %) as my back of envelope projections suggest. Do I have this right?

    • Thanks Bob and, in general terms, you are right.

      Another (if quirky) way to look at this might be to think of a person who, every morning, walks to a forest and picks 100 nuts. He then carries them home in a sack.

      But this sack is wearing out. One year, an average of two nuts fall out of the sack and are lost. Next year, five nuts fall out – and, next year, eight. He still picks 100 nuts, but his ‘prosperity’ has fallen from 98 to 92, even though we could say that his ‘productivity’ (the number of nuts picked) hasn’t.

  5. “That means that, whilst as purists we might prefer to set out our findings in calories, BTUs and joules, we have to talk in dollars, euros and yen if we’re to secure a hearing. It also means that we need models of the economy based firmly on energy principles.”

    This conflates Apples and Oranges particularly when one talks of Borrowing Value from the future.
    Debt is a claim on future Wealth but not future wealth. If wealth is Surplus energy then Borrowing can only sensibly be expressed as Borrowing Future Energy Streams. Energy Budget have to be expressed qua Energy budgets a subjective value-based currency unit is simply not up to the job.

    The Gulf in understanding and Speaking at crossed purposes inherent in maintaining the Old Financial artifices, and artifices are what they are, will maintain the ignorance of the majority of people. This is I think perfectly acceptable to those of an Elitist world view and Mindset.

    Embodied Energy pricing and circular economy concepts along with DIstributive concepts of political economy and not re-distributive taxation and state-based centralised top-down control mechanisms are what is required. Vested interests are not going to listen anyway Tim, Afterall Turkeys do not vote for Christmas.

    Finally, Interest charged on a dead medium is unsupportable by definition, this is the driver of the Growth requirement it’s the debt-based Financial system, and debt and taxation as a political control mechanism of the masses is something which again Elitist world views are more than comfortable with and simply do not wish to let go of.

    • Hang on a minute – debt IS future wealth, if you’re the person to whom it is owed.

      If you owned £1m of gilts, and the government then said it was never going to pay up, crashing the price to zero, would you not feel just a bit poorer?

    • Tim a Claim on wealth does not necessarily represent Skin in the Game. How people feel about wealth or value is purely subjective. For Objective energy-based economics what is important is actually the Pigou Dalton principle, which is related to Status and taxation/re-distribution tolerance.
      At its root, “status” is related to mating prospects, these are visceral matters of instinct, the Subjective issues around monetary value are far less problematical than Social re-ordering through perceived discriminatory re-distribution of relative status within civil society.
      Energy is a falsifiable measure the Variability and subjectivity of monetary “Values” are pseudoscientific, thats why the conflation is a contradiction of the claimed first principles of energy Economics, That’s just the way it is.
      Under a distributive monetary system based on Energy Credits and not Debt, the redistributive aspects of subjective earned monetary income are less acute and the process of a leveling out as posited by Proudhon in his theory and proposal for a State credit bank as argued with Bastiat is well worth reading both are available on my Blog and Conquest of Dough web site.

    • Status is one of the many issues that I think we need to address as we go further into this. At various times, different metrics have determined status. Levi Strauss and others did interesting work on the status-signalling of foods, for example. At various times, too, ancestral lineage has had more status than wealth.

      These various indications of status have applied either in economically-static societies or in those where material prosperity has been growing. We have few (though there are some) examples of status markers in deteriorating economies.

      On the original point, though, cancelling debts does mean depriving those to whom the debts were owed. This is why, when debt burdens have become excessive in the past, the usual resort has been to inflation – creditors have been ‘repaid’, albeit in money of lesser or even of minimal worth.

    • R.L. writes:
      “How people feel about wealth or value is purely subjective.”

      S.K.-That same inherent genetic drivers affecting status and mating affect ‘feelings’ and thoughts. All are assumed to be physical until *anything* non-physical can be demonstrated, in which case a Nobel is likely.

      R.L. -“For Objective energy-based economics what is important is actually the Pigou Dalton principle, which is related to Status and taxation/re-distribution tolerance.”

      S.K.- “important” to you? I suggest you look at Lotka and Odum’s work on the Maximum Power Principle. It isn’t an absolute law, but the vast majority of humans and other living systems follow it.

      R.L.- “Energy is a falsifiable measure the Variability and subjectivity of monetary “Values” are pseudoscientific,…”

      S.K.- Monetary values are determined by human actions in trade. This is for other currencies as well as for goods and services. Barter served (& still serves) the same purpose. Terms like pseudoscientific are normative. Tim is not conflating. You seem to have another axe to grind.

    • For the greater part of Human History in sedentary societies, the solution has been Jubilee, not Inflation. Inflations are a fairly modern innovation as is, of course, the secular State and Supra-National Government and Corporate monopoly Capital. Since John Law got his innovations adopted by the French court, there has been a considerable memory holing of the Science of Money ( Del-Mar and Zarlenga require mention).
      From the perspectives of Monetary History, the timeline goes back a long-Long way and feudalism and outright Slavery also enters the equation even in the relatively modern era. There is certainly a conversation to be had. Of Course, even the Work of Henry George, well known at the Fin De Cicle is all but forgotten after over Half a century of Hayekian and Chicago School Neo-Liberal monetarism and financialization.
      Regarding Usury, I consider Benthams in defence of Usury to be the point at which the Liberal lobby for Usury to have bamboozled the better judgment of more Conservative heads, overturning a couple of Millenia of religious and ethical thought. Bentham’s Treatise is well worth reading it is an un-requited invitation to Dialogue with Adam Smith who opposed usury.

    • Usury, forbidden to this day by Islam, was once considered to be prohibited by Christianity, too. Jesus did, after all, throw the money-changers out of the temple.

      In fifteenth century England, it carried the death penalty. Henry VIII relaxed this, such that usury was only punishable by death if interest in excess of 10% was charged. Importantly, though, it remained impossible to enforce debt obligations using the law – because you couldn’t expect the courts to uphold a contract which was itself unlawful.

    • Hi Tim, This is a Post dating back to the Greek Crisis and is called The Irony of reading Plutarch, who wrote about Solon’s reforms.

      Sec. II. Why pay court to the banker or trader? Borrow from your own table. You have cups, silver dishes, pots and pans. Use them in your need. Beautiful Aulis or Tenedos will furnish you with earthenware instead, purer than silver, for they will not smell strongly and unpleasantly of interest, a kind of rust that daily soils your sumptuousness, nor will they remind you of the calends and the new moon, which, though the most holy of days, the money-lenders make ill-omened and hateful. For those who instead of selling them put their goods out at pawn cannot be saved even by Zeus the Protector of Property: they are ashamed to sell, they are not ashamed to pay interest on their goods when out at pawn.

      Its great Stuff.

    • From that same ZH article – my emphasis:

      “A system which, according to some, is now more a Ponzi scheme based on force and blind faith than sound economic principle. That notwithstanding, the centralized financial powers of the world know the real score, and that’s why hard assets like gold are hoarded and locked down while everyday, individual residents of these geopolitical jurisdictions are encouraged to spend and spend, going further into debt to prop up ultimately unsound national economies.”

    • “All are assumed to be physical until *anything* non-physical can be demonstrated, in which case a Nobel is likely.”
      “Terms like pseudoscientific are normative. Tim is not conflating. You seem to have another axe to grind”.

      Steven, I suggest that it is perhaps you that have some sort of Axe to Grind.

      Regarding Physicality and the Materialism V Idealism dichotomy that you perceive of, I do not go in for such a dualism it does not affect my own Philosophical system.

      I use the Term Psuedo Scientific in a Popperian sense of Falsifiability. That is Truth Claims based upon Experimentation and repeatable predictions. SUbjective Human value relations are variable and subjective any such Metric claimed for them are both inductive, and circular in their basis and not repeatable by testable experiments as such they are Psuedo scientific within the terms defined.

      The points which I have made are contained and kept within the Terms within Tims excellent article.
      Tim and I have a difference of opinion with respect to how to get the energy Metric into the discourse on the Financial System that is all.

      Tim Says.
      ” That means that, whilst as purists we might prefer to set out our findings in calories, BTUs and joules, we have to talk in dollars, euros and yen if we’re to secure a hearing. It also means that we need models of the economy based firmly on energy principles.”

      Making a procrustean attempt to shoehorn Scientific energy-based concepts of a metrological system based upon Energy Budgets, into the meta-physics of the current FInancialised paradigm is in my view a fruitless exercise. And Tim and I have been discussing this from the very first comments I made on this Blog.

      Steven, you broke off from our separate discussion on other issues at my own blog, in reverance to Tims wishes expressed at the start of this thread I will not link to that here or indeed take the discussion in that direction. I have dealt with the relevant substantive points there. I will only say Electro Magnetism and action at a distance is not Physical yet is testable by experiment.

    • Here’s a line of thinking which I hope you’ll take on board.

      Conventional, money-fixated economic interpretation has failed us, with each new failure compounding the ones before it. The next such failure could be a real horror-show.

      So, in the public interest, we need to urge the case for replacing it with something more scientific – which, for me, means energy-based interpretation.

      This requires us to participate in the debate, as logically and as forcefully as we can.

      We’re only going to make progress if we put our case in terms to which the ‘arbiters’ of the debate – governments, businesses, opinion-influencers – can relate. That means expressing our case in the financial language understood by participants.

      If we say that somebody is ‘£xxx worse off, and has £xxx more debt’, participants can relate to this. Saying that they’re ‘xxx BTUs poorer’ would marginalize what we’re trying to do.

      This is also why we need the maximum number of people to engage – it’s both humbling and encouraging that close to 46,000 different people visited this site last year – and participation will not be encouraged by long comments lacking in brevity and relevance.

    • R.L.:
      Your blog applauds people like Nietzsche and Sheldrake. That is not economics. It is hocus-pocus. That’s why I ceased engaging you there.

      Ask The American Physical Society, The AAAS, The Royal Society, etc. if “Electro Magnetism and action at a distance is non-physical” Energies we don’t understand are not automatically placed in the realm of deities or woo.

