#163. Tales from Mount Incomprehension


There was more than a grain of logic in the observation by US treasury secretary Steven Mnuchin that climate activist Greta Thunberg should save her advice until “[a]fter she goes and studies economics in college”. If the authorities were to consent to her demand for the immediate cessation of the use of fossil fuels, the economy would crash and, quite apart from the misery that this would inflict on millions, we would have abandoned any capability to invest in a more sustainable way of life.

This said, taking a course in economics, as it is understood and taught conventionally, would not enhance, in the slightest, her understanding of the critical issues. Conventional economics teaches that economics is ‘the study of money’, and that energy is ‘just another input’. These claims cannot be called ‘contentious’. They are simply wrong.

Worse still, her audience at Davos – the Alpine pow-wow of the world’s political and economic high command – are almost wholly persuaded by a false interpretation which states that action on climate risks carries a “cost”, meaning that doing what she asks would be costlier than carrying on as we are, with an economy powered by oil, gas and coal.

This is a folly every bit as absolute as the argument that we must immediately cease all use of the energy sources on which the economic growth of the past two centuries has been based. Continued reliance on fossil fuels might or might not destroy the environment, but it would certainly condemn the economy to collapse.

A commonality of interests

Because I have an extensive ‘to-do’ list – and in the hope that readers might appreciate some brevity on this issue – let me be absolutely clear that neither side of the debate over the economy and the environment understands how these processes really work. Worse still, it seems that neither side wants to understand this reality.

There’s a hugely damaging false dichotomy around the assumption that there’s some kind of trade-off between our environmental and our economic best interests. If “Davos man” thinks that the economy can prosper so long as we cherry-pick the profitable bits of the environmental agenda (like carbon trading, and forcing everyone to buy a new car), and pour bucket-loads of greenwash over the rest of it, he (or she) could not be more wrong

Because literally none of the goods and services which comprise the economy could be produced without energy, it should hardly be necessary to point out that the economy is an energy system. Equally, it should be obvious that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This access component is known here as the Energy Cost of Energy (ECoE), and it forms a critical part of the equation which determines our prosperity.

The third part of this ‘trilogy of the blindingly obvious’ is that money has no intrinsic worth, and commands value only as a ‘claim’ on the products of energy. I make no apology for repeating that air-dropping cash (or any other form of money) to a person stranded in the desert, or cast adrift in a lifeboat, would bring him or her no assistance whatsoever.

Money is simply a medium of exchange, valid only when there is something for which it can be exchanged.

The complexity trap

The modern industrial economy is not only enormous by historic standards, but is extraordinarily complex as well. Scale and complexity make the modern economy high-maintenance in energy terms. Output grew rapidly in the period (roughly between 1945 and 1965) when trend ECoEs were at their historic nadir, but has struggled since then, as ECoEs have risen.

Analysis undertaken using SEEDS (the Surplus Energy Economics Data System) indicates that prosperity in the Advanced Economies (AEs) of the West ceased to grow when ECoEs hit a range between 3.5% and 5%. Less complex Emerging Market (EM) economies have greater ECoE tolerance, but they, too, start to become less prosperous once ECoEs reach levels between 8% and 10%. Both China and India have now entered this ‘growth killing ground’.

Back in the high-growth post-War decades, ECoEs were between 1% and 2%. By 2000, though, global trend ECoE had reached 4.1%, which is why the advanced West was already encountering something which bewildered economists labelled “secular stagnation”, though they were at a loss to explain why it was happening. By 2008 – when ECoE had reached 5.6% – efforts at denial based on credit adventurism had achieved nothing other than an escalation in risk which brought the credit (banking) system perilously close to the brink.

Since then, and whilst futile exercises in denial have segued into monetary adventurism, ECoE has continued its relentless rise. Last year, world trend ECoE broke through the 8% threshold at which prior growth in EM prosperity goes into reverse. This, ultimately, explains why global trade in goods is deteriorating, and why sales of everything from cars and smartphones to chips and components are sliding.

The average person in the West has been getting poorer for more than a decade, and, increasingly, he or she knows it, whatever claims to the contrary are made by decision-makers who, for the most part, still don’t understand how the economy really works.

Something very similar now looms for EM countries and their citizens – and, when evidence of EM economic deterioration becomes irrefutable, the myth of “perpetual growth” in the world economy will be exploded once and for all.

When that happens, all of the false assumptions on which a bloated financial system relies will crumble away.

Tenacious irrationality

The irony here is that, far from avoiding economy-damaging “costs”, continued reliance on fossil fuels would be a recipe for economic oblivion. The destructive upwards ratchet in ECoEs is driven by fossil fuels, which still provide four-fifths of our energy supply, and whose costs are rising exponentially now that depletion has taken over from scale and reach as the primary driver of cost. Far from imposing “costs” that will push us towards economic impoverishment, transitioning away from fossil fuels is the best way of minimising future hardship.

This means that economic considerations, when they are properly understood, support, rather than undermine, the arguments put forward by environmentalists.

But we should be equally wary of claims that renewable energy (RE) can usher in some kind of economic nirvana. The ECoEs of REs are highly unlikely ever to fall below 10%, a point far above prosperity maintenance thresholds (of 3.5-5% in the West, and 8-10% in the EMs), let alone give us a return to the ultra-low ECoEs of the post-1945 era of high growth.

Critically, transition to REs would require vast amounts of inputs whose supply relies almost entirely on the use of FFs. The idea that we can somehow “de-couple” economic activity from the use of energy, meanwhile, is utterly asinine.

The only logical conclusion is that we should indeed transition towards REs, but should not delude ourselves that doing this can spare us from deteriorating prosperity, or from other processes (such as de-complexification and de-layering) associated with it. The one-off gift of vast surplus energy from fossil sources is fading away, which, from an environmental point of view, might be just as well. What matters now is that we manage, in a pragmatic and equitable way, the transition to lower levels of energy use and gradually eroding prosperity.

It’s a disturbing thought that our economic and environmental futures are trapped in a slanging match between green fanaticism and Davos-typified cynicism. It’s a truism, of course, that people tend to believe what they want to believe – but this is a point at which the reality of energy as the critical link between prosperity and the planet needs to force its way to the fore.

If there’s cause for optimism here, it is that reality usually triumphs over wishful thinking. The only real imponderables about this are the duration of the transition to reality, and the scale of the damage that protracted delusion will inflict.

800 thoughts on “#163. Tales from Mount Incomprehension

  1. Thanks for new post Tim – I wonder if there is anyway to get Greta interested in your site.

    I would love to hear her opinion.

    Regarding falling prosperity in China I wonder what the ECoE is on the vast new mine in Mongolia they are developing.

    Certainly they see it ad key to maintain economic growth. Too bad about the environment

    • The remorseless, immutable ties between energy economics and finite, limited, energy are a mater of thermodynamics of dissipative systems.
      Greta T’s opinion, like all other /opinions/ on this subject – is irrelevant.
      — Physicist.

    • Thanks, Dr Gary

      It always surprises me that we’re told about “laws” of economics – essentially, just observations of the behaviour of the man-made artefact of money – when the real laws of thermodynamics hold the real explanations. These laws, too, are politically neutral….

    • Well it’s not irrelevant to talk about the problem in terms of finding a solution – even if this means mankind making do with one lump of coal a day each.

      We could of course come on here every day and post ‘We’re all doomed’

      I’m sure if Greta read this blog she’d get a better understanding of just how complex the situation is and stop broadcasting how simple steps could save us all.

    • In my experience Don, Martin is very sound and I do follow his blog. I wouldn’t dismiss it out of hand but remain cautious to possible hype – after all, they all want to sell their book.

    • Personally I go by what I can see happening.

      Clearly he has more invested interests than just selling his book

      And where money is involved the accuracy of information becomes variable.

    • Well FF companies have huge resources to influence people and when I see a video like that my heart sinks.

      The World is in serious trouble both economically and environmentally.

      Trump seems intent on poisoning the water supply at the whim of large corporations looking for more profit – I pray he’s booted out and his scandalous actions are reversed.

    • Just been reading on BBC news about the rise of so-called “buy now, pay later” services allow customers to either delay the whole bill for their chosen item, or split the cost into a clutch of equal instalments, interest-free.

      One worrying statistic is that a group called Kkarna which already had 6m UK members with 55,000 being added each week.

      Obviously this further illustrates that households are struggling to get by.

      Kkarna no doubt wants late payments do it can earn money – which I’m sure happen frequently.

      However if it stops people having to go rely on not do honest local money lenders then it does serve a useful purpose.

    • The current laws of economics will have to be adapted until we have a better understanding of the laws of physics relating to Nuclear Fusion.

      If we ever do crack Nuclear fusion then we can live well with all sorts of things being powered by cheaper electricity and economic to run desalination plants.

      Fuel wise we have 3.67 to the power of 20 gallons of sea water available.

      Probably not in my lifetime though

  2. This is probably the most erudite article ever written on degrowth economics. I will be forwarding to degrowth networks and Greta.

    Thanks for your dedication on this very important subject.

    • Thanks Steve, much appreciated. I’d be interested in the feedback that you get.

      Truth to tell, I wrote this one ‘on the volley’ rather than building it ‘from the ground up’ – it follows, as you might know, from a longer article, published last July.

      If you detect a note of irritation here, you’re right. The one side means well, but doesn’t seem fully aware of the issues. The other side’s attitudes are depressingly ‘the same as ever’, and very short sighted, even where their own best interests are concerned – it’s a case of ‘support the bits we can make money out of, damn the rest of it with faint praise, PR and spin’.

      If I could impress just ONE thing on this debate, it’s the false dichotomy – I have no idea why everyone involved seems to miss this truly pivotal issue.

    • As I understand it, the false dichotomy rests solely on the false ideological dichotomy between eco-capitalism and eco-socialism.

      To be fair, degrowth eco-socialists are pretty much on the same wavelength as yourself and appreciate that the economy is an energy driven system but their analysis is shrouded in socialist hubris around class conflicts, neoimperialism etc etc which requires centrally planned economies.
      https://www.newstatesman.com/politics/environment/2019/12/europes-green-deal-tepid-response-climate-crisis (paywall)

      And https://t.co/fgEeWASxF7

      The ideological dichotomy is then entrenched and complicated by the dichotomy between Progressivism (liberalism) and Conservatism with appeals to supranational/national socialism and supranational/national capitalism.

      My own attempts to transcend this ideological battlefield in order to appeal for cross-political-spectrum endeavours has so far been met with the usual ideological positioning.

      In other words, upholding the Left/Right dichotomy seems to be more important than resolving our multiple threats of climate change, biodiversity loss and ecological degradation.

      From that point of view, I understand your unwillingness to engage more publically. In other words, it is a paradoxical nightmare in itself.

    • This is new thinking for me so forgive the incoherence but the ideological paradox seems to revolve around the different ideological solutions regarding

      Economic/ecological capacity
      Population growth/stabilisation
      Human consumption/production

      In this respect, at present I have no idea where to start except that our cultural politics is key to bringing people together rather than bringing people apart through the ongoing culture war.

      I think this need to create a more integrative cultural politics is a particular blind spot for eco-socialists due to the ideological entrenchment. Consequently, there is a tendency on the Left to use their environmentalism as a proxy for their disdain for the Right.

      However, far from moderating their general position, the democratic backlash towards Wokism/Progressivism/Socialism is actually encouraging them to be more extreme in their views and actions, which you very much appreciate.

      Unfortunately, unless ecological economics is depoliticised and is able to operate within more integrative cultural ideological frameworks, chest beating will win the day. Meanwhile Gaia burns.

    • It seems to me that (1) de-growth and (2) de-complexification will act as powerful solvents, changing all sorts of systems including corporate, financial and political.

      Just look at what these two tendencies are likely to do, when trends in the EMs demonstrate the invalidity of growth assumptions – what, then, happens to the systems (business, finance, government) represented by/at Davos?

    • I think this is already happening, as you have already pointed out. Meanwhile the Left seems to be analysing degrowth as an abstraction rather than a currently existing reality. I pointed out to the Degrowth movement that now is the time to lobby for their economic policies in relation to reducing prosperity now but they want social redistributive concerns to take precedence which of course requires being democratically elected.

      In this respect, I believe the Right do understand that prosperity has stopped growing but are concerned that continuing population growth demands an increasing gdp, even if it is subsidised by debt. However, the government is now looking at how to reduce reliance on debt and increase savings.

