#219. The unravelling begins


In nineteenth-century England, pictures of great events and famous personages could be purchased “penny-plain or tuppence-coloured”.

Where the world economy is concerned, the price of flattering colouration has soared into the trillions, but the value of a “penny-plain” view has never been higher.

The penny-plain picture now, of course, is that a vast gap has opened up between the consensus expectation of continuity and the hard reality of a post-growth economy. This gap is the counterpart of the chasm that exists between the ‘real’ economy of goods and services and the ‘financial’ economy of money and credit.

Our understanding of these dissonances sets an outline programme for ongoing analysis. The best routes to effective interpretation are those which (a) compare reality with perception, and (b) calibrate the relationships between the ‘two economies’ of money and energy. In the coming months, the aim here will be to add interpretive and statistical detail to the picture that is emerging as the aquatint wash of delusion fades away.

The divergence between expectation and reality isn’t – in itself – a new development. Many of us have long known that, over a very extended period, most economic “growth” has been a cosmetic product of breakneck and hazardous monetary expansion, that the underlying economy has been faltering, and that the confidence placed in ‘continuity’ lacks a basis in fact.

We can go further, recognizing that even the simulacrum of “growth” can’t last much longer, that the real prices of assets are destined to fall sharply in a context of broader financial distress, and that the balance of political power might be poised to shift, perhaps in a direction that, once upon a time, used to be called “left”.

What IS different now is that a process of fundamental change is already underway. The consensus case for continuity is crumbling, and is being exposed as a product of self-deception, wishful-thinking and economic incomprehension, spiced with absurd amounts of techno-utopianism.

The outcome mightn’t – and needn’t – be the wholesale “collapse” predicted by doomsayers.

But the game is up for what we might call the ‘continuity consensus’.

Of price and value

The single most obvious symptom of change is inflation. The Fed might – belatedly – have stopped calling this “transitory”, but the consensus view remains that this isn’t the start of a “stagflationary” trauma of the kind last experienced in the 1970s.

It’s widely argued that the take-off in inflation is a short-term product of the shortages and supply-chain fractures created by the coronavirus pandemic and, perhaps, of the gargantuan amounts of money injected to cope with the crisis. It’s further contended that labour lacks the pricing power to create a price and wage inflationary spiral. 

Before buying this comforting narrative, it makes sense to look at the fundamentals. Prices are the point at which monetary demand meets material supply. Put another way, prices are where the ‘financial’ economy of money and credit intersects with the ‘real’ economy of goods and services.

Conventional theory states that the price mechanism enables strong financial demand to prompt corresponding rises in physical supply, because rising prices give producers an incentive to increase supply to the market.

This logic, though, holds true only under conditions of infinite capability. No rise in prices, or increase in financial demand, can prompt the delivery of products which do not exist in nature. If physical constraints exist, the theory that ‘demand creates supply under all circumstances’ is exposed as a fallacy.

This is particularly pertinent to the supply of energy. Surging European natural gas prices are a case in point. Conventional theory dictates that spectacular rises in prices ought to have brought new supply gushing into the market for gas. The reality is that no such new supply exists. To be sure, price differentials can divert supplies between competing markets, but they cannot increase the aggregate availability of gas. The same applies to other forms of traded energy, including oil and coal.

This brings us to the fundamental point about scarcity. Conventional economics, with its insistence that ‘demand creates supply’, dismisses the very concept of material constraint. Hard fact, on the other hand, decrees that the supply of fossil fuel energy at an affordable cost is constrained by the limits of resources.

Two observations are necessary here. The first is that the process of depletion has created sharp rises in the ECoEs – the Energy Costs of Energy – of oil, gas and coal. The second is that nothing that has any economic utility at all can be supplied without the use of energy.

Accordingly, rises in the ECoE-costs of energy must force up the cost of everything else, imposing changes in allocations, priorities and distribution. This is particularly applicable to resources such as food, water, minerals, metals and plastics, all of which are supplied through energy-intensive processes.

We can’t conjure them out of the ether by pouring money into the system.

Supply constraint and the implications for demand

Of course, conventional economic theory doesn’t limit its concept of the price mechanism to the assertion that rising prices must increase supply.

It states, also, that rising prices depress demand.

If we superimpose resource constraint onto this ‘equilibrium-through-price’ equation, what we’re left with is a process whereby supply isn’t increased – but demand IS depressed – by rising prices.

Put another way, the introduction of material scarcity into the pricing equation tells us that supply constraints will, through the mechanism of rising prices, reduce demand.

This is the point at which two realities have to be factored in. The first is that consumer purchases are divided, in order of priority, between essentials (things that the consumer must have) and discretionaries (things that he or she may want, but doesn’t need).

The second is that there is extraordinary sectoral and popular resistance to the idea that discretionary consumption might be trending downwards.

We can see these factors in operation right now. Because of resource scarcity in general – and energy scarcity in particular – the cost of essentials is rising markedly. We can see this, most obviously, in the rising costs of food, fuel and domestic energy, but we can be sure that this process is going to extend into other necessities.

It’s noteworthy that the Resolution Foundation, a British think-tank, is forecasting that 2022 will be a “year of the squeeze”. This description can be applied globally, differing only in pace and magnitude between countries and regions. The cost of everything from gas and electricity to fuel, travel fares, food, clothing and even water is going to rise.

The brunt of this pressure is felt initially by the poorest households, who spend the largest proportion of their incomes on necessities. But there need be no doubt that the rising tide of costs will move steadily up the gradient of household incomes.

For suppliers of discretionary goods and services, this is a double-edged sword. On the one hand, consumers whose living costs are rising have less to spend on non-essential purchases. On the other, the costs of supplying discretionaries are rising. Credit-funded discretionary spending, long the prop of non-essential sectors, is in the process of being undermined by inflation or, more specifically, by the monetary implications of the rising cost of necessities.

Behind the brittle optimism presented by every sector from travel and hospitality to ‘tech’ and the supply of consumer goods lies a reality shaped by rising costs, decreasing consumer resources, and an eroding capability to bridge the gap using cheap and abundant credit.      

Prices as interface           

In order to interpret the role of inflation correctly, we need to understand the conceptual distinction between the ‘two economies’ – the ‘financial’ or proxy economy of money and credit, and the ‘real’ or material economy of energy and resources.

What this distinction tells us is that money has no intrinsic worth, but commands value only as a ‘claim’ on the goods and services supplied by the real economy. If we wanted to be high-falutin’ about it, we could say that money is an artefact ‘validated only by exchange’.

What this really means is that inflation is a process governed by changes in the relationship between the availability of money and the supply of goods and services.

Over an extended period, we’ve been pouring enormous quantities of financial demand into the system, at the same time that material supply has become ever more constrained.

In this sense, inflation isn’t even a new phenomenon. Rather, price escalation has, hitherto, been channelled into asset prices, whose movements are – conventionally, but mistakenly – excluded from the measurement of inflation.

If we had, all along, been using a comprehensive, RRCI-type measure of inflation, we would have been far better prepared for, and much less surprised by, what is happening now.  

Since there are no ‘fixes’ for material constraints, the only way in which inflation can be tamed is by pushing monetary demand back downwards into alignment with material capability.

This understanding re-frames what we know about monetary policy. As things stand, the real (ex-inflation) cost of money has fallen to unprecedentedly negative levels. Since we can’t create physical resources out of nothing, the only policy fix for the gap between the real and the financial economies is the elimination of the subsidy of deeply negative real rates. The scale of past recklessness has ensured that any such process would be extraordinarily disruptive. 

This means that raising rates by enough to tame inflation would have two effects, not one. The first would be to temper the rate at which the supply of credit expands. The second would be to start unwinding past expansion in the quantity of credit.

It would be futile to suppose that we can have one of these effects without the other. We cannot restrain inflation simply by raising rates by just enough to deter new borrowing, without affecting either the servicing cost or the collateral backing of existing credit.

In any case, the current system depends on a continuity of increasing credit. 

