#210. As the window narrows


These are hard times for what British politicians ritually call “hard-working families”. Taxes have been raised to levels not seen since the post-War years. The ‘cap’ on the costs of electricity and gas has been increased by 23% so far this year.

Our focus here is on global economic issues, not local political ones, so this isn’t the place to debate whether the tax increases could have been implemented more equitably (which probably they could), or whether the additional revenues will be sufficient to fund the cost of social care for the elderly (which very probably they won’t).

The point is that paying more tax – and having to spend more on electricity and gas – leaves less money in the pockets of “hard-working families”.

Inflated asset prices may enable statisticians to claim that Britain has ‘never been wealthier’, and official figures continue to show “growth” in the economy.

But the inflated prices of property, equities and other assets are functions of the ultra-low cost of money, whilst “growth” in GDP is a conjuring-trick – comparing 2020 with 2000, aggregate British debt has increased by £2.8 trillion in real terms, whilst GDP has “grown” by just £400bn. Even this ratio – of £6.90 borrowed for each £1 of “growth” – understates the true extent to which “growth” has been bought with credit. Asset prices, meanwhile, cannot be monetized in aggregate, because the only people to whom an entire asset class can ever be sold are the same people to whom it already belongs.  

GDP measures economic activity, whether as money spent and invested, or received as incomes. It doesn’t concern itself with where this money comes from, or connect recorded “activity” to a balance sheet showing forward commitments.

GDP thus measured can always be inflated by pouring credit into the economy. Within the parameters of currency credibility, GDP can be ‘pretty much whatever you want it to be’, so long as you can pour enough liquidity (which conventional economics calls demand) into the system.

In 2020, the year of the coronavirus crisis, British GDP fell by 9.9%, or £230bn, but that’s after the authorities had pushed more than £280bn of additional liquidity – borrowed by the government, and monetized by the Bank of England – into the system.

What we’re describing here is a flagging economy, with GDP juiced using credit expansion, at an adverse rate of exchange where nearly £7 of borrowing gets you £1 of “growth”.  Meanwhile, the cost of essentials – whether purchased by households or provided by the state – is rising, whilst underlying prosperity is not. The overhang of liabilities – debt, other financial commitments and forward pension promises – keeps getting bigger.   

We need to be clear that these problems are by no means unique to the United Kingdom, and are worse in other countries, including the United States. The situation may look better in some of the EM (emerging market) economies, but all this really means is that the West has already encountered problems which, for some Asian countries, still lie in the future.

What we’re experiencing, at least in economic terms, is the approach of The Limits to Growth (LtG), as forecast back in 1972 by Donella Meadows, Dennis Meadows, Jørgen Randers and William Behrens. Recent analysis by Gaya Herrington has used intervening data to demonstrate, first, that the authors of LtG got it right, and, second, that we may be within “a decade or so” of the point at which growth comes to an end.

If this is indeed the case, it’s highly unlikely that the ending – and, in all probability, the reversal – of growth will be an event, narrowly identifiable in time. It’s always been likelier that this would be a process, characterised by (a) economic deceleration, and (b) increasing stress on all systems that are – like the global financial system – wholly predicated on growth.

This is exactly where we are now. To be more specific, the world economy entered what we can call a precursor zone back in the 1990s. That was when observers began to worry about “secular stagnation”, and the authorities embarked on ‘credit adventurism’ – and, latterly, on ‘monetary adventurism’ as well – in an effort to ‘fix’ a problem that they didn’t understand.

Once we’re clear about the real dynamics of the economy, we can see why growth has been tipping over into involuntary “de-growth”, and we can also understand the lead-indicator mechanics of the “precursor zone”. Growth has flagged for reasons which have little or nothing to do with money, and everything to do with the energy dynamic which really determines prosperity.

Unable to understand this process, and shackled to the imperative of delivering ‘growth in perpetuity’, decision-makers have poured ever more credit into the system, much of it monetized by central banks. Though efforts have been made to improve regulation of the banking system since the 2008-09 global financial crisis (GFC), much of the subsequent expansion in credit has occurred in the unregulated ‘shadow banking’ system.

For a group of twenty-three economies (G23) for which fully comprehensive data is available – and which, between them, account for 80% of the global economy – aggregate financial assets (which, for the most part, are the liabilities of the non-financial economy) now stand at an estimated 495% of GDP, up from 300% back in 2002.

Even this ratio increase is a severe understatement of the real extent of exposure, because credit and monetary expansion has inflated GDP to levels far ahead of underlying economic prosperity. If we measure the financial assets of the G23 countries against prosperity, the ratio already stands at about 700%.

Regular readers will be familiar with the concept of prosperity, and how it differs from the increasingly misleading conventional measure that is GDP. The first point to be understood is that economic output is a function of the use of energy, because nothing that has any economic utility at all can be supplied without the use of energy. The history of the Industrial Age has been one of using ever larger amounts of energy to deliver economic value at rates of growth which, until quite recently, exceeded the rates at which population numbers were increasing.

The second critical point is that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This ‘consumed in access’ component is known here as ECoE (the Energy Cost of Energy). The role played by ECoE is that it’s the difference between economic output (a function of the use of energy) and prosperity (which is what remains after the deduction of ECoE).  

This understanding provides us with an equation which, in principle at least, is comparatively straightforward. Prosperity is a function of the quantity of energy used, the value and cost of that energy, and the number of people between whom the resulting aggregate is shared. Money isn’t an intrinsic part of the prosperity equation, but acts as a proxy and a medium of exchange – money has no intrinsic worth, but commands value only as a ‘claim’ on the products of the energy economy.  

In recent times, the prosperity calculus has become a constrained equation, in which the constraints are (a) the rising ECoEs of energy supply, and (b) the limits to environmental tolerance of the use of fossil fuels.

The only way of breaking out of these constraints would be to find an alternative source of energy which delivers low and falling (rather than high and rising) ECoEs, and can be utilized without causing environmental harm. Desirable though their expansion undoubtedly is, renewable sources of energy (REs) such as wind and solar power cannot meet these requirements. Their expansion, maintenance and replacement are dependent on legacy energy from fossil fuels, and their ECoEs are highly unlikely ever to be low enough to support current levels of prosperity, let alone allow for a resumption of “growth”.

As the following charts show, even the rapid expansion of RE capacity cannot be expected to do more than blunt the rate at which overall ECoEs rise. The pace at which global aggregate prosperity has been growing has decelerated markedly since we entered the precursor zone in the 1990s, and we are now at or very near the point where aggregate prosperity starts to shrink. Because aggregate prosperity growth has fallen below the rates at which population numbers have continued to increase, prosperity per capita has already turned down.      

As this ‘top-line’ measure of prosperity per person has turned downwards, the cost of essentials has continued to rise, in part because many necessities are at the high end of the energy intensity spectrum. This means that the discretionary (ex-essentials) prosperity of the average person in each of the Western economies is already under increasing pressure, as typified in the charts for Japan, the United States and the United Kingdom.

‘Essentials’ are defined here as the estimated total of household necessities and public services provided by the government. The British situation exemplifies the rising trend in essentials – taxes have had to be increased to fund public services (in the current instance, health and social care), whilst rises in the costs of electricity and gas reflect trends which can be expected to extend to other energy-intensive necessities, not just in Britain but across the world.

As well as a deterioration in prosperity which is adversely leveraged at the discretionary level, this situation also leaves us trying to support an ever-growing burden of financial commitments on a static and, in due course, contracting basis of aggregate prosperity.

The final set of charts illustrates this process with reference to the G23 countries which represent four-fifths of the global economy.

Since we entered the precursor zone in the 1990s, both debt and broader financial assets have grown much more rapidly than GDP. Output reported as GDP has itself been inflated by credit expansion, and now far exceeds both underlying output (C-GDP) and prosperity.

Measured against prosperity, both debt and broader liabilities have become unsustainably large, pointing towards either the ‘hard’ default of repudiation or the ‘soft’ default of inflationary devaluation.

Asset prices, meanwhile, have been driven to highly over-inflated levels, primarily because the prices of assets move inversely with the cost of money. We might suppose that asset prices will remain at inflated levels until the liability side of the equation reaches the nemesis of hard or soft default.

Examination of the precursor zone and the dynamics of falling discretionary prosperity do, though, suggest that another process might trigger asset price slumps. Equity markets are dominated by the suppliers of discretionary goods and services, which is likely to worry investors once they realise that the scope for discretionary consumption, already propped up by the continuity of credit expansion, is shrinking. At the same time, the affordability of property is linked to incomes on a post-essentials, credit-adjusted basis.       

151 thoughts on “#210. As the window narrows

  1. Thank you. Would you please clarify what the vertical axis in your discretionary prosperity graphs mean. Eg what does £30 on the uk graph represent – £30 per head per day, week, year ?? Thank you.

    • It should be annotated there, though small – you can enlarge the charts to see it better.

      Unless otherwise noted, all aggregate charts are in billions, all per capita charts are in 000s per person. All figures are annual.

  2. Tim & al.
    I have attempted to create in fiction an account of how declining EROEI eventually reduces the complexity of organizations and institutions that a society can afford. Don’t know if I succeeded, but FYI, the project (set in 2040) has been published as “Fossil Nation” (2015), “Emergent Disorder” (2016), and – coming during autumn 2021 – “Oligarchs’ Gambit” (2021). These are available through Founders House Publishing (https://www.foundershousepublishing.com/) and, of course, Amazon. Reviews welcome.

  3. Tim, Re tax. In 2015 you wrote: “Let’s be clear on one point here. Acceptance of the mathematics of MMT means accepting that MMT is an accurate description of the contemporary monetary system. It does not, however, mean that we must endorse the efficacy of the system thus described. In short, MMT may provide an excellent guide to a deeply flawed system.”

    If MMT is such an “excellent guide” then why today do you write about whether: “…additional [tax] revenues will be sufficient to fund the cost of [e.g.] social care for the elderly…” and ” taxes have had to be increased to fund public services” ignoring a core MMT observation that government taxes are NOT needed for government expenditure?

    You write toady “Money [which is what taxes are paid with] isn’t an intrinsic part of the prosperity equation, but acts as a proxy and a medium of exchange – money has no intrinsic worth, but commands value only as a ‘claim’ on the products of the energy economy” thus you seem to accept that taxes do not “fund” anything, and that central banks create money on treasury account demand. So why keep writing about government taxes “funding” its spending?