      As mentioned here and on degrowth forums, the difficulty is how to sell degrowth within a democratic context. The Left resort to catastrophising whilst the Right chooses to manage the narrative by effectively selling degrowth as inclusive green growth. I actually think the latter, although disengenious is more plausible as a strategy in order to contain the liklihood of social volatility. In this respect, I think the Right is managing expectations pretty well whilst the Left seem hell bent on increasing expectations, protecting middle class interests and punishing the rich, who as you know provide the majority of the tax base and the investment base to our economy.

      Consequently, at present, if forced to choose, as we currently are, I’m putting my faith and support behind the Right who despite their feel good rhetoric are absolutely unable to avoid, like the Left, the social, cultural, political, ecological and economic ramifications ECoE.

      As such, I prefer a more apolitical regulatory market based approach that a more ideologically driven centrally planned approach which will be incredibly disruptive in itself with all manner of unintended consequences to deal with.

      In this respect, cautious change is needed, not radical disruption.

  3. “The ECoEs of REs are highly unlikely ever to fall below 10%”

    More likely: the ECoEs of WIND will never fall under 100 %. Very small output compared to price. High maintenance costs (15 % of installation costs), short function time (20 to 25 years). Furthermore, wind must to a very large extent rely on auxiliary power plants. If these auxiliary power plants are not there, wind must pay for incredibly large and expensive batteries of some sort.

    • I phrased this in a very particular way, not leasat because claims and counter-claims are so far apart!

      Issues here include (a) costs of overcoming intermittency, (b) longevity of RE plant, (c) reliance on inputs provided by FF use, (d) real maintenance costs and (e) portability and density. One just one of these, a pretty good study put the cost of overcoming wind intermittency at 10x capacity installation cost. It’s been pointed out elsewhere that lithium mining is pretty bad in environmental terms. A lot of the more optimistic appraisals seem based on the false guideline of extrapolation.

      On the other hand, progress will continue to be made, economies of scale will help, and redesign could be significant.

      As one instance of the latter, mains-powered trams make far more sense than EVs (though the latter will no doubt be pushed at the public for all sorts of reasons). We can’t, it seems to me, assume EVs will ever improve on, or even match, the power/weight ratio of a tank of gasoline, and neither can we source the charging network for EVs without using huge amounts of FFs – moreover, claims that EVs are ‘greener’ than ICE vehicles seem far from convincing. Trams, on the other hand, capture economies of scale, and eliminate much of the storage issue, making trams far lighter than EVs in terms of weight per occupant.

    • Tim, I like the list: “Issues here include (a) costs of overcoming intermittency, (b) longevity of RE plant, (c) reliance on inputs provided by FF use, (d) real maintenance costs and (e) portability and density.”

      But I wonder if it comprises two categories: behavioral and technical. Except for intermittency, the items listed seem to be design and O&M issues. In contrast, intermittency may be, primarily, a behavioral issue. For most of human history, and for many people across the globe today, intermittency is normal. Non-intermittency is one, highly marketed, feature of growth-based techno-industrial society. But it seems to have morphed from a possibility, to an opportunity, to an expectation, and now to a sense of entitlement. That was a drawn-out behavioral transition, one that had to be managed/marketed. Thus, it can be reversed. That is, the issue here isn’t whether people will change their behavior, but rather what are the conditions under which they will change.

      Consider that these days we may dry clothing in a mechanical dryer, thoughtlessly expecting to be able to do so whenever we wish (i.e., an entitlement of no intermittency). In contrast, my grandmother always dried her clothing on an outdoor line (i.e., huge intermittency). She admitted to some inconvenience, but also claimed embedded benefits: better smell, better feel when worn, lasted longer. She was a constant target for the marketing of gas/electric dryers, but she did not make the change (I can recall her rebuffing the sales pitches, repeatedly). Admittedly, many others did change, and created what we now think of as normal behavior. But the key lesson here isn’t to imagine non-intermittency as a fixed, unchangeable requirement. We should not assume that people will never again change their behavior and that RE thus meet a fixed set of societal expectations.

      When we judge the feasibility of an RE opportunity, we seem to require that all behaviors be allowed to remain unchanged (without asking anything about the history of how those behaviors got adopted, or doing any analysis on how they might be changed, how fast, and how durably). This “all else must remain the same” criterion is itself rarely questioned. But might it be itself the product of growth-based thinking?

      I guess the bigger issue here is that we haven’t agreed upon what the baseline conditions for a good life are. Are our behaviors to remain unchanged and what we need to do is “green and lean” the means of fueling those behaviors? That is, move from fossil fueled life patterns to RE fueling the same patterns? Or, can we remove some of the sense of entitlement that a growth-based existence has created? Holmgren explored this and has suggested a fourth scenario that might be labeled energy descent (the others being techno-growth, green-stability, and collapse). One citation is at: http://www.futurescenarios.org

    • For what it’s worth, for nostalgic reasons I was watching this the other night. I’m just old enough to remember the old Belfast mains electrically powered trolleybuses :

  4. Driving to Work?
    If we had truly understood both the power and the threat of fossil fuels, we would likely never have gone down the path of putting many miles and huge investments in highways and private automobiles between a persons dwelling and the place they work. But…the deed was largely done. When a photographer acquaintance started on a project of photographing worker houses next to steel mills, etc., he found that there are very few remaining examples in the US. Yet my father and father in law never in their lives drove to work. So, over my lifespan, we destroyed the most energy economical way of dealing with the necessary task of going to work.

    Now that we have done it, and admitting that No, everyone will not be telecommuting, we really have an urgent need to resolve the practical questions. Is it really possible to build and operate all those EVs? (Albert Bates is about to publish a book detailing the plans to destroy the ecosystem on the ocean floor in order to get minerals to build EVs…all overseen by the UN.). Are public transit systems capable of connecting workers and jobs in highly decentralized cities such as LA? If not, what happens to those cities? How much ocean level rise is already baked into the cake, or very soon will be? Is it time to stop investing in Miami and New York?

    In my experience, one can find experts in one question or another, but we really have no comprehensive look at how the overall system might be working in, say, 2050. It may be that there are just too many moving parts, and sketching out scenarios is impossible.

    An excellent essay….Don Stewart

    • Regulating car finance more tightly, in a similar manner to how the Mortgage Market Review led to mortgages being regulated more tightly, would achieve more than any “cultural interventions”.

    • Will. The remit is “So far very little is known about the effectiveness of cultural and media interventions for promoting alternative visions of wellbeing and for creating greater public acceptability for reductions in consumption of high carbon goods and services (including travel)”.

      Your intervention, continue encouraging consumption of high carbon goods and services (including travel).

      Somehow, I don’t think you’d get the post! 😊

  5. “I phrased this in a very particular way, not least because claims and counter-claims are so far apart!
    Issues here include (a) costs of overcoming intermittency, (b) longevity of RE plant, (c) reliance on inputs provided by FF use, (d) real maintenance costs and (e) portability and density. One just one of these, a pretty good study put the cost of overcoming wind intermittency at 10x capacity installation cost. It’s been pointed out elsewhere that lithium mining is pretty bad in environmental terms. A lot of the more optimistic appraisals seem based on the false guideline of extrapolation.”

    If we are pushed down the renewable energy route and fail to make sufficient investments in nuclear energy, there is a continuum of methods that might help to deal with the intermittency problem. Below is a link to gridwatch, which provides real time data on UK generation statistics.

    If you click on ‘Generation’ and select ‘Renewables’ you get hourly averages for renewable generation in the last month and daily average for the past year.

    One relatively cheap way of storing energy is as heat, for end use. Space heating and hot water is a large part of energy end-use in the UK; more than 50%. The good news is that many days of heat can be stored in an enlarged water tank. Two cubic meters of water, heated from 10C to 100C, will store 200kWh of heat. Grid interactive storage heaters allow the heating function of buildings to be controlled by grid operators. Hence, when supply exceeds demand, storage heaters are activated to absorb excess power.

    Going back to the renewables generation graph, notice that the biomass proportion is relatively flat. If that is ignored, the wind solar and hydro generation shows a peak generation of 15GW, but fall beneath 7GW for only short periods of time. Let’s say we use grid interactive storage heaters to absorb the top 67% of the renewable energy generation curve. That amounts to a little less than half of the total energy generated by wind and solar power plants over the year. Beneath a capacity of about 5GWe, wind and solar output experience must shorter and shallower lulls. This could provide the basis for baseload electricity supply to non-controllable loads. Maybe we could use open-cycle gas turbines burning a mixture of natural gas, biogas and hydrogen to fill the remaining lulls.

    Capacity might be a problem. UK electricity demand is about 40GW in winter, suggesting the need for 120GW of wind capacity. So presumably, we would need several times more wind and solar generation than presently exists, in order to cover baseload electricity demand. It might be difficult finding space for that many wind turbines. It means covering an area the size of Wales. The more nuclear power plants we can build, the easier the non-fossil energy future will be.

    • Thanks. On renewables globally, it’s worth pointing out that capacity additions in 2018 were the same as in 2017 (so percentage additions were lower), whilst capex, adjusted for inflation, was lower than it had been back in 2011. Essentially, the scaling of RE seems to be undermining the subsidy systems which were viable when take-up was tiny.

  6. William Gibson
    Gibson is the American author of futuristic novels. Here is what he is thinking now:
    “Gibson is famed for his sensitivity to the zeitgeist, and I asked him if he thought that part of what he’d picked up on here is a growing sense of the future as an abyss. “In my childhood, the 21st century was constantly referenced,” he said, “You’d see it once every day, and it often had an exclamation point.” The sense, he said, was that postwar America was headed somewhere amazing. Now that we’re actually in the 21st century, however, the 22nd century is never evoked with excitement. “We don’t seem to have, culturally, a sense of futurism that way anymore,” he said. “It sort of evaporated.””

    As I see it:
    *The dream of more for everyone has diminished, but it still has farther to fall
    *The young are in debt and can’t get out, which makes them slaves
    *The world is now mostly over-fed, which makes us sicker. There are some green shoots here, but overall the trend is toward sicker.
    *It usually takes a little of the stick and a lot of the carrot to get people to move. Reality will provide the stick if government stops greasing the increase in leverage…but I don’t think they will do that. Carrots are all over the social media…some work and some don’t. Government policy may need to enable, but mostly by stopping repression and the escalation in asset values.

    Don Stewart

    • In my opinion, the ending of real growth in EM countries, by destroying the credibility of the ‘perpetual growth on a finite planet’ myth, will knock away the props from over-priced asset markets. As in 2008, everyone will be wise after the event, of course…….

  7. Velomobiles: An opportunity missed? Whilst governments across the world debate the need to subsidise battery electric vehicles, the velomobile provides all of the mobility of the car, using about 1% of the energy. In fact, it is 4x more efficient than an ordinary bicycle and a lot more efficient than walking.


    Why do people not use these more? Simple. Every time you went anywhere in one of these, you run the risk that some moron in an SUV will crush you to death.

    • Certainly an interesting solution. Where I live I would need elevtric assist to get back from the railway station as it’s 2.5 miles – all uphill -with a particularly steep first section

    • I used a velomobile for my 2×15 mile dail commute to work. Easy doable, even at -20 degrees Celsius outisde !
      They are considerably safer & faster than normal bikes . Main reason they are not used more often is the fact that they are unknown, and fairly expensive ( but worth every penny )
      Google for “oliebollentocht” for velomobiles in action ( 150+ of them !)

    • Not to mention “crush you to death on his way to a hot date, with a female that is looking to procreate and not looking to be energy efficient”.

  8. The only way to decouple growth in energy consumption from growth in GDP is more debt. And even then it’s only a little bit.

  9. Excellent article, Tim, thank you and all so true. I am sure that TPTB, who have the power to invoke change will do nothing until forced by circumstance to act:

    “Man has such a predilection for systems and abstract deductions that he is ready to distort the truth intentionally, he is ready to deny the evidence of his senses only to justify his logic”. (Dostoyevsky

  10. From the Telegraph (Ambrose)

    Global debt levels have reached dangerous extremes and central bankers no longer have the ammunition to counter a financial crisis, a top cast of officials warned in Davos.

    My goodness have they finally woken up?