      Please go to the Nobel Committee with your imaginary ontological categories! Repeatedly rewinding your tape from your first post on Tim’s blog indicates you are a one trick pony who never gives up.

      Metaphysics is an examination of the unknown; that is an oxymoron. As I posted prior to this response, subjectivity is the result of the embodied past of all living systems including you. You can’t help it, so I’ll not criticize you again for mumbo-jumbo.

      I am not the only respondent who is fed up with proselytizing one’s own blog and theories here. I’m surprised Tim permits you repeatedly use his blog to pump your creations. You have your own blog to do that.

    • Hi, Tim, I agree with you,

      “We’re only going to make progress if we put our case in terms to which the ‘arbiters’ of the debate – governments, businesses, opinion-influencers – can relate. That means expressing our case in the financial language understood by participants.

      If we say that somebody is ‘£xxx worse off, and has £xxx more debt’, participants can relate to this. Saying that they’re ‘xxx BTUs poorer’ would marginalize what we’re trying to do.”

      I would after setting out the terms of reference define the energy Budget in relation to a Stock and flow model of Energy reserves, generation capacity and realistic Every Big that helps as per Prof Sir David MacKays With Hot Air.


      The Oracle link was the reasoning I used to convert the world FInance economy into a KWH basis
      to which I have linked before.

    • Money is a claim of future work. In other words, a claim on a future amount of transformed energy.

      Debt is simply lending that claim on future work. In essence, forgiving the right to make the claim for a given duration in exchange for a potential larger claim down the line.

      From an energy centric point of view, debt is money, because in both case they have no value if the energy required is not present when the claim is “called”.

      So, if one thinks a bit about QE and other helicopter money creation, we can see that this is exactly what one would expect from a monetary POV when the energy to make the claims real starts to get scarce : since present money and debt is conflated with future work in our minds, creating money is conflated with creating future energy (work).

      Which of course is pure fantasy, but a fantasy we have been swiming in for so long that we can’t see it. So long as the energy surplus was growing, that fantasy was a very good approximation of the real deal. Now it is becoming a very wrong approximation.

    • Quite right too @houtskool


      I think David Malone has used the Term in several of his Blogs on Greece, In fact I seem to recall seeing your own comments there too and at Off Guardian.

      Now the claimed Systems thinkers amongst us will be familiar with the concept of Wicked Problems and Convergent and divergent problems.

      The Scientific method is great for Convergent Soluble sort and not so good for the Divergent Wicked Sort.

      View at Medium.com

      on March 9, 2018 at 8:40 am
      Can I ask, politely, why you post so many links here? Speaking personally, I don’t have the time to follow them up, though of course others may. I’m pretty busy and have to plan prettycarefully.
      on March 9, 2018 at 9:36 pm
      Current seeds numbers should tell us enough about where we are heading.
      We have numbers and we have words. Mixing up those doesn’t add anything to the conclusion.
      Its like putting a ‘price’ on gold. In my opinion, dear doc, you can skip efforts putting numbers on words and let the blog figure it out.
      on March 10, 2018 at 5:33 am
      The analysis regarding EROEI and its effect on prosperity potential is one thing, Continuing Economic models are failing for other reasons in addition to available cheaply priced Energy. ( Crony Capitalism is the buzz term I believe)
      Placing all of ones’ analytical ammo into the seeds weapon would be a strategic mistake.
      Another mistake is accepting the starting assumptions and definitions moulded in the Growth Paradigm and applying them to a post-growth paradigm.
      Finally, Seeds is not looking at the embodied energy question which gets very interesting when one considers re-cycling and circular economy, this question gets into use models over ownership models, this speaks to efficiency of energy use and not to some ideological measure of fairness or equality, or indeed some subjective voodoo related to the time value of money.
      Google Procrustes.


  6. Is it possible to do SEED calculations for the different social classes within a country? it seems that the upper classes are maintaining their high energy consumption fueled prosperity by strip-mining the lower classes, through de-industrializing and forcing down wages.

    • It should be possible, though I don’t, yet anyway, have the data to do it. The inference which might be behind the question is one that I can address, though – yes, redistribution is going to become ever more of a hot issue.

    • A way to build a (very) rough proxy would be to do the following :

      Compute C-GPD per capita (average) (already done)
      Compute Median C-GDP per capita.

      Take the ratio. It rough, but it gives you an indicator on which side of the median the growth is going over time.

  7. 3rd Question
    I’ll use my third comment to ask a question. Do you see the 320 trillion dollar ‘at risk’ figure as being a worst case, a median case, or a best case? For example, if the world reacts to the trends irrationally, then almost all wealth could be destroyed (e.g., a nuclear holocaust). A best case, as you have previously described, might involve the deployment of wind and solar along with adaptation of the production system to intermittent electricity. Is the 320 trillion what will happen to us even if we adopt a best case strategy?
    Thanks…Don Stewart

    • $320tn is my figure for ‘excess valuation’ – this includes overvalued assets, debts that can’t be honoured, and other ‘expectations’ (which can range from pension or inheritance expectations, for example) that won’t turn up.

      The mechanism here is that, for any one of a number of reasons, expectations change. Stocks, for instance, then fall in value, exposing debt secured against them. People draw in their horns when they realise that debt owed to them, their expectations for receipts from realising assets in the future, their expectations for the real value of pensions, and so on, all become part of a cascade effect.

  8. Dear Tim,

    Thank you for your insightfull analysis.

    May I suggest that you dare venture into the geopolitical potential consequences of an asymmetric group of nations falling down the net energy cliff.

    Best regards,


  9. A very interesting post Tim.

    Something I have been wondering some a while; I have an open cast coal mine near my house here in the NE of the UK. In getting to the coal they have removed about 70 meters of topsoil. Which seems a lot of effort. And then they have to fill the hole in again.

    The energy expenditure now, compared to how coal was extracted with human labour is interesting. I has to be significantly more now than then.

    32 fully laden trucks leave the site each day. There are maybe 30 workers on site. This clearly wouldn’t have been possible 100 years ago.

    They have one vast excavator which must use quite a bit of diesel – so I’m guessing the price of coal is still significantly high enough for this to be profitable.

    • What we’re talking here is something that Andrew Lees (in a brilliant essay) has called “energy sprawl”. As ECoE rises, the amount of activity – equipment, holes in the ground, area covered – all increase, just to keep energy supply static.

      It would, of course, be interesting to compare the energy used in the machinery with the energy value of the coal extracted.

  10. @Dr. Morgan
    So, if I understand you, 320 trillion is your estimate of what is going to happen, and there is nothing much political leaders can do about? There is no way to lessen the loss. All that can be done is under the heading of Adaptation for A New World.
    Thanks. Don Stewart

  11. Great post Dr. Morgan.

    Given your view of the economy as an energy system, I’d be interested in your ideas about how entropy applies to this system. Beyond the obvious, that is.

    Thanks again for a thought-provoking post.

  12. Actual Fantasy could be the subtitle to an incredibly delusional article that a residential barfly at Moon of Alabama posted. The said article: https://reason.com/2019/10/09/the-economy-keeps-growing-but-americans-are-using-less-steel-paper-fertilizer-and-energy/
    The whole premise of this fluff piece is “Yay! Americans are doing more with less, and they’re better off as well! The economy is still growing!” Except that there is so much omitted that makes it a nonsense. As Tim has pointed out before, this so called growth has only come about by ever increasing amounts of unrepayable debt. Therefore, this effect is only illusory and, that, in real terms, the average American is becoming poorer. I dread to think what happens when we hit the Seneca Cliff..

  13. Since the real economy is an energy system, subsidizing the production of energy means taking energy that would otherwise be “surplus” and devoting it to the production of energy.

    The act of taking that surplus diminishes the prosperity of everyone who is not an energy producer, but I still don’t understand why “taking” in the form or higher prices is different from “taking” by reducing the return on capital. Both kinds of energy diversion suppress economic activity in the non-energy-producing sectors of the economy to the detriment of everyone.

    I re-read your March post on this subject, but still have to ask, “Why is suppression of return on capital better for society than higher prices for energy”?

  14. One surplus question, if you will permit?
    Oil consumption in Russia dropped by 50 percent with the collapse of the Soviet Union. With the magnitude of the financial debacle that your numbers indicate, is the Russian experience as good a guide as any? Can we expect energy consumption, and thus economic activity, to halve in a very short period of time? If so, then Dmitry Orlov’s book on that period in history probably needs to be dusted off.

    Thanks…Don Stewart

  15. Maybe Two Surplus Questions?
    Alister MacLoud made the point to Max Keiser that in 2013 an economist named Kotlikoff calculated that the net present value of future obligations of the United States government were 220 trillion dollars, discounted at the then rate of interest. If interest rates go to zero, there is no discounting and the net present value of the future obligations increases very substantially.

    Do your calculations
    *include promises to pay such as Social Security and obligations such as Medicare as well as pensions?
    *include discounting at zero interest rates. (I have no idea what would be appropriate in a negative interest rate world)

    One thought did occur to me. One way to look at Russia in 1992 is that it was only worth half as much as it had been worth in 1990…since production as estimated from oil consumption had halved. Russia is now worth about what it was in 1990 once again, as its oil consumption is roughly back where it was in 1990. Consequently, we might assume that Russia’s ability to fund government programs was 100 percent in 1990, which dropped to 50 percent in 1992, and has now inched its way back to 100 percent. If the US and other countries sustain a drop to 50 percent, then we could assume a 50 percent reduction in all programs. Of course, across the board is not a good assumption, but it would give us something to start with.

    Thanks again…Don Stewart

  16. I’ve been reading a lot of Roger Pielke Jr’s stuff recently and it introduced me the the Kaya Identity,


    when you talk of ‘decoupling’ you’re referring to trying to reduce the energy intensity of GDP ?

    and by ‘transition’ you mean reducing the carbon footprint of energy by rapidly expanding renewables?