    • It’s perfectly possible for a theory to be mathematically correct but not useful as a policy – particularly when it’s a theory about the wrong thing.

      MMT is, as its name suggets, a theory about money. The “laws” of economics are observations about the behaviour of money.

      But the economy isn’t a monetary system. It’s an energy system. Money can be created out of thin air. Low ECoE energy can’t be. Our societies could be awash with money, but bankrupt if surplus energy is insufficient. If someone was adrift in a lifeboat or lost in the desert, a parachute drop of money wouldn’t help.

    • The critical issue is whether the economy is a monetary system, as classical economics insists, or an energy system, to which money is an adjunct but not a source of economic value.

      The former is full of holes. It assumes that supply will always respond to demand. So, if there’s a demand for energy, which can no longer be met safely and cost-effectively by fossil fuels, ‘something else will turn up’. We can drink tea if we run short of coffee, but nothing can arrive as a replacement for fossil fuels courtesy of ‘market forces’ alone, i.e. sufficient demand.

      MMT can help us understand money (maybe). The “laws” of classical economics can do the same thing. But money isn’t the economy. The Fed can create (“print”) money, but it can’t create low-cost energy.

    • Thanks, Tim. I hope that we can talk more about this on our show with you. I sent you another email requesting Tuesday, September 21st at 8 pm (PST), with post-Keynesian economist Steve Keen. Re: https://planksip.me/ProfSteveKeen. Please confirm at your convenience and I will send you an updated calendar invite.

    • Tim, thanks for your reply (September 9, 2021 at 2:43 pm) but MMT does not dispute the economy is by definition an energy system. Indeed implicitly it agrees that it is. MMT does this by pointing out that the quantity of new money that can be “created out of thin air” is limited ONLY by real world resources including energy – i.e. what is ‘for sale in the economy’. As such, you have not answered my question: given the economy is an energy system, then why repeat the neo-classical economic ‘error’ (lie / propaganda) that taxes – mere liabilities “created out of thin air” – must be settled (paid) before government is able to “fund” its spending?

    • “……the quantity of new money that can be “created out of thin air” is limited ONLY by real world resources including energy – i.e. what is ‘for sale in the economy’. ”

      Yes, but who decides and sets those limits? Political advocates of MMT seem to think money creation is the fix for everything. The US, with it’s rampant – and, I’d say, reckless – programmes of stimulus and monetization seems to recognize no such limits.

  4. Good article capping a lot of other illuminating work.
    Couple of points:
    *From the New York Times today:
    “For the vast majority of people, the virus resembled a typical flu, rarely causing serious illness.”

    Those doctors who said things like this 18 months ago were deplatformed by the Establishment. When the NYT says it, it indicates to me that the Establishment has changed course. I’ll let each of you come up with either simple idiocy or some deep conspiracy as an explanation.

    *Lloyd Alter has written a book about to be published:
    “Living the 1.5 Degree Lifestyle reveals the carbon cost of everything we do and shows how to slash your own carbon footprint by 80% to 2.5 tonnes per year by choosing a life of quality over quantity, and sufficiency over efficiency, as we race to save our only home from catastrophic heating.” Alter has given and will be giving interviews to publicize the book. I think he tweets as well. Whether you are interested in living with less energy or saving the planet, his year’s experience may be enlightening. He did not quite reach his goal, but got close.

    What his book will NOT do is provide a way to preserve BAU. He concluded early on that consuming less of everything is the only solution. So, for example, he invested in an electric bicycle and did not drive a car. He admits that such an action would be very hard for a typical suburbanite.

    Don Stewart

    • the pandemic will be announced to have been solved or be manageable now, once all the funding possible to be allocated to it has been completely stolen by the elite and their crony patronage networks. Here in the UK for example, billions of newly printed money nominally for covid-related contracts has disappeared into the pockets of the establishment connected, yet now taxes are being raised that will impoverish the most vulnerable. (But no money can ever be magicked out of thin air for their actual needs funnily enough)

      This cycle is endlessly played out, but still the masses never see the pattern, this time it was the turn of the medical-industrial-complex to gouge a slice out of the resource pie. Then the ruling party which has quietly used the crisis to enact laws making it more electable, will shuffle the deck to produce a new candidate, blame the pain on scapegoats and win again. Rinse and repeat, the electorate never cotton on, they chase the mechanical rabbit of electoral promises by instinct and like slugs voting for salt pellets pay with their lives in the end. Moths to the flame.

  5. Thanks Tim, good article.

    W.R.T. debt and the economy, I expect that the financialist thinkers will increasingly advocate for a debt jubilee as a means of resetting a dangerously unstable economy with too much debt. MMT will allow them to describe this debtas merely “notional”, thus justifying the jubilee as just and necessary.

    As one who also looks at economy as an energy system I can support a debt jubilee as a means to get people to see the reality of our energy based, rather than financial based, economy. The joy of the jubilee will not last long and may force realistic thinking.

    Or maybe not, some delusions persist unto death.

    • The real problem with debt isn’t so much whether the borrowers can repay it, but whether they have the wherewithal to service it. Debts can always be rolled over, or have their repayment date changed. But can the borrower ‘keep up the payments’, or does his or her debt become ‘non-performing’, at which point the lender has to write it off?

      The latter is what 2008 was about. Debt had become excessive in relation to what borrowers could service under normal conditions. We ‘fixed’ that by changing those conditions with ZIRP etc. That has had a lot of very adverse consequences.

      This is one reason why a jubilee isn’t a good idea – if the monthly cost of a debt is $0, and the repayment date is 25 years away, the principal amount isn’t the issue.

      Second, debt owed by someone is owed to someone. If we write off debts, how can the lender be ‘made whole’? We could print money to do this, but that has obvious consequences.

      We did, some years ago, write off debts owed to the West by some poorer countries. But this simply formalized a known situation – everyone knew that the capital amounts of those debts were never going to be repaid anyway.

      Finally, it’s worth remembering that, for a lender, bankrupting the borrower gets you nowhere at all.

    • “for a lender, bankrupting the borrower gets you nowhere at all.”
      I suggest that it depends on the circumstances. At the present time in the US, retail malls are going bankrupt and roughly half the debt is written off. The question is whether new management under a new financial system can get more economic benefit than the old management under a highly leveraged debt system. My suspicion is that in the case of malls, we are merely swapping one financial guy for another financial guy…nothing much changes in terms of outcomes.

      We can imagine other scenarios. Displacing a ‘financial’ management with an ‘engineering’ management with a realistic financial structure may result in more real output. We may see some of that happen in terms of big office buildings, now empty. But the built environment tends to be very use specific, so repurposing certainly isn’t easy in most cases. All those empty Houston office towers were not designed to house the homeless and get them off the streets….which would improve life all around.

      Don Stewart

    • True, and perhaps I could have expressed this differently. In most businesses, though, ‘bankrupting the customer’ isn’t a good idea, and I’d say that’s true of the lending business too.

      In banking, a loan remains ‘performing’ so long as the borrower keeps on servicing it. If that stops, it becomes ‘non-performing’, which means it has to be written off. That hits not just assets but the bank’s capital, at which point capital ratios kick in and a contractionary process can begin. To avoid this, you can lend to the borrower, adding this to the capital at the end-point of the loan, but enabling him to carry on ‘performing’. The capital amount rises, and it’s even less likely ever to be repaid, but no immediate write-down (and hit to capital) is required. The operative terms here are ‘zombie’ and ‘2008’.

      Take mortgage lending. If the borrower fails or is underwater, the lender can reposess the property, and sell it. If too much of that happens, though, prices slump, and the situation worsens. This is why ‘forbearance’ or negotiation can be good banking practice.

    • Hypothetically, let’s suppose three conditions exist:
      *You have a billion dollars
      *You are invested in businesses that have no future, and are currently a drain on cash
      *There are businesses which you might invest in that do have a future

      Then it seems to me it’s time to ‘fish or cut bait’. At the present time, we schizoids are proclaiming that we will limit emissions to stop warming at 1.5C, but we are also pouring money into BAU. We are not learning anything from looking at the guy who actually came very close when he limited his emissions to the needed level.

      You have frequently mentioned businesses that you believe do have a future, such as public transit systems. DC solar on rooftops may make sense. These are NOT the businesses which are getting investment in the US. The growing investment now is more debt…which has no future.

      Am I missing something?
      Don Stewart

    • To a large extent, markets have become speculative arenas (“casinos”), and have never had particularly long-term horizons. To what extent is there investment in the US, rather than speculation, and riding the Fed’s money-wave?

      Look back at market index constituents from 50, 40, 30 or even 20 years ago and most of the big names no longer exist. No reason why this time should be different.

      Where you – and we – might be wrong is in assuming a private capital model post-growth. A different model, perhaps a hybrid of public, co-operative and private ownership, might evolve instead. I’ve made no secret of my preference for the ‘mixed economy’.

  6. Well done, Dr. Tim. You might continue to refer to population growth in these essays (as long as it is occurring) as a reducer of p/capita well-being ceteris paribus. The physical ‘pie’ which includes energy, gets divided into more slices daily. Even if the pie remained constant (which it can’t as drawdowns are occurring continuously), more slices = smaller average size.

    • Thanks Steven. I think we’re ‘almost there’ in terms of understanding the issues and putting numbers on them.

      I’ve tended to skate around population issues but, if prosperity is tied to resources and therefore ultimately finite, population increases make the average person poorer.

      I’m in little doubt that overpopulation is a central part of the current (sixth) “extinction event”. I don’t, regrettably, have the data needed to put many of the world’s poorer countries on the SEEDS model, but what I can see is disturbing. It seems likely that we will see rising flows of migration as people seek to escape worsening hardships.

      I skate around this issue because it’s hard to see any workable answers.

  7. ‘The only way of breaking out of these constraints would be to find an alternative source of energy which delivers low and falling (rather than high and rising) ECoEs, and can be utilized without causing environmental harm. Desirable though their expansion undoubtedly is, renewable sources of energy (REs) such as wind and solar power cannot meet these requirements. Their expansion, maintenance and replacement are dependent on legacy energy from fossil fuels, and their ECoEs are highly unlikely ever to be low enough to support current levels of prosperity, let alone allow for a resumption of “growth”.’