To be effective, then, rate rises would have to be big enough to trigger credit defaults, asset price slumps and a re-pricing of the financial system back into equilibrium with the constrained character of the underlying economy.

The paralysis of predicament

In practical terms, this means that positive real rates won’t be reinstated voluntarily, and this leaves us looking for pressures that might force us to act realistically.

The most obvious such pressure will come from households, which might accept the impairment of the scope for discretionary consumption, but won’t – and can’t – tolerate relentless increases in the cost of essentials.

This is where forecasting processes need to be reinvented, meaning rebased away from the fallacious assumption of ‘growth in perpetuity’.

By calibrating both prosperity and the trend in the real cost of essentials, we can make sense of a dynamic whose consequences will include widespread defaults, sharp falls in real asset prices and a fundamental shift in the political climate.

At the same time, our recognition of the relationship between the ‘real’ and the ‘financial’ economies should give us steadily-improving visibility on the economic, financial and broader outlook.

None of this necessarily spells “collapse”, but it does establish a relationship between systemic risk and the prevalence of self-deception.

In this sense, our best hopes for a manageable future rest on an orderly assertion of reality, and the retreat of delusion.

284 thoughts on “#219. The unravelling begins

  1. Thank you Dr. Tim and a Happy New Year to you. In my simple way of looking at things from the perspective of consumers of financial advice, I think we are already seeing a concentration on three words, which will become strong themes in 2022.
    “Depletion: reduction in the number or quantity of something”. That will be discretionary spending, then. People are also aware of the heavy UK tax burden, perhaps more than certain politicians might think.

    “Resilience: the capacity to recover quickly from difficulties, toughness.” I’m already seeing individuals and couples deciding to ‘sort out’ their disability, critical illness and life insurances, People will also spend less and save more, especially in tax-advantaged products like pensions.

    “Income: money received, especially on a regular basis from employment or investments.” The tough one for older clients. Lately, people have been seeking guarantees, and there has been an uptick in interest in very old-fashioned contracts (an important word) such as non-pension annuities.
    I think older clients will partly rotate away from the current reliance on the kindness (or otherwise) of the market towards guaranteed contracts (an important thing as cognitive ability declines with age) as the prospect for increased dividends seems doubtful.

    • Thanks Mark, and a Happy New Year to you.

      If those three words do become the key themes in 2022, that would be a positive step in my opinion. There may be no ‘good’ choices from where we are, but there are certainly some choices which are better than others.

  2. Another excellent treatise, Tim. I seem to recall you once saying that one potential feature of where all this is heading will be currencies collapsing. I take it you would continual to argue this point. If so, it begs the question which currencies around the world are most at risk as the current politico-economic madness is sustained by various governments?

    Happy new year to you.

    • They all are (unlike previous periods of hyperinflation and currency destruction this is now global and there are no or very few places to run too now)

    • As I see it there are degrees of risk within a global context of hazard.

      One could, for instance, make a strong case against any one of USD, EUR and GBP – each of these areas has huge though differing problems. But this doesn’t guarantee a home run for, say, China, or even Russia.

  3. Thank you for this analysis Tim.

    Regarding this commment:
    “The second is that there is extraordinary sectoral and popular resistance to the idea that discretionary consumption might be trending downwards.”

    I think we clearly see it through the lens of three trends in retail:
    1) Year-round sales (either through absolute percentage price reduction or through mechanisms to encourage spending like Buy 1, Get 2 or X% discount on 2nd item)
    2) The introduction and rapid adoption in the past few years of Buy now, Pay later schemes.
    3) Buying used, refurbished, or second-hand is becoming increasing popular.

    • Thanks. Based on my own experience, the costs of food and household products are rising dramatically. Pack sizes are shrinking, just as prices are rising. 500g of pasta has become 450g. 250g of butter or cheese has become 225g or 200g. Even if this trend were to halt now – and that’s very unlikely – the cost of living would already be far higher than it was twelve months ago.

      ‘Buy Now, Pay Later’ is really a new twist in an established pattern of buttressing the present by mortgaging the future. Like any other form of credit, this depends on the future prosperity of the borrower being higher than it is now. This assumption underpins a huge part of the financial system.

      If people do buy used, and extend the lifetimes of what they already own, this is bad news for the suppliers of new products. It’s a logical corollary of the trends set out in this article.

    • Keep in mind that “discretionary consumption” could, at some point in time, include things such as internet access, a new front door, fuel to heat more than one room, and eating four times a year.

  4. Tim, with this comment I wholeheartedly agree:
    Quote: This understanding re-frames what we know about monetary policy. As things stand, the real (ex-inflation) cost of money has fallen to unprecedentedly negative levels. Since we can’t create physical resources out of nothing, the only policy fix for the gap between the real and the financial economies is the elimination of the subsidy of deeply negative real rates. The scale of past recklessness has ensured that any such process would be extraordinarily disruptive.

    Seems to me that negative and low interest rates have fanned inflation of the value of real estate, houses, equities and cryptocurrencies, all of which is speculative rather than productive. This does nothing, and more likely, inhibits the production of goods and services because it feeds income to the haves rather than the have nots. It hits the lower 70% of income earners hardest. That’s where the majority wanting change will come from. In Germany, change came from the right, not the left. Trump, who set the US economy on a path of growth, was from the right. However, he and his advisers were not aware of the damage being done by the Federal Reserve and he had no inclination to tax the rich to feed the poor. Money buys political office. The rich, with the notable exception of Franklin Delano Roosevelt, tend to be wholly opportunistic and incapable of seeing a solution. Currently the rich are in love with the idea of global warming/climate change/planet in peril, because the supposed remedies will slow the rise of India and China. Mr Modi, who is no fool, asserts that this is the last gasp of imperialism.

    Currently, its difficult to see where the necessary discipline will come from. Without discipline the US dollar must hit the skids. China is best placed to assert influence because the Chinese are very productive and inventive. Some there work a 9/9/6, 72 hour week.

    • The undermining of the financial system as we know it was evident in 2008-09. We chose to dodge these implications with gimmicks, none of which was ever sustainable.

      One of these was pricing credit at rates lower than inflation. Unless safeguards were put in place – which they weren’t – this was always going to push asset prices higher, not least because, all other things being equal, the price of assets is the inverse of the cost of money.

      I take your point about China, but there are problems there, too, including vast credit associated with the expansion of real estate. A big difference might be the ability of Beijing to address problems without being opposed by interest groups.

  5. Thank you for this. Could you possibly explain what you mean by ‘sharp falls in real asset prices’, as in do you think we are going to see a steep fall in house prices, or are you talking about stocks and shares and other ‘financial assets’?

    • Everything will burn as soon as they stop printing (only BTC and PMs might survive)

      I would also have food and a means of water filtration too as it is going to get nasty

    • Thanks.

      It’s possible to see the scale of potential changes in overall asset prices, and these do apply to housing. There will, though, be variations within these classes.

      For instance, a solid business, selling consumer essentials, with strong cash flow and low debt, will obviously fare far better than one heavily in debt, loss-making or CF-negative now and ‘priced on hope’ for future growth, aiming to capitalise on discretionary expansion that isn’t going to happen.

      Property prices are definitely very exposed, most obviously to rises in mortgage costs. Affordability is already very stretched, and is worsening. Again, this can be expected to vary, this time geographically, and in relation to the local profile of ownership.

  6. a Wolf Street article that caught my eye a while back was this;


    another amusing story was this one on the new wonder mortgage;


    Russia has already achieved an interest rate of roughly inflation + 0% and it’s economy is still functioning,
    how much would the UK base rate have to be to put Britain on an equal footing and what effect would that have on our economy in the short term?

  7. Pingback: #219. The unravelling begins – Olduvai.ca

  8. Thanks Dr. Morgan, for continuing the analysis in clear language. Best to all for ’22. I wonder about house prices too. Building costs have been rising dramatically the past two years. But as taxes and mortgage rates rise, affordability declines. I suspect that demand will slacken as wages are unlikely to rise significantly. Perhaps a reverse mortgage is an idea to research, locking in the high prices of today in many places.