    I’m trying to use the Kaya Identity to get a grasp of the overall picture whilst also suspecting it might have been guiding a lot of policy over the last few decades,

    I’m wondering if there’s been extreme policy emphasis on decoupling, some genuine but mostly fake, in an attempt to avoid the challenge/need to transition,

    writing successful globally marketable IP like Microsoft Windows or Harry Potter novels is real decoupling,
    dodgy financial instruments and faking GDP with spending huge amounts of borrowed money is fake decoupling,
    also deindustrialising and switching to a consumer/service economy where you smuggle the carbon into your economy embedded in imported goods is also fake decoupling, (just moving the carbon emitting to the exporting country)

    the one thing we’re just not doing enough of is ‘transitioning’ so we’ve got clean energy we can safely use to power the real economy and generate authentic prosperity?

    you’re prognosis is ‘they’ will probably push the fake decoupling to new limits in response to the next crash in an attempt to continue to ignore the need to transition to an energy source we can use without frying all life on earth?

    also we still don’t have a viable alternative to fossil fuels on the scale of current energy consumption?

    • First of all, yes, “decoupling” does mean growing the economy without using more energy. A recent report from the European Environmental Bureau debunked this, saying the arguments supporting it are “a haystack without a needle”.

      “Transition” means replacing climate-harming fossil fuels with renewables. Two considerations make like-for-like replacement implausible.

      One of these is sheer scale. I’ve seen a report stating that, to do this by 2050 using wind power, we’d need to install 1,500 turbines, covering 300 sq miles, every day between now and 2050. Alternatively, we could build three new nuclear power stations every two days.

      The second is intermittency. In a partially-renewables system, you can use alternatives when the sun doesn’t shine and the wind doesn’t blow. In a wholly- or mostly-renewables situation, you would need enormous battery back-up. It’s been calculated that this would cost 10x the cost of installing the capacity itself.

      Put these two together and ‘saving the planet’ is likely to require de-growth. It means that promises of “sustainable growth” are false.

    • An easier way of dealing with intermittency is to store energy as heat. This can be done as an end-use or it can be integrated into a power generation cycle. Excess electricity is used to generate heat that is stored in hot rock or concrete. The heat is then used to raise steam in a super-critical cycle during a wind or solar lull. When temperatures get too low during occasional deep wind and solar lulls; biomass and small amounts of coal are burned to bring the steam up to full temperature. Because deep lulls are only occasional, relatively little fuel would be needed.

      Whilst the efficiency is lower than batteries (~50%), much more energy can be stored far more cheaply in bulk materials heated by resistance heaters. Hence, this option is likely to present lower aggregate cost, even though efficiency is somewhat lower than batteries.

  17. Has anyone else noticed that Greek government debt now trades at negative yields? Paying Switzerland or Germany to look after your money is one thing – but Greece?

    • I saw that a week or so ago, and thought I shared it. This blog permits responses, but not new posts. It is sometimes tricky to find a “hook” to reply to in cases like that. I did share it with other recipients and email lists.

    • Yes it’s surreal. Negative rates amount to taxing lenders to subsidize borrowers.

      It’s a kind of shadow bailout where entities able to get loans at negative rate can be kept alive artificially long.

      It seems to me that we are moving from capitalism to some type of strange patronage system based on the level of access to financial markets.

      My question is how long until something brakes ? Once the musical chair games ends, the players holding negative loans will look like sad pandas.

    • Distortions by central banks. The ECB in this case. Trying to avoid reality by all means.

      When southern Europe pays market intrests, the system goes down, and out. We both know that.

      Seems things are worse than Seeds tells us, that is because our current financial and political system is leveraged like a trebuchet on steroids. Difficult to translate through Seeds, impossible if i may say.

      The mindset of the masses must be kept in place or there’s trouble.

      Trouble like Greek citizens throwing Africans off their islands into the sea. Or something like that.

      Central banks are an extension of political promises that are failing.

    • Surreal is absolutely true, if we’re talking the financial system.

      What I try to do, using SEEDS, is to see through to the reality of an economy that’s really an energy system. Drawing a clear distinction between the ‘real’ economy and the ‘financial’ one seems the only way to observe the surreal from the standpoint of the reality.

    • Thanks doc, for reply. Seeds puts some serious and much needed numbers on where we are heading. Quite unique imho. I just think we have to leverage Seeds like financial markets, in our assumptions. One sneeze in the S&P and a hundred thousand Americans cut billions in spending. We cannot afford any downsizing with this kind of leverage.

      But we need to know what we are talking about, Seeds provides in this. Without those hard facts we would have boatloads of deniers aka economists.

  18. Put these two together and ‘saving the planet’ is likely to require de-growth. It means that promises of “sustainable growth” are false.

    The solution to ‘saving the planet’ is to remove the species that is destroying it.

    Actually the planet will be fine no matter what we do to it in the short time we as a species have left on this splendid ball.

  19. Housing
    One of the collapse items that I remember from Dmitry’s book is the issue of housing. Everyone in Russia could lose their job, but they didn’t lose their house. All the housing had been owned by the government, so the government simply deeded all the houses to the occupants. In the US, where the great preponderance of houses are owned by financial institutions and the citizens occupy them courtesy of mortgages, even a modest financial collapse such as 2008 has the potential to both bankrupt the financial institutions but also to put hundreds of millions of people on the streets.

    I doubt there has been much, if any, thought in Washington about this.

    Don Stewart

    • I’ve considered this issue, and think it merits debate.

      Let’s say – in the US, the UK, Spain or any Western country that you care to name – that the mortgage system implodes, and house prices crash. Millions can’t keep up the repayments, and millions have mortgages lower than the much-reduced value of the property.

      Theoretically, banks could foreclose, take over properties and put them up for sale. But there a very few, if any, buyers. Unleashing huge sales volumes thus crushes prices still further. Moreover, banks would now have to take huge losses against carried values if they crystalised these losses.

      The better solution might be to convert homes from owned (a euphemism anyway, where there’s a mortgage) to rented.

  20. Hello Dr. Tim,
    After years of reading your work I am still in admiration of your skills as a wordsmith. Your texts are so easy to read and you make complex issues easy to understand.
    Getting into the subject matter, I feel that something has already broken, and that the downward spiral has already commenced. The Titanic may not yet have sunk, but many can feel that She is definitely taking on water.
    What you are asking for ( Economic Rationality ), is in today’s mad world a very big ask indeed.
    In fact I feel that few if any, are up to it, the bulk of the population are too busy painting their toe nails to care about the future of mankind. I now understand why Nero fiddled while Rome burned.
    We are at a tipping point. Our Economic model has failed, which in itself is a big, big problem. However, this is complicated even further now by Climate change which is putting a limit onto our primary sources of energy.
    Now I personally do not buy into some sixteen year old’s idealism, climate change is an intrinsic phenomenon which is ongoing, with or without human interference.
    But I do believe that less pollution is absolutely essential and that rampant consumerism must stop.
    We do not necessarily need to give up on technology altogether, but some serious lifestyle changes for everybody are going to happen, whether we like them or not.

    • Thanks, Johan. We are indeed at a tipping-point. I share your grave doubts that rationality can prevail.

      But, this said, what else can I, or we, do? Do we give up – or simply put our knowledge to our personal advantage?

      I really think that we have a duty to try to influence the debate for the better.

      Additionally, if both de-growth and financial collapse are looming, there seems a likelihood that these will be cathartic, forcing everyone to re-think where we’re going.

  21. “in good faith”?

    That’s another fantasy. They are liars & cheats who will never change. History is crystal clear on what reduces inequality. The only thing the average person can do is slaughter them, AKA revolution which has no guarantee of working. The other factors are as equally ugly & deadly.

    The Only Thing, Historically, That’s Curbed Inequality: Catastrophe

    Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.


    You are correct about the energy, but your child like faith in the goodness of humans is getting old. You write like a typical over privileged white westerner who has never known hunger or fear of real physical harm or poverty. You sound like an elite sycophant apoligist. That makes you one of them.

    • First off, I’m not denying that there are liars and cheats in high places – as well as some who have acted in good faith. Where the liars and cheats are concerned, I’m just not persuaded that this is vastly worse or different now than it was in past eras. I also believe that there are idiots, and the ill-informed, as well as the liars and cheats.

      Second, nobody who knows me or my track-record would call my a sycophant or an apologist for the current incumbency. I’ve said that ‘regime change’ is both desirable and inevitable, and have said the same about redistribution. There is no case to be made for a tiny minority of billionaires whilst huge numbers are in poverty, and millions more are ‘struggling to keep afloat’. I also wrote a report, in my City days, called The Dick Turpin Generation, highlighting the consequences for the young of the greed of their elders.

      But this doesn’t necessarily mean that revolution, at least in its violent, 1789 or 1917 form, is the best solution. Was a wrought-iron ‘tree of liberty’ in the place of every French town, sitting beside a guillotine used by many just to settle old scores or eliminate inconvenient creditors, better than the rule of Louis XVI?

      I’m not suggesting that we can educate or reform the elites – but we might be able to show them that their best interests lie in reform.

    • Thanks for your sanity, Tim. Unfortunately population has doubled in my son’s 45 years, tripled in my 74, quadrupled in my mother’s 95…and that has greater %s at each other’s throats as we get deeper in overshoot. When TSHTF, I expect even nastier predation. Our progeny likely face troubled times.

    • Our host’s polite and patient reply to your entirely unwarranted and ignorant rudeness says everything about him, and why we come here to discuss serious matters IN A CIVILIZED MANNER.

    • “I’m not suggesting that we can educate or reform the elites – but we might be able to show them that their best interests lie in reform.”

      That is really all that can be attempted.

      Supporting arguments for elites to be proactive in their own reformation:

  22. Aren’t you falling into the same trap you’re decrying here? If the economy is an energy system (which it surely is) then there’s no such thing as “pulling consumption forward through debt”. We obviously can’t consume next year’s energy today.