    Those high ECOE values for wind and solar power are a direct consequence of the low power density (energy flux) of ambient solar energy.  This necessitates a lot of infrastructure and embodied energy and materials to harness each average MW.  There may be limited technical solutions that reduce embodied energy (I.e more efficient solar panels; the use of concrete rather than steel supports; concrete or stone towers for turbines; wooden blades, etc).  But ultimately, we are locked in a battle against entropy and any reductions in ECOE will be slow and incremental.  It isn’t really that surprising that RE cannot match the low ECOE of legacy stored fossil energy, whose only real cost was digging it out of the ground.  The high ECOE of RE makes it physically impossible to expand energy supply using this option, based upon a shrinking supply of fossil energy.

    So far as evaluating the human and environmental consequences of any alternative to RE and fossil fuels; I would argue than any energy alternative would have a long way to go before it could feasibly match the human and environmental consequences of fossil fuels.  Although estimates vary, fossil fuel air pollution alone appears to be responsible for several million deaths every year.

    In terms of human consequences, that is equivalent to having three Chernobyl scale nuclear meltdowns somewhere in the world every single day.  If that were to happen, every day, the world would run out of nuclear reactors before radiation could produce as many fatalities as a single year of fossil fuel air pollution.  If we were to apply the same protective standards to fossil fuels as we do for nuclear energy, we would be forced to permanently evacuate all of our towns and cities in order to protect people from the danger of fossil fuel air pollution.

    But the reality is that we have had two significant nuclear accidents in the past 35 years.  And modern nuclear designs are far safer than these legacy plants, as they rely heavily on passive cooling.  Nuclear fuels have six orders of magnitude greater energy density than fossil fuels.  A lump of uranium the size of a golf ball contains as much stored energy as a cube of coal the height of four storey building.  And there are technically developed options for closing the fuel cycle, removing any long term issues around fuel supply.

    It should therefore be obvious what the realistic alternative to fossil fuels is.  The obstacles standing against this option, have more to do with cultural, political and institutional inertia than they do with technological practicality.  The red tape surrounding the use of nuclear energy and institutional bias against it, make it impossibly expensive to start a nuclear power reactor programme in most Western countries.  And the skill base and supply chains needed to support such a programme, was allowed to die in the 1990s.  None the less, the expanding use of nuclear energy is the only possible foundation for any nation seriously attempting to transition away from fossil fuels whilst retaining high living standards.

    • Surely a problem with this is that with fossil fuel you literally just dig it out of the ground and take it to where you need energy and burn it. Once people worked out how to do that, the idea spread rapidly around the world and now people burn fossil fuels for energy everywhere in the world, rich countries, poor countries, devastated anarchic failed states… Nuclear reactors are extremely complex (read: expensive) pieces of gear. You comment on “The red tape surrounding the use of nuclear energy and institutional bias against it” yet there is also strong institutional bias in favour of it (military by-products etc). I think it is just full stop expensive to build a reactor, no matter the institutional or regulatory framework.

    • The UK’s Magnox nuclear power reactor programme was to
      a large extent an offshoot of the Windscale weapons grade plutonium project. Graphite moderated reactors are advantageous for plutonium production because they run on natural uranium (with low burn up and low resulting Pu-240 content), do not require enriched uranium (Nat U fuelled), can be refuelled on load and have low burnup and low decay heat per tonne of fuel, allowing relatively rapid reprocessing. They were relatively complex and suffered from low power density, so not the best technology for a power reactor programme.

      For light water reactors, none of that is true. Back in the 1970s, reactor build projects were completing in 3-5 years and typical costs were $1000/kW in 2010 dollars. Following Three Mile Island, political pressure led to regulatory ratcheting, which increased build times and generally ballooned the costs of commissioned reactors. Whether there was any commensurate improvement in safety is certainly debatable.

      Click to access 436.pdf

      But the fact remains, there is nothing inherently expensive or complex about nuclear reactors. They are essentially just boilers, with burners replaced by fuel rods. Complexity is a design decision and it may be justified or not. But in essence, a nuclear reactor is fundamentally simple: a steel pressure vessel, containing water and zirconium clad fuel rods, with the reaction controlled by boron steel control rods; generating steam that runs through a turbine. Inherently no more complicated than a boiler.

  8. Pingback: As the window narrows (by Dr Tim Morgan) | ORCOP.COM

  9. Hi Tim
    I have been thinking about raising the interest rates.
    I am starting to think the options are:
    Raise the rates before hyperinflation kills your currency.
    Or Raise the interest rates after hyperinflation kills your currency.

    Is that right? or am i just being pessimistic?

    • I think you’e right.

      Back in 2008-09, when rates in Western countries were slashed to negative real levels, the effect was to trigger huge increases in asset prices. The authorities chose not to weaken this connection, which they could have done with various fiscal measures.

      Even now, the authorities seem relutant to take any measures which might reduce asset prices.

      Asset price rises are, by convention, excluded from measurements of inflation. This suggests to me that systemic inflation is higher than reported consumer price inflation. Spill-over into consumer prices is inevitable, compounded by scarcities as prosperity deteriorates. I’ve been trying to measure this with a project called RRCI.

      To cut a long story short, I think they’ll put off raising rates until they’re forced to do so. Rates below inflation are an anomaly, and harmful – they are characteristic of a “precursor zone” before the limits to growth hit.

  10. So much for Peak Oil Demand. Imminent problems appear to be supply driven.

    Though given the energy basis of the economy, demand is a function of supply. Lower energy availability makes people poorer, which caps long-term average prices. It is a bit like food shortages causing starvation, which then lowers the demand for food. Oil shortages cause economic starvation, leading to Peak Oil Demand. So Peak Demand, isn’t exactly a reassuring thing. The fact that demand is there and is pushing up prices, suggests that there is still life in some of the world’s economies.

    • @Tony
      My conclusion would be that those economies who are exporters of energy are the only ones with any life blood in them. Unfortunately ECOE will drain their veins eventually.

  11. Thanks for another great article – I appreciate the point you made about Equities being focused largely on discretionary consumption.

    I guess the “precursor” is easily diagnosed as what we see – expanding P/E ratios and ballooning valuations. We also see collapsing breadth (markets buoyed by few headline names rather than a larger basket of firms). But I would think that what we’d see by definition if discretionary consumption is declining would be a collapse in earnings.

    However, I can’t explain how we haven’t seen declining earnings broadly: https://www.in2013dollars.com/us-economy/s-p-500-earnings-inflation-adjusted

    Expansion in debt makes this mathematically possible, but energetically this period should be marked by the physical impossibility of increasing discretionary spending.

    There are lots of places this could be “leaking” outside of the markets. 3rd world countries collapsing, for instance, or places like Ecuador where huge increases in poverty are occurring.

    Do you have any thoughts on the matter? Thanks.

    • Some thoughts, certainly, though with the caveat that I don’t do investment advice here, it’s a regulated activity.

      I’m sure we’re in the precursor zone, and it’s consistent with the points you mention. This isn’t a value market, it’s a macro market. “The Fed etc has our backs. We need to be in the market”. OK, so where do we put our money? A: Into stocks that are big, liquid, are well managed, and/or have big market shares. That’s where the breadth has gone. I’ve not looked at this but I’d guess correlation between earnings performance and market share is at a high.

      There are still risks in a macro market rather than a value one, just different ones. Overseas deterioration is one of those risks. If Westerners get poorer, OK they can still afford necessities, and a lot of discretionaries too, with help from cheap credit and CB policy, at least for as long as those last. But if people in places like Ecuador get poorer, and didn’t have much of a discretionary cushion to start with, things quickly get very bad indeed.

      Meanwhile, discretionary consumption is propped up by credit expansion. That era’s drawing to an end – maybe it ends in credit exhaustion, inflation, rate rises, whatever. A huge proportion of consumer discretionary spending is credit-dependent. Earnings in those sectors mostly look OK. But when we have to ease back on credit, or raise rates, or people just don’t want to get further into debt? We carry on with the essentials, but we cut back on travel, leisure, gadgets, subscriptions – and perhaps this gets glossed as a change that ‘is good for us’.

  12. Here’s what a German financial journalist thinks the world elite may be planning under cover of what is called a ‘pandemic’.

    ‘Uncovering the COVID Narrative’

    In short, the end of cash, a dystopian dictatorship in which people need an electronic ID to live, are told what’s good for them and are penalised for doing what the state disapproves of … China on steroids.

    Separately, the former mistress of the UK Prime Minister asked in an interview 2 months ago what was said at the secret meeting with the Bank of England 10 days before lockdown. Indeed.

    Wolf wasn’t clear what timescale he thinks Black Rock, Vanguard, Bank for International Settlements, Apple, Amazon, Alphabet, M’soft, Twitter, etc are moving on. But with the speed at which things have happened in the UK, some ‘conspiracy theories’ from March 2020 now seem to be ‘truth’.

    • As a historical observation, dictatorships tend to either (a) come to power where the economy and society are in deep trouble, and the public want ‘strong’ leadership, which usually fails as a solution; or (b) come to power through other means, and preside over a rapid worsening of economic and social conditions. I’m not in a position to know whether such plans exist, but I’m pretty sure that, if they do, they won’t work.

      Most of the focus seems to me to be on the US, and, to a lesser extent, the UK. Both have adopted ‘extreme liberal’ economic philosophies, and economic extremes are usually a bad idea.

      My assessment is that the US is in deep trouble. Prosperity per person has been shrinking for twenty years. The authorities have been pouring money into the system, seemingly for no better reason than to inflate and support asset prices. Logically, this gets to a point where inflation takes off, whilst real world systems, such as logistics, power supply, utilities and so on, start failing. Though one shouldn’t exaggerate, quite a lot of this does seem to be happening in the US and, to an extent, in Britain.

      We’ve seen these processes before, in different countries and at different times. Often, new and better leadership can either prevent a crisis, or gradually restore the situation after one.

    • Conspiracy by individuals who compete with each other over power and resources is highly improbable. The first few comments tell us who falls for this nonsense.