  11. @Dr. Morgan
    See the first few minutes of this Max and Stacey show:

    The amount of money marches steadily upward, while the velocity of money steadily declines. Now my question/ suggestion:
    Is declining velocity a sign, as Stacey claims, that the banks cannot loan the money for productive purposes because the companies and the economy are zombies? If that seems plausible, are there money velocity charts for EMs such as China and India? If investment opportunities in China have indeed declined, then I would expect the velocity there to have declined. I’m not familiar enough with the Chinese money system to put together any chart I would have any trust in…and the Chinese money system may be opaque even for experts.

    It seems to me that the velocity chart is looking at things from a different perspective than debt to GDP charts. The velocity chart seems to represent very directly the willingness of the banks to loan money for speculative investments.

    If you can shed any light on my question, I would appreciate it.
    Thanks…Don Stewart
    PS. Also, on the subject of the Repo market, Stacey notes that the Fed has floated the notion that it should be empowered to loan money directly to Hedge Funds.

    • Have a look at the Economic Overview section commentary for 4th quarter at hoisingtonmgtDOTcom

      ” In 2019, velocity was extremely close to the lowest levels recorded since 1950. As Fisher originally noted, velocity declines in highly over indebted economies.”

    • Complex issues, but I’ve been watching the downtrends in velocity for some time, and wondering about this.

      I suspect that lack of viable uses for credit is an issue, but I also think that we’re nearing ‘credit exhaustion’, the point at which borrowers can’t (or won’t) take on any more debt, irrespective of how cheaply it is offered to them.

      It’s one thing to pour credit into asset markets, pushing stocks, bonds and property prices higher – but quite another to push new credit through into the ‘real’ economy of transactions.

      Additionally, the mechanics of this are that pushing credit/liquidity into the system more rapidly than ‘real’ activity can grow reduces velocity.

    • @Dr. Morgan
      Regarding the fall in velocity of money. I am unclear on the issues. Now to take a left turn.

      There are at least two ways to try to analyze our options. One is to study end results (e.g., a healthy person, a healthy economy, a healthy ecosystem, a successful social system, etc.) and develop more or less mechanical models by correlating factors. One dreadful example of this is the macroeconomic models used by the central banks, under the delusion that the economy is driven entirely by money.

      The alternative is to develop ideas about underlying mechanism and see where we can find them in the real world. For example…heat engines and dissipative structures. One glance at Earth NullSchool’s map of the Earths circulation patterns at this moment will convince anyone familiar with heat engines that we are looking at a heat engine and the resultant dissipative structures. It was part of the genius of von Liebig and the other scientists who looked at human nutrition to recognize that humans are also heat engines and have dissipative structures. We now know a lot more about the humans, so we recognize layers of dissipation and control and signaling. Diabetes is now recognized (by a wise minority) as a heat engine gone off the rails. The underlying cause is insulin resistance, brought on by excessive fat stored in the muscles. When the cells in the muscles refuse to accept more of the energy offered by the insulin, we say that the human has become ‘insulin resistant’, but we might more helpfully say ‘energy resistant’.

      It’s a short bridge to viewing the fall in velocity of money as ‘debt resistance’…from both the standpoint of the banks being unwilling to lend and the consumers being unwilling to borrow. As one gruesome possibility, we can deal with diabetes by amputating limbs.

      Don Stewart

    • Agreed Tim; most of the stats are at best guesstimate in my view but I suppose it’s the best we have. If they are consistent and not massaged over time, then the trends can be useful even though they are not empirical.

    • @Don Stewart

      I am delighted to see that others have seen the parallels between type 2 diabetes (obesity and metabolic syndrome) with economic systemic dysregulation manifest in our debt and inequality ridden economy. I will look for your sources, thanks

  12. Excellent essay and discussion. Those in power will do almost anything to keep relative advantage. I think I posted the short article by a Davos attendee that the wealthy should pay higher taxes, as the pitchforks will be forthcoming if inequality isn’t addressed.

    What they don’t realize is that rearranging buying power won’t change the end of growth of physical throughput. It might calm revolts for a few years in some countries, but it actually speeds the rate of decline as resource usage increases ceteris paribus.

    • Thanks Steve.

      Some of the more far-sighted members of the incumbency do ‘get’ it, at least as far as the inevitability of redistribution is concerned. But money is indeed not the answer, or even the correct language in which the answer should be expressed.

  13. Tim, a really excellent essay! Your ability to clearly and succinctly describe, and make cogent points about the problem is, IMO, unparalleled. You are top notch at providing the relevant context around your remarks. As long as we are relying on billionaires to do the right thing and save us (or at least pitch in), we need to get you, not Greta, to Davos next year.

    Steve Gwynne, your remark regarding the need for a more integrative cultural politics in lieu of the divisive politics of the day, ideological and otherwise, is of the essence. Of course the big question is how do we do this. In this regard permit me to recommend a thoughtful essay (I apologize if I’ve cited it here before) with practical recommendations about what we need to do to avoid a fascist future, fascism unfortunately seeming to be the human “go to” response when the world / economy is collapsing around your feet. His proposal concerns the need to integrate politics with the rural population. If that doesn’t sound too interesting to you, think of it as a proposal for insulated city dwellers, apparatchiks who run things and politicians reconnecting with the reality of the land and the earth that sustains us.
    Search for “Blood . . . or Soil? Fascism, Leftism and the Coming Food Crises,” Gods & Radicals Press website. Snippet below:

    “So as it stands, people in cities are completely dependent upon increasingly precarious capitalist distribution and food production and have no alternative. Worse than this, the population actually involved in that production (farmers large and small, farm laborers migrant or otherwise) have little care for urban politics and have been for so long abandoned by leftist organizers that they are now solidly sympathetic to white supremacist, nationalist, and fascist rhetoric.
    Let me restate this simply: during the coming food production crises, unless the left also attempts to organize rural populations and farming communities, it will be the fascists determining who in the cities gets to eat. And not just the people in the cities now, but the people flooding into the United States from the Global South (those that get past Trump’s wall, which is being built specifically because he knows they’re coming). And also the people fleeing to larger cities from smaller towns whose infrastructure will collapse first in floods, droughts, and storms. And add to this number all the internal refugees already flooding the streets of large cities, the grey traumatized masses we generally just call “homeless.””

    • Tagio, you do raise some very serious points here.
      As a long-time follower of Dr. Tim’s excellent work here, one thing that I do spend time thinking about is the dynamics of de-growth and decline.
      Dr.Tim’s numbers from his seeds analysis, show us where our economic future lies and also what we will be able to afford in that future.
      However, my great concern is that when taking human nature into account, ( a very unpredictable variable as we all know ), then the decline that we are in will soon turn tumultuous and violent. Dr. Tim’s numbers tell us that we have been in decline here in the UK since about 2003, and my wallet tends to agree with his assessment. We have not yet reached the tipping point, but that can change any day now. Any serious shock to the present system, be it food , water, electricity supplies etc, will result in chaos and in many deaths. This will be used as justification for ever greater control and restrictions being placed upon us. The path ultimately leads to an authoritarian police state where all private property and wealth will be confiscated, and personal travel will be restricted.
      I would rather see a different outcome, but as I ponder over various scenarios, I always come to the same conclusion. I hope that this is just my personal bias coming through, but I try my best to be objective in my thinking. Maybe others can help lift my pessimism, ( which I see as realism ).
      In times of crisis we will need cool heads and rational thinkers to be in charge, sadly, other than the visitors to Dr. Tim’s blog here, I do not see too many of such heads about anywhere.

      Just a quick general comment on Greta,
      I think that the little brat needs a good skelp on the bum and sent to her bedroom with her schoolbooks.
      I will not let myself be lectured to by an overly idealistic teenager who is being used and manipulated by others to push an agenda.
      Please forgive my overly non-PC opinion on her.

    • Johan, Tagio:

      These are very important points, and deserve at least one whole article (probably more) devoted to them.

      All that SEEDS can do is ‘tell it like it is’ from an economics and energy point of view.

      This is important, because it’s something that the ‘conventional’ models in use around the world cannot do (hence so many wrong decisions).

      But there are, necessarily, variables, some of which are structural (de-complexification, de-layering, pressures for redistribution, and so on), which can be tackled logically, but others, which are human, and which lie outside what any model can accomplish. As I’ve said before, ‘decisions are what turn circumstances into outcomes‘. The best that any of us can hope to do here is try to ensure that decisions are taken from as informed a perspective as possible.

      All of us here are rationalists – we want to know the facts, weigh the choices and the probabilities, and assess the most likely outcomes. We don’t let emotion and sentiment over-rule judgment.

      But I’m well aware that being a rationalist can be a weakness as well as a strength.

      My hunch – no more than that, but a strong hunch – is that irrationality and chaos are high risks. In a de-growth situation (something which lies outside all prior experience), we can’t assume that the wisest and most rational choices will prevail. Systems and structures are at risk. To name just two, our financial system is ‘dining in the last chance saloon’, and the incumbent elites, in my judgment, aren’t informed enough, and perhaps aren’t bright enough either, to ride out what’s coming. In the chaos that could ensue from ‘financial chaos’ and ‘regime/elite change’, almost anything could happen.

    • @AustrianPeter,
      Thanks. I have been reading your articles regularly over on TheBurningPlatform.
      PS. My mother was Austrian, and my middle name is Peter 🙂 ,
      so maybe that has influenced my economic perspectives too.

    • Really important thread and ideas. There does need to be a narrative that includes all people in the degrowth. One of the primary concerns is allocating for food production and that will take fossil fuels for the near future. I fear your central model makes sense. So if the market signals are telling everyone in the agricultural industry to consolidate, then we should tell a good story how that may proceed to benefit all parties?

      If we can convince the agricultural community to take a percentage of the profits of the acreage they currently control: but they would not live on the Farm. For instance, take Nebraska or Kansas, we could zone each state for large scale farming done with no labor, while those former individual farmers would be offered a spot in the Big City of Omaha or other locations designated to “survive” the Consolidation. This same model could be applied to Wyoming concerning Cattle as these individuals will still be able to reap the money earned from the Bison, Elk and other wild game that would be allowed to “naturally” (as little as effort for maximum benefit) return as the fences are torn down. The Ranchers and their kin would get a reasonable number of Elk or Bison or Bear for each Cow they had on their land or under grazing leases on public land.

      If we could get a well spoken candidate to propose the idea as a gradual wind down of the rural life that is not sustainable at the current levels of population. I certainly think horses and other animals would increase in use, but the primary mode of making hay would be centrally managed and consist of GPS combines and other non-human equipment. This type of market/government solution could be accomplished in America because of the pro ag bent of the Electoral College.

  14. I like it. Punchy and straight to the point.

    As someone once said (original authorship debated) – ‘if I had more time I would have written a shorter letter’.

    You state that you ‘volleyed’ this one but I’m sure this one has been stewing for a while.

    • Thanks. I’ve been studying this issue for a long time, but what motivated me to ‘shoot from the hip’ on this one was the amount of sheer nonsense that we keep hearing from all sides.

      I admire Greta T, but she needs more factual back-up on energy and the economy. Her opponents need the same, plus greater realism, and the removal of blinkers.

  15. To add to houtskool’s comment, “reality usually triumphs over wishful thinking” on one’s deathbed.

  16. Interesting comment from an electrician in Melbourne: EVs and legacy infrastructure:

    The whole CBD (Hoddle Grid, Docklands) and Southbank is fed by two sub-stations. One in Port Melbourne and one in West Melbourne. This was done to have two alternate feeds in case one failed or was down for maintenance. Because of the growth in the city/Docklands and Southbank, neither one is now capable of supplying the full requirement of Melbourne zone at peak usage in mid- summer if the other is out of action. The Port Melbourne 66,000 volt feeder runs on 50 or 60 year old wooden power poles above ground along Dorcas Street South Melbourne. One pole is located 40 cm from the corner Kerb at the incredibly busy Ferrars St/ Dorcas St intersection and is very vulnerable to being wiped out by a wayward vehicle.


    • All systems contain embedded energy (used to create them in the first place), and all require maintenance energy (keeping them in good condition, and replacing them when necessary).

      Re. EVs, trams and so on, this means that we have to consider more than just the energy used in operating them. Copper alone – required for circuitry – uses a great deal of energy, not surpringly given that we now extract 1 tonne of copper from 500 tonnes of rock.