    The only thing debt is doing is messing with the _distribution_ of today’s consumption. Whoever can take on more debt gets to consume more of today’s energy – whoever holds the corresponding IOU expects to be able to consume more energy when it comes due but will be left holding the bag.

    Otherwise, excellent article and thanks for your insights!

    • I don’t think so, though it’s a good question.

      We’re not pulling physical consumption forward – obviously, that’s not possible, except where consumption takes place at the expense of investment.

      Rather – and remembering that this is all measured financially – we’re manipulating the supposed value of economic output, and simultaneously manipulating the supposed value of the economy of the future.

      This is such an important topic that I might well address it in a future article.

    • IMO one can pull consumption forward through debt. Just use debt to finance consumption rather than maintenance and infrastructure. Infrastructure is a type of energy store that decays. Slower if you maintain it, faster if you don’t. If a country faces energy troubles like rising ECOE, I would expect infrastructure maintenance to be cut back since it’s a good way to borrow real energy against the future.

      Thinking a bit deeper, it seems to me that if the lower quintiles lose prosperity, and the upper quintile invest in paper assets and companies use cheap debt for stock buybacks instead of expansion (since there is weak demand), then one can have the mix of increasing debt + decreasing real GDP all the while the measured GDP seems to increase.

      Isn’t that an explosive mix ?

      Surely, if there was actual demand, we should see expansion with rates that low. But we don’t. And so the energy use does not increase (this can be see in OECD countries energy use).

      Incidentaly, AGW is the same deal : a way to borrow energy againt the future. You get 10 units of energy now, but the suckers 50 years down the line have to repay 5 units of it in climate change induced damage.

    • Very good points, JH.

      The question of ‘pulling consumption forward’ is something I need to address, or in some senses to clarify.

      We’re really comparing two things here. The first is a ‘real’ economy, determined by energy, and the second is a ‘financial’ economy, which, I assert, is a worsening misrepresentation of the ‘real’ one. This ‘falsification’ may involve attaching unrealistic prices/values to large swathes of activity.

      As you rightly say, we can increase consumption by neglecting maintenance, and reducing real investment achieves the same thing. Something very striking emerges, too, when you look at the composition of “growth”.

      Taking the US as an example, the aggregate contribution to growth over the past ten years from increases in manufacturing, farming and the extractive industries has been close to zero. All of these industries’ output are hard-priced, on international markets. The vast majority (well over 90%) of “growth” has come from services that Americans provide to each other, with finance, real estate and government contributing the largest slices. To what extent is the injection of credit falsifying these valuations?

      Let’s imagine a real estate agent taking a commission of, say, 2% when selling a house. When house prices are, say, $200,000, he or she earns $4,000 on each transaction. If prices rise to $400,000, that commission becomes $8,000. But the work – and, if you like, the real value – added by his/her activity hasn’t changed – it’s just been repriced.

      The extra $4,000 is paid by the homeowner – typically the seller, but almost every participant in housing transactions is both a seller and a buyer. Where does the homeowner find the extra $4,000? Ultimately, by adding it to the mortgage.

      So, in this simple example, the availability of additional credit has had at least two effects. It has driven up house prices, thus increasing the commission – and it has provided the money with which to pay this extra commission.

  23. The pendulum swings, from currencies to money. From money to currencies.

    Its almost twelve am. Money will take its rightful place again, in harmony with reality. As it should be.

    Overshoot is a bitch. Readers, everything will be turned upside down. Everything.

  24. Hi – Do you see gold as a good money? as there is a large energy input required to produce an ounce if gold.

    Also (putting aside all the other things that might increase gold) do you think new environmental policies that various export countries are implementing, such as Carbon neutral by 2050 will push up the price?

    • Gold has no price. It is the price.

      I’m not telling you to buy some here. I own some. Read and think. Then make decisions.

  25. One option that may allow quite rapid build-up of nuclear power, is the fusion-fission hybrid reactor. The idea is to use nuclear fusion to generate fast neutrons, which then fast-fission thorium or heavy uranium, without the need for breeding. Given that most of the energy is coming from fission, the fusion reaction does not need to reach breakeven. It is a source of neutrons, rather than a source of energy, which is technically easier to achieve.

    Click to access Fissile%20and%20Fusile%20Breeding%20in%20the%20Thorium%20Fusion%20Fission%20Hybrid.pdf

    The critical advantage of a hybrid over a standard breeding cycle, is that we are not limited by doubling time. In a conventional fast breeder reactor, twenty years may pass before the breeder can produce enough excess fuel to start a new reactor. Not particularly useful if we need to build capacity quickly on a global scale. A hybrid like the one described, would generate power itself and would produce extra fissile material for light water reactors. A single hybrid would probably provide enough fuel for 3-4 light water reactors built on the same site. A half a dozen hybrids might be sufficient to power a country like Britain.

    Although not discussed in the article, a uranium-plutonium fuel cycle would work better than thorium, given that uranium-238 and plutonium-239 generate more neutrons during fast-fission. And neutrons is what drives fission and breeding of new fuel.

    Western countries need to stop worrying about equality and diversity and get on with the job of building infrastructure like this. How is it that we could build things in the 60s and 70s that we can’t build now?

    • Now stop being silly, considering such trivia: you must know it’s far more important to re-brand one’s country, in order to convey it’s contemporary ‘creativity, openness and diversity’, than to pay attention to such matters.

      We salute the Dutch political class, bold leaders in this vital endeavour!

      Farewell ‘Holland’, hello ‘Netherlands’!

      Just think of the time devoted at the highest levels to such nonsense, not to mention the consutancy fees.

      Will such re-branding have a discernible impact on GDP, food and energy security? We shall have to wait with bated breath to see……

    • TonyH,
      Well, Feminism happened.
      They embraced Diversity and attacked perceived inequalities and forced everyone else to either join in, or to be denounced as a Faschist.
      Standards slipped.
      Taking part was more important than winning.
      Social sciences were put on a par with real sciences.
      Of course, coming off the Gold standard and spending money that we did not really have allowed such madness to proceed unabated. The financialisation of the economy allowed society to entertain all manner of hare-brained ideas as there were no longer any monetary constrains on things.
      Anyway, I expect that in modern day Britain, there are now not enough trained scientists and engineers capable of designing and building a new nuclear reactor.
      I think the UK might well need to go eat some Humble Pie, and ask the Russians to do it for them ( practice saying: “пожалуйста, очень прошу !” – Please, please, pretty please ! ) .

    • Better get building then as it will require at least one reactor to be built every fifty days in the UK for the next thirty years to replace coal, oil and gas (when calculated in Mtoe).

  26. @Dr. Morgan and Bendith Fawr
    Jim gets up in the morning in his energy consuming house, eats some energy consuming food, and goes to work using energy and gets paid in dollar bills (which are essentially energy free) in the expectation that he can use those dollar bills at some point in the future to purchase goods and services produced using energy. He stops at the grocery store on the way home and exchanges some of his dollars for food which required energy. But he has some dollars left over.

    Betty would like to go on a Caribbean Cruise, using energy. But she doesn’t have the money to pay for it. So she borrows Jim’s dollars and gives him an IOU.

    Fortunately for Betty, but unfortunately for Jim, a renegade economist points out that the Emperor Has No Clothes, and the value of the currency crashes and no one will do any work to give Jim what he expected to get in exchange for his now worthless dollar bills..

    Looked at from the standpoint of a renewable economy…one which generates today the conditions for its own replication tomorrow…declining energy is a Spectre of Doom. If energy is declining then the economy will only be able to reproduce a fraction of itself tomorrow. (I won’t go into one and done economies…apres moi le deluge).

    BUT….does the economic turnover and the creation of money bring forth its own supply of energy? That is the Faith of the Economist. That is the crucial question, and the dividing line between the physical realists and the post-modern economists. Even if Jim has spent all of his earnings on food, could the government or banks simply create the money that Betty needs to consume energy on the Caribbean cruise, and likewise the energy companies would produce the required extra energy in return for money from the cruise line?

    A realist will also ask the question: Is Jim using more energy to produce his work than the energy required to produce the energy he used. If the answer is ‘Yes’, then his lifestyle is unsustainable (unless he can appropriate energy from others). If the answer is that he is producing products and services which will incentivize others to produce the energy he required and that producing activity yields a surplus, then the economy can grow. Likewise, if he can appropriate energy from others through force of arms, he can sustain his own lifestyle at the expense of the losers, giving the illusion of growth to those in the winning countries.

    Economists may also perceive that the production of hedonically adjusted GDP is not limited by Energy. We can disembody production because everyone is just sitting at a terminal moving characters around a screen and being rewarded with chemicals in the brain, or we can ‘green’ the production process.

    I see Dr. Morgan’s empirical finding of limits to ECoE by strata of countries as answering those latter questions in ways complementary to EROEI studies, but more comprehensive. We do get some clues. I would argue that subsidizing energy use is hopeless (the path taken at present by most countries…Canada supposedly spends about 1600 dollars per year per capita in subsidies). If the economy is declining, we need to consider rationing…e.g., kill Las Vegas to allow more energy to be used by the food industry. In effect, we would be moving the ‘high tech’ countries back in the direction of ‘emerging economies’ in terms of lifestyle using central planning (Five Year Plans?). We also need something other than debt as money to use as a medium of exchange and store of value. I don’t rule out, in principle, the notion that investing in Mars Colonies or new Nuclear technology might restore the Sustainable Economy…but I’m skeptical.

    Questions around the mechanics of fast collapse of the ‘growth system’ are beyond what I will attempt here. I suggest that Orlov and Kunstler may have some clues.

    I do not have an answer to the demand to explain everything in terms of dollars. If I go into the coffee shop and patiently explain to smart people that the dollar bills they have in their investments are actually not worth what they think they are, I will be challenging their faith in God. Dollars were briefly challenged in the US during the Civil War. The Union took time to recover from the Greenbacks, and the Confederates lost everything in Confederate money. But the long trajectory has been that money was functional. 2008 was a brief period of introspection, but now Wall Street seems to be totally convinced that ’the Fed has our back’, and ‘markets can remain irrational longer than you can remain solvent.’ If Dr. Morgan can succeed, I will be in awe of his powers of persuasion.