  13. Another great essay Tim.
    You may be interested in a very timely programme on Renegade Inc featuring no other than Dr Joseph Tainter: https://www.rt.com/shows/renegade-inc/533833-complex-societies-collapse-joseph-tainter/

    In it, Dr Tainter uses the EROEI measurement rather than the ECoE as used in SEEDS. His estimate is that it we are around 15 to 1 at the moment – just post WW2 it is closer to 100 to 1.
    His view is that the West will avoid a complete collapse – more of a slow and gradual decline, one which I have doubts about. I’ll leave it up to others to make their own mind up regarding this discussion

    • The proportions – post WWII vs now – look about right to me.

      My view is that some systems – and probably some countries – will collapse, but the question then becomes: how much of this constitutes general collapse?

  14. @Dr. Morgan
    RE: bankruptcy and re-organization
    A good example of the uncertainty, at least in the US, is the fate of the suburbs. Jim Kunstler has long claimed that the suburbs are one of the worst ideas we ever had. The fellow who wrote the book about living in the US on a 1.5C carbon budget did pretty well, but he was not living a suburban life style and admitted that suburbanites would likely have a hard time duplicating what he did.

    So are the suburbs as bankrupt as a Houston office tower? Which leads us to dismal thoughts that the built environment is mostly simply unusable in the future we claim to be committed to. Maybe the leadership is actually smarter than we think they are, and the best possible course is to take one where we have a one in a hundred chance of success because the alternative is zero chance of success???
    Don Stewart

    • Jim and I discussed some of this in our recent podcast.

      It’s not clear whether city centre commercial property can be re-purposed for housing, but that’s costly, and the problem is that upkeep costs are significant.

      The suburbs are products of transport – historically rail, but increasingly, in modern times, cars. If – as I believe – cars are an FF-optimised system, so EVs in general are a bad idea and public transport makes more sense in post-FF economy, then suburbs are in trouble.

    • Here in the UK, the law is changing to give property developers the ability to easily convert shops in town centres to living accommodation. This is nominally because so many look blighted (Old Blighty?) by boarded up shopfronts, charity outlets, betting shops, discount and bottle stores, basically the appearance of a depressed area. Usually this is explained away by the MSM as due to changes in buying patterns with more selling moving online, but while that’s true to an extent, diminishing disposable income is as likely.

      This will further enrich property development companies (big political donors) and help prop up property prices which is government policy, but will leave even fewer public spaces for people to socialise in. Most of the population is in densely built up areas, so public transport is more viable here and works well in Europe, (where it hasn’t been ideologically crushed as much) with lively, affordable, much loved trams even in hilly Lisbon for example. But good public transport at this political moment in time is as likely as the winter olympics first being held in hell what with the neoliberal choke-hold being as strong as ever.

  15. @Dr. Morgan
    No argument about mixed models post growth. But I do observe that transport companies in the US were historically privately owned, as were railroads and canals. These either went out of business or were nationalized or changed shape drastically (the railroads) as government policies and the abundance of fossil fuels favored trucks and automobiles. What I am trying, probably not very successfully, to imagine is how things might evolve in a Degrowth economy. Governments are a kludgy way to try to solve it, and I have about as much faith in Green New Deals as I have in the Tooth Fairy. It just seems to me that what we are actually doing in the US is suicidal, and I keep looking for alternatives. I have this vague notion that at the intersection of health, good human relationships, and modest volumes of simple energy production may lie some opportunities. The Garden of Eden. Albert Bates will be publishing this weekend his prediction that precision fermentation is going to decimate the industrial animal model and free up land in the US equal to the Louisiana Purchase. The price of farmland will fall 50 percent. There should be an opportunity in there somewhere.
    Don Stewart

  16. Good News?
    See Albert Bates post on precision fermentation and the potential for upending the food system with enormous reductions in greenhouse gas emissions, decline in land used, and potential for more trees.


    The article at the top of the blogroll on Rewilding Iowa is the one to read.

    A few comments from me:
    *I haven’t thought through and seen analyses of how far this can go. Can we use solar PV to operate all this machinery?…as one of the questions I have.
    *If it works, it frees up a lot of land to use to power Wood World. But Europe ran out of woodland a long time ago. We might be able to devise a ‘civilization’ using renewable wood, but at a much lower level of energy consumption.
    *According to the graphs, the fake meat just gets cheaper than normal meat, and this drives a tsunami of change among the mass of consumers.

    It seems to me that this is the potentially biggest impact of technology in many decades.
    Don Stewart

    • Personally….
      I like Who Killed Roger Rabbit? The great conspiracy to kill the trolleys in LA. Jessica says the immortal lines: “I’m not really bad, I’m just drawn that way”.

      Runner up is Lionel Barrymore and You Can’t Take It With You, from 1939: the plot by the bad guys to put a horse drawn passenger car out of business in New York City. Cheerful anarchism. The boy gets the girl, the horse car survives, all is well with the world.
      Don Stewart

    • The British equivalent is probably The Titfield Thunderbolt, about a community determined to keep their branch railway going after the authorities decide to close it down. They find a wealthy backer for whom the appeal is that the bars on railway buffet cars aren’t subject to limited licensing hours, and a driver in a train-mad vicar. The bad guys run a rival bus service.

  17. Just learned that in UK there is an organisation called –
    The head man is Andrew Hilton who appears on YouTube .
    Could this be a group worth discussing your SEEDS modelling with before they indulge in yet more ill-founded innovation?

    • It could certainly be an ‘interesting’ winter in the UK, if there are power-cuts, a lot of things missing from the shelves, and a PM who thinks he can out-last Mrs T by taxing income and not wealth.

  18. I like the precursor zone Tim.

    We have a period of reassessment to do as a global species before we hit tipping points.

    Regarding this MMT thing, Natasha do you have anything to say about

    the rate of money transfer (energy velocity)

    the route of money transfer (energy investment)

    the efficiency of money transfer (energy productivity)

    and do you consider QE and ZIRP forms of mmt?

    For myself, I’ve been focused on the cultural dimension in anticipation of the sociological impacts of peak human growth.

    It’s going to be crazy if diversity is going to continue being the sole focus rather than a balance between unity and diversity.

    Balance seems key in all this with energy, frequency and vibration (Tesla) being the thermodynamic factors that give shape to what needs balancing. In this case it is the ecological demand and the ecological supply of humans needs, wants and desires and whether we want a synthetic world future or a natural world future for our ascendents.

    • Steve G., The “we” here:

      “We have a period of reassessment to do as a global species before we hit tipping points refers to what %, in your estimation, of the 7.85B humans?”

      The “we” in the last sentence:

      “In this case it is the ecological demand and the ecological supply of humans needs, wants and desires and whether we want a synthetic world future or a natural world future for our ascendents.”

      refers to whom?

      In my opinion, it is likely that 99.9+ % of humans never consider these topics.

      Steve K.

    • Hi Steven.

      Ideally everyone. Do you have any humans in mind that should be discounted from taking part in this reassessment process?

      For your second question, the same answer as above.

      I find it hard to believe that only 0.1% of the human population are concerned with the practicalities of their survival, especially in terms of energy costs, their standards of living, ecological constraints including finite quantities of land and other natural resources and of course, the ecological impacts of human sustainability and whether human population should decrease, whether per capita human consumption should decrease or both.

    • Steve G. It is most likely the case that the bulk of humanity have no clue about the points you mention outside of their personal and family/clan situation. That is why when civilizations have declined historically, people were blindsided. To expect awareness and system thinking to become universal is a pipe dream. Read a small book by Ronald Wright composed of his 5 Massey Lectures in Canada. _A Short History of Progress_ A synopsis or long review should be on-line.

    • Steven. They might not talk about these things in your language, but nearly all the ‘ordinary people’ I know talk about and have opinions about these things in their language.

      From the book, “Why, if civilizations so often destroy themselves, has the overall experiment of civilization done so well?”

      For the answer, he says, we must look to natural regeneration and human migration, with of course population numbers and migration often being at the forefront of many ordinary people’s minds, at least on a political level.

      In my experience, it is not so much that ‘ordinary people’ don’t think about these things, it is that they have different perspectives on these things ranging from the inevitability of collapse to the potential ingenuity of technology to adequately terraform our ecological demands.

  19. Dr. Tim – ‘The Precursor Zone’ is an excellent description of where we are economically. May I venture to be bold, and suggest that a suitable description for the politics of the era in the United Kingdom is: ‘Twilight of Delusion’ – a title taken from one of the chapters in John Kenneth Galbraith’s book ‘The Great Crash 1929’.

    • A good term. Based on what I see, the UK and the US are the western economies that are in the most conspicuous trouble. If there are going to be power cuts in Britain this winter, and a lot of empty shelves, there are going to be a lot of very angry voters, whilst the prospect of Scottish independence seems to increasing.

      It’s arguable that things are even worse in America. Wolf Street has looked up the pipeline from consumer to precursor levels of inflation, finding year on year rates that are at or above 20%. The authorities seem to see endless stimulus as the answer to everything, and the maintenance of asset prices as the primary objective, much as the UK government seems fixated on property prices.

  20. Interesting historical study here on the energy efficiency of hydraulic container pipelines. This involves the delivery of freight in floating cylindrical capsules through a water filled pipeline.

    The conclusion is that a 5-foot diameter pipeline can deliver freight with less than one twentieth the energy cost of a truck and about one fifth the energy cost of rail. The linear electric propulsion system can be powered directly from the grid, without need for batteries or any fuel, making this a strong candidate for a post oil goods transportation system.

    Downsides of this transportation option are low speed, basically limited to about twice human walking speed; and the need for high utilisation to achieve the impressive energy efficiency. The low speed makes this unsuitable for transporting perishable items.

    This option seems to have fallen off of the official radar. In the race to develop a transportation network that does not depend on fossil fuels, it appears to have been largely overlooked.