    • Thanks Steven. I do think we have arrived at a persuasive explanation of what is really happening. Property prices are often predicated on unrealistic assumptions of affordability, as applied both to owner-occupiers and to tenants.

      Reverse mortgages are an interesting idea. But could the counterparties in this situation honour their commitments?

  9. To all readers and followers of Dr Tim: although I am sure he is too modest to highlight it, please be aware that Dr Tim has added a donate button at the top of the page.

  10. Thanks for the article.
    It occurs to me that the challenges we face are as follows:
    *We need to cut out all superfluous consumption
    *We need to develop less energy intensive ways to provide our necessities
    *We need to build a new energy system
    On that last point, we will have to mobilize existing capital to invest in the new system, even though it may never pencil out in terms of return on investment. (Alice Friedemann is being interviewed by Rachel Donald for January release…all gloom and doom in terms of any ideas about plug in substitution). I first observe that 80 or 90 percent of the people on the planet simply don’t have much capital to mobilize. Which leaves us with getting the capital from the rich. So it seems we need a wealth tax. But taxing and giving the money to governments doesn’t usually turn out well. So one alternative is to write a tax law which taxes investments, but excuses investments in new energy systems. (This is fraught with concern about whether nuclear should be in the sheltered camp. I don’t know how to solve that problem, but I suspect that all governments will go toward nuclear.). Such a system would leave it to the good judgment of the individuals as to the optimum investments to put in their tax sheltered bin, thus insuring that the assets available for purchasing huge yachts steadily declines while money is instead funneled into the energy system we absolutely require.

    I will also note that the plan should ideally contemplate more use of passive solar and passive cooling. Passive solar both heats buildings and grows crops.

    I guess the moral of this story is that what industrial agriculture and digital media and the Fed have given, the tax man will take away.

    On the point of superfluous consumption and increased efficiency, I believe in the principle of accurate feedback. Governments should not be sheltering people from consequences.

    Don Stewart

  11. Greatly appreciate your thoughtful analysis and commentary, Dr Tim, as always, but am rather intrigued by this sentence:
    “The outcome mightn’t – and needn’t – be the wholesale “collapse” predicted by doomsayers.”

    The term ‘doomsayers’ carries undertones of irrationality, or as Websters describes it, as “one given to forebodings and predictions of impending calamity”. However in your sentence, you do not deny that collapse is a possibility.

    Indeed, as resources, particularly the availability of oil, will continue to decline, which, when coupled with our declining fertility and lack of genetic diversity, logically implies that collapse is ultimately assured, if not for a couple of thousand years.

    To me your use of the term doomsayers here, is to distance yourself from negativity and to highlight your rationality. But to predict collapse is entirely rational, it is just a matter of time.

    • Thank you – and, as I think this is your first comment here, welcome.

      First of all, I think this is about timescales – the Industrial Era has been with us for a little over 200 years. It will probably collapse eventually, but that’s not the question here.

      The consensus line is that the economy will carry on much as it has now, and will continue growing. My reading of the evidence is that this isn’t possible.

      What I call the ‘doomsayer’ view is that catastrophic collapse is imminent, amounting to the end of the world as we know it, and there’s nothing we can do to prevent it.

      The evidence does not, to me, demonstrate that this is inevitable. It’s certainly possible, but that’s not the same as inevitable. It’s a question of how we manage it.

  12. “No rise in prices, or increase in financial demand, can prompt the delivery of products which do not exist in nature. If physical constraints exist, the theory that ‘demand creates supply under all circumstances’ is exposed as a fallacy. This is particularly pertinent to the supply of energy. …”

    I would like to submit that it is also pertinent to the supply of food. And, I think that food prices (eg. the FAO food price index) can be used as a proxy for the obvious, and otherwise universally ignored cost of destroying the natural environment. When I read about the rising cost of food as it relates to current inflationary pressures, the author always says something to the effect that food prices are going up because of the cost of transport, fuel, and (in small print as if whispering), climate change.

    I cant help but monitor the worlds weather and what has become more typically the worlds weather disasters. Those weather disasters ruin crops. Sure, the price of food is partly dependent on the cost of fertilizer and transportation, but the recent rise in price has been driven mostly by anthropogenic global warming (AGW) in the form of drought, excess heat, sudden unusual cold, and flooding sometimes all in the same place.

    “We can’t conjure them out of the ether by pouring money into the system.”

    Indeed, farmers can dump all the fertilizer they want onto the ground, and they can irrigate (if some non-precipitation source of water is available), but if the crop is destroyed by hail, excessive heat, etc., they will produce no food.

    “Of course, conventional economic theory doesn’t limit its concept of the price mechanism to the assertion that rising prices must increase supply. It states, also, that rising prices depress demand.“.
    Except for food. People will want/need food regardless of price to the point that the very poor are selling their children to procure it.

    I think that AGW has finally reached the point that the price of food can be used as a proxy for the economic cost of environmental degradation. If so, the FAO food price index will display a correlation with climate. That is it will trend up long term since the climate is going to continue to get worse, but will vary with the vagaries of the weather.

    So, my question are these ideas irrelevant to SEEDS, or can the model be made to include the food price index, or is it already “aware” of the price of food?

    • There has been no increase in the temperature of the southern hemisphere, taken as a whole, in the months of December and January, for three decades.
      I am an Australian farmer. Australian Farmers can and do produce the food that you need. Just lower your tariffs.

  13. The outcome mightn’t – and needn’t – be the wholesale “collapse” predicted by doomsayers.

    Over the last 200 years and particularly since the beginning of the “great acceleration” circa 1950, total population and energy use per capita have continously increased. During that time growth in the economy and money supply have been almost continuous as well.

    We are now about at the point where surplus energy availability per capita will start declining rapidly, taking production of goods and services with it. Whether global capitalism can adjust to continuous economic contraction seems to me to be an open question. What do you see as critical strategies which can allow capitalism, and the debt-based financial system that allows it to function, to shrink rapidly without falling apart and producing “collapse”?

    • We are at the point where the availability of finance and permission for the exploitation of fossil fuels is being denied by activists of the global warming persuasion. The tail is wagging the dog.

    • Whilst I say that collapse isn’t inevitable, I also contend that continuity isn’t possible.

      Capitalism in its present form can’t continue, but it’s strongly arguable that what we have now ceased to be ‘capitalism’ a long time ago. Capitalism, after all, presupposes positive (above inflation) returns on capital, and also presupposes the failure of businesses which cannot achieve these positive returns. We’ve reached a condition of excess in which neither predicate applies.

      The critical strategy now looks like the ‘mixed economy’, which combines the best of the private and public sectors. We could have started in this direction during or immediately after the GFC, but we didn’t. Instead, we stymied creative destruction, where some enterprises are allowed to fail, creating space for new ones with new ideas.

    • “We could have started in this direction during or immediately after the GFC, but we didn’t.”

      Indeed, and the question is why? Answering that explains why SEEDS will never be adopted, mainly because certain “personalities” wouldn’t be in control of how it is deployed. That is what the Great Reset is for.

    • This is the crux of everything, agree or disagree?

      ” “Fourth Turning”, agreed. This one is some kind of 300 year “super-cycle” and nobody in power can see what to do, because they must relinquish power, and they cannot gaze upon that possibility at all.

      As energy per capita falls, the upper levels of system-complexity must be shed, and economies must re-localize more and more, in order to survive.”

  14. We are now in a state of human overshoot and the scientists that study it say we have overshot to the tune of 7 billion humans of which there are currently 7.9 billion. There is only one solution to overshoot seeing as we’re not going to be able to plunder andsteal the resources of another planet any time soon and that is a large and immediate human die-off. There’s a reason they call our present dilemma a predicament is because it has no satisfactory answer. If the die-off hasn’t already begun it will commence shortly and with a horrific efficiency. If you don’t believe me just wait awhile longer, for the undeniability of our fate will not allow even the most ignorant and avarice to deny it.