      Replacing an ICE car with an EV is about motre than mpg-equivalent. Are we throwing away embedded energy prematurely? What energy use (and associated emissions) is involved in building the EV, constructing the factory that makes them, installing charging systems, etc? Reliable studies indicate that, in use, EVs are no “greener” than the latest diesels – it would be interesting to know what happens to the calculation when embedded energy considerations are included.

  17. @Dr. Morgan
    One more provocative thought about humans and economies. We know that some dissipative structures in biology have very short lives (e.g., yeast) while whales have been found in the Arctic Ocean who are 500 years old. While both are structures which dissipate energy, they are very different structures. One isn’t necessarily ‘better’ than the other…just different.

    As I was looking at the differences in money velocity in different countries, it struck me that what we might be looking at is similar to speciation in humans and across different kinds of plants and animals and microbes. Just because China has historically had a low velocity, while the US has had a high velocity, doesn’t necessarily make one better than the other. Such an assertion is analogous to an assertion that the yeast is ‘better’ than the whale because it is burning more calories per minute per kilogram of body weight.

    The trick, of course, is that all of us who read this are constitutive parts of the dissipative structure. Davos Man is certainly happy to think that he is dissipating energy so rapidly…perhaps unaware that he is analogous to the yeast…and will be dead in a short period of time. Meanwhile, the peasant may ‘live long and prosper’ as the energy availability context changes.

    Don Stewart

    • Just a reminder re velocity of money and associated energy: A low dissipation rate is normally not voluntary. Voluntary simplicity is an exception to MPP. (Maximum Power Principle)

    • @Steven Kurtz
      There can be structural elements which can cause hoarding of money as opposed to spending like a drunken sailor. If one calculates the velocity of the money which is put into the sailor’s pocket at 4pm and what he has left at 3am, every central banker in the world is ready to award medals to drunken sailors. Thousands of years ago Moses allegedly told the Pharaoh to start saving, slowing down the velocity of the grain…which was equivalent to money…many duties of vassals to masters being measured in physical items like grain.

      And there are a few rugged individuals who do not eat everything on the buffet as rapidly as possible. In fact, we are now in the historically unique position where diseases of excess are more characteristic of the poor than of the rich. So..perhaps the rich really are somewhat smarter (I didn’t say wise) and know poisons when they see them.

      So the Maximum Power Principle is sound statistically, but there are other mechanisms at work also, which can lead to its suppression in the right circumstances.

      Don Stewart

    • Don, There are exceptions in humans (I guess under 5%), but in no other life forms that I’m aware of. I would not expect the tail to wag the dog voluntarily. INvoluntary simplicity is the rule in many places today, and if most analyses on this blog are correct it will become the norm this century. My trend following estimate comes with the caveat of a Black Swan like success in fusion. BTW, I just read that the JET in Oxfordshire is about ready to be fired up for another test.

    • @Steven
      Go to a playground and watch the children. Are they exhibiting the Maximum Power Principle? We could spend a lot of time trying to even understand the question, but it is clear that it is not ‘pedal to the metal’ and ‘making money’ all the time because they readily fall asleep. I think it is more descriptive to say that animals and children are seeking homeostasis…the balance of movement and rest and consciousness and sleep.

      Now this is not to deny that very small children can be seen falling prey to industrial food. I see toddlers eagerly eating the sugary snacks that their parents feed them. That is one reason why I recently heard some doctors relabeling ‘adult onset diabetes’ as ‘teenager onset diabetes’.

      The issue is that we have used fossil fuels to create a world that we are simply not equipped to find homeostasis in. Our pets are living in a world they can’t navigate…which is why our cats and dogs die from the same diseases humans die from…diseases of excess. I think even the pervasive depression characteristic of the world today is a result of poor use of fossil fuels.

      If there is any hope for us, it will depend upon us expanding our consciousness to include an assessment of the pluses and minuses of any use of carbon. We will have to consciously weigh the use of carbon to terraform an agricultural field to effectively use water versus using carbon for a stock car race. And, thus far, financial capitalism has not shown that it is capable of doing that.

      It’s not hopeless, at least for a minority, in my opinion. Some leaders have developed simple rules of thumb to help guide us. The fact that most people don’t follow those rules of thumb is one reason why I favor governments allowing people who behave unwisely to face the consequences. Experience is probably the only teacher most people are going to pay attention to.

      Hope this clarifies….Don Stewart

  18. @Dr. Morgan
    One final thought on underlying systems vs surface manifestations. Ask yourself, “why do we call it insulin resistance rather than energy resistance?”

    I believe the answer is that ‘insulin’ resistance identifies the problem as some hormonal dysfunction which can be hammered into shape by clever scientists in pharmaceutical laboratories. Very friendly toward Davos Man.

    If we call it ‘energy’ resistance, then it points toward surplus which our particular dissipative system is not designed to handle. And if we consider the awful idea of reducing the energy coming in, we begin looking for reasons why people are eating too much and drinking too much. And we may be dimly aware of the National Institutes of Health metabolic lab study which showed that people eating industrial food eat 500 more calories per day than people eating natural food. And 500 calories per day is enough to add roughly a pound a week (ignoring some control mechanisms available to the body). And now, the finger is pointed right at Davos Man as surely as Greta Thunberg gives them her icy stare.

    As a last resort, we can blame God. God created the Maximum Power Principle which Davos Man leverages by designing more energy dense foods which clueless humans eat which creates the budget busting medical expenses and untold suffering and death.

    Personally, I think Greta Thunberg probably conjured up this whole thing.

    Don Stewart

  19. Range of Responses
    Here is a hilarious 15 minute video which manages to encapsulate some of the range of responses to the CO2 issue:

    I recommend the 15 minute version. It shows ordinary people going about their work while using carbon driven modern equipment, BUT using that equipment and fuel to sequester carbon. We can contrast the trans-Atlantic flights which use the modern equipment and fuel, but ordinarily don’t sequester any carbon at all.

    You can also see the trivialization of everything by the media, and the ‘grossness’ reaction of over-educated urbanites when confronted with the messiness of biology.

    Whether the use of biology to sequester carbon can save us from disaster is a different question. One would have to carefully measure how much diesel they are using, including delivery of the mussels or seaweed to the consumer versus how much CO2 they are sequestering.

    From a broader perspective, the film highlights the necessity for the adolescent human to actually grow up and use carbon responsibly.

    Don Stewart

  20. Pingback: The road to hell is paved with good intentions – La strada per l’inferno è lastricata di buone intenzioni o Greta Thunberg a Davos 2020. – La grana delle parole.

  21. @Steve Kurtz
    Consider walking with your dog beside a pond. You pick up a stick and throw it at roughly a 45 degree angle into the water. The dog will almost instantly calculate the distance it should run on the land and then begin to swim in the water in order to get to the stick in the shortest time. Is this an example of the Maximum Power Principle?

    I think it is really a holdover from the dog’s hunting heritage. It doesn’t make sense for a hunter to calculate the least possible expenditure of calories…the prey might escape. It doesn’t make sense to always do a right or left angle 90 degree turn into the water…because the dog is capable of running faster than it can swim. So the dog optimizes without ever thinking about it.

    A father sitting in a beach chair, who hears a distress call from one of their children in the ocean, makes the same calculations effortlessly.

    The point is that the ultimate goal is what guides the action…speed, calorie efficiency, or industrial convenience (e.g., 90 degree turns).

    A human deciding whether to recycler kitchen waste into the garden can:
    *Have no idea why he would want to recycle, and so doesn’t.
    *Be acutely aware that preserving the fertility of his garden depends on recycling.
    *Believe, perhaps correctly at the moment, that he can always just buy more fertilitty
    *Be aware that kitchen waste put into trash bins is a prime source of methane, which isn’t going to do anyone any good.
    *Have no idea why he might want to have a kitchen garden, and so has foreclosed his options.

    I believe that good public policy makes consequences immediately apparent to citizens.

    Don Stewart

    • Don,
      MPP is the automatic search, procurement, and throughput of energy gradients which nourish life forms permitting replication and expansion of niches. However that is best accomplished is naturally selected.

    • @Steven Kurtz
      If so, then it doesn’t apply to humans living in the age of fossil fuels. See the first 15 minutes or so of Ari Whitten’s interview with Dr. Brad Dieter:

      Listening to the rest of the interview you can hear Keto diets (the current craze in the US debunked). You can also check Dr. Dieter’s website for some provocative articles, including his recent one saying that medicine as currently conceived is never going to resolve our chronic disease issues. And another that the world we are living in (too much food and too little exercise) is profoundly toxic to us. I will note that Dr. Dieter has been invited to events such as the National Institutes of Health trying to intelligently allocate research funds.

      If one wants to say that humans are innately designed to practice wisdom in picking out the targets to shoot for, then I think one has to confront the claims of Dr. Dieter and others who have struggled for decades with the human tendency to take the easy way and damn the consequences. Fossil fuels have made it easy for many people to take the easy way and damn the consequences.

      Dr. Adrian Bejan, the Duke professor who formulated the Constructal Law, admits that humans are currently headed for disaster, but, being an engineer, he thinks we will come up with something. But, as least the last time I talked with, he believed there is no alternative to pedal to the metal. If one applies his notions of evolution, I would argue that humans are about to be selected out of the gene pool for lack of wisdom.

      Don Stewart

    • Don,
      Your interpretation doesn’t jive with that of many who have researched this for decades. Energy to replicate and expand niches doesn’t mean optimal nutrition and exercise to prolong life – just enough to reproduce. And those individual specimens which fail to “do it right” don’t get to reproduce! The gene pool self-selects over time and environmental change. The 7.8 billion who have quadrupled from under 2B in a century are all the evidence needed to prove that humans aren’t an exception.

    • @Steven Kurtz
      One has to start with some basic ideas about survival of the fittest and what defines fittest. If fitness is measured simply be multiplication of genes into the future, then humans should die at about the age of 45. Which we did in many societies for a long time…but there were societies where people lived about as long as they do now…if they got through infancy. Fossil fuels have allowed us to extend lifespan beyond 45, but they have not resulted in an increase in Healthspan for most people. The downside of that is we put more of our resources into keeping sick people from dying. Now if our Value is to have multiple years of healthy life, fossil fuels have failed to give it to us…even though we have some good ideas how to do it. And all those extra years of life are not adding materially to the future gene pool. So why don’t politicians simply say so and stop all the effort going into keeping sick people alive?

      It is instructive, I think, to look at this lecture by Professor Bejan:

      I call your attention to a few points:
      *He assumes that evolution through selection shapes structures to the realities of existence. Modern politics and finance and culture are about denying reality (in my observation).
      *Consider his oil example. He contrasts the Saudi Arabian classic oil field…one vertical pipe producing oil…with a shale field which looks like a tree. From his perspective, the shale field is the natural evolution to a tree structure which provides the most access. This is diametrically opposed, I think, to the notion that rising ECoE is dooming us.

      I believe it is true that, in Bejan’s world, the evolution from single vertical pipe to tree structure would select for humans who are able to live with expensive oil. So let’s look at the sorts of people who would get a lot of benefit from oil…perhaps the sea farmers featured in the videos I linked to earlier, or to permaculture people living in Ecovillages. But strongly selected against would be transportation structures which are not shaped like the Atlanta airport in Bejan’s talk. Which leads us to the notion that LA is toast.

      My point is this: fossil fuels have given humans an excess of energy. The burst of energy was so fast and so huge that we did not evolve specific infrastructure to deal with that amount of energy. So our infrastructure cannot deal with a shrinking amount of energy. In terms of our bodies, since we can’t manipulate them the way we manipulate transportation and manufacturing facilities, we might very well get healthier. Because the surplus which gives us the chronic diseases would disappear. In effect, selection would do the work that years of preaching have not accomplished for the mass of people.

      Don Stewart

  22. The ‘shampoo bottle challenge’, remember?

    The one i posted on here many months ago.

    With a new, fully filled up bottle, you do not consider the consequences of an empty bottle.

    With a almost empty bottle, BUT, knowing the supermarket has your back in the form of boatloads full bottles of at least 150 different brands, you still do not consider the consequences of an almost empty bottle.

    How would you treat an almost empty bottle with the knowledge the supermarket doesn’t have these fully filled up bottles anymore?

    THAT, ladies and gents, is called reality.

    And this is just shampoo. Don’t let me start on other important stuff.

    Remember me when you’re in the shower.