    • or you could tow a barge full of goods down a canal with a horse on the path alongside?
      are you starting to notice a pattern, every clever high tech solution people suggest turns out to be a rehashing of a technology that was developed and used before fossil fuels became a thing,
      we already did the 100% renewable energy, net zero, sustainable economy,
      it was that bit between 10,000BC and 1760AD,
      the future will be rediscovering the past, like turning back the clock, going back in time, going backwards, climbing back down the mountain, we’ve climbed up the incline, now for the decline.
      when the electric is cut you look for the candles in the cupboard, when the gas goes off you unblock the fireplace, when the fuel shortages bite you leave the car at home and dig that rusty bike out of the shed, or take the bus, or cycle to the station,
      in 1906 there were more electric cars on the streets of London than internal combustion engine ones,
      the first diesel engines ran on vegetable oil, early cars ran on alchohol not petroleum,
      the term car is just an abbreviation of horseless carriage,
      the electric street trolley is a late Edwardian thing,
      the Dutch pioneered the industrial revolution utilising windmills on a large scale,
      tidal power is a tide mill, you can see the ruins of some down on the coast near me,
      bio-gas was being made by the British in India to use as town gas back around 1900,
      the first major electrification schemes in the US were powered by hydro-power,
      all that CCS technology is just Bosche and Sabatier reactions from the late 1800’s
      making synthetic fuels from gasses is using Fischer Tropsch processes, remember the Germans making gasoline from coal in the 1940’s?
      you see the Stirling Cycle engine or other variants of external combustion engines being rehased over and over, they date back to 1860,
      oh well, photo voltaics are a new invention, or is it that technology reached a point that the scientific principle could be fabricated into a commercially viable thing, and was it principally done for space probes and off planet applications,
      we’ve been capturing solar energy and putting it to use on Earth for millennia,

      check out this picture of a high tech bit of equipment!

      the only radical breakthrough we’ve made since entering the fossil fuel era is splitting the atom, we have dabbled in some crude nuclear power plants but we seemed to pour the majority of our resources into making completely useless nuclear weapons,
      so far the only fusion reaction we’ve mastered is the hydrogen bomb.

      use the eyes of an engineer, a physicist and a technological historian and the whole Green Tech Revolution starts looking like lipstick on an elderly pig.

      and don’t get me wrong, I like pigs, but a pig is a pig, it’s not an elephant.

    • Matt,
      I am eagerly waiting for the day when they finally tell us that they have discovered a completely 100% renewable, net zero solar-powered energy supply that indefinitely stores energy at no cost until ready for use: trees!

    • I suspect wooden barges on inland waterways were very fortunate to be eclipsed by the heat engine, iron and steel and the boiler, because it was well past peak trees!

      And we’re still past peak trees despite CO2 @ 415ppm.

      Instead of the cascading defaults of our financial adventures we need a destratifying set of retrophilic technologies to help us level out to lowering energy civilisations. If it can’t be held together, as the social fabric tears, we’ll find the unknown unknowns giving more appeal to the demagogues and the men of God.
      And after that the trees and the barges can return.

    • Hi Jeremy,
      a fascinating fact I stumbled upon recently is the origins and usage of the Govt. mark I associated with wartime equipment,
      The Broad Arrow,


      the British Navy was already having to go to the Baltic for trees suitable for mast making, one of the advantages of the American Colonies was access to the White Pines,
      govt. agents would mark suitable trees with a broad arrow mark to reserve them for the Crown’s usage and this was one of the issues of contention for the colonists,
      we appear to have started running low on the right sorts of trees a long time ago!

  21. “European energy pricing dynamics offer a glimpse of what is in store for other commodity markets…Demand destruction is the only option to rebalance markets.”
    –Goldman Sachs

    Don Stewart

  22. UK wholesale energy prices, especially gas, up by +60% in a month. Spain mooting reducing tax on energy from 5.1% to 0.50%. Coal fired power plants lit again as least windy summer for decades. Crikey!

    • Mark, I know; and it’s absolutely terrifying.
      Perhaps Dr. Tim will allow me to offer something lighter to brighten the mood – the way things are going in the United Kingdom they’ll be an awful lot of people heading for the Prosecco Zone!

    • Indeed it is terrifying, Kevin. I had a meeting with a nice couple this morning and I was pointing out recent rises in the costs of essentials and a problem they will have with restricted income (about £25,000 per annum, gross) now they are retired. Although one will soon inherit some capital, it’s pretty hard getting income from capital at present, and I can’t see this improving much for a while. Whilst this couple are ‘quiet livers’ and have modest expectations going forward (and, thankfully, no debt), they were concerned for their adult children who they described as just about getting by. They will probably be OK, but agreed with me that it might be a long hard winter ahead.

      I am really very concerned that the ‘man and woman in the street’ have utterly no idea about what might hit them soon and are completely unprepared. This:- “The outstanding value of all residential mortgage loans across the UK has risen by 4.6% in the last year, new figures published by the Bank of England (BoE) have revealed. The total sat at £1,584.1bn at the end of the second quarter.

      Figures also showed that the value of gross mortgage advances in Q2 was £89.0bn, more than double the amount seen in Q2 last year, and the highest level since Q3 2007.The Bank also stated that the value of new mortgage commitments, which involves lending agreed to be advanced in the coming months, was almost 2.5 times greater than a year ago. This sat at £85.6bn at the end of Q2 but remained £2.1bn lower than the recent peak seen in Q4 2020.” helps illustrate one of Dr Morgan’s points about the UK residential property market. In my small village in Somerset, a short stroll highlights where the problems are: – the unkempt gardens, ‘blown’ double glazing that needs replacing, the air of neglect as residents age and can no longer cope, the booze bottles in the weekly recycling box, the battered big old cars that will soon be very expensive to refuel. Ten years ago this was just one or two properties, but now rather more exhibit the symptoms of declining prosperity. Seems to be the same everywhere.

  23. Thanks, Don. It’s just that “demand destruction” as a deliberate policy has a real “Dr. Evil” feel to it and suggests many policies that seek destruction that are decidedly NOT based on a “we’re all in this, let’s degrow and ease the transition together” mindset, including: wars to create failed states, crush ability to use oil and gas and induce mass starvation (obviously, the West has already been doing this); pandemic or climate lockdowns for our own good; vaccine mandates that eliminate jobs including in health services, collaterally shortening the lives of the sick and elderly; vaccine passports that crush discretionary economic activities; and impoverishment of middle and lower classes and the elderly thereby accelerating death by, among other things, wages at subsistence levels that don’t keep pace with inflation, underfunding (or not increasing funding to keep pace with inflation) unemployment coverage, and letting social security and medicare “run out of money,” etc.

    FWIW, I expect this Dr. Evil approach, leading to a “Hunger Games” vision of society, with its 12 resource and manufacturing based colonies living a subsistence 18th or 19th century lifestyle to support a technological utopia in the Capitol, enforced by deliberate impoverishment and brutal repression, is far more likely than more positive adaptations. I find the fact that GS is just openly saying it pretty chilling. Should have reserved that sort of thing for discussions at Davos, not blurted it out in a public forum. I am not sure that Art Berman picked up on the connotations – or maybe I am paranoid?? But it’s one thing to say that demand destruction is happening and another to say it is a necessary policy to “rebalance the market.”

    Of course, the fact that this is what they want, doesn’t mean they’ll get it. But it is a strong indication of the social and economic strife we’re going to experience.

  24. Kleiber, thanks for that link! I just read it and see that the actual quote is “”As commodity markets are now unable to react to the first leg higher in prices through greater supply, once inventories are exhausted like in European gas, then demand destruction VIA SHARPLY HIGHER PRICES is the only option to rebalance markets.” Well, don’t I feel like Emily Litella! Nevermind!

    • Art Berman is an enigma in many ways, but I think what I perceive as his position is enlightening.
      *He was the head of the now defunct Peak Oil USA. A professional geologist.
      *He reports higher prices for oil as being a good thing…because it enables production of one of the most undervalued commodities being traded.
      *He also sees the inevitable and necessary transition to other primary energy sources. I don’t have any clear understanding of what he thinks those are.
      *He lives in Houston, and the Texas debacle last winter probably gave him a very clear picture of the fragility of ‘renewables’. (Texas has been a leader in wind, for those who don’t know that.)
      *So he sees higher prices as squeezing the waste out of the system. I don’t think he has much faith in governments wisely deciding which sources of waste are to be sent for ‘re-education’.

      Don Stewart

  25. This morning, UKCPI is recording 3.2%.
    Inflation is taxation by another name.
    Although CPI is an accurate measure, it is not necessarily a meaningful measure.
    For example, for 2020 CPI was recording at 0.8%, the government GDP Deflator was 5.7% and Dr Tim’s UK Realised Rate of Comprehensive Inflation was 5.2%. In other words, by any systematic assessment inflation was probably somewhere between 5% and 6%.
    A CPI recording of 3.2%, means that the real rate of inflation in the UK economy is now probably well in excess of 8%.
    That assists in devaluing debt, but crucifies purchasing power.

    • Quite so. If we look further up the supply chain we can see inflationary pressures that are likely, in due course, to impact retail/consumer inflation. Asset price inflation, of course, is already well established, and worsening.

      RRCI is a development project. Preliminary indications are that comprehensive inflation spiked last year, not in every country, but in many, with the UK amongst the worst affected.

      Interestingly, RRCI – which, I must emphasise, isn’t yet fully developed – is suggesting lower inflation in Britain this year. Because RRCI is designed to be comprehensive, this doesn’t automatically mean that CPI must fall. What it might suggest is that economic ativity slumps, and/or that asset prices fall very sharply.

    • Wolf is hot on the inflation situation, and I’m sure he’s right.

      In the UK, though, recipients of the state pension were set to get a very big increase through the “triple lock”, a specific guarantee and manifesto commitment. But the government suspended it.

  26. on the way up, i.e. through the 20th century, Jevon’s Paradox seemed to rule the day,
    but now we seem to be falling under the control of Liebigs Law of the Minimum,

    a finite world that is constantly discovering limits will keep finding it’s plans scuppered for want of one or another ingredient,
    energy limitations hamper every grand plan but also shortages of this or that component,

    maybe we truly are within the realm of a long and drawn out catabolic collapse now,


  27. @Steve K,
    Inflation adjustments like these will only mean that the “trust fund” (really just an accounting fiction) will run out of money even earlier, after which payouts will be limited to the amount of SS taxes actually collected while politicians shrug their shoulders that there is nothing they can do because they can’t raise taxes. The annual notifications I receive from the SSA remind me of this coming cliff, and project a reduction in benefits in the neighborhood of 23%, as I recall. Can you imagine what effect that is going to have on the retired?

    I think the current prediction is that we will use up the “trust funds” in 13 years. I think we geezers will be lucky if we get 10.