    • I used to think along these lines, but now I believe population could contract at a slow rate (say 0.5 to 1.0% per yr) for a long time without it feeling catastrophic. Population shrinkage will be destabilizing to financial systems predicated on the concept of growth, but we humans have muddled through many a challenge before. I don’t think an inflationary spiral will be the end of us. Widely available birth control appears to be taking us to this end whether we enter a fiscal crisis or not. The Economist magazine just published a piece about India’s population growth rate entering negative territory for the first time in recorded history…

      To keep one’s own life as comfortable as possible in what will probably be a long and difficult stretch – grow a big garden and build strong relationships with neighbors you truly enjoy spending time with.

    • I agree about overshoot, as do both the developer of the Ecological Footprint and a co-founder of Greenpeace. And the number ~ one B is their intuition too. However the timing and speed of the reduction is speculation. There are myriad weak links in the support system. We might cull ourselves, pathogens might do so, or…who knows. Not fun to think about when one has progeny, and certainly painful for many other species too.

  15. yes, the air temperature rise (zonal 0-90;0-360; DecJan) is quite dramatic isn’t it, especially since 1990!

    • @erl happ

      I did just what you suggested and got a chart that clearly shows a steady climb in winter temps, amounting to a little more than a degree C since 1950, with most of the increase since 1980.


      Since I saw nothing significantly different in the southern hemisphere from global temperature increases, I was not surprised. In any case, although it is easy to find local or narrow temporal examples of minimal temperature change, it is hard to show the the entire world is not warming.

      Besides, even if CO2 emissions caused no environmental harm, basing a global civilization on a one-time pulse of fossil fuels is very stupid. Modernity has been locked-in to fossil fuel dependency and fossil fuel depletion will be its downfall, regardless of any possible ancillary environmental destruction.

      Or perhaps you believe that not only do carbon emissions pose no danger to the climate, but that fossil fuels are unlimited resouce that we can rely on in perpetuity? But even if such a belief were plausible, growth in human domination of the earth’s land surface and stripping the oceans of biomass must surely halt sometime, don’t you think?

  16. All the deniers have ever had to argue with is cherry picked data that ignores the total picture which includes Siberian wildfires, melting permafrost, and increased methane releases. There is literally no multi year ice left on the Arctic Ocean and when you lose the albedo effect the ice provides exponential warming will kick in. We can’t refreeze the Arctic or bring back all the species that we are driving to extinction. We will continue with BAU until the entire biosphere is wiped clean. The wise ape has always been an illusion.

  17. Can we have a gentle decline?
    As old as I am, I have no memory of how the fascists rose to power in Europe. I do have memories of American fascists. Here is a summary of how the Nazi’s came to power in Germany. I think those of you familiar with current US events will see some parallels. What will happen when the debt spigot is turned off may resemble what happened when Germany’s loans from the US were called in response to the Great Depression:

    I will note that the Nazi use of propaganda was pioneered in the US by an advertising man. Social Media in the US is totally dependent on advertising, and the silos and censorship are similar to what happened in Germany.

    I also want to comment on the inability of any leadership to emerge in the governments before the Nazis took power. The Duke Professor Adrian Bejan has shown that hierarchy is essential to the functioning of efficient systems from rivers to college basketball. There are also hierarchies in the most basic human organizations, but the good hierarchies are based on solving particular problems…not inherited thrones or the blind worship of money. In a word, decentralization and democratic decency toward each other.

    The US MIGHT make it through the bottleneck, but it is hard for me to get optimistic.

    Don Stewart

  18. A theme which keeps arising here, and understandably so, is whether we can have de-growth without collapse.

    A large part of this comes down to how we handle it. In the past, growth has given us the luxury of making mistakes and getting away with most of them. With this ‘get out of gaol free card’ taken away, will we, collectively, ‘raise our game’?

    This brings in politics (!) and a number of other issues that might justify a separate article.

  19. Thanks Dr. Tim and Happy New Year.

    One of the consistent demands of many environmentalists has been the demand to end subsidies to the energy industry. I wonder how the would react to the realization that the most important subsidy has been the low interest rates that they also enjoy?

  20. Hi Dr Tim and happy new year. Firstly thanks for keeping a really good comments section open without the conspiracy rubbish that happens on too many sites. I think we have also already had too much climate stuff over the last couple of days. Once people keep commenting on climate or conspiracy stuff, the real purpose of the blog gets lost.

    On your de-growth opinion, I’m really interested in the how it could possibly happen without collapse. We need to get over the obvious math of the problem of increasing debt earning interest, which makes growth necessary to keep the system of the last 200 years going.

    Also there is the problem of accelerating decline in spending on discretionary aspects of the economy compared to spending on essentials. Let me give an example, and sorry for the long post….

    At a certain level of income the spending on essentials and discretionary is 50%/50%, so taking this as a starting point, it takes ‘x’ time to increase costs of essentials 10%, so we get essentials 55% of spending, discretionary spending 45%. That’s an obvious 10% increase in one and a 10% decrease in the other.

    Go forward another ‘x’ amount of time and essentials go up another 10%, so now are taking 60.5% of income and discretionary 39.5% of income. While essential spending went up 10%, discretionary spending went down 6.5/45 or 14.44%. It’s an accelerating decrease in income available for discretionary spending, up from 10% decrease in the prior period of ‘x’ time.

    Fast forward another ‘x’ amount of time to when essential spending goes up another 10% to 66.55% of spending while discretionary falls to 33.45% of spending, another decline of 15.3%.

    The natural outcome of the math is that eventually the spending of most people goes entirely on essentials, so the discretionary part of the economy must suffer accelerating decline. As most of the economy is discretionary, given the essentials part being energy in all it’s forms with a current ECoE being 8-10%, plus govt ‘essential’ spending etc, then every y% increase in essential spending has to lead into an increasing decline rate of spending on the discretionary economy.

    I’ve always considered an accelerating decline of anything as a collapse, just the overall time frame taken can be slow or fast, so something can appear as ‘degrowth’ if the fall is slow on our time frame.

    I’m looking forward to this years posts as we nut out this conundrum.

    • Thank you, and a happy new year to you.

      Thanks in part to clear guidelines, but mostly to the good sense of our community here, we’ve steered clear of conspiracy stuff, and have stuck to our ‘areas of knowledge’, essentially energy, the economy and closely-related matters.

      Our concentration on these issues has given us, I think, what might be called a ‘shared understanding’ of how the economy works, and where it is now.

      The question of ‘decline or collapse?’ merits an article of its own, something I’m pondering now.

  21. @erl happ on January 2, 2022 at 5:19 am said:

    Thank you for pointing out that little anomaly to readers, although rather strange when we look at annual, that’s January-December stats from 1900, since 1970 we get a one-way trend, which is up – I look at the 1970 figure as its corresponds closely with the publication of the Limits of Growth and, by year end we’ll have a full 50 year’s of data to look at.

    @oldscouser on January 2, 2022 at 2:07 pm said:
    Thank you for the link, may I enquire if Piers Corbyn contributes to that site?

    @Hideaway on January 3, 2022 at 12:12 am said:

    Many thanks for your comment, suffice to say this certainly is not a conspiracy Blog, so have taken your advice under consideration and will refrain from matters outside the remit of this weeks Blog post.

    Dr Tim, many thanks for producing a thought provoking Blog, which has been an important resource tool for two years for this reader.

    • Thanks Christopher. As I think this is your first comment, welcome.

      Part of the plan looking forward is to provide more resources, including stats. I like to think that we’ve ‘got the basics right’, giving us a good platform for developing and detailing our interpretation.

  22. @ joe Clarkson on January 3, 2022 at 12:11 am
    ‘Or perhaps you believe that not only do carbon emissions pose no danger to the climate,’
    None at all. And the failure of temperatures to increase in January since 1980-90, in the southern half of the planet, is sufficient in my view to establish the point. The supposed CO2 effect can’t take holidays. I don’t care about the annual average. If temperature is rising in winter and stable in summer you can rule out CO2 as the source of the increase in the average.