    Don Stewart

  27. Re: the question of what can people who are interested do now if the elite wont listen and we don’t have the power to make them. We can educate others only by setting an example when boosting our own resilience to the incoming volatile insecure times, which will totally change our way of life.

    In the poor world, never far from chaos, countries will descend into endless wars as in south sudan already, driven by overpopulation and culture. (that was how they always lived throughout history)

    In our world, where we are used to the rule of law and also tend to feel entitled to the right to earn or receive enough income to survive, we are also overpopulated with respect to the amount of land we have to grow food and supply energy, (as well as cut off from our own ancestral land for the most part) so the transition will come as more of a shock.

    The least painful option we have therefore is to radically change our way of life to something more akin to 2 or 3 centuries ago, like life on a frontier. This lifestyle will expect constant volatility with extreme events too and build mechanisms to deal with it as well as possible. Extended families will have to live in communal homesteads with division of labour and benefiting from the advantage of communal defence, labour, knowledge, insurance and energy savings. Those that do it well and cultivate good relations/co-operation with like-minded neighbours will survive with seriously hard work. There will be few luxuries as we know today, people will have to live with the flow of nature, like activities tracking daylight hours to cut energy needs.

    A concurrent population crash will still be inevitable though because the majority will resist reality to the end to avoid pain and their actions will affect those who are capable of change, but for the most part, it should be quick, because poverty kills fast. Even if the healthcare system alone falls apart in a country in chaos today, while there is still enough food, life expectancy can halve in a couple of years. Just with no antibiotics or vaccines, even infections from a scratch can mean quick death. This can be seen in places right now like Yemen, it’s not a guess.

    • Thank you, Guy, you put this very well. I don’t think, in the circumstances you describe, there will be many billionaires still around.

      What you say here underlines what I regard as an obligation on us to press both for reform and for preparation, doing so by presenting the facts.

      It needn’t be quite as bad as you describe it if we plan ahead – but, if we don’t, it will be.

    • Quite right about higher mortality, but really not at all terrifying seen rightly: death as such is not the worst that life throws at one, by far. Our ancestors lived infested with parasites, internal and external,and in a sea of disease and incurable conditions – we will return to that, clearly.

      But even in the midst of disease and war one can set a good example of courtesy and consideration, and be a good neighbour – although we would need a mechanism for eliminating stubbornly bad neighbours, as all societies have had before the advent of universal rights to be supported by society regardless of how you act (one of our principal problems at present in the West).

      The hard fact, abhorrent to liberal sensibilities and sentimentalists, is that not all people are of equal value, or innocuous, and it’s not just the selfish elites who cause harm to others: on a daily basis, most harm is caused by the poor, stupid, psychopathic but clever, and malevolent, who make up the gangs no one seems able to control now even in conditions of comparative stability.

      If the institutions of the state weaken even further in a permanent economic crisis, they will have a field day with harmless citizens, the old, the weak. We can expect very much more low-level violence,and I would say kidnappings as a frequent occurrence -look at Latin America, Africa, the Middle East.

      The rich will certainly be hiding, but not form the 99%, but from the professional gangs who will hunt them as they did in Italy in the ‘Years of Lead’.

      However, as to how we should live, the self-reliant, low-consumption, multi-generational homestead farming/craft life is precisely that which industrialisation, based on fossil fuels, and mass-urbanisation, have almost eradicated in most advanced societies.

      In fact, civilization itself has worked against them for thousands of years. Even the psychology of self-reliance which survived the way of life has been eroded greatly since WW2.

      My grandmother was born into that world,unchanged since the 17th century at least, and it’s all gone now. Moreover, big business and governments simply do not want citizens living like that,and the structures of commerce, taxation and so on – everything in fact – work against it.

      Even now, the last, tough, mostly elderly small farmers,of the Pyrenees, working on land they have owned for centuries, are dying out, the economic pressures are simply too great. Same in Britain, where the Vegans and Greens want to eliminate the sheep farmers and mixed family farms.

      I phrase this aspect of civilizational progess as: ‘Kicking out the lower rungs as you climb a ladder’.

      It’s a long way down, and you can’t fix in new rungs as you descend………

    • I might be one of few list members in New England, US. We are lucky to still have many small farms: some dairy, many agricultural, some meat or poultry animal raisers, some tobacco (still), some organic, some specialty cheese makers, etc. Local foods are healthy and delicious.

      Fossil fuel is required in nearly all as far as I know. Electrical grid too. There are some off grid homesteaders but I doubt many are cash crop farmers. There are farmers markets in most towns, all accessed by trucks and cars.

      The % of the population having the skills and physical fitness to do subsistence farming, with fishing and hunting perhaps too, is quite small. A decent % have wood stoves, but few cut their own wood. If the grid fails, water would be an immediate issue for most. All in all, not sustainable.

  28. Excess Baggage
    I’m afraid I am over my allowance, but I would like to point out that there is frequently some good news even in the darkest night. In the US, a new study says that 91 percent of adults and 69 percent of children are ‘overfed’…that is, we are developing metabolic diseases from Alzheimers to Heart Disease to Diabetes to Cancer. That is the main reason medical costs are skyrocketing and Health Span is decreasing. Indeed, if we define ‘health span’ as the absence of chronic disease, we are now down to the teenage years in terms of the average American. Our grandparents had a much longer health span…if they survived infancy. The crash of the industrial economy has the seeds for a return to a lifestyle which conferred on us a longer health span. Let us hope that we can follow the example of Cuba and also achieve low infant mortality even with low incomes.

    Exactly how does our modern lifestyle cause us to be ‘overfed’. I’m going to approach it from the direction of ‘what does one need to do to avoid being overfed today in the US?’ This is a note I sent to an MD researcher and instructor last evening. It is speculative on my part, but it is based on some careful listening to cutting edge researchers in the field:

    Dr. XXX
    I hope this is the last time you will ever hear from me. I was in your Epigenetics class a few weeks ago.

    A penny has dropped for me in terms of some things you said and other research I have heard about. For example, you said that a team in Washington have figured out how to read the microbes in the gut based on blood tests. Emeran Mayer, in Perlmutter’s webinar, says that the metabolites produced by the microbes are extremely important. Emeran says that the microbes in the gut communicate with all the distant organs, and are important in metabolism. Leo Galland says that 90 percent of the chemicals in our blood are made by the microbes in the gut.

    I could not begin to describe exactly how the metabolites control something like glycemic response, but I can certainly suspect that it is true. My guess is that the metabolites impact the ability of the muscle/ liver/ fat cell system to either accept and store energy which is in momentary surplus, thus affecting the spiking or not of blood sugar. So we have not only the fat storage profile of the organs, we also have the interaction with the metabolites.

    IF, we have
    *small amounts of fat stored in the muscle/ liver/ fat cell system due to calorie restriction relative to metabolic rate
    *healthy gut microbe population as measured by diversity scores
    *absence of leaky gut
    THEN we shouldn’t have problems with metabolics
    IF we are eating real food in a diverse fashion such as the Mediterranean diet.

    We can also see how the Washington team works backward from the metabolites in the blood to the composition of the microbes.

    Sorry this took me so long to work out.

    End Quotation. Many, many things in modern society work directly against the healthy gut, including supposed miracles such as antibiotics (killers of microbes), sedentary societies, high energy-density food in abundance, high stress levels, poor sleep, pervasive toxins, etc. If the chain of causation is as I have described it above, we are just beginning to figure this out. Our ancestors knew nothing about the causation in terms of science, but they were living in an environment they had evolved to live in. Wisdom on our part would involve sorting the wheat from the chaff in terms of what we try to take with us as we move backward.

    Don Stewart

  29. So, do we need a New Economics, that fully takes into account energy flows as the basis of all civilization and economic interactions, and rectifies this absurd and irrational assumption that ‘energy is merely an input which can always be substituted’?

    Moreover, a New Economics that will be able to guide us adequately in a situation which will be inevitably characterised by reliable, viable energy supplies being replaced by unreliable, intermittent flows much diminished in both quantity and quality?

    All in a context of very great political and social turmoil…….

    Can it be done? Economic science that finally reflects physical realities?

    • As ‘New Economics’ won’t obviously benefit the super-rich (fiat-money), it will likely be difficult. Relative advantage (status/mating/privilege) is in the genes. The greed/power tail of the Bell Curve is composed of those most successful at that. They don’t voluntarily give up advantages. System failure (if not complete crash) would likely soften their resistance. (many bonds and stocks go to zero; majority of mortgages defaulted, but repossessions stopped by government or armed resistance…)

      An energy based currency-economy is rational, but expect the same types to attempt to game that as well. It is difficult to envision a desperate, superstitious, tribal, overshot species coming together to organize a new system with agreed upon controls. The UN can’t control invasions of sovereign nations now! (been so for many decades)

    • Haven’t we always had the ability, to model what goes on around us in this way? Anyone with a high school education in physical sciences can technically contemplate these concepts.

      Isn’t it more the case that studies such as Limits To Growth, Biophysical Economics, Surplus Energy Economics, Nate Hagen’s Reality ‘101’, Peak theories, etc, at odds with the majority’s wishes for the future, and the story we like to tell ourselves, our dominant cultural belief. ‘The Myth of Progress’?

      The strength of currently popular “economic ideas” seems to me to not me in their technical arguments, but in there ability to prop-up the Myth of Progress.

      People always seem to ne looking for an ideological prop to support their other beliefs, and expectations, however unrealistic they are.

      Maybe we need the Myth of Progress to naturally die, through continual unmet expectations, before these old but “new” ideas can become popular?

      These ideas were initially of interest to me because they help me make sense of why things aren’t turning out the way I thought. They help me craft a story that makes me feel better about this situation, “it’s not me, it’a increasing ECOE.”