  28. Pingback: Wrong for a different reason

  29. Fractal Mathematics and DeGrowth
    The authors of Hunter Gatherers in the 21st Century state that evolution (of genes, epigenetic, or culture) is a fractal process…and therefore linear mathematics doesn’t work very well. I’m not an expert mathematician, so take the following as not very reliable. So for what it is worth:

    As the water content of soil increases or shrinks, then the soil may expand or contract. We have all seen mud cake and crack as the mud dries. Now if we think about a smart phone in the pocket of some random American, we can see that a vast fractal network brought that phone to the port at Long Beach and a similar vast fractal network moved the phone into our pocket. Can the study of soil shed any light on the fractal networks which pervade our economies, and thus shed light on the likely prospects for the economy if energy, which is the ‘water’ for the economy, begins to shrink?

    I ran across this article:

    Click to access 39855313.pdf

    Look at page 2935 and the S curve.

    It looks to me as if some small loss of water leads to small shrinkage for a while, then accelerates into the more rapid shrinkage as it follows the S curve down, and finally settles to a new equilibrium. So, for example, in successive periods of time we might see shrinkage of 2 percent, 2 percent, 3 percent, 5 percent, 7 percent, 7 percent, 7 percent, 5 percent, 3 percent, 2 percent, and then stability at a lower level.

    The point is that the decline will not be linear, but will likely follow an S curve as the energy content shrinks.

    Don Stewart

  30. EU and UK Natural Gas
    Dmitry Orlov gives chapter and verse on exactly how the EU and the UK put themselves at risk of freezing to death this coming winter:
    “European natural gas hub spot price has surpassed $900 per thousand cubic meters with the psychologically important threshold of $1 per cubic meter not far off. This is an astronomically high price that is likely to bankrupt a lot of European energy companies while causing their customers to die of exposure this winter.

    Just in the UK, where around 10 thousand people freeze to death during a normal winter with normal prices, so far PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point have kissed the world good-bye, their customers getting picked up by the government regulator Ofgem. Acting wisely, Ofgem raised the monthly price cap for a typical household from £139 to £1,277. Just to make things even more interesting, the underwater cable providing electricity to the UK from France just failed, knocking 1GW out of the 2GW link.

    What’s behind all of this chaos and mayhem? Call it the wages of stupidity.”

    The post is provided to his Patreon people. If you want to read it and weep, pony up a US dollar.
    Don Stewart

    • This feeds into our broader theme of growth reversing as ECoEs rise, with the rising cost of essentials squeezing out the scope for discretionary consumption.

      At what we might call ‘ground level’, things are getting tough for the ‘ordinary’ household. As this pressure increases, voter priorities are going to change. It seems likely that domestic energy supply will be taken into public ownership.

      It’s worrying that so much of the decision-making process continues on the mistaken basis of ‘growth in perpetuity’ and ‘a tech fix for everything’.

  31. Australia plans to build SSNs. It is a bold move, but hardly surprising given Australia’s position as a large, under-populated country, full of natural resources on the periphery of Asia. The Chinese look upon it with envious eyes.

    Ultimately, small modular nuclear reactors in the few tens of MW range could power surface ships, both military and civil. Nuclear powered ships could ultimately become the work horses of global freight and passenger transport.

    • SSNs are a logical capability for Australia, but the air of Sino-Western antagonism worries me.

      We’ve used nuclear power plants at sea, not just in SSNs, SSBNs and CVs but also in specialist ships like ice-breakers. But they seem never to have been economically viable for civilian shipping.

    • Unless I am mistaken, the Savanna was the only civilian ship ever fitted with a nuclear propulsion system. It was essentially a show piece that was part passenger ship, part cargo ship and was never really used that much beyond proof of principle.

      Maybe the biggest institutional problem to overcome in applying nuclear energy to land based civilian energy production and mobile applications, is the licencing process. Each plant has to be separately licenced, essentially as a licenced site, with its own safety case and unique hazard management plan. Refuelling and modifications have to be covered by unique individual safety cases. All of this is very expensive and labour intensive. A better arrangement would be to produce a safety case for a class of powerplants that covers all foreseeable hazards and establishes a design basis for the entire class. Each unit would then demonstrate that the design basis is bounding for local conditions. This is essentially how safety is managed in the aircraft industry – each aircraft demonstrates safety through a flight history that remains within a predefined envelope.

      Whilst there are undoubtedly challenges to scaling up nuclear power, they are at least institutional in their nature. Arguably, that makes them easier to overcome than the Physics based constraints on the ECoE of renewable energy.

    • Hi Tony,
      the Russians operate several nuclear powered icebreakers, that is a civilian application of nuclear propulsion, it is of a national interest, I’m completely in the dark as to the management, regulatory and organisational structure they fall under,
      I don’t see why Britain couldn’t run a couple of nuclear propelled container ships under our national flag, overseen by the Admiralty and crewed by ex Royal Navy ratings and officers, a sort of Merchant Navy,

      the Russians also are building small floating nuclear power stations using the same reactors as are used on the icebreakers, due to melting permafrost siting power stations on land in the far north is very challenging and their proposal is to tether these power station barges at the docks of northern cities to supply power and desalinated water and tow them back to base for maintenance and refuelling,

      for Britain one could do something very similar, again overseen by the Admiralty and staffed with RN ratings and officers, as an island we have docks and harbours dotted around our nation and each port city and it’s surrounding region could be supplied with electricity in this way,

      it might seem a bit of a mundane task for the Navy but electricity supply is of vital national interest and the operation of nuclear plant needs to be in responsible and trustworthy hands,

      there ought to be a more dual use function for our armed forces, a peace time role that allows them to maintain a decent level of trained and experienced manpower whilst also providing a useful service,

      the commercial airline industry is sure to contract as energy constraints bite and there are certain situations where aviation is the only realistic solution, when certain routes become commercially unviable they could be replaced with a basic skeleton service provided by the RAF, a sort of Merchant Air Force using chaps towards the end of their military career but still wishing to work and keep their hand in,
      it would be a good way of keeping pilots, aircrew and groundstaff still active and on the books but not actually deployed in specifically defensive roles,

      all this cuts against the ‘privatise everything’ mantra and is much more ‘state controlled’ but we do need better forward planning and contingency planning that can only really be structured at a state level.
      the horizon for private enterprise is only the next quarter away and this just doesn’t cut the mustard.

    • The service you have in mind is the Royal Fleet Auxiliary (RFA). I spent some time aboard an RFA ship, and found it a fascinating experience. The ship’s company were, on average, older than on a warship, and consisted largely of ex-RN sailors.

      There’s another potential benefit in time of war – a nuclear replenishment ship would be a floating power station, which could be moored in the Thames to power essential services.

      But the argument against is probably cost. Even the new CVAs (HMS QUEEN ELIZABETH and PRINCE OF WALES) are powered by gas turbines, despite being large enough for nuclear power.

    • oh, I didn’t realise our new carriers were gas turbine, I’d rather assumed they were nuclear!
      RFA sounds just the thing, I was sure there already existed an organisational structure but couldn’t name it,
      I know cost is always an issue but I’m confused as to what the cost/benefit is of our current military posturing,
      we just seem to get press ganged into whatever hairbrained scheme Washington dreams up and the outcome always seems to be plenty of cost and very little benefit,
      I’m prepared to admit Britain is no longer an Empire, it’s just an ordinary European Nation, we are only 66 million souls living on an island with no manufacturing base, reliant on a Heath Robinson financial sector to give the appearance of wealth,
      going up against China seems a bit daft and fool hardy, being shackled to Washington which is proving to be increasingly dysfunctional is rather like backing the wrong horse,
      I’d much rather be non-aligned and following our own chosen course, relying more on soft power than hard power,
      a small RFA fleet of nuclear container ships could probably cover most of their cost in commercial activity whilst projecting soft power, diplomacy, freedom of navigation excercises by sheer nature of their commercial activities and still be able to play a role in information gathering and surveillance,
      you could even squeeze onboard a helicopter and a small Marine detatchment if required,
      Britain keeps trying to live a champagne lifestyle on a beer drinkers income and reality is going to catch up at some point.

    • I think they’re driven using IFEP (independent fully electric propulsion) powered by gas turbines. They’re certainly not nuclear.

      The UK does seem to try to do rather a lot with limited resources. It might make more sense to expand maritime capability, rule out participation in protracted land wars, and reconfigure air capabilities into homeland defence (the acronym used to be UKADGE) and sea-based power projection. Land, sea and air compete for shares of funding, making compromises pretty much inevitable.

      An excellent defence blueprint was established back in 1997-98 – and then ignored when joining the invasion of Iraq.

  32. When it rains, it pours
    “The Rate of Global Warming During Next 25 Years Could Be Double What it Was in the Previous 50, a Renowned Climate Scientist Warns”
    The cause is declining sulfate emissions from shipping….which has an effect on the reflectivity of clouds. The headline is from James Hansen and a co-author.
    Don Stewart

  33. @Dr. Morgan
    ” the air of Sino-Western antagonism worries me.”
    My”‘intelligence agent” connection tells me that the military/ spy people think almost exclusively in terms of doing damage to the other guy. If country A and country B are competing with each other in terms of, let’s say, manufacturing, then the goal is to sabotage the other country. They do not usually have the capability of thinking about improving their own efficiency and effectiveness in order to outcompete. One can see this playing out, especially in the English language ‘advanced’ countries. They are simply not willing to accept China as a real competitor, and will do whatever damage they think they can get away with. The antagonism will probably accelerate as China turns away from oligarchy and the amassing of huge private fortunes and attempts to ‘level up’ it’s masses. The West does not know how it might possibly deal with a China which behaves in a socialist framework…so sabotage is the tool to hand. The West seems to be willing to risk nuclear war.

    Don Stewart

    • Everything I can see suggests that the Chinese authorities, whatever anyone might think about them, are thinking things through more effectively than ‘we’ (the West) are. We have to hope that this includes awareness of Mutually Assured Destruction.

      The West still seems to believe in perpetual growth, shaped by ‘liberal’ economics and enabled by ‘technology’. China may be aware of the weaknesses in this assessment. If so, at least four things logically follow.

      First, they would note that the fabrication of ‘growth’ using financial gimmickry creates risks, and would be determined not to go down the same road. That’s why they would turn against ‘speculative’ activity that creates ever-larger bubbles which must, in due course, burst.

      Second, they would see economics in resource terms, would aim to secure sources of resources going forwards, and would not fall for the idea that resources will simply ‘turn up’ when needed, through the creation of demand and the ‘wonders of technology’.