    There are good reasons why the thermal experience of the two hemispheres is very different but now is not the time to list them.

    I believe that there is enough coal for hundreds of years and coal to liquid is old technology. Many people espouse nuclear. Oil is still cheap and plentiful and the technology still improving.

    The great advantage of enhanced CO2 is that it is greening the planet with the largest impact in the driest places. Water use efficiency improves and yield gain is impressive. CO2 is still at near starvation levels from a plants point of view. A plant adapts to enhanced CO2 by reducing the number of stomata in its leaves, so reducing evaporative moisture loss.

    The downside attached to the decision to confine energy generation to renewables is now manifesting and its catastrophic. The way out of a debt crisis is to have productivity increasing at a rate faster than the rate of interest. That enables borrowers to repay lenders. Productivity will decline as the machines that require fueling cease to fire up when required. As the machines fall silent, income will decline.

    • OK, I understand your position with regard to climate change and energy.

      But if you do agree that the surface of a sphere with a fixed diameter is also fixed, then there must also be a maximum expansion of the human economy on that sphere. If so, would you not agree that the best time to limit that expansion would have been when our sphere’s natural environment was relatively intact and healthy? Or do you not believe that the natural environment has any impact on the human species?

      In case Dr Morgan feels that discussions of climate change and biodiversity. are off topic, I think it can be safely assumed that whether, or when and how, we limit economic expansion and any associated monetary aspects of the economy are relevant topics. And even if energy availability were unlimited, as Dr Tom Murphy noted in his classic 2012 post, Exponential Economist Meets Finite Physicist, “The upshot is that at a 2.3% growth rate (conveniently chosen to represent a 10× increase every century), we would reach boiling temperature in about 400 years.” This only from the ability of our sphere to reject heat through its existing atmosphere.

      There are indeed limits to growth and we have been seduced by two hundred years of constant economic expansion into thinking that limits don’t exist. That is a mistake that will have devastating consequences.

    • Joe, I don’t share you enthusiasm for the Malthusian objection.

      When I travel in an airplane at night and observe the twinkling lights below, they seem few and far between. I can understand that if you live in the midst of a concentration of pinpricks of light you might be kept awake at night.

      Where I live there is lots of space, no streetlamps and very few people.

      When I visit China and enjoy their transport network, by rail, by road or by air, and enjoy the view from a high rise apartment, I appreciate what is achievable, at a very high level of quality, when the market is very large and economies of scale can be harnessed.

      The problem that we face today is that too few people appropriate the product of the work of an ever increasing number. Housing is unaffordable for the bottom half of earners. Women must work. The birth rate is below replacement levels. The population is aging. Governments appropriate more of the national income and are pressured into spending it unwisely. Investors rack up the price of existing assets without adding a jot to productive activity. At the root of this is selfishness that denies a refugee, or the man in the street, a place at your table.

    • Hi Erl.

      You say “The way out of a debt crisis is to have productivity increasing at a rate faster than the rate of interest. That enables borrowers to repay lenders.”.

      It’s an interesting point. Perhaps the role of productivity has gone under the radar.
      How much more productivity can be squeezed out of a manufacturing process? It can’t be infinite and the investment in new plant and machinery to “knock out” “widgets” for a fraction cheaper eventually stops being viable as the returns on investment shrink. The payback on the investment can’t keep up with the rates of interest.

      The overcapacity of global production means that productivity declines.
      Maybe this is an underlining cause of the global slow down and the debt crisis?

      On the whole burning fossil fuel question.
      For the sake of argument, imagine that global warming through fossil fuel combustion is a reality. (I know you don’t, but let’s pretend that it is) What would be the issues for the economy/planet going forward?

  23. Happy New Year to all.

    You distinguish between essential and discretionary spending. There is actually a third category, at least at the corporate/business level. If companies are to stay in business — and avoid their own ‘Kodak Moment’ — they will have to invest in new technologies to meet the potentially business-ending challenges of climate change and resource depletion. This is already happening. For example, the Ford Motor Company aims to build 600,000 electric vehicles annually by next year (2023). United Airlines is investing in carbon capture and sequestration programs. These investments may adversely affect short-term results, but they are necessary for long-term survival.

    • Good points.

      A related question, though, might be whether sectors as a whole can be protected from fundamental economic and environmental change, or are these relative moves, i.e. getting ahead of competitors?

      My view is that we cannot replace all of today’s cars and commercial vehicles with EVs, or prevent declining air travel through carbon capture.

  24. @David Higham
    The first strike against us:
    “Humans are distinguished from the other living apes in having larger brains and an unusual life history that combines high reproductive output with slow childhood growth and exceptional longevity1. This suite of derived traits suggests major changes in energy expenditure and allocation in the human lineage, but direct measures of human and ape metabolism are needed to compare evolved energy strategies among hominoids. Here we used doubly labelled water measurements of total energy expenditure (TEE; kcal day−1) in humans, chimpanzees, bonobos, gorillas and orangutans to test the hypothesis that the human lineage has experienced an acceleration in metabolic rate, providing energy for larger brains and faster reproduction without sacrificing maintenance and longevity. In multivariate regressions including body size and physical activity, human TEE exceeded that of chimpanzees and bonobos, gorillas and orangutans by approximately 400, 635 and 820 kcal day−1, respectively, readily accommodating the cost of humans’ greater brain size and reproductive output. Much of the increase in TEE is attributable to humans’ greater basal metabolic rate (kcal day−1), indicating increased organ metabolic activity. Humans also had the greatest body fat percentage. An increased metabolic rate, along with changes in energy allocation, was crucial in the evolution of human brain size and life history.”

    A second strike against us is that humans have evolved a method for storing fat which we share with orangutangs, but no other apes, which allows us to use fructose to promote the storage of lots of body fat. The fructose causes us to become insulin resistant, which results in the calories being stored rather than burned for energy. Organgutangs store body fat in preparation for the change of seasons and the loss of a major source of food, bears store body fat to prepare for hibernation, and birds store body fat to prepare for long migrations. When the crisis is over, they lose the excess body fat. Humans in modern societies never experience a shortage of food…even homeless people can get fat by eating pizzas thrown away at the end of the day. So we tend to become overweight or obese, and stay that way. Which results in the exorbitant cost of medical care. Search on the you tube conversation between Dhru Purohit and Dr. Richard Johnson for about an hour of the detailed science.

    The third strike: Note that we have also evolved, using science, a method for concentrating fructose in high fructose corn syrup, which is ubiquitous in industrial food. While almost everyone ASSUMES that technology will save us, our experience to date should give us pause…high fructose corn syrup is not just a lone example of science gone bad. The Limits to Growth type models regularly show that disaster awaits.

    We became dependent on technology to “take more than our share”, using our various gifts from evolution. We apparently did not evolve the wisdom which increased power requires to avoid disaster.

    Don Stewart
    PS. Maybe this time is different. We await Dr. Morgan’s description of the way out of the trap.

    • Thanks, Don. I wrote a reply,and it didn’t appear for some reason.
      Re. “The Limits to Growth”, If we look at the most optimistic of the projections,
      “Stabilized world model 1′ (fig.46 ),which the caption describes as “an equilibrium state far into the future”,it doesn’t take much thought to realize that the horizontal graphs would not continue their horizontal trend far into the future at all.
      Note that the ‘resources’ graph trends downwards. That would inevitably cause most of the other graphs to trend downwards as well. Also,the ‘pollution’ graph
      is clearly incorrect. If we are burning fissil fuels to provide the enegy input for this civilisation,the polltion graph will inexorably rise. We only have to glance at the Keeling curve to see that. It isn’t a stabilised world at all.