  23. “Because literally none of the goods and services which comprise the economy could be produced without energy, it should hardly be necessary to point out that the economy is an energy system. Equally, it should be obvious that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This access component is known here as the Energy Cost of Energy (ECoE), and it forms a critical part of the equation which determines our prosperity.”

    Thank you for another interesting post Dr Morgan.

    Does SEEDS offer any insight into how the rate at which energy is accessed by the economy affects our prosperity?

    For example, shale appears to have increased the rate at which chemical energy can be accessed by the economy relative to the economy’s ability to use it (i.e. convert that chemical energy to other forms of energy) and so the monetary price of oil has fallen even as the ECoE has risen.

    The economy appears to change the way it uses energy more rapidly in response to the monetary price of oil that it does in response to rising ECoE. Some of the changes in response to a lower price of oil appear to exacerbate the effects of rising ECoE. How can economic actors look beyond the oil price?

  24. Don,

    MPP applies to all living systems. It is not concerned with quality of life, just expansion of it. I’m not getting into a values discussion as that isn’t directly relevant to this blog. I’m merely stating what history has shown over many millennia, and that voluntary simplicity and
    “rational socio-economic engineering” are not “in charge.” The scale problem (overshoot) will be taken care of by the rest of nature. Rebalancing to fit the environment is rarely the result of intentionality!

    Off to take grandsons X-C skiing!

    • Steven, a point regarding your statement that MPP “is not concerned with quality of life, just expansion of it.” This makes sense only if MPP operates on a time scale of relative immediacy and within parameters that permit further expansion. IOW, to me MPP appears to be just a restatement of the primacy of the limbic system over rationality, which foresees longer term consequences but has relatively no ability to curtail or revise immediate desire. Also, while MPP may be a restatement of the desire for expansion, for “more” (Nietzsche’s will to power) our rational brains can see that this is inevitably self-defeating, i.e., renders further expansion impossible and in fact renders collapse inevitable and species extinction much, much sooner rather than much, much later. Exploiting the energy gradient leads to no more gradients to exploit, not necessarily because they don’t exist but because they are beyond our particular life form to access and utilize. What is MPP then?

      Your point further up the chain that the expansion of human population from 2B to 7B illustrates the MPP further drives this home. The things that got us to 7B are also the same things that are going to reduce human numbers below 2B, quite possibly before the end of this century, and possibly to zero. The 2B to 7B “proof” relies on an arbitrary selection of starting and end points in order to be “proof,” because the same conduct that got us to 7B – use of FF and technology (partial list of long-term consequences: heating the atmosphere and oceans causing climate instability, acidifying the oceans, depleting fish stocks and poisoning them with microplastic particles, soil and micro-nutrient depletion through fertilizers and crop monoculture, mass animal extinction, depletion of water and poisoning of water supplies, substantially increasing human infertility from ingestion of micro plastic and other “forever chemicals” that disrupt normal endocrine function) are going to round trip us to below 2B if we don’t drastically alter behavior: it’s only “expansion” if you stop counting at 7B.

      My conclusion is that MPP is valid only on a short time scale, it describes relatively moment to moment behavior, but Don’s point — that we are going to be eliminated from the gene pool because of our lack of wisdom, i.e, our inability as a species collectively to moderate MPP / the will to power for long-term survival based on knowledge and foresight — stands.

      A cruel joke (well, a blind experiment) by nature, that our rational brains can see the inevitable, but only a few of our species will actually alter their behavior based on that foresight.

    • I agree that we will be culled and have said so here many times. My point is that rationality is not the prime driver of human behavior, and long term planning is not our primary strategy. 7.8 billion is current. And the beat goes on. If few localities can plan a generation ahead, why strategize for national or UN/global action? Odds of success are slim and none as the saying goes, and Slim left town. Teach your clan the best you can. Our son and wife refuse to entertain collapse. Their concerns are saving for their sons’ (3 against our advice) education and their retirement.
      I became a fatalist around 15 years ago, although I keep shouting into the wilderness.

  25. Butting in, as is my wont!

    This is forwarded from a friend who is heading proposals for trams in Bath:

    Trams are the only solution in UK that have ever actually drastically reduced congestion and pollution e.g. in the 8 British cities where they have been re-implemented. No bus based solution has ever achieved this. Swansea wasted £10m trying with buses and new roads layout and failed.
    Trams are part of Bath’s heritage 1890-1930, overhead wires are not required in Bath, and do not emit the deadly rubber tyre and road dust pollution that buses do.
    We hope you can attend our conference on Saturday Feb 8th, Bath to find out how trams can revitalise Bath and similar cities and solve the congestion, pollution, and carbon emission problem.

    Full agenda here: https://bathtrams.uk/

    To register and further details see here= https://r1.dmtrk.net/4H0W-R8VI-1L97D7-KZD4W-1/c.aspx

    Our mailing address is:
    Claverton Energy Group
    3 Victoria Place,
    Combe Down,
    Bath,, Somerset ba2 5ey
    United Kingdom

  26. @Steven Kurtz
    I hope you had a good time skiing. I used to ski around the backyard and through the Great Swamp when I lived in New Jersey. Also skied in Vermont and Colorado.

    But if I may make a suggestion about a subject which is none of my business. Bejan “opened up” the subject of thermodynamics, by freeing it from some of the dogma of Ilya Prigogine. See this recent story about his recognition:


    “It was in 1996, however, that he published what became his most notable and daringly original work to date. At a conference a year earlier in France, he heard Nobel Laureate Ilya Prigogine discuss branching patterns found in nature, such as in trees or in the vascular systems of animals. He found himself disagreeing with Prigogine’s assertion that such phenomena were merely coincidental. Bejan was certain that there had to be an underlying principle at work that governed it all. He found that principle in what he termed “constructal theory.”

    If one permits the actors in a drama to have “values” or “goals”, then the subject moves away from molecules bouncing off walls and toward the real world of our consciousness. Since, as we know from Kristof Koch, consciousness is widely spread in the biological world, and Bejan applies something like it in world of river deltas and heat in microcircuitry, then the problems become complex rather than simple or complicated.

    I suggest that if we want to grapple with the issues around rising ECoE and Degrowth and Delayering, then we probably have to deal with Bejan type problems. I’m not at all saying I agree with him on all points…but I find his ideas provocative.

    Now to the meddling. I am now 79. Team Sherzai tells me I can’t avoid losing neural connections in my brain…but I can add new connections by grappling with complex issues. The complicated act of cross-country skiing is not complex, although it does involve a high percentage of the brain. A complex problem while skiing is when one comes to a fork in the trail and you want to go left and your wife want to go right, and both of you have strong preferences. Since women are masters of feedback loops (putting helpless males at a steep disadvantage), you are presented with a complex problem.

    In my experience, it is more fun, and maybe generates some new neural connections, to treat the issues we are discussing as complex systems.

    Don Stewart

    • @DonS. What we don’t know is infinite. Consciousness is understood by science (so far) as energetic in that there are no known examples of it without caloric throughput. Speculations like panpsychism abound. We’ve touched this subject before on this blog. Most humans believe in things they cannot evidence such as supernaturals – deities, ghosts, devils, karma, black magic, witches, etc. If “Constructal Theory” is like MPP in that it is a principle of coordination and trend towards interaction, then OK, it is worth researching. If it implies an intentional teleology, then evidence is required. The greater the claims, the greater the demand for evidence. I have to walk the dog, so can’t research it right now.

    • @Steven Kurtz
      If you watched Bejan’s short lecture at the Divinity School at Duke, you can see that he identified two different strands of ‘knowledge’: religion (very old) and science (very new). He is not an aggressive atheist, in other words. He uses words like ‘finding meaning’. On the back of an envelope, he was able to deduce the hierarchic structure of a river system, such as the Mississippi, by assuming a purpose or organizing principle for the flow of water from a catchment basin to the Gulf of Mexico. Previously, a whole lot of money had been spent laboriously counting tributaries to come to the same conclusion.

      The facts are what they are. Arguing about whether fungi and plants actually have a symbiotic relationship (which is plain English understood by most anyone) or torturing the facts to insist that it is all selfish genes, is an exercise in futility. Which doesn’t prevent ardent reductionists from doing it.

      Don Stewart

    • @Steven
      Read my note on how he calculates the structure of a river basin.
      Don Stewart

    • I read it originally. So he’s a savant with math…Proves nothing re a physical system doing other than “what comes naturally.”

      Out until late afternoon.

    • OK, I found it quickly. It is like MPP in that it is energetic/physical:
      from Duke University:

      The constructal law was stated by Adrian Bejan, the J.A. Jones Professor of Mechanical Engineering at Duke University, in 1996 as follows1, 2:

      “For a finite-size system to persist in time (to live), it must evolve in such a way that it provides easier access to the imposed currents that flow through it.”

      The constructal law places the concepts of life, evolution, design and performance in physics, which is in the broadest scientific arena. The constructal law is the law of physics of life and evolution3-5.
      The constructal law accounts for the arrow of time6, which is the direction of the evolution of flow organization over time.

    • @Steven
      One note about something which confused me for a while. When he says ‘finite’, he doesn’t mean ‘not infinite’. He means ‘not quantum level’. I’m a little unclear on quantum mechanics, but it is possible thermodynamics doesn’t apply at that scale. Maybe all the little quanta just go on about their business for an infinite amount of time…or maybe time is meaningless at the quantum level and time only acquires the arrow he talks about when one gets at least to the level of the atomic particles or the the atom or the molecule.

      Don Stewart

    • @Don S
      I’ll let physicists argue about that. He’s a mechanical engineer, so I assume finite means a bounded system.

    • @Steven Kuirtz
      In the introduction to the award in Philadelphia, he was introduced as a ‘physicist masquerading as a mechanical engineer’. In any event, he has an endowed chair at Duke, which is a very good thing in terms of being able to follow your own path. He has also written bales of physics textbooks over the decades. In any event, you will misunderstand if you thing of “finite” as a bounded system.

      Don Stewart

    • I must admit that my own reaction to ideas like this has tended to be ‘oh, more ways to use more energy – just what we need’. Although I’m open-minded about it, I’d take a bit of persuading…………

      Yes, ECoE is a question – but so is the real economic value of any of this.

    • ECoE for Space stuff ? The only way the question even makes sense would be geostationnary solar PP with mircowave power transmission. There is some rather detailed estimations done at https://dothemath.ucsd.edu/2012/03/space-based-solar-power/ but the TL:DR is that we can hope for 4:1 ERoEI, vs 10:1 for ground based solar power. aka total waste as far as power generation is concerned.

      I doubt we will get to 35$ / kg. 200$ / kg ? yeah probably in the realm of the possible. But then again, LEO is not that interesting beyond communication, observation and tourism. LEO is about 100MJ/kg, which is about the same energy cost incured for transporting 1kg of stuff over 10000km by plane.

      Going further “out” gets much, much more energy intensive really quickly (read expensive). Going to the moon or mars seems a bit like a trap : these places are worse than Antarctica, but without atmosphere (or verry little), nasty levels of radiation and loads of abrasive sand/powder. Mars is also months away, receives low amount of solar power and can get engulfed by storms for weeks.

      The interesting stuff are asteroids, as they are relatively easy to get to, there is no gravity well and they contain usefull materials. But those would only really be usefull to build things in space since bringing them back to earth would cost a fair amount of delta-V. Still : no air, radiation bath, months to get back “home”.

      Nontheless, I can imagine that with low cost per kg, and large investments, something like a moon distant retrograde orbit station or at one of the lagrange point could be made into some ore processing hub and manufacturing center while using the moon as a water & silicates source and asteroids for metals. LEO could probably be used for “mass” tourism alright at 200$/kg.

      It would do zilch to aleviate our energy problems.

    • Thanks. I must say that, in the context that we discuss things here, “space tourism” seems completely pointless – and I’m not even persuaded by the current fascination with littering the skies with huge numbers of dustbins (sorry, satellites). Even flight-based tourism is poised for rapid deterioration, and at least that version gets people sun, skiing and the experience of a different culture.