      Third, they would recognise that responses to our current economic predicament are likely to trend towards reductions in inequality.

      Fourth, they might think that the relative influence of the West is set to deteriorate anyway, such that all China really needs to do is have effective defensive capabilities (including defence of supply lines), and then let events take their course.

    • As far as I am aware, AUKUS has been set up to protect the South China Sea with part of the military collaboration sharing secrets regarding submarine nuclear power propulsion in order to upgrade Australian submarine deployment.

    • @Dr. Morgan
      Things consolidate while I sleep. Dmitry Orlov describes what is happening in China, and increasingly so in Russia, as ‘State Capitalism’. That is, the government essentially charters corporations to do jobs which are in the public interest while also being fiscally sound. This was a popular solution in the 1930s, as several countries in Europe turned to fascism and the US chartered the Tennessee Valley Authority and the Bonneville Authority in the Pacific Northwest to produce electricity and electrify rural areas in the South and West.

      In terms of the assumed need to electrify transportation and transform the generation of electricity to renewables, we have relied on a hodgepodge of profit maximizing companies given financial incentives by the taxpayers. I believe it is still true that all of Tesla’s ‘profits’ come from subsidies. IF we had taken the State Capitalism approach, and demanded fiscal responsibility from the management of those companies, thing might have worked out differently. In Texas, for example, would the wind company have behaved with such carelessness? Would the New Orleans electric company have concentrated the connections to the outside world into so few channels?

      I understand the resistance to the idea of State Capitalism from those who (probably with good cause) suspect that the companies would be diverted into virtue signaling and not get on with business. But the virtue signaling problem arises from lack of accurate feedback to the public about what the real problems look like. A local black farmer recently gave a ‘tell it like it is talk’, not ‘all that black vs.white B.S.’ Once we understand the real problems, the virtue signaling tends to fade into the woodwork.

      The heretical thought occurs to me that unrestrained capitalism works pretty well so long as the payoffs are large and collateral damage small. If the payoffs are small, a State Capitalism approach will minimize wasted capital (in the US, 90 percent of the railroad companies founded in the 19th century went bankrupt). If the payoffs are negative financially, but necessary for public purposes, then State Capitalism may well be more efficient than subsidies to profit maximizers.

      A whole different problem is presented by the Social Media companies, where profit maximization requires anti-social behavior on the part of the companies.

      From a legislator’s point of view, subsidies are King of the Hill. All those profit maximizing companies have to wine and dine and contribute to the guys with control of the subsidies…most of whom don’t know diddly-twit about the actual business.

      It’s curious that Putin seems to understand the actual businesses pretty well. As I understand his KGB assignment in Germany, he never had a dagger and never wore a cloak. His job was to gather intelligence about how German society and businesses worked. He learned to speak fluent German. Perhaps his experience gives him a better understanding of the State Capitalism companies in Russia today.

      Don Stewart

  34. Here is a good example of a mindless political signaling exercise which is profoundly wasteful of resources:

    I submit that anybody who thinks that Arizona is developing into an Eden on Earth just doesn’t understand the problems…because the feedback they are getting is not accurate. A scientist friend of mine (same age as me) moved to Arizona 2 years ago, because he fell in love with the desert 60 years ago. He is now disgusted at the lack of ecological understanding, and moving back to Virginia.
    Don Stewart

  35. John Michael Greer with an excellent post on our current predicament. If people understood this, how would their perception of a ‘walkable neighborhood’ change? How might the response to the need to electrify our current total energy budget change? Would bloated bureaucracies survive?


    “Since the arrival of the first energy crisis in 1973, the world’s industrial nations have effectively had zero-sum economies: that is, the total amount of wealth—not of money, but of nonfinancial goods and services—remained largely static on average, while the total amount of illth rose to equal it. We are now moving into an age of negative-sum economies, in which the total amount of wealth decreases on average from year to year, while the total amount of illth rises steadily for a while.

    In a negative-sum environment, trying to preserve wealth by stockpiling tokens is a fool’s errand, and no, it doesn’t matter what tokens you stockpile. Are there strategies that can deal effectively with such times? Yes, though they’re highly counterintuitive to minds raised to believe in limitless growth. “

    Don Stewart

  36. Almost everyone thinks automation will replace people’s jobs, but lack of energy pushing up its price, combined with ever cheaper workers, (as vanishing demand wipes out the jobs behind those purchases) mean human labour is cheaper. In that case, enabled by states reducing regulation for corporates, guess if they’ll go for the bottom line as usual?


    Working conditions for the vast majority are in a heating up race back to dickensian times.

    • We have a tendency to assume that today’s popular themes must endure, but they don’t – even in ‘normal’ times, let alone with ECoEs rising.

      Many people assume, for instance, that “tech” will remain the most profitable and influential industry. At different times, people thought the same about coal, textiles, railways, steel, cars, petrochemicals and plastics.

      In most instances, automation is a way of using energy to replace human labour, not just in the workplace but also in the home. As ECoEs rise, and as REs fail to provide a sufficient replacement for FF energy value (value, not necessarily quantity) the trend of change will run in the opposite direction.

    • It’s not a well received view, but I have often voiced my concern that the “normality” we have today is taken for granted. That the myth of progress, or even just keeping as we are, is predicated on a very unstable circumstance that is a complex system one can easily collapse.

      When I hear people expecting things like womens’ or minorities’ rights to get better, or education to become more abundant and free, along with increasing personal wealth, I have to ask: why? There is no arrow of time that means things improve any more than evolution had a plan to make modern humanity from bacteria. Many seemingly forget that we lost a lot of knowledge and technology and culture when Rome fell, leading to centuries of turmoil and trampling of freedoms and lack of progress in many other areas beyond what was salvaged from the ruins of empire.

      And yet, if you have only ever been raised in this period and known only how things have been over the last 250 years and had most history filled in with pop culture for that matter, you’d probably expect nothing but accelerationism without collapse.

      It really is all built on a foundation of energy and resources that enable our way of life and prosperity that filters down into personal liberty and stability to enrich ourselves in many non-material as well as material ways. That foundation crumbles, and fighting for BLM or worrying about Internet cancellation drama, or the latest smartphone release will seem positively irrelevant next to just putting food on the table.

      I find it telling that the natural gas situation hasn’t made any headlines yet. Calm before the proverbial and literal storm, perhaps. No one would expect, even after 2020, for a country like the UK to potentially risk rolling blackouts, but then I imagine Texas this year didn’t either.

    • I think we here understand the central issue – an economy built on fossil fuel energy faces the combined constraints of rising FF ECoEs and deteriorating environmental tolerance for the use of FFs. The forward trajectory combines (a) deteriorating prosperity, (b) a worsening squeeze on discretionary prosperity, and (c) the failure of efforts to stave off these trends with risky and futile financial gimmickry.

      Most of the things that we’re observing now are consistent with this scenario – for example, rising inflationary pressures, supply shortages, energy supply problems.

      Ideally, there would be contingency planning for a situation in which the orthodox scenario (growth in perpetuity) turns out to be wrong.

  37. I found an independent documentary that seems to have managed to slip under the radar,
    it came out in 2006, was made by an Irish filmaker and includes quite an impressive array of interviews,
    it links together peak oil, 9/11 and the subsequent Amercan led War of Terror.
    it might have seemed a bit potty at the time but in retrospect it stands up rather well.
    the original version was edited down to 50 minutes but this version has the cut out parts of the interviews added after the end of the original film, more than doubling it’s length.

    I made a list of the people interviewed,

    Oil, Smoke and Mirrors. 2006. Produced & Directed by; Ronan Doyle.
    Julian Darley, Founder – The Post Carbon Institute.
    Michael Meacher MP, Former UK Environment Minister.
    Richard Heinberg, Author.
    Andreas Von Buelow, Former German Science & Technology Minister.
    Paul Roberts, Journalist, Author – The End of Oil.
    Colin Campbell, Founder – Association for the Study of Peak Oil & Gas.
    Chris Sanders, Political Economist – Sanders Research Associates.
    Philip J Berg, Attorney – Scholars for 9/11 Truth.
    Christopher Bollyn, European Editor – American Free Press.
    Nafeez Mosaddeq Ahmed, Policy analyst, Author – The War on Truth.
    David Shayler, Former MI5 Counter-Terrorism Officer.
    Webster G. Tarpley, Author – 9/11 Synthetic Terror, Made in the USA

    if you can’t accept the reality of what is happening in our world you probably won’t like this film one bit.

    • Thank you, it’s a fascinating documentary and settles the debate often had here by our own commentariat on whether the powers that be are ignorant or calculatingly malevolent. As the interviews show, sane rational people in the know were stating clearly years ago that energy is the lifeblood of the entire system, money being just tokens and powerful countries were making war to control it because they knew it was running out and that this is the single greatest existential issue of our time.

      Some of those interviewees were in government or had access to government thinking and say there is no way the decision-makers couldn’t know about this type of thing. Yet many here have repeatedly said they believed it was down to incompetence rather and that all in power couldn’t cooperate to this extent to have a MSM omerta on significant or sensitive subjects. Some have even mocked deeply sceptical views here as cretinous conspiracy theories, but throughout history the difference between some conspiracy theory and reality was just in the timing. Those punished as heretics when flat-earth beliefs were accepted as unchallengeable are not conspiracy theorists today when it is anyone denying the planet is round who is regarded as insane.

      This indicates that 99.99% of the population will believe in magic saving them right up until the moment their lives will fall apart.

    • Hi FI,
      I think a salient point is that the form of Western foreign policy we’ve been seeing enacted over the last two decades is what is often referred to as neo-conservative, or neo-con, this really relates to the philosophy encapsulated by Leo Strauss, who was mentioned at one point during this documentary,
      I don’t claim to be any expert on the subject but I did once find an essay which explained it quite well,


      these are the PNAC people, the project for a new american century, the people George Herbert Walker Bush described, derisively, as ‘the crazies in the basement’, the neo-cons that Ron Paul demonstrates a visceral loathing for.

      Adam Curtis has mentioned Leo Strauss and his acolytes in some of his films, The Power of Nightmares might be the best example,

      we all get fooled from time to time, they suckered me at first but I became suspicious and got wise to them, the saying goes ‘fool me once, shame on you, fool me twice, shame on me,’
      the whole 9/11 War of Terror schtick has been a con job played on the American people, it’s time to wise up and not get fooled again because next time they could be playing for the biggest stakes possible, if they try and pull an overt stunt over China.