    • @David Higham
      I have just started reading Dance to the Tune of Life: Biological Relativity by the illustrious British scientist Denis Noble. From his conclusion:
      “organisms have genuine purposes and creative purposiveness …is a real phenomenon that arises naturally from the social interactions of organisms and which is therefore within the range of knowledge of science”. This is the opposite of genetic determinism or Neo-Darwinism.

      Let’s assume that we all, from lowly me up to Elon Musk, have pretty much the same purposes if one digs deep enough. The difference, then, between me and Musk is mostly in the ‘interactions’. Musk has tremendously more power to manipulate SOME of his interactions than I do. If our society wishes to change WHAT our purposes are in order to change HOW we attempt to accomplish those purposes, then society will have to change the power relationships and the physical relationships.

      Let me give a very simple example. When deer and ducks were approaching extinction in the US, the Fish and Wildlife Service was formed and hunting regulations were adopted. While I am sure there was grumbling at the time, it was obvious to any thinking person that hunting deer or ducks was getting to be a desperate situation. Fathers could not take their sons hunting with any prospect of success. The regulations restored abundance. At the depth of the Depression, there were fewer than 3,000 deer left in the State of Missouri. Now, far more deer than that are killed in the first hour of deer season and those that survive are now pests because of overpopulation. A new Governor of Missouri missed a White House affair for the newly elected State governors because “it conflicted with the opening of trout season”. The difference between the “no regulations, shoot it if you see it” regime and the “regulated hunting and fishing” reflects, I suggest, what we are going to have to do to achieve any reasonably peaceful DeGrowth.

      There are daunting problems, such as the extreme centralization of ownership of assets and hoary regulations which simply don’t serve in the new environment. We are, like the hunting and fishing regulations writers, going to have to exercise the “creative purposiveness” that Noble attributes to us.

      A big stumbling block is the Constitution and especially the way the Supreme Court has interpreted it to enshrine the rights of capital. There is some interesting history in Graeber and Wengrow tracing John Locke’s ideas back to the Huron natives in North America. Thomas Jefferson and others of the Founding Fathers were influenced by Locke. I can’t really describe the Huron culture satisfactorily in a brief note. Suffice to say that they were enjoying entirely too much freedom for the Jesuits sent to “save” them. The Hurons believed and acted on the assumption that most people were doing the best they could. Women and children had rights which scandalized civilized Europeans and most of all the Jesuits…who held the Christian belief that humans were “fallen” and needed to have faith in a God they could not see and rules which made no sense and a Church which was clearly dysfunctional. But the Hurons lived in a world of abundance. Mistakes were usually not fatal. They also had no fossil fuels of any kind to amplify mistakes. We are somehow going to have to tread the narrow path between Huron type freedom and the requirement to live together in relative peace and harmony in a world of declining resources. Noble emphasizes “the rules of the game”.

      Don Stewart

    • I guess I should elaborate a bit further. Re. the ‘pollution’ graph,what iI meant was
      that the real world hasn’t tracked a projected future where all the emitted CO2 was somehow going to be removed from the atmosphere. That was heroically optimistic modelling.

    • @David Higham
      What we do know is that the last time atmospheric CO2 was at this level, the seas were many dozens of meters higher. There would be no existing seaports surviving and no sandy beaches and billions of refugees. As I see it, the only possible way out is to sequester carbon with regenerative farming and adopting the same forest-centric lifestyle as the Indian villages which produce so little GDP but do provide sustenance. To my knowledge, no professional group has been willing to tackle that subject. If a professional group were assembled, my guess is that they would anticipate miraculous breakthroughs in industrial carbon sequestration.

      It is easy for people like me to get enthused about carbon sequestration with regenerative agriculture, but the numbers only look good when we restrict our vision to atmospheric CO2. But most of the CO2 had gone into the oceans. And the air and the water have mechanisms which lead to balance in the CO2 pressure in each. So if we take it out of the air, the seas will replenish what we have so laboriously removed. I expect the same sorts of outcomes would be expected relative to industrial carbon sequestration. Albert Bates and other people in the biochar community promote CoolLabs which basically burn wood to produce the energy to make useful products with biochar (which is sequestered carbon) as a residue. The residue is useful in many building applications. But so far, Albert is still just trying to get some funding together to do a demonstration project in Belize which would benefit the millions of refugees that Central America is already generating. My guess is that CoolLabs will work, but not at the scale necessary to save all of us.

      We do know that life can thrive at the higher CO2 levels. I was in Colorado looking at some dinosaur remains from the time when Earth was much warmer. There were giant plants. When I asked about how life could have been so vigorous with such higher temperatures, the answer I got was that ‘yes, but it happened very slowly and life evolved to deal with it….the CO2 explosion from fossil fuels has happened way too fast for life to adjust’.

      Which politician is willing to talk about that?
      Don Stewart

    • Don,
      re.your 4.03 pm comment, The narrow path certainly has plenty of obstacles along it I won’t write much else,as the readership here must have a good understanding of those obstacles,and I don’t know what is going to happen .There are too may variables to tell what course that path will take.
      All the best. I read some comments in the last thread,and liked your comment about the hunter-gatherer societies .

    • Don,
      Re your 12.35 pm comment, I think you are probably right about the sustainability of the forest-dwelling Indian village
      lifestyle,versus the unsustainability of an industrial civilisation. Most of our species time on the planet has been one where
      the energy source has been from solar energy collectors (and dissipators ) which were self-replicating,and did not rely on mining and manufacturing for their existence.

  25. Fructose and It’s Discontents
    Now that we have pretty convincing evidence about the impact of industrial food on medical costs, do we put medical costs in the ‘essentials’ bucket, in the ‘luxury’ bucket, or do we try to separate “accidents” from “inevitable”? It doesn’t sound like a very appetizing distinction to make. Humans regard everything bad that happens to them as “an unforeseeable accident”.
    Don Stewart

  26. Pingback: The Unravelling Begins | ORCOP.COM

  27. Mr Happ is a classic cherry picker and his ignoring of the annual average of temperature rise renders his thesis useless. It’s like throwing a snowball in Congress to disprove the reality of global warming. Science literacy is an endangered species these days along with so many others.

    • Oh Dear Sissyfuss, I can see you are upset. Logic has gone out the window.

      One exception is sufficient. Call it cherry-picking if you wish, but it doesn’t render ‘that exception’ any less significant.

      Look for another theory my friend. That one is kaput.

  28. Paradoxes Abound
    Energy Skeptic on the imminence of oil decline and the subject of biodiversity:


    She links to a Davos sponsored article about the importance of biodiversity. I call your attention to this sentence:

    “In India, forest ecosystems contribute only 7% to India’s GDP yet 57% of rural Indian communities’ livelihoods.”

    Now the article posits that enormous GDP lies available for harvest if we just devote our attention to biodiversity. But then cites evidence that a pretty biodiverse system (the Indian forest dwellers) generates vastly less GDP than Bollywood and Company.

    I’ll leave you to ponder the paradox (and how smart guys like the Davos Crowd can buy into both statements).
    Don Stewart

  29. Where will energy to heat homes and water, fall on the discretionary v essentials scale?

    I can see both as being luxuries that most people will no longer be able to afford.

    Here in the UK, there is already talk of
    people having to decide between “eating” and “heating”.

    De-growth will not be politically sellable. People (me included) just aren’t ready for the implications of a falling ECoE.

    God, I’m going to miss having a hot shower! I’ve always considered it an essential when in reality, it has always been a discretionary activity.

  30. Dr. timm,

    RE your idea / hope for a controlled collapse, maybe the whole of the 21st century is a tribute to that process – the collapse has been for the lower classes, as the basics like food and housing, (which are really energy units) has become scarce, then more expensive, finally to be financialized, which means it is now too a debt-instrument.

    Leverage is placed on top of this original debt to acquire other hard assets, then to be hollowed out and sold off when the whole scheme starts wobbling.

    This is the fate of the middle and lower classes of the US for the last twenty years – a dystopian version of public policy, run by the likes of Mitt Romney and his uber-leeches at his rentier hedge fund. Everything is collateralized, then taken away, save the eternal debt payments. Debt masks the on-going collapse.