    • Regarding your views on flight based tourism I’ve got my fingers crossed that the demand starts falling before Heathrow’s 3rd runway is started otherwise we’ll be staring at 4 kilometres of hugely expensive empty tarmac

    • Jackson, I will try to sum up as much as I can in one post. You are correct in your assumption that the main benefit that everyone has in their sites is space solar power satellites. There are other relatively small potential benefits to be gained from asteroid mining of elements that are rare on Earth. But space solar power satellites are the biggest opportunity in terms of revenue and resources returned to Earth. I would also agree that Mars is not a sensible or realistic near term destination, for all of the reasons that you cited.

      SSPS would be constructed at power levels of 10-20GWe and parked in geostationary earth orbit and transmission efficiency by microwaves to rectenna stations of Earth would be about 50%. In Geostationary Earth Orbit (GEO) sunlight is available 99% of the time and flux levels are about 10 times greater than in inhabited areas of the northern hemisphere. So SSPS allows solar power to be deployed without intermittency problems and at a power density much greater than can be achieved on Earth. Structures built for low gravity can also be extremely slender, as they do not need to support their own weight.

      For this concept to be at all successful, the SSPS units must be constructed in space using materials that are already outside of the Earth’s gravity well. As you pointed out, the energy cost of launching the satellite to GEO from Earth surface results in poor EROI and poor financial performance. But let’s assume that there is a source of materials in near Earth space that can be accessed at a much lower energy cost than launching from Earth. In that case, it would make far more sense shipping into Earth orbit the required industrial equipment to smelt those materials and manufacture the SSPS units in space. So Musk’s rockets will not be launching the SSPS, they will be launching the factories needed to construct them.

      The mass and gravitational field of the moon is only 1.2% that of Earth, meaning that only 1.2% as much energy is needed to reach escape velocity. It is also a vacuum environment, allowing bulk lunar materials to be launched into space very cheaply using stationary electric coil guns. With no atmospheric drag and minimal gravity losses, energy requirements for launch from the moon will be 100 times lower and logistically much easier, as we do not need rockets to launch bulk materials. The asteroids have lower gravity and generally better quality ore bodies, but are much further away.

      With a source of materials that are energetically cheap and the industrial capability to process them; the EROI of SSPS units would be far more favourable than a comparable unit launched from Earth and potentially, more favourable than a solar power system built on Earth surface with energy storage.

      This sort of scenario is still a long shot. It would require huge investments in infrastructure and new technology to stand any chance of success. But if launch vehicles like Musk’s Starship are successful in reducing launch costs to low Earth orbit down to a few hundred dollars per kg or less, it becomes possible. And some very rich and powerful corporate interests (i.e. Jeff Bezos) are pouring their billions into exactly the scenario that I have described. If it works, it will change human prospects forever and we will no longer be tied to the resources and living space of a single planet. The same factories that build SSPS could be used to construct human habitats in space and solar powered space craft that would ultimately allow human beings to colonise the inner solar system. I would be wary about betting money on it, but this is the great hope for humanity in the 21st century.

    • Isaac Asimov first wrote about microwave energy beamed from space in 1941.

      It may well be over a hundred years from his idea to realisation.

      My guess 2060


  27. @Steven Kurtz
    Consider this paragraph on carbon sequestration from Adrian Ayres Fisher reprinted today at Resilience.org:

    “However, there’s more. As I have learned about the ways that plants form ecological communities, I have come to understand that soil management requires attention to garden design and plant palettes as well. Maximum carbon sequestration occurs when multiple species of plants with similar cultural needs form a community with each other, other organisms, and the denizens of the living soil in which they grow.

    The complex ecological relationships and interactions among these community members literally create and maintain the conditions they themselves need in order to flourish.

    These interactions also enable short and long-term carbon sequestration. Community health is the reason that boreal and Amazonian forests, as well as wetlands, prairies, woodlands and savannas are able to store so much carbon, naturally. Each of these ecosystems is a different community comprised of yet other different, nested, smaller communities, and carbon storage mechanisms are different in each, yet store carbon they do, in ways we humans haven‘t been able to duplicate.”

    I have isolated the one sentence to highlight what makes this a complex system…the plants are able to sense that the whole is greater than the sum of the parts. Now if you want to impart a purpose to the plants and microbes and insects and creepy-crawlies, it is something like homeostasis: a sense of flourishing. We can explain the existence of the ‘wood wide web’ of signaling between many of the plants by assuming that they can sense when the whole is flourishing. Can you get to this place starting with selfish genes?

    Perhaps. But if I was tasked with talking to a group of people about how to survive in a world characterized by degrowth and delayering and definancialization, I would try to talk like Ayres. Just as Franklin told the rebels in 1776, “we must hang together so we don’t all hang separately”.

    Don Stewart

  28. A comment on Mark Livingstone’s note, on Jan 24, on trolley buses in Belfast.

    In the 1960s I was the Traffic Engineer in the city of Kingston-upon-Hull (NE England) which then had a city-wide network of trolley buses. In 1964 we made most of the streets in the city centre one way. As a result all the trolley bus routes and many of the overhead cables had to be re-routed. All the engineering work was undertaken between the last service on Saturday and the first on Sunday morning.

    It is much easier, cheaper and quicker than trams to install trolley buses. Just poles, overhead cables and relatively light-weight main-powered vehicles. (With surprising acceleration on starting)

    • The first battle that has to be won here is public transport versus cars.

      It’s industry, I assume, which is driving (no pun intended) the case for EVs, even though the logic for conversion to EVs is as full of holes as a string vest.

      Public transport commands all the high-ground of the debate, including economic efficiency and the environment. It’s even, arguably, socially and psychologically preferable for us to interact on trains, trams and buses rather than isolate ourselves in cars.

    • I wonder how a public transport network fits into a de-growth economy? De-layered bus services round here are on-demand community minibuses driven by volunteers. Maybe we are seeing the future round here without recognising it! Our ‘phone boxes are now village libraries, art galleries, defibrillators, etc.

    • Public transport vs cars will solve itself. Isn’t that one of the levels of delayering? Lets hope de-globalization can keep up with de-growth and provides the rest of us with some form of local economies.

  29. Tying Some Things Together
    How do we talk with the public about the Post-Cheap ECoE world?

    I suggest a few points;
    *Adrian Bejan’s work explaining how things move in the world from water seeping through soil to finally end in the Gulf of Mexico; how swimmers excel; how people choose means of travel, and so forth are instructive. I would argue that Bejan is assuming that humans and other animals and even inanimate objects have agency. We can call it purpose, or goal, or whatever we like. Agency frequently means we are dealing with a complex system with multiple agents have their own agendas.
    *The ability of things in the world to have agency is not derived from quantum mechanics. It is obvious. Those who use quantum mechanics to insist that nothing actually exists are off in their own universe and we can’t communicate with them. (A proof of parallel universes???)
    *Kristof Koch takes consciousness as his bedrock. Just like Descartes, he does not derive it from quantum mechanics. It just is, and we recognize it as real.
    *Where science starts is when we begin to study consciousness, including figuring out whether other people and other critters and other forms of matter have it or not. Do bacteria who are activated by quorum sensing have consciousness? Are single celled critters who flee pollution in ways very much like a human conscious like humans? How do I know that you are likely conscious? And underlying all that is some definition of consciousness which allows us to make useful predictions.
    *Cronise and Hever, in their book The Healthspan Solution, argue that any successful missionary endeavor will involve showing that the proposed change will be “convenient, familiar, and enjoyable”. Unless the proposed change meets at least one of those criteria, no change is going to happen.
    *I suggest that there is another criteria that Cronise and Hever do not consider: necessity. Part of the ECoE and debt as diabetes story is that continuing on with the present plan is simply impossible. Therefore, the missionary appeal is that what most Americans (substitute your own country) are doing simply cannot be sustained. And you (the missionary) have some suggestions for how a person or a family or a community or a political group might adapt to the new reality and still live a meaningful and enjoyable life. If you can’t do that, in the words of Harry Truman: “if you can’t stand the heat, get out of the kitchen”.
    *So the appeal might be thought of as something like this: the dog chases the stick thrown in the water to minimize time to retrieve…but perhaps a starving dog, or a dog which has to hunt for its supper, would not chase the stick at all, or might take the path of least energy expenditure. In terms of ‘not chasing the stick’, think the use of cosmetics or the time spent on social media.
    *I do not have a stump-speech in my hip pocket. Just thinking about the framework.

    Don Stewart

    • This, for me, is one of the most disturbing aspects of de-growth.

      Over three decades and counting, both greed and ‘entitlement’ have been validated by ‘liberal’ economic (and social) ideologies. As the economic pie gets smaller, some will try to grab a larger slice of it, and others will try to defend their own slice against the shrinkage happening generally. Another way to look at this is that vested interests could become an even bigger problem in de-growth than they already are.

      I would stress that it’s not just criminality to worry about here, but the use of legal means to oppose down-sizing.

      This adds to the growing list of actions likely to be required of government at a time of unprecedented change (and shrinking budgets).

    • Tim and all,
      Recall the experiments with (conscious? I think not) rats in a cage. As their numbers kept increasing they began cannibalizing each other. Living space and resources kept shrinking p/capita. Humans are likely headed down a similar path. Cultural values and societal structures can moderate/govern this, but it seems to me that there are limits to that. Biology and clan preservation are powerful.

    • I’m quite certain the fate of countries will be determined by whether the elites of a given country are able to behave in the common interest like in the US post 30’s crash (Revenue act of 1935) or choose to ghetto themselves even more aka turn most countries into flyover states with safe enclaves here and there.

      From an historical perspective it seems that the more the elite gets insulated from the consequence of their actions, the worse the failure. The mayan elites and the french nobility both experienced first hand the limits of wealth insularity on a degrowth background.

  30. @conscious rats
    The rats were, using Koch’s definition, hyper-conscious.

    Which just goes to show that in a complex system involving conscious rats, overcrowding, with blocked escape routes is like excessive pressure in a steam boiler.

    Don Stewart

    • Koch’s book:

      “This engaging book―part scientific overview, part memoir, part futurist speculation―describes Koch’s search for an empirical explanation for consciousness. Koch recounts not only the birth of the modern science of consciousness but also the subterranean motivation for his quest―his instinctual (if “romantic”) belief that life is meaningful.”

      Rats are aware (conscious in that sense), as they react to stimuli. I should have written “self-conscious.” What distinguishes humans according to some psychologists and philosophers is reflexive self-consciousness: aware that they are aware.

    • @Steven Kurtz
      Koch defines consciousness as the ‘feeling of living’. If one accepts that definition, then any critter that can seek homeostasis is ‘conscious’…at least it seems so to me. A creature with more sophistication can take into account more breadth in assessing how it feels. For example, a wise person would not feel so good right now about putting a lot of carbon dioxide into the air. There is no evidence that apes give it a second thought. But apes certainly pick certain leaves and fruits based on the prediction of how they will feel. The same way, a human predicts how it will feel while driving a fast automobile, with perhaps some nagging doubt about the CO2…but most people go with the animal reaction. So my suggestion is that effective missionary work (the context of this series of posts) requires that the missionary widen the scope of consciousness in the audience so that more than the immediate rises to prominence.

      For example, consider how much money the rich used to bribe their children’s ways into USC and Yale…yet they probably wouldn’t spend nearly as much money to ensure that those children had a safe world to live in. A successful ‘broadening’ was accomplished by GrowBaby, where the mother and daughter team were able to leverage a pregnant woman’s concern about her baby to over-ride the woman’s desire to eat junk food.

      Don Stewart

    • @Don S. Koch is a Panpsychist. Believe what you like. It’s the same as religion. I’m unwilling to assign consciousness to a grain of sand. He isn’t. I grant that living systems seem to be aware.

    • @Steven Kurtz
      The more ‘scientific’ people become, the more they tend toward a ‘unity of all things’ perspective…at least some significant number of them. From the magical properties of number to the statement by Bejan that ‘life is movement’ to the statement by Koch that consciousness is not a mysterious substance floating in the ether, uniquely given to humans…but is instead simply the ‘feeling of life’. The Life Sciences have done a pretty good job of figuring out the mechanisms connecting our forecast of how we will feel given the alternatives we can choose between and the actual decisions we make. You can label it ‘religion’, (I presume to damn it), but it just is what it is. While reliance on feeling has some obvious drawbacks, it also allows us to very quickly choose between alternatives that we could never model with engineering studies.

      Don Stewart

    • @Steven Kurtz
      ‘Magical’ in the sense that we really can describe the world with mathematics…a property which many eminent scientists find ‘magical’. As in statements such as ‘God must be a mathematician’.
      Don Stewart

  31. Tim, you noted, very aptly, that “I would stress that it’s not just criminality to worry about here, but the use of legal means to oppose down-sizing.”