      I anticipate that many others will take interest in these ideas over time as their expectations are not met, and there existing beliefs challenged.

    • In a sense, we could always have worked this out. But this reminds me of a Tory leader (Disraeli) responding to a particularly ingenious budget from a Liberal chancellor (Lowe) – “but we could have done that – if we’d only thought of it!”

      For roughly two centuries – say 1790 to 1990, for simplicity – growth was real. Energy supply increased, through reach, scale and technology. This volumetric increase was leveraged in our favour by falling ECoEs.

      This was more than enough time for us to think of growth as “normal”. It’s in human nature to extrapolate from the past into the future (‘house prices have increased by 5% annually for the past ten years, so they’re sure to grow by 5% annually for the next ten’). Extrapolation is in action all around us – it’s the ‘logic’ that informs the plan to expand Heathrow, for example).

      In, say, 1959 rather than 2019, nobody would have bothered to challenge the reality of growth – because it actually was real.

      So the growth narrative has been ingrained, and is critical to vested interests, too.

      Thus, for say 20 years, we’ve been faking growth – not just because it’s absence is ‘unthinkable’ in the political sense, but ‘unthinkable’, too, in that most people are unable to think it.

      It’s been said (I don’t know how correctly) that, when the first European ships arrived in Central America, locals standing on the shore could not see them – their eyes saw them, of course, but their brains could not process what the optic nerve sent, because the image was outside the range of the credible.

      True or not, this may be analogous here – so, instead of “why has growth stopped?”, the thinking might have been “growth must be there, it always is – so why can’t we see it?”

    • “…so, instead of “why has growth stopped?”, the thinking might have been “growth must be there, it always is – so why can’t we see it?””

      Possibly, I never really thought about it from that perspective. If this is the case, it is quite scary.

      If there was a unexpected step-change in a situation, it would be prudent to consider that your monitoring system has suddenly failed, before considering other factors.

      However official figures for growth, say for example in the UK, have been on a downward trend for decades.

      Does this suggest wilful ignorance, rather than excusable ignorance?

  30. “Money”, by Philip Larkin
    Quarterly, is it, money reproaches me:
    ‘Why do you let me lie here wastefully?
    I am all you never had of goods and sex.
    You could get them still by writing a few cheques.’
    So I look at others, what they do with theirs:
    They certainly don’t keep it upstairs.
    By now they’ve a second house and car and wife:
    Clearly money has something to do with life
    —In fact, they’ve a lot in common, if you enquire:
    You can’t put off being young until you retire,
    And however you bank your screw, the money you save
    Won’t in the end buy you more than a shave.
    I listen to money singing. It’s like looking down
    From long french windows at a provincial town,
    The slums, the canal, the churches ornate and mad
    In the evening sun. It is intensely sad.

    a very good Chris Hedges piece on Truthdig,
    The Age of Radical Evil.

    “These architects of radical evil extract the coal, oil and gas, poisoning our air, soil and water, while demanding huge taxpayer subsidies and blocking the urgent transition to renewable energy. ”

    “Corporate culture serves a faceless system. It is, as Hannah Arendt wrote, “the rule of nobody and for this very reason perhaps the least human and most cruel form of rulership.” It will stop at nothing. Anyone or any movement that attempts to impede their profits will be targeted for obliteration. ”

    But who are those who resist? Where do they come from? What historical, social and cultural forces created them?

    They too are familiar. They are Denmark Vesey, Nat Turner, John Brown, Harriet Tubman and Frederick Douglass. They are Sitting Bull, Crazy Horse and Chief Joseph. They are Elizabeth Cady Stanton, Susan B. Anthony and Emma Goldman. They are “Big Bill” Haywood, Joe Hill and Eugene V. Debs. They are Woody Guthrie, Martin Luther King Jr., Malcolm X, Ella Baker and Fannie Lou Hamer. They are Andrea Dworkin and Caesar Chavez. They are those who from the beginning fought back, often to be defeated by this radical evil but knowing they were called to defy it, even at the cost of their own reputations, financial security, social standing and sometimes their lives.

    • While many may agree with your declaration and elucidation of evil, those are normative evaluations. The Bell Curve has a greed/power tail as well as a voluntary simplicity one. The drivers are biological. Societal feedback can work to manage the situation, and it is easier in groups of a few hundred including kids and the elderly than in those of tens of thousands and larger. Group responsibility is operative in social mammals. Feedback and knowledge is diluted by scale.

  31. Thanks for your new post Tim. I must admit I’ve tried to stay away for a while because I find the reality of your research hard to take sometimes – but I’m always drawn back because the papers I read (The Telegraph – Guardian) sometimes start to skirt around alarms you’ve raised but don’t seem able to understand the economy as energy based.

    They do of course write about the negative effects of oil price rises but still seem to think that turning on the monetary taps is the answer.

    From all your posts and the 1000s of readers comments on here we know where we’re headed and what should be done – but are powerless to invoke any real changes.

    You know already that letters I’ve written to my MP referencing your work just get forwarded to a Government department and disappear.

    So if we cannot change anything and the people who govern us are either stupid – indifferent – or too afraid to admit the truth – what can we do?

    • There is another aspect to those who govern us Donald, as our local Tory MP gave away not long after being elected. She was selected precisely because she could be relied upon to support and continue business as usual. From an investment banking background, and funded by (amongst others) private healthcare companies, her salary and whole position in life depends on her sustaining BAU. Where is the incentive to consider ideas discussed here, especially when the crony club of business, finance and politics is all suborned in that direction too and contributes to the self-reinforcing groupthink? Personally I would love to see Dr Morgan’s work a mandatory part of MP induction, be interesting to see how quickly the big vested interest lobbying would be wheeled out with a counter-information and discrediting campaign.

    • Yes you’re right Jackie – Tim would become a marginalised outcast eventually ending up in the UK equivalent of a Chinese thought correction facility.

    • No sense in getting down about things Donald: you are doing a good job trying to raise wider awareness.

    • Thanks – it’s a question of getting people to understand that money – in any of its forms – has no instrinsic value.

      This was one of the first things taught to me in my economics class – of course back then we were a World away from all the financial manipulation with complex maths based instruments we use now.

      From this site I guess we’re pretty prepared for the next shock but so many will be walking around with surprised looks.

  32. So many questions about the economy/environment. Why not do what I did circa 1970? If you have a clear question then formulate it in your mind and keep returning to it; my background is in engineering and that is how I solved all those maths problems up at the University, often while out for a bike ride the solution would just pop into my mind. I could of course have just asked someone for a clue but what would have been the point in that?

    So on starting employment, at the age of 24, I had lots of questions, but of relevance to Dr. M’s work the major one was “Surely the world was not going to splurge all of its ff. endowment in 30 years on the hope that fusion or some such would come along to keep the show on the road, that would be just crazy?” Now I knew I shouldn’t ask for clues from anyone partly because what would be the point in that, partly because I wouldn’t have known who to ask and partly for fear of social isolation( i.e. being thought a complete nutter- not for the first time I was confronted by what I now know to be a very small Overton Window)

    So the Big Question, was I crazy or was it Society? And the answer? Big drum roll—- neither, cos although it seemed to me crazy, it is in fact Society that gets to say what is crazy or not and what you are allowed to talk about, and what you are not allowed to talk about. It is in fact Society which writes the narrative which holds everything in place, until of course it comes undone.

    In this nice safe space provided by Dr.M we are all free to explore the implications for a world of 7.6 B people in which only a hand-full seem to have any idea that money is no more than a social construct.

    I was sent a review copy of Fuel’s Paradise ( Peter Chapman, Penguin 1975) Peter had gone to the trouble of setting out the UK economy in terms of BTU s, so some one else who wasn’t crazy. It was about that time that I realised that no one in charge had any idea at all of what they were doing and that within a few years of N. Sea Oil peaking, say 2005, things here in the UK would start to look very bleak. I had no idea, no idea at all, that the whole show could be kept going for so long by the simple expedient of a ZIRP and loads of money printing.

    • Just as Malthus couldn’t possibly conceive the extraordinary developments made possible by deep-mined coal and the mass-adoption of the steam engine, so classic Peak Oilers and people with a sense or physical reality (resources, etc) couldn’t be expected to have imagined what our host has so aptly termed ‘credit and monetary adventurism’ carried to these extremes – the great conjuring trick of financial delusion.

      But this fantastic misadventure does seem to be breaking down now in effectiveness, as real prosperity declines markedly in major economies among a significant % of the population, and credit exhaustion takes hold.

      What next? I grip the edge of my seat…….

    • I think it’s more likely that Ireland will beat the ABs this weekend than get an apology.

      Are ZH aware of the link between energy and the financial mess we’re in.

  33. The comment about ‘feedback and knowledge being diluted by scale’ is interesting,

    Ancient tribal peoples as encountered by the Romans seem to have worked in groups of about 50 to 100,000, quite effectively – ie they managed things so well that they formed such large groups able to act in a concerted and intelligent manner.

    We,with our fuddle-headed and media/stimulation – distracted 100’s of millions are in a poorer position.

    I would also observe that the politics in our province of Spain is no saner for the population being only 600,000. Bitter personal enmities are very prominent – so much for he joys of ‘localism’!

  34. What could replace the Myth of Progress when it dies, as Kevin suggests?

    Maybe, dressed up on in a more scientific form, the old myth of the Divine Order preserved only if you are very careful not to offend the gods: in this case, the most important deity being Mother Earth – ie natural, seasonal, energy limits and a sense of a cyclical pattern in human and natural affairs.

    However, one can’t really make a good election platform out of that…….

    • Perhaps we’ll have to change so that progress / growth could be measured purely in emotional and intellectual terms.

      Of course this has been the staple of many science fiction stories.

      At the moment – generally – we don’t seem to be moving towards an emotional and intellectual paradise.

  35. Dr Tim – thank you; a very interesting read as always.
    Your comment:

    “True or not, this may be analogous here – so, instead of “why has growth stopped?”, the thinking might have been “growth must be there, it always is – so why can’t we see it?”