    There is a phrase in Wall Street lore – how the rise in prices goes in steps, but falls like an elevator.

    Leverage, at all levels of life, (including the BIGGEST bond bubble ever,) will ensure a crash at the societal level.

    • Just to be clear about this, my view is that “continuity” has become impossible, meaning that we face either (a) a disorderly “collapse” or (b) a “managed decline” in prosperity.

      So long as both outcomes remain possible, collapse isn’t inevitable. That doesn’t mean that collapse can’t happen, only that it might not. This comes down to how effectively we handle this predicament. Precedent and current practice aren’t encouraging, but de-growth may change how economic, political and social affairs are conducted.

      Even a managed decline involves fundamental change. There’s no reason to assume that the distribution of wealth and power remains the same as it is now – indeed, this is most unlikely.

      Neither does managed decline exclude pockets of collapse.

      Even a 40% real-terms fall in asset prices, with no subsequent recovery, would change the balance of power and wealth. Add the failure of whole sectors – and a drastic change in popular priorities – and we have the recipe for enormous realignment. What we might call the ‘globalist-financialised-rentier’ system may have reached the end of the road.

  31. Whether one calls it Anthropogenic Global Warming, Climate Change, Global Weirding, or whatever, there are two basic ideas that are paramount. First, it is global, that is the phenomenon has meaning only in relation to the entire planet/globe. The other part is that it is related to climate, not weather. Climate occurs over a long period – 30 years or more – while weather is the short term phenomena that occurs minute to minute.

    If someone says that the low temperature here this January 2 was -20F and since that is very warm for this time of the year at my home global warming exists, the speaker is showing one of three possible things: 1. ignorance of the fact that a single data point is not climate, and this very specific area is not global; 2. That he is a babbling idiot saying things that he knows makes no sense; or, 3. The speaker is a liar.

    Debate with the ignorant, an idiot, or a liar is not productive, and yet for decades, people have said that “deniers just have a different point of view”, or that “they just need to be exposed to the truth”, or some such silliness. I do not agree. In the example I gave the person might be ignorant. Fine, someone who actually knows the facts sets him straight, he says, “Thank you, I stand corrected.”, and that’s the end of it. If the person is an idiot, then someone who actually knows should be able to call him an idiot. And if he is in fact a liar (probably a paid liar), that fact should also come to light. No one should be exposed to and be expected to respect the opinions of an idiot, or a liar.

    Maybe the air above Australia has been cool for a couple years. Maybe it hasn’t, and the fires that ravaged much of that country recently weren’t normal. It doesn’t matter because its weather, not climate and it is localized, not global.

    AGW and other environmental problems do indeed affect the economy. Sadly, that fact is not easy (or perhaps even possible) to quantify in an economic model and so environmental issues should not be discussed too much here. We all know that this is an economics site. On the other hand, once someone says something silly or patently absurd, it needs to be corrected I think I have done that and that this can be the end of it.

    • That’s your reality Pintada and you are welcome to it.
      Unfortunately, a lot of people will suffer needlessly as a consequence of your belief, and most of all, those who do not have yet the advantage of possessing tools that depend on fossil fuels to power them.
      But not you.
      Consider this phenomenon: https://www.wsj.com/articles/chip-makers-contend-for-talent-as-industry-faces-labor-shortage-11641124802
      Humanity invents, adapts and progresses.
      It’s in Asia that this technology is taking off fastest.
      You are standing in front of a train and it will sweep you away.

    • Personally, I’m in no doubt that we face serious environmental problems, which, in addition to climate change, include ecological degradation and the consequences of pollution. I’m in no doubt, either, that human activity is responsible for much of this.

      The consensus line is that we can achieve “sustainable growth”. This is indeed an economics site, and energy-based analysis indicates, not just that further growth is implausible, but also that much of the “growth” of the past 25 years has been cosmetic.

      The decline in the supply of affordable fossil fuels is critical in this. Optimistically, this suggests that CO2 emissions will decline or, at the very least, will stop growing. The SEEDS model, as well as plotting a deterioration in prosperity, also projects lower levels of emissions.

      Within the mantra of “sustainable growth”, the implausibility of “growth” may make “sustainability” more attainable.

  32. For the avoidance of collapse, prerequisite #1 might be the continued reliable production and distribution of oil and gas, particularly for nations which are not self-sufficient (let’s see, that would include most of the OECD?)

    What proportion of present liquids consumption could each country get by on and maintain civilized society?

  33. Focus on the US
    “But this time, the taxpayer is mostly on the hook for those mortgages, not the banks, when the market turns south. So a financial crises of the type in 2008 is not what I see because the banks have sloughed off much of the risk to the taxpayer.”
    The quotation is from Wolf Richter. He is telling us why he thinks the 2022 situation is NOT like 2007-8. He says that he has not seen real interest rates so negative in his lifetime. So interest rates have to rise by multiple percentage points to meet the inflation which the Fed has ignited. In 2008 we got a Wall Street crisis because private investment companies held the mortgages (sliced and diced beyond recognition). Now it is the US government which is the bag-holder. So one way of looking at it is that the government cannot raise taxes because of the Spector of Donald Trump, who roundly criticized the Fed for not driving interest rates below zero and never saw a tax he liked and didn’t personally figure out a way to avoid paying. Will the US have its Weimar moment? If the US implodes, then the implications around the world will be profound. El Salvador, which used the US dollar as its currency, added Bitcoin as legal tender. But from what I have read, the public did not want to use Bitcoin, so the experiment has been described as a ‘failure’. Assuming that there are some solvent countries, can they band together and create a new global currency? What happens to the OECD countries?

    Lots to ponder….Don Stewart

    • Its all just a continuation of 2008, it never ended. Not the “fixes” because they’re still being used, and in fact in greater amounts since 2019. 2008 never was fixed and never ended, it was papered over by low interest rates and QE to keep those in power in power. Capitalism must have failure, otherwise the same people who screwed things up will remain in “charge” forever. Small biz can go bust, but mega corps are not allowed. That which caused 2008 (too much debt) has only got worse, so whatever comes will be bigger then 2008. How do you think they’ll try to explain it away?

    • Mr House has it right in my opinion. Too big to fail and jail is still the rule. Fed will print and buy as much garbage as they can get away with. This time it may not be sufficient to prevent a meltdown of 50% or more. Consumers are leveraged to the gills, and government can’t handle even 4% interest rates in the opinion of some economists.

    • In my opinion, 2020 and on is them trying to “explain” it away. And that’s just my opinion, and in fact most of what occurred in my life (can’t speak for others) in the past two years has mainly been economic. Shortages, denying me from spending my money in public, threats to fire you if you don’t take the loyalty test. Such compassion and caring!

    • @Mr House and Steven Kurtz
      I think his main point is that it is now government which is overextended. Banks may be overextended in other ways, but not in the housing market…because the originators of portages rapidly pass them on to government or else have government guarantees.

      A crash in the price of houses, due to, for example, a big increase in interest rates, will imperil anyone who has assumed responsibility for them…and that is now the government.
      Don Stewart

    • If massive defaults occur, prices will decline. Houses will be bought by those who aren’t bankrupt. Millions could lose their homes, and the guarantor of the mortgages would lose a %, but not the bulk of the loan.

      My 2 cents

      Sent from my iPhone


    • When people understand that rates are likely to rise, there’s an understandable rush to lock-in long term mortgages at low rates whilst these remain available. This implies that house prices would rise strongly on the cusp of rate tightening. I think this is what we’ve been seeing.

    • Dr Tim, I agree about the rush to buy houses being partly due to low rates. In the US, many people fled crowded cities for suburbs and rural areas due to Covid. They sold million dollar homes and bid up the 300-500 thousand ones away from cities. Also, some who hadn’t refinanced earlier in the low rate cycle did so recently. This released buying power which added fuel to the inflationary surge in general.

    • Thanks.