    This is one of Nicole Foss’s continuing themes, who predicts that property taxes will rise dramatically as state and local revenues decline.
    And of course this kind of thing is already occurring. The original “Obamacare” mandates that people buy health insurance. I.e. compels people to support the health insurance industry, premiums growing at 10%+ per year, under the guise of “providing” “healthcare” more universally. Failure to buy insurance was punishable by a tax penalty to be assessed by the IRS, and the Supreme Court upheld the constitutionality of the law as a tax law! The Republicans under Trump repealed the tax penalty which logically means the law is unconstitutional unless a new theory can be drummed up by the Supreme Court.

    I have read that certain localities have prohibited people from collecting rainwater for personal use, because it diminishes the amount of run off going into the reservoirs – in order to support the local utilities and amounts collected for water fees.

    • Tagio (et al):

      In reference to the use, by ‘interest groups’, of illegal (but also legal) means to insulate themselves from the effects of de-growth – and thereby, of course, to transfer more of these adverse effects onto others – I’ve been reflecting on this, and suspect it’s going to be a huge issue.

      From big business to labour unions, from financiers to workers, from bureaucrats to management cadres faced with de-layering, from demographic interests to ideologues, as well, of course, as the simply selfish, this could get very messy indeed.

      Increasingly, I feel that we need to find some kind of structure for our analysis of what all of this means – it’s huge, complex and potentially amorphous. I’ve already looked at things from the point of view of business, with ‘government’ and ‘finance’ listed for future assessment.

      I might well produce an article on ‘where do we go from here?’ – a question that, incidentally, I’ve increasingly found that I’m asking of myself…..

    • On the subject if de-growth I see that the Government is hoping that the introduction of 5G will spur growth.

      Well I’m not sure how many will be able to afford it and of course it will need another layer of technological complexity adding to our economy

      I’ve also read that it could cost £9bn to cancel HS2. Together with the 5bn already spent just think of the difference 14bn would have made to local transport infrastructure.

    • ” I might well produce an article on ‘where do we go from here? ”

      A very interesting question indeed Dr. Tim, and I too have been asking myself this.
      But I am also asking myself the question,
      ” How much choice do we actually have ? ”
      I am increasingly of the opinion that we are on a runaway train, and that regardless of what we do now, it will have little or no effect.
      After all, the mainstream is not on board with what we all discuss here. There is really no consensus out there, other than for BAU.
      To make a significant change now, would require a new Cultural Revolution, one so large and tumultuous that would make MaoTseTung look like a boy scout.
      Nobody is going to buy into that.

    • We seem to be thinking along parallel lines here, Johan.

      What I would stress, though, is that the capability to put off decisions and changes is limited by what is actually happening to prosperity. We can tell ourselves comforting fibs about how great everything is, and pour in huge amounts of cheap credit and cheap money in an effort to ‘prove’ it, but reality has a habit of turning up, and breaking through our collective efforts at denial.

      It’s almost like being a general, looking at your defensive perimeter and not knowing where the ‘breakthrough’ is likely to occur. Will it be asset markets, and other financial issues? Will it be public anger? Might it be somewhere that we haven’t even thought about yet?

    • The “Runaway Train” metaphor was used in a book title by Brian Czech, leader of Steady State DOT org Worth a look. He has a PhD in Natural Resource Economics, and teaches as well as runs this NGO. I met him around 17 years ago in DC at a population strategy conference.

  32. @Steve Kurtz, it’s even more depressing to think how little the payoff amount actually likely is compared to the damages to the commons. As I am sure you know, there have been economic studies of the relative pittance that lobbyists have to pay to achieve incredible cost savings or secured monopolies for the industries / financial enterprises that employ them, through new laws and regulations. The returns on this kind of “investment” are astronomical.
    How do you beat this when people sell themselves so cheap?
    Our current society is very, very toxic.

  33. Rats and Debt Diabetes
    Now that we know rats are conscious, pay attention to their neighbors, and have triggers that influence behavior…

    It would be interesting to try to induce debt diabetes (resistance to more debt) in a rat population. Suppose we give the rats a quantity of sugar, but then they are dumped into a tub of water and have to tread water for X minutes before the water drains out of the tank. They will soon learn that if they take the sugar, they are going to have to swim. So we hypothesize that the negative reward may, at some level, overwhelm the short term pleasure of the sugar. So we begin to increase the time to X+N; X+2N; X+3N etc. until, we hypothesize, the rats will refuse the sugar. We can also get a clue whether they understand derivatives and slopes. The amount of time they have to swim is equivalent to a human debt…how much work are you going to have to do to repay the debt?

    But now suppose we have a circle of rate cages, and, we manipulate the quantity of sugar so that our rat who stopped eating the sugar sees other rats (who are still starved for sugar) enduring the longer dunking in order to get the sugar. Will our hero endure the longer dunking because everyone else seems to be doing so?

    We can also run the experiment in reverse. What happens when the dunkings keep happening but the amount of sugar declines? What happens with groups of rats when the amount of sugar declines (similar to the square inches per rat declining in the experiment cited by Steven Kurtz?

    And so forth. Somebody may have done all these experiments already. But they might give us clues as to how a very large rat with only a little bit more sapience might react in a Degrowth, Delayering; De-Financializing world.

    Don Stewart

  34. Rats are among the most fascinating of creatures. But let’s look instead at the behaviour of much less charming animals: drug gangs.

    In the UK -perhaps everywhere? – the price of drugs has fallen markedly, so they are engaged in vicious struggles to increase their market share and maintain/increase revenues. Cuts in police funding are aiding this market development.

    This is spilling out on to the streets; we also see the ruthless and unprecedented exploitation of even very young children, and, according to the hospitals, increasingly savage attacks and murders ie not just one or two stab wounds, but frenzied assaults.

    There’s a robust, real-life, economic behavioural model in times of stress!

    As for irrationality rather than crime, I see that it’s being said that the absurd fast railway line going Up North, HS2 (not very high speed at that) should not be cancelled, as it has to be built ‘to send a message about national confidence’!!!

    Tantamount to saying it’s nonsense, but has to be seen through to show we can do something, anything.

  35. Dr Morgan,

    Common sense, yes I know, ha ha ha, tells me that money should have been running around like a mad thing back in 1950 when half the world needed to be rebuilt, so why was the velocity so low? What is it I’ve missed?
    Billions of words have been written since GFC1 in 2008 but you are one of the very few people with any real understanding of the extraordinary position we all find ourselves in. Another first-class post.

    • Thanks Paul, you are very kind.

      I’ve been fortunate in having, thanks to the the pioneers, the basic idea (that the economy is an energy system) to build on, after which, with my background in energy, finance and ‘strategy’, it has seemed logical to model the situation (SEEDS), and to explore issues arising from this process.

      The further we proceed, the more amorphous the whole issue seems – and, to try to impose some framework on it, I’m looking at five themes, of which ‘finance’ is one. So we’re likely to be looking at financial issues here pretty soon – and I’ll be discussing velocity as part of that.

      For now, though, my thinking starts with two observations.

      First, the effective money is supply is Q x V, and not simply Q, as used in early monetarist interpretations of inflation. (A practical problem here is defining and measuring Q – the US, for instance, no longer publishes M3).

      Second, V is largely conditioned by public perceptions and expectations.

      My feeling is that the post-1945 mind-set was one of caution – most people had memories of the 1930s, so were ‘conservative’, in the sense of liking to save, and being cautious about ‘going into debt’. This would have acted to restrain V.

      Latterly – circa 1980-2008 – attitudes were almost the opposite, driving V upwards. This might be called ‘unrestrained’, to differentiate it from ‘conservative’ in the sense I’m using the word here.

      My supposition is that, since 2008, the authorities have promoted and facilitated the ‘unrestrained’, but the public has retreated towards the ‘conservative’. What the authorities have been trying to do is a bit like ‘pushing on a string’ (it’s also been mistaken, but that’s another discussion).

      From a SEEDS perspective, I note a huge overhang of ‘excess claims’, meaning a money/credit/asset price aggregate on which the ‘real’ economy is incapable of delivering. By definition, ‘excess claims’ cannot be honoured, so must be destroyed, either by asset price collapse (and associated defaults), or by hyperinflation.

      This takes us back to ‘pushing on a string’. What looms, I think, is ‘credit exhaustion’. This means (a) that people refuse to take on even more debt (however cheaply and easily it is offered), and (b) that we run out of viable projects for credit funding (however low our definition of ‘viable’).

    • Tim,
      Your evaluation matches mine. As my last partner in our currency option dept. (30+ years ago) used to say, “You can’t make chicken salad out of chicken sh*t.” This isn’t copywritten!


    • In relation to “the post-1945 mind-set was one of caution” I suggest this was unavoidable. I left school in 1953 – the year sweet rationing ended. My recollection is that this mind-set lasted until the 1960s. Domestic borrowing was impossible. With hindsight It was hard, but that was all I knew. Will de-growth be like that?

    • I believe that, as late as the 1970s, banks would not advance a loan unless the customer explained, satisfactorily, what it was to be used for.

    • “Domestic borrowing was impossible. With hindsight It was hard, but that was all I knew. Will de-growth be like that?”

      We’ll begin to find out on 30th March when overdrafts become much more expensive.


      This will probably have a significant impact on the velocity of money in the consumer sector of the economy.

    • I don’t know about other countries, but a 40% rate on overdrafts,. with base rates close to zero and saver rates much the same, seems outrageous – even credit cards (typically 19% in the UK) seem exorbitant.

      This sort of thing can only bring “credit exhaustion” nearer – that’s the point at which credit stimulus fails to work in the ‘real’ economy, and ups the ante on staving off an asset price crash.

    • Thanks.

      I’m thinking about bringing forward a discussion about ‘the financial system and de-growth’, provided that I can obtain all of the necessary numbers.

    • One reason for the low Q x V, at least back in the 1960s when I started work, was not much Q and no credit cards. Once I’d paid for my basics, rent, food (not ready made meals and takeaway coffee) and transport to work – there was very little left.

  36. Interesting article from Peter Schiff, nearly 2 years old now.

    For a set of technologies that are overwhelmingly capital intensive, sub-zero effective interest rates since 2008, have been an enormous boost for renewable energy manufacturers, installers and customers alike. Since 2010, commodity prices have been in deflation as well. After 2008, the price per watt of solar PV fell off the edge of a cliff. Wind power prices have followed the same trend. Both energy sources were expensive curiosities back in 2008. Practically all growth in the solar and wind sector has taken place in a negative real rate environment.

    Which raises an interesting question: What will happen to per watt installation costs and levelised cost of energy, when interest rates eventually return to normal?

    • Much to ponder!

      Stats show that, even within the ZIRP environment, capacity growth in RE has stalled, with capacity added in 2018 the same as was added in 2017 (the first time this has happened), whilst real-terms RE capex was lower in 2018 than in 2011.

      My belief is that prior growth was powered by subsidies, but these ceased to be affordable once take-up passed a certain (very low) point.

      I’d reiterate that, with the cost of tackling intermittency being circa 10x the cost of capacity additions alone, the economics of ‘add-on’ and ‘baseline’ RE are two totally different things.

  37. Climate Scientist/ Psychologist
    I will be participating in a conference call with this man today. (I’ll let you know if any startlingly good ideas come out of it.). About a 5 minute read:

    First point is that my discussion with Steven Kurtz about feelings is right along the lines of this article…it’s not primarily about facts, it’s about feelings.
    Second, feelings are also connected to the stories we tell ourselves. The most profound shocks frequently come when people realize that their stories are fantasies which will not come true. E.g., getting your child into Harvard won’t guarantee them a bright future.
    Third, for some considerations it doesn’t matter whether one sees fossil fuels declining because of climate change or financial debacles or depletion…we are currently utterly dependent on fossil fuels. (see note below)
    Fourth, it does make a big psychological difference whether we walk away from fossil fuels in order to save the planet, or whether fossil fuels walk away from us. In the former, we can console ourselves that we still have a choice. In the latter, we don’t have even the illusion of choice.