    I fear that the question is “Growth is always possible so we must be doing something wrong. Which monetary or fiscal levers do we have to pull to achieve it.”

    The prospect of de-growth would never be acceptable to the electorate; if it occurred, they would assume that it’s the fault of the politicians. For politicians, the prospect of de-growth is simply terrifying; how on earth do you get elected by admitting it will happen? Politicians are used to promising more and the electorate is used to receiving it. And, what sort of extremist parties might arise if the ‘middle of the road’ parties cannot provide growth? I fear greatly for the future of ‘civilised’ society.

    • although overall growth as expressed as GDP has been shored up by financial gimmickry over the last 10 years the majority of individual citizens in Western countries have been experiencing a reduction in their prosperity,

      the continual pretending that ‘everything is just great guys!’ when it obviously isn’t is the primary driver of discontent in the masses,

      most of us, to some extent or other, having been living de-growth for a decade now,
      all politicians need to do is be honest, accept growth has stalled and offer measures to make it as bearable as possible,

      we’ve already got everything we could possibly need, why can’t we just relax and enjoy it?
      these days yearning to ‘escape the rat race’ is a widespread phenomena,

      if politicians, the media & advertising took their foot off the gas pedal life would quickly settle down to a much more bearable intensity,

      degrowth isn’t difficult, balancing the books during degrowth is the big challenge.

    • This assume, of course, that career politicians have sufficient intellect to grasp these unorthodox – though spreading – ideas which effectively tell us that real growth is dead and done.

      And there is another factor: from what I’ve observed of the internal dynamics of the political party mt step-mother belongs to in Spain, you only get on if 1/ You echo the views of your patron and peer group – likely to be a redundant ideological view and 2/ You are ever vigilant about competitors for power with in the party,and so have to spend a good deal of time fighting them.

      This leaves little time for any original thinking, and reduces the chance of it ever being accepted by others within the party.

      And career politicians are subject to no test of intellectual competence or relevant specialist knowledge in the first place.

      One can see why politicians would rely on economic advisors, themselves filtered for ideological acceptability, for ready-made policies promising, as ever, ‘growth.’ Hence the attractions of the sexy-sounding GND…..

    • Regarding growth what if it was nandatory to make goods that last at least 25 years.

      Obviously current growth is all about creative destruction but the principles of fridges – washing machines etc haven’t changed fir decades.

      Mobile phones as they are now with 5G offer all the connectivity and computing power that most of us will ever need but we keep being tempted by slightly better cameras and sleeker designs – unfortunately with non replaceable batteries that lose their usefulness after a few years.

      My mobile phone is nearly 4 years old and the battery is on its last legs – but nobody comes up to me and says ‘Oh my God you’re using a 4 year old phone’

      Cars too should last a lot longer and I’m sure electric cars will.

      So with goods being reliable enough to be ‘recyled’ as such on the secondhand market – wealth could be filtered down to less well of people.

      Of course secondhand markets already exist but you’re always taking a gamble.

      Status then would just be a matter of how new your goods are – if that remained important.

      If course manufacturers would protest about their profits and employment would fall but the energy savings would be colossal leaving surplus energy for R&D in health for example.

      One scenario I can envisage with our current trajectory by the 2040s is any army of technicians riding around on bicycles trying to keep shoddily made goods from the 2020s working.

      A bit like Cuba and its ancient cars perhaps.

  36. Guidelines for commenting

    We’ve had some healthy discussion here about what is and what isn’t acceptable comment. Obviously, we want the maximum of discussion here. But we don’t want the experience of the many undermined by a minority.

    So – and this itself, of course, is up for discussion – I’m trialling an approach which I call ‘two gates, a filter and a request’.

    The two gates to be navigated are:

    Relevance to energy, economics and finance

    – Reasonable brevity

    The filter is courtesy and respect for others’ points of view. The slogan for this, borrowed from sport, is “play the ball, not the man”.

    So it’s fine to say to someone that “your argument is idiotic”

    But it’s not fine to say “you are an idiot”.

    Finally, the request is that you don’t post a disproportionately large number of comments, insert too many links, or include too many ‘additions’ (such as video clips).

    The response to comments breaching these guidelines is review. This isn’t the same as a ban or block. Instead, anyone whose comment breaches these guidelines will have his or her future comments moderated – but any comments which don’t breach these guidelines will still be approved in moderation.

    • Hello Tim,
      All of my posts have been moderated here for a long time when Links are included I know it is possible on WordPress to hold in moderation any posts with links or with N no of links according to the Blogger’s own preference.
      If I post both briefly and on point, my posts are still moderated, I do not like it but I value the discourse here more than my dislike of the treatment afforded vis moderation. Your house your rules afterall “An English Mans Blog is his castle”,
      Or are you like me a Welshman?

      As I often Re-Blog your posts and where I find that I wish to take issue or expand on limitations I consider in their reference points I have taken to simply expanding a dialogue in the comments or at the bottom of my own re-blogged post.

      “”So it’s fine to say to someone that “your argument is idiotic”

      But it’s not fine to say “you are an idiot”.

      Really? this is stretching it IMO, my last Comment complaining of regular straw-manning is still in moderation, it is not discourteous but makes a valid point.

      Best wishes

    • Roger, you have posted numerous comments linking to the same site, presumably your own. If you’ll refrain from doing that for a period, that would be helpful.

    • Dr. Morgan
      IF our society is destined to have to live with less energy, and
      IF our economy is an energy harvesting, processing, and using energy to do work system, and
      IF our current system uses only very crude metrics to allocate scarce energy
      THEN opportunities to use public policy or individual education to reduce energy usage in ways which are either positive or at least not negative are important. The alternatives of ‘it’s all good as measured by GDP’ or ‘those with the gold make the rules’ are not likely to serve us well, in my opinion.

      So I guess it comes down to whether you want the blog to have a large horizon or a smaller horizon. Tversky says that the evidence suggests that moving alternatingly from broad to focused is more successful than either alone. I suggest that if you want the blog to come up with ‘big’ solutions, you have to take a broad outlook some of the time. Which inevitably takes you into messy realms such as Xabier alludes to in the ‘Divine Order’ just above. Or into some of the stunning recent advances in the science of health. Or into retrospective ruminations about why decades of ‘environmental’ work have yielded so little.

      It’s your blog. It can’t be everything. So you get to choose.

      Don Stewart

    • There can be asides, of course, but brief. Any long digression from the core themes is likely to leave others – and me – scratching our heads.

    • “Relevance to energy, economics and finance” – what about politics? I personally do think it’s pretty relevant to all of that (“political economy” seems to be an underused term, IMO).
      For example, the imprisonment of Catalonian separatist leaders has interested me recently. Is it relevant to energy? Maybe… to me, it suggests a certain hardening of attitudes in the EU, and also increased competition in the Spanish society. I kind of wanted to ask Xabier about it, but wasn’t sure it’s appropriate for this blog.
      So, what about political discussions, Dr. Morgan?

    • The late Jay Hanson who died prematurely within the past year or so, used to say that all Economics is Politics. He was referring to the drive for status, power, and wealth. That is likely an overstatement, but I agree that it would be foolish to omit it.

    • Dear doc, as you know, what we need is common sense.

      Its your blog, so f*ck those who misuse your hospitality and let them start their own blog.

      Freedom of speech doesn’t support a free visit to the dentist.


  37. News items which fit the blog topic are not always easy to post as a reply. Here’s an example of a voluntary commercial decision which, as an unintended consequence, reduces energy usage and pollution.

    Sainsbury’s to stop selling fireworks (today’s news)

  38. For one I find it very difficult to see how politics can be completely separated from any discussion here of energy, economics and finance. Our system as evolved (or rather, steered) is so complex and thoroughly intertwined with politics. Despite our best efforts as individuals to spread the message about our energy predicament to family, friends and whoever else will listen we could do with somehow shifting the Overton Window – a ‘political’ tool – in order to get the far wider awareness of Dr Morgan’s work that would hopefully focus attention on solutions (if not solutions then at least preparations). It will be interesting to see if Dr Morgan dismisses legitimate, proportionate political references as a related and subordinate component of E, E & F discussions, where they would still comply with this blog’s politely expressed requirements. It’s easy enough to be respectful and post topics of ‘other’ interest (political or otherwise) for discussion elsewhere on more appropriate blogs, which in a way is a slight shame that it has come to pass because there have been some fascinating nuggets of interest and information in some of the off-topic posts over the years.

    • Politics in the sense of ‘government and political ideas’ is one thing, but party politics is another. I know it’s a fine line.

      If someone said that Mr Trump, say, was a great or a terrible leader, for instance, that would be party politics. If they commented on one of his policies, though, not trying to score party points, that would be OK.

    • I suppose the point must be that party-political arguments of a partisan nature are essentially futile and should be excluded as such ; and also that no one coming to the site should be able to dismiss it as ‘just another Right or Left-wing’ blog,and so miss the main core of the argument presented by our host, who is resolutely impartial on political matters.

  39. Very big questions
    See Rob Hopkins advertisement for his new book:
    (about 10 minutes)

    Those interested in the very broad perspective may wish to check it out.

    Finding a place to discuss from the broad to the detail, or vice versa, is hard. For example, a farmer in Mississippi just posted his story about regenerating a farm. In 6 years, the BRIX score on his pasture plants increased from 2 to 20, a multiple of 10 times. What relevance does that have to the price of pork bellies or with fossil fuels and how does it relate to human metabolism and health and climate change and the nature of human relationships? So it is necessary to go from a very specific observation to some broad generalities through an intricate set of relationships which are not likely to be apparent unless someone has put an alternative story together. I conclude that it can’t be done on this blog.

    We are trying to see the universe by looking carefully at a grain of sand.

    So those who are interested can check other venues.