    • Some top system scientists have agreed with me that *all* isms and ideologies are anthropogenic, and are tools used by those with hierarchical advantages to try to maintain their positions. Hierarchies in social mammals are biological. Luck plays a part, but the first power elites were military leaders. They were war lords. This was not just in Europe/UK. They became lords of the manor, and then landlords. Clever merchants, priests, politicians, joined in. To blame an ism for biological inequality makes no sense. It is the product of socio-biology. To expect change due to displeasure with the outcome is to expect violent revolt. That does not seem likely while the elite have most of the cards and military might.

    • Hi Steven,
      well power elites do have a built in self destruct mode, they become detached from reality, hubristic, over-confident and eventually over play their hand and fall flat on their faces,
      when they realise the games up and the tables have turned they tend to run in a blind panic,
      that twit of an Afghan puppet president doing a runner with his ill gotten gains and having to leave a pile of money on the tarmac because it wouldn’t fit in his escape vehicle is a classic example.

      just wait for the coming financial crash to happen, all the current strutting peacocks will be looking very sheepish and muted after things go tits up.

    • The irony of running out of a gas that is overly abundant in the air we breathe, while we curtail its production elsewhere, isn’t lost on me.

  38. Skeptical Views
    I believe that the core of the United States government clearly understands the challenge. They have to maintain an Empire around the world to produce the energy, goods, and services that they have come to expect. If we look at Rome or Britain, they never expected the cities of Rome or London to actually produce much of anything. The goal was to synchronize global production such that the surplus flowed into Rome and London, respectively. Yesterday I watched just a few minutes of Jim Rogers decrying the continued money printing. He said that while more central banks are tapering, the US is only talking about thinking about tapering. To me, the explanation is very simple: the US needs to restore the Empire bonds which keep Asia producing stuff and the Middle East reliably using petrodollars with the US able to print as much money as is convenient to keep the whole thing bubbling. The US public needs to be given bread and circuses so that they never think very far ahead. A few years ago, a senior official said “we have to maintain the force which makes them do our will”. Britain was able to govern an Empire “on which the sun never sets” with relatively few people who actually understood what the game was all about.

    There SHOULD be cognitive dissonance…but don’t hold your breath. The rulers of Texas can both make abortion illegal and ignore the humanitarian crisis brought on by population growth which exceeds ecological boundaries…which plays out daily on their border with Latin America. We know that Lyndon Johnson understood the population dynamic very clearly. It’s not that hard to figure out.

    I suspect that Biden, in his long years in Washington, has seen US influence wane, such that we were actually approaching the multi-polar world that Russia and China are promoting. Contrary to the propaganda, neither Russia nor China see themselves as the center of a global empire. So the basic conflict was between the notion of multi-polar versus the notion of a single empire gathering tribute from around the world. Biden knew he had to roll the dice, and that is what he is doing. I suspect that Britain and Australia (and Canada and New Zealand) perceive the same thing. A former Australian prime minister criticized the current PM for being ‘Washington’s lap dog’. But I suspect that the current PM has chosen to be part of the effort to reconstruct a global Empire uniting the “civilized” parts of the old British Empire rather than be a main supplier to China.

    What about continental Europe? I see total confusion…but maybe some of you have a better explanation.

    If the preceding is anywhere close to being right, then the “reconstructed Empire” will bleed the periphery in order to maintain its privileges. The rulers make the simple calculation that there are plenty of resources in the world if they can be channeled into a small enough elite. Dollar hegemony is essential.

    Don Stewart

    • I have to say that the handling of Afghanistan didn’t enhance my opinion of Mr Biden’s judgement in foreign affairs.

      The European Union, now sans-UK, seems confused about whether it should or shouldn’t have military co-ordination. France is likelier than Germany to favour such an idea. Meanwhile, France is mega-annoyed over the SSN deal with Australia, and loss of a valuable contract to supply 12 French-designed SSKs to the RAN.

      SSNs are a logical capability for the RAN, given Australia’s enormous area of interest at sea. Some in the RAN probably regret that they no longer have carriers, and Australia did try to negotiate to buy HMS INVINCIBLE (CVS) back in 1982. I believe that their new amphibious ships could, in theory, have a VSTOL capability.

  39. And a wonderful excerpt, courtesy Dave Pollard and Caitlin Johnstone:
    From John Steinbeck in The Grapes of Wrath (thanks to Caitlin Johnstone for the link):

    “We’re sorry. It’s not us. It’s the monster. The bank isn’t like a man.”

    “Yes, but the bank is only made of men.”

    “No, you’re wrong there—quite wrong there. The bank is something else than men. It happens that every man in a bank hates what the bank does, and yet the bank does it. The bank is something more than men, I tell you. It’s the monster. Men made it, but they can’t control it.”

    • I think it was John Wyndham who wrote that institutions are built to give us things that can out-last a human lifetime.

      C. Northcote Parkinson explained – quite seriously, albeit tongue-in-cheek – how institiutions work to their own dynamic, which isn’t necessarily designed into them, but simply happens.

    • There are some who would categorise corporations as being superintelligences of a sort. They are amoral, purely interested in expansionary growth at all costs, and able to apply vast resources to attain such goals. The only difference is that they are a system comprised of people working under one banner, not a single silicon based artificial intelligence with a primary mandate to prosper.

    • hi Kleiber,
      you’re right, commercial corporations are very single minded, state institutions are likely to be more open and accountable and have a broader range of interests and objectives,
      an example that springs to mind is the British East India Company that was given free rein in India and got in a terrible mess, in the end the Crown had to take over administration and bring the running of India ‘in house’

      Empire is very difficult to control, distant administrations can run somewhat off the rails, Kenya and the Mau Mau uprising didn’t do the image of Britain any favours,
      the age of Empire is over, a multilateral world of nation states taking responsibility for their own affairs and not meddling in the affairs of others is a much more localised and agile system,
      soft power, trade and diplomacy has to be the most sensible geopolitical currency,
      the sooner we can end wars of Imperial conquest and get rid of those damned nuclear weapons, the sooner the world can pull together as a community and solve our pressing challenges,
      trans national corporations are Imperialistic in their approach and do need reining in and/or breaking up, that is if degrowth doesn’t break them up first.

    • An interesting little factoid – in 1855, the House of Commons debated putting the Crimean War (a total shambles) out to tender, i.e. privatising it. 114 MPs voted in favour…………

  40. Skeptical views.

    I’m certainly of the view that governments, institutions etc are not incompetent but like all us, have yet to fully work through the various energy paradoxes of which these are just a few.


    Not only are entropic policy prescriptions difficult to implement without public support but how do you stop prices rising in the short term within the context of scarcity.

    This dynamic alone is seeing a slow but sure drift towards socialism and greater state intervention which is infuriating the libertarian Right who predominantly have vested interests in growth. Perhaps to the point of a synthetic future or at the very least war.

    In my view, the future probably is more ‘rational socialism’ or at least ‘state corporatism’ since prices, as I understand them in my limited capacity, are more reflective of the value of money rather than the value of energy.

    This perhaps explains the rationale behind the resource based economy.


    Perhaps a flaw in our current thinking is perceiving energy as money rather than perceiving energy as a utility and as such, view energy in terms of instrumental values rather than in terms of intrinsic value.

    I think what I am trying to say, is that monetary consciousness may well be the source of our many paradoxical problems.


    • What I keep asking myself is, where is Plan B?

      Transport is an example. We’re betting everything on ‘EVs, powered by REs’. What if that doesn’t work? What if it turns out to be negative environmentally? What if we don’t, or environmentally can’t, source materials for grid battery intermittency AND mass use of EVs? Or what if EVs are affordble only for a minority? How does everyone else get to their place of work?

      In this instance, trams – called street-cars in the US, I believe – would be a very good Plan B.

    • Steve G.

      You seem to be utopian, expecting equal outcomes for unequals in skills and power. Biology doesn’t work that way. If it did, the outcome would be different than the increasing inequality in our present greatly overshot species.

      Please explain what you mean by a “synthetic future.”

      Steve K.

    • There’s also ‘regression towards the mean’, Steve.

      If women preferred to marry tall men, and men to marry tall women, we might expect, eventually, an elite of people 7ft tall, and a ‘peasantry’ averaging 4ft. It doesn’t happen, because of biological regression towards the mean.

    • Tim,

      In socio-biology (humans are social mammals), inequality and hierarchy are a given. Your example of tall marrying tall is a thought experiment which has had millennia to occur…if it was a real example. It hasn’t. Nutrition has enabled average height to increase across the board, still fitting a Bell Curve.

      Inequality can no more disappear from humans than from dogs, horses, etc.


    • Steven. My current working model is

      Liberty (Living)
      Inequality (Ingenuity)
      Fraternity (Fellowship)
      Equality (Equity)


      and the goal of my working model is to avoid ww3 by balancing these components.

      By synthetic future I mean a world in which the planet is increasingly concretised with technology mimicking or replacing natural processes and natural materials. Think human habitats on Mars but instead located on Earth.

    • Steve G,

      I like the design of your model as a goal for informed, homogenous societies. As long as there is adequate energy and a healthy environment, there is a chance that communitarianism might head that way. But the requisites don’t seem to be the norm in most locals globally.

      As to synthetic, usable energy is key, and that is diminishing. Adequate materials (rare earths, other minerals…) are also diminishing. It is questionable if high tech can consistently outsmart nature when mistakes can mean quick death.

  41. Plan B
    Take Vaclav Smil’s numbers (thanks to the National Labs) as the starting point:

    Click to access smil-energyconversion2021-1.pdf

    First try to figure out why our energy conversion efficiency has been falling, while, of course, we have all been getting smarter. Second, try to figure out some way to stop and reverse the energy conversion efficiency loss. Any ‘energy transition’ plan must achieve a higher energy conversion efficiency. Third, if that effort fails, figure out how to reconfigure society to simply use less energy.

    As a starting point, I suggest comparing the self-satisfaction of the Big Man in an African village with the self-satisfaction of Joe Biden. (Hire a crack silicon valley biohacking company to track hormones and neurotransmitters.) Has Biden, who commands trillions, gained anything real as compared to the Big Man? If not, we might get some profound insights.

    Don Stewart

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