    *Footnote: I read yesterday that, back in our race’s childhood, humans and their stuff was about a tenth of one percent of what we could see around us. Now it is 98 percent humans and their stuff. For example, humans and their domesticated animals now dwarf wild animals. This is important because wild animals take care of themselves and we can simply prey on them. Domesticated animals will die rapidly if we can’t take care of them. And how do we take care of them? Overwhelmingly by using fossil fuels. Consequently, dreams of the deer hunter about living off the land are fairy tales for almost all of us. The inability to revert back to the world we evolved to live in is scariest for those who are best educated.

    Don Stewart

  38. Even at zero effective interest rates, growth in new investment in renewable energy stalled back in 2011 and has remained flat since then.

    Total capacity additions started tapering off in 2015 and are now at a steady 170GW per year.

    At this rate, it will take 200 years to replace the energy we receive from fossil fuels. Long before then of course, new wind and solar plants would simply be replacing those that had worn out. At present rates of capacity addition, that would happen when renewable energy provided about 10% as much energy as fossil fuels do now. Part of the problem is that with the growth in capacity, subsidies have become unaffordable. And growth appears to have stalled as they are increasingly withdrawn.

    This is a huge problem for two reasons:

    1. Interest rates are already effectively zero. The economic conditions favouring renewable energy will never be better than they are now. And yet the industry is full of zombie companies with a high bankruptcy rate. What would happen if interest rates went back up to ‘normal’ levels?

    2. Because of their poor baseline EROI, building up renewable energy capacity will take a lot of energy, most of which comes from fossil fuels. But as conventional oil and gas deplete, the EROI of fossil fuels is falling fast. Dr Morgan’s analysis indicates that the Energy Cost of Energy from fossil fuels is already above 10% and very little will be economically viable by the middle of this century.

    These inconvenient truths suggest that renewable energy will not be capable of substituting fossil fuels at anything like present rates of energy use. A world running on renewable energy would be a very different place. It would be a world of much more expensive energy and much lower incomes. It is questionable whether we could feed the present world population under those conditions.

    The question then is: How long will it take the world to wake up to the reality of our energy problems? Will that happen soon enough to replace declining fossil fuel energy production with a High EROI nuclear alternative, before famine becomes a serious problem?

    • All of your critiques of renewable energy also apply to nuclear energy. Both require huge amounts of up-front fossil fuel consumption for construction and low interest rates are needed to make the large initial financial investment feasible. Nuclear has also always received a huge “subsidy”, at least in the US, from the Price-Anderson Act and its like, without which insurance costs would skyrocket.

      In addition, nuclear power production entails significantly more CO2 emissions than wind or hydro. It has about the same CO2 footprint as solar PV and solar thermal. http://energiasostenible.org/mm/file/GCT2008%20Doc_ML-LCE%26Emissions.pdf

      The only significant advantage of nuclear over renewables is its constant capacity. This is important, but not enough to make nuclear a panacea for all our energy and climate issues.

  39. Even at zero effective interest rates, growth in new investment in renewable energy stalled back in 2011 and has remained flat since then.

    Total capacity additions started tapering off in 2015 and are now at a steady 170GW per year.

    At this rate, it will take 200 years to replace the energy we receive from fossil fuels. Long before then of course, new wind and solar plants would simply be replacing those that had worn out. At present rates of capacity addition, that would happen when renewable energy provided about 10% as much energy as fossil fuels do now. Part of the problem is that with the growth in capacity, subsidies have become unaffordable. And growth appears to have stalled as they are increasingly withdrawn.

    This is a huge problem for two reasons:

    1. Interest rates are already effectively zero. The economic conditions favouring renewable energy will never be better than they are now. And yet the industry is full of zombie companies with a high bankruptcy rate. What would happen if interest rates went back up to ‘normal’ levels?

    2. Because of their poor baseline EROI, building up renewable energy capacity will take a lot of energy, most of which comes from fossil fuels. But as conventional oil and gas deplete, the EROI of fossil fuels is falling fast. Dr Morgan’s analysis indicates that the Energy Cost of Energy from fossil fuels is already above 10% and very little will be economically viable by the middle of this century.

    These inconvenient truths suggest that renewable energy will not be capable of substituting fossil fuels at anything like present rates of energy use. A world running on renewable energy would be a very different place. It would be a world of much more expensive energy and much lower incomes. It is questionable whether we could feed the present world population under those conditions.

    The question then is: How long will it take the world to wake up to the reality of our energy problems? Will that happen soon enough to replace declining fossil fuel energy production with a High EROI nuclear alternative, before famine becomes a serious problem?

  40. Blue Zones and ECoE Problems
    As we think about Degrowth, Delayering, DeFinancialization, etc., it may be worthwhile to look at an initiative which is tackling some of the same physical and psychological problems.

    This is an interview with Dan Buettner, an endurance athlete, who writes about the Blue Zones where people live healthily to 100 and older. In contrast with the average American who has 5 chronic diseases when they go on Medicare at age 65. Buettner provides a glimpse, with the invaluable contribution of the National Geographic photographer, of what it looks like to live a Blue Zone lifestyle. But moving to a Blue Zone does not solve anyone’s problem, because the Blue Zones are rapidly turning into LA or Mississippi in terms of food culture and chronic disease. The trick, as Buettner says, is to live in a context such that eating (and working with your body?) is the easiest and most familiar thing to do. (Echoing Hever and Cronise).

    If our Missionary work is to show people how to deal with declining Surplus Energy, then I would guess that something similar is required. For example, we don’t see pictures of Blue Zone people cooking on a 3 rock stove. So some clarity about what can be preserved from the existing civilization and what needs to be ditched is probably an essential step we need to take. Unfortunately, most people are either ‘pedal to the metal’ or total collapse. Little attention is usually paid to decline rather than collapse.

    Don Stewart

  41. ‘All of your critiques of renewable energy also apply to nuclear energy.’

    Joe, not really. Producing 1MW of electric power from the wind, requires about 20 times more steel and concrete than a modern light water reactor.

    Click to access a5c55a312f3f45ccfcc4a093a941366c6658.pdf

    And that doesn’t include investments in extra transmission lines needed for wind or any investment needed for intermittent power buffering. When we include estimates for these and factor in the fact that wind turbines have effective life of 20 years; it takes about 100 times more materials to add 1MW of wind electricity to the grid compared to a competing unit of nuclear power. Nuclear power capital costs are largely the result of institutional issues and atrophy of supply lines. In the 1970s, the US was building light water reactors for $1000/kw in modern money. The French and Koreans has similar costs in the 80s and 90s.

    I address most of the remainder of your points in the comments of Tim’s previous post.

    Strictly speaking, neither wind power or nuclear power emit CO2. There have been attempts to link embodied energy to carbon dioxide emissions. Light water nuclear reactors massively outperform any competing renewable energy source in this regard, due to their much greater power density.

  42. Note from Psychology and Climate Change Discussion
    I thought this was off-track in an important respect. The message from the scientist/ psychologist seemed to be that we have plenty of ways to generate energy…so why are people irrationally addicted to fossil fuels?

    I closed the session with an observation about one of the participants who said he was looking for ways to visit relatives in Europe that didn’t involve flying. I called to mind Jan Troell’s masterful movies The Emigrants and The New Land. Very poor people from Sweden, abused by the religious hierarchy and the nobility, set out for Minnesota. The director, Troell, told the actors in the scene where they leave in a horse drawn cart to portray people with the knowledge that they will NEVER again see the people they are leaving behind. I said that if one calculates the energy required to travel to Europe, the cheapest way to get there is to fly. Spending many days or weeks, rather than hours on a plane, will consume a lot more calories than a heavily loaded large airplane. The straight-forward solution is to simply get over traveling to Europe.

    I related the psychological change to someone recognizing the reality of death. I referred to a friend of ours who, in the last 2 years, will have buried her husband and a daughter, both victims of cancer. I remarked that it seems to me that she has now accepted the inevitability of the daughter’s death (the daughter has stopped eating), and a sort of peace has enveloped her. In other words, she has moved on…just like the Emigrants.

    I don’t think we can fool people into thinking that we have a rabbit in the hat which we can easily pull out for the audience to see. I do think we might have something to offer in terms of coming to grips with the new reality.

    Don Stewart
    PS. I also used my line about all the wealth of the world disappearing in 4 hours of plunging markets. That got some serious silence.

    • I’ve seen my Californian cousins three or four times in seventy years, that’s now it, unless they come to Europe. They just want to travel the West Coast. So that’s it…different lives…

    • Don:

      Much of the world’s financial wealth is indeed notional, meaning ‘theoretical, and incapable of being monetised’, and could indeed evaporate through price crashes. Once the myth of “perpetual growth” is exploded, many of the fundamental props supporting asset prices could collapse. There are multiple ways of looking at this. For instance, if someone has a house worth $500,000, and its price falls to $100,000, he or she still has the house – but if they also have a $400,000 mortgage…….

    • Jeremy:

      As a youngster I had a fascination with CA, but I never got quite that far West. My late father, on the other hand, once bought a Mustang and drove the entire US and Canadian West Coasts, not including Alaska.

    • Humans, like other life forms, follow MPP (Maximum Power Principle) and MEPP. (Maximum Entropy Production Principle. Fossil fuels are just discovered forms of stored energy which filled the bill.

  43. Well ‘unbelievably’ it looks like HS2 is going ahead although it’s more political than financial.

    Javid must know it doesn’t make financial sense and that’ll divert resources away from much more vital local transport needs.

    Who ok n the Treasury has done the sums for this? I wonder if I can ask for a copy.

    In my area they are cutting much needed buses that are heavily used because their routes go over the London border and there’s a funding row.

    There are similar stories all over the country.

    Buses could be provided at a fraction of the cost of HS2 – so it seems like madness to me

    • Just follow the money Don, and I don’t think you will get anywhere questioning the Treasury – they will bamboozle the best of interrogators – it is what they do and are trained to do. I, like you, believe that HS2 is a boondoggle and someone is making big bucks out there somewhere, well hidden; there is no logic that can justify this immense ‘investment’ – it is political. The Tories need to convince their new, temporary northern supporters that they are being coddled ready for the next election.

      I read recently that Bath, here in Somerset, have a ginger group to promote electric trams which I think is a great idea, and they should be FOC IMO. This would eliminate the pollution of tyre wear and brake dust which I think is at the root of urban health problems; as well as providing a controlled pedestrian environment.

    • If it were down to me, and taking advantage of some of the freedoms created by “Brexit”, I’d be tackling UK rail in a totally different way.

      It seems to me that the UK can use rail to attain two, complementary objectives. The first is to create a superb quality railway service, not in decades to come, but soon. Second, the UK needs a centre of engineering excellence. Rail, properly handled, could deliver both.

      The first steps would be (a) to take all rail operations into public ownership, and (b) scrap HS2, but earmark much of its huge budget to ‘rail excellence’.

      A northern project would be a good place to start. Passengers don’t need faster trains – and certainly not decades in the future – but need comfortable, reliable, roomy and frequent trains now (or, at least, as soon as possible). At least one centre for engineering excellence, and a facility for building rolling stock, would be created in northern England (my suggestion might be Sheffield). The aim would be to establish new standards by making the northern system better than anything ‘down south’. The new enterprise could endow and maintain its own higher education institute, with the focus on engineering, innovation and design.

      To start with, this would need a lot of public money – but it would still cost a lot less than the huge sums allocated to HS2.

    • Excellent assessment Tim, thank you, and I fully agree with all you say. I am a member of a group promoting public ownership of the railways and have always thought that the immense capital investment required in railways has to be in the hands of government.

      We are led my people whose agenda does not conform to the public good. As projected here by public-minded commenters, this cannot end well.

    • You’d probably be sent to an asylum for coming up with such a good idea Tim.

      Peter – yes follow the money – you’re idea is a good one.

      I’d love to see a light railway introduced in my area to take people under the Thames plus a train line heading East to West just south of the southern section of the M25.

    • Another good idea Don, but TPTB have another agenda; they don’t care about the 99%. Everything is geared for the 1% to prosper at our cost – it has ever been so IMHO.

    • Well there is one bit of good news – it maybe that the multi billion pound theme park due to be constructed in my area has stalled again. Perhaps the accountants have read Tim’s blog.

      Of course my local MP (Conservative) is furious or feigning it – but the truth is that our local roads – trains hospitals etc could not cope with 1000’s of extra people.

      As it is huge new estates are going up with no sign of any new hospitals.

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