    Don Stewart

  40. If we are persuaded – as I think we are – that globalised industrial civilization is doomed to severe changes and disruptions (to say the least!) due to compromised and disintegrating energy flows, then we must direct our attention to a renewed and saner agriculture, organised on a very different basis, for too long wholly in the hands of short-termist, cynical, industrialised Big Ag, supported by the bankers and chemical giants.

    That facet of the industrial system, too, must surely break down; and without viable agricultural practices, we have no economics to discuss…..

    Agricultural reform is implicit in the idea that in the face of these profound changes we will have to do and organise things very differently indeed. And perhaps pay very much more for decent food -so there is a ‘prosperity’ link there, too.

  41. A quick note on Catalonia: the independence parties there (and also in the Basque Country), above all on the far-Left, present the decline of prosperity in Catalonia, once an industrial power-base in the Peninsular, and where everything was booming before 2008, as something that can be easily remedied by gaining freedom from Madrid – a ‘they take our taxes and give us too little back’ argument.

    Another instance, really, of missing the declining prosperity wood in which we all are wandering, some in darker bits than others, for the party-political.ideological trees (the 100-yr-old obsession with the ideology of nationalism, memories of the Civil War, etc).

    Just as we see that leaving the EU will likely not remedy the profound and steady decline in the real prosperity of the average person in the UK, not actually being the prime cause of it!

    Very few independentistas in Catalonia call for the abolition of the Euro Zone, which probably would help them a bit, being pernicious in its effects for the European South!

    The great anger visible among the young in the protests is certainly due to their very poor job prospects, appallingly low wages and insecurity – but they are blaming that almost solely on Madrid, and of course Neo-liberalism.

    So, it’s not just economists using the wrong analytical tools who misunderstand the causes of increasing impoverishment….

    • In situations like Catalunya, I always think dialogue is better than the stand-off posturing that we’ve seen from both sides.

      On “Brexit”, I periodically feel that my avowed non-involvement in politics is extremely strained. The fundamental issues, as I see it, are that (a) the public voted for “Brexit”, and (b) all MPs elected as Tory or Labour candidates in 2017 are bound, by manifesto commitments, to deliver it.

      Essentially, democracy only works when the losers accept the voters’ decision, and put that verdict before their own prejudices.

    • It seems a society where prosperity is deteriorating has two ways to deal with the problem: cooperative and disintegrative. The second one is essentially this: society splits into competing groups that more or less try to exterminate each other (not necessarily phisically; it’s probably better to say “try to prevent competitors from accessing resources”).
      I think such things happened many times in history. The most common cause was certainly population growth. As one Qing emperor observed “population grows, but the land doesn’t”. That didn’t end well for the Qing empire. In some cases there might have been other causes, e.g., climate change that reduced agricultural productivity.
      Looking at history, a society can split along just about any line: race, ethnicity, language, history, religion/sect, geographical location, socio-economic class or anything else really.
      The number one cooperative way to obtain more recourses appears to be warfare. The Axis of WW2 is the most famous example, but there are, of course, countless others.
      A more desirable ways would be redistribution of wealth (more precisely, consumption) or increasing energy supplies, or both. The former is politically challenging and the latter doesn’t appear to be technically possible right now.
      I personally expect that the situation in the world will significantly deteriorate in the short to medium term. There does seem to be a whole lot of revolts going on right now.

    • Excellent point about the difference between redistribution of wealth vs consumption. How the inadequate “pie” is divided matters, but most leftists commit the same fallacies as the right: Cornucopian (plenty, if we just share…), and Techno-optimist.

      Social justice can be negative for sustainability. Billionaires (& those close to that) have, by far, most of their assets in savings, investments, and real estate. If that wealth was distributed to the needy or to the state (which is in hock forever), latent consumption would become immediate consumption. Throughput would increase more rapidly, and so would pollution and resource depletion. Heavy taxing of the purchase of luxury stuff is better, as it tends to redistribute consumption, not increase it.

      I’ve presented this on and off for well over a decade, and there have been no rebuttals. An additional point is, that no matter the socio-economic engineering, scale overshoot trumps all.


  42. I appreciate your keeping the arguments in terms that are used by policymakers (e.g., economics, finance). Among my colleagues and students we often use images like the one I’ve linked below (not sure how to display in a reply). Such images help identify possible leverage points for intervening in a system (i.e., donellameadows.org/archives/leverage-points-places-to-intervene-in-a-system).

    I’m wondering if the EcoE is already displayed in this image, but I’m just not recognizing it? Or, more likely, we’d need to modify such an image to include EcoE. Perhaps a modified image already exist but I haven’t found anything.

    I ask since perhaps different paths through the diagram may have different EcoE and suggest where we’d see stress earlier or later, and thus identify who would be predisposed to currently listen to SEE-based arguments.


    • Thanks. On your question, I think ECoE probably is in the diagram, but in fragmented form. It’s a useful diagram, in my opinion, and shows the proportions into which concern and action should be concentrated.

      The critical thing about ECoE, though, is that it’s dynamic – and, where FFs are concerned, is worsening. The ECoE fraction of FF use causes emissions – as does all FF use – but without giving us a corresponding economic ‘gain’.

      Here’s something to ponder, I think. If we build, say, a wind turbine, that should give us cleaner energy. But the materials used to build it cannot, at least at present, be supplied without the use of FFs. This makes transition to renewables very much more difficult than it might – at first sight and to many – appear. For one thing, the rising ECoEs of fossil fuels are embodied in the building out (and eventual replacement) of renewables capacity.

    • Does the diagram represent a complete picture, for example are military contributions included in all those sectors I.e. transport, industrial processes, etc.? First glance makes it seem as if only publicly visible sources are included.

  43. The events in Catalonia certainly show the dire consequences of a failure to negotiate and to compromise, as well as the great dangers of prolonged economic failure and worsening inequality – many younger people just cannot tell themselves that it might better next year, or even in 5 or 10 years! In fact, the economy is now slipping back after a brief period of improvement, exports falling, rents rising, etc.

    Alas, it’s just not in the Iberian character to compromise:, nor the way the state functions there: if you are moderate, you tend to get bashed and repudiated by both sides as a ‘traitor’!

    Compromise, talking rather than posturing, and a sense of fair play – remember that? -and not screaming for an impossible or distorted ‘justice’ , will be invaluable qualities in the public arena as things worsen economically.

    Unfortunately, these are precisely the qualities that over-stressed human beings tend not demonstrate, and we can reach tipping points into irrationality.

    On the other hand, people – until things get out of hand and the nastier group dynamics come into play – can take their cue from wiser heads with influence: not everyone need be sensible, just recognise good sense when it’s put to them, with timely compromise to defuse things.

    We can all contribute to that, which is hopeful, although faced with the terrible amplifying effect of social media and unhelpful journalism on partisan antagonisms which have been all too evident over the last few years.

  44. I love the discourse which includes the idea of kicking the rungs out as we go up the ladder and not being able to see what is front of us due to the seeming trajectory of growth. I writing this while resting in my small recreational vehicle in a New Mexico RV park. I find it funny that people want to have their space, even though relatively small, but still want to reside in a community with some basic common elements, pool, restroom, food. There is hope in that concept if we could only decide that the amount of energy used to get these behemoths around is what we collectively need to invest in a future where we are socially together but still survive. We could live more simply and still have pleasures if see the truth of our energy predicament. My feeling is we will not and here is a story from Chili that has a similar feel to the yellow vest protest in France. The Canaries are singing but no one is heeding the warning…..

    • The essential point missed here is that they are not burning cash, they are buring misallocated and mispriced Debt/Credit. The assymetry and lack of skin in the game this engenders for the HedgeFund/MerchantBank sock puppets should be evident to those who engage their grey cells and critical thinking skills.

    • The companies are, I think, burning cash, but it’s been supplied to them either by lenders or investors, the latter perhaps using borrowed credit.

      The point is that newly-created credit, used by these companies as ‘cash’, finds its way into the economy, where its circulation creates activity, measured as part of GDP, which wouldn’t have existed without the cheap credit being created in the first place.

    • “The point is that newly-created credit, used by these companies as ‘cash’, finds its way into the economy, where its circulation creates activity, measured as part of GDP, which wouldn’t have existed without the cheap credit being created in the first place”.

      Tim that Begs the question, in my opinion, Richters previous video on the Housing bubble sets up the same strawman.

      I have put up a blog on the question as to why Richter is wrong due to his faulty premise.

      The control of the debt is the shell game that he and you are missing. as we move to an increasingly cashless economy it becomes ever more obvious but the same old robber barons are playing the same old cards.

      “On Sept, 1, 1894, we will not renew our loans under any consideration. On Sept. 1st we will demand our money. We will foreclose and become mortgagees in possession. We can take two-thirds of the farms west of the Mississippi, and thousands of them east of the Mississippi as well, at our own price… We may as well own three-fourths of the farms of the West and the money of the country. Then the farmers will become tenants as in England …” — 1891, American Bankers Association, as printed in the Congressional Record of April 29, 1913

    • Of course history shows just how successful the bankers were. 😉 The blame game solves nothing about the limits of throughput, resources, and waste sinks. Scale trumps all. Dividing an inadequate pie equally is not nature’s way. Humans are part of nature! The left commits the same fallacies as the right: Cornucopian, and techno-optimist. Socio-economic engineering can permanently solve overshoot unless scale is reduced, and we can’t change human nature.

    • Smart ways to subsidize the economy. Zero intrest rates, buybacks etc.

      Full faith & credit.

      This will change when the currency buys you nothing. Only then, not before.

      We are in that phase now, next up is tax cuts for you and me. The UN already calls for fiscal stimulus because the CB pump becomes too obvious.

    • Yes. Both the Fed and the ECB are using QE again, and no major central bank now even claims to be aiming for the normality of rates above inflation.

  45. Please forgive me for butting in. How does the development of Artificial Intelligence (AI) fit into surplus energy model.

    • Well, it could enable us to do things more efficiently. But it seems more likely to mean using more machinery – and the energy which powers it – than human labour. But these people, though not working as much, still need energy from nutrition.

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