      I’m expecting to frame issues of government and politics within the context of gradual (“managed”) de-growth versus sudden (“unmanaged”) “collapse”.

      It seems to me that we can define the current situation as (a) deteriorating prosperity in the material or “real” economy, and (b) severe over-extension in the counterpart “financial” economy. I see this as a predicament, meaning a situation admitting of more than one possible outcome.

      Whether this outcome is managed de-growth or unmanaged collapse depends on how we handle it. This is where government and politics fit into the equation.

    • ‘Assuming that there are some solvent countries’.

      Responding to Covid has swept that away except in the case of the most productive countries that are now flat out filling sea containers with manufactured goods (if available), compressing natural gas for transport, loading bulk iron ore, coal and fuel oil tankers, stuffing it into pipelines and fracking underground oil reservoirs.

    • @stephen
      “Fed will print and buy as much garbage as they can get away with.”
      They already did. They printed and bought more in 2020 then they did in all the years 2009 thru 2019. They’re only now talking about “tapering” which i doubt they will actually do, because once the “market” has one 20% drop they’ll turn the spigots right back on. Its a confidence game and they’re going to try to use the same trick one to many times before people ever stop believing anything they say. I think we’re getting close to that point. Heck look how much people believe in any institutions these days. The problem with lying to benefit only yourself is that eventually it catches up with you!


      “I think his main point is that it is now government which is overextended.”

      Exactly, and that has been the case ever since the fed bought all the garbage debt that should have liquidated in 2008. I like to think of it this way: My wife ran up all kinds of credit card and gambling debts all over town in my name and then left me holding the bag, and to boot she’s now in some tropical paradise and when i asked her why she did she told me was doing “gods work” (good ole loyd blankfien). How is that any different then what the FED is doing now? They’re buying bad debt, putting it on the public balance sheet, paying the ex holders 100 cents on the dollar and laughing at us while they do it. And this all fits in with my reply to stephen above. They are squandering the most precious commodity you can have in a society, trust.

    • Mr. House: You don’t appear to see the full picture. The Fed prints and buys. The loser is eventually the currency value. So far the buck has held up, but that is the eventual loser due to lack of trust internationally. Then all whose assets are primarily in US dollars lose buying power on a relative basis. Inflation depreciates all currencies, but once the perception of flooding the money supply is recognized globally as deleterious, inflation will hit US $’s faster than the average.

    • @Steven

      “The loser is eventually the currency value.”

      I understand that my friend. What i am pointing out, is that if we’d liquidated the debt in 2008 we would have suffered deflation and myself, who was just graduating from college then, would have been able to acquire assets at a reasonable price. Those at the top who had been lecturing us about the free markets since the 80’s would have been taken down a few pegs, new management would have taken over. But we didn’t do that, instead we took all the risk that certain personalities had taken while paying themselves million dollar bonuses and put it on the public ledger. Because that debt was never destroyed and its not good debt we’ve continued to pretend it is to the benefit of the largest institutions, both public and private. Someone once said that bad money drive out the good, and i think we’re almost finished in that process. How do you think people will react when everything they spent their life pursuing becomes valueless over night? We’re losing our minds in the west because for some time now we’ve worshiped money, and its dying. How do most people react when everything they believe in crumbles? Its explains alot of the strange things you notice going on in society.

      Dr. Morgan likes to point out that those at the top do not recognize the problem. I think they do and they’re just lying, the ship is sinking and they’re loading up the lifeboats with all the valuables and the band is playing on. Even if they don’t recognize the problem, its just as good a reason to myself to remove them of power. I do not wish the captain of my ship to not be able to recognize the giant iceberg of debt in front of us before we hit it!

    • Mr House: The blame game solves nothing. You are angry, and I understand your view. Hierarchy is biological, and the cleverest who are also greedy rise to the top of the power elite. There is no way they will ever support actions that are against their interest. Also, as throughout history, they do their utmost to steer government policy. To expect them to lose money via domino bankruptcies in the economy is not realistic. They will push for a repeat of the bailouts the next time too, and the next…In my view, it will take a good chunk of the worlds wealth that is invested in the US to fear currency depreciation, profit deterioration in corporations, real estate rolling over…and begin selling. The Fed can’t buy everything. A loss of confidence could finally bring you what you sought when you were younger…deflation of asset prices.

    • “You are angry”

      Yes you are correct and i have been for 12 years.

      “The blame game solves nothing.”

      I strongly disagree with this. Society is run by the stories we decide to believe aka “the narrative”. I think by thinking it doesn’t matter who does wrong, you’re playing into the hands of the people who screw stuff up, say who coulda knowd, and ask that we just move on. Leaving them in positions to create more havoc in society. If the blame game doesn’t matter, then why even have laws? Why not just live by might makes right? We seem to be heading back in that direction if you ask me, and i doubt you’ll enjoy living in that world. Too big to fail, needs to fail, to big to jail, needs to be jailed. Even more so now as society is going to be running on less resources then previous times.

    • Most philosophers and scientists are determinists, meaning that events are caused by the past. Heredity, and cumulative experiences since conception are embodied and physical. No known exceptions have ever been evidenced. When the present is encountered, the outcome is a product of the combination. A good explanation for the denial of free will is here:

      Social mammals have clan, tribe, pack,…responsibility. Deviants are disciplined, sometimes ostracized, or killed if group well-being is threatened or impacted. Humans often blame ‘the other’ for things that happen to them. Sometimes the anger is justified; sometimes not. It is up to society to set the rules. Massive overpopulation has made it more difficult for feedback to function as groups are now too large. Dunbar’s Number is 150 See

      The system isn’t working well. Your anger is justified if you are injured. But a remedy isn’t easy and some might be illegal. Remember that revolutions are group events, and history has shown that eventually the shoes of the ousted are filled by people prone to power themselves. That’s what I mean by “solves nothing.” The system continues much as before, with new players being advantaged in place of the displaced ones.

  34. Don Stewart, check out Alice’s article “Why Do Leaders Ignore Peak Oil & Limits to Growth. It lays out tour dilemma in succinct and realistic fashion.

    • Curious to see what Dr. Tim comes up with about “managed” degrowth. I’ve never seen a sober response to the basic problem that if and when people broadly believe growth is over the economy will collapse. Any “managed” degrowth to me seems to have to either start with (1) lying to people and offering a false hope which has the same intended effect, or (2) nationalizing broad swaths of the economy, controlling most of people’s daily lives with force, and using the military to crush opposition.

      Some may contend we’re already living under #1, which I think is far fetched.

    • I’m still working on this, but part of the answer may lie in a totality of change.

      The onset of de-growth is a change more fundamental than anything in modern economic history, and the economy largely shapes everything else.

      Therefore, everything else changes too. This implies different industries, different attitudes and priorities, a different balance of wealth and power, different ideologies, different parties, different leaders……..

      Under current conditions, we probably couldn’t handle de-growth. When we recognize how much everything else would change, we might start to see new ways of handling things.

    • @Dr. Tim – That’s fair – and I hope you have something optimistic to share that others have not covered. Where I stand now is that I’m not sure “managed” degrowth is possible, in that I’m not sure we ever had “managed” growth to begin with. Possibly we are more dust in the wind than we’d like to believe. The alternatives seems to me to be disorderly chaotic collapse, or orderly tyranny where resources are consolidated through force, and collapse is externalized for some time. I don’t see any solution to the mass change in psychology if a degrowth mindset ensues, unless one hopes that perhaps in the midst of mass despair some better nature or our spirits prevails – e.g. women and children first.

    • “orderly tyranny where resources are consolidated through force, and collapse is externalized for some time”

      Kinda like the last two years and we can even see where its going to be externalized if we look very hard, cough the unjabbed, cough. Wait maybe the old cough cough isn’t a good phrase during these times 😉

      I know we’re not supposed to talk about that, but i can’t help but see how its all interconnected.

    • We don’t have censorship here, but we do have guidelines.

      These – in general, and with no specific application to you – are as follows.

      First, we have courteous discission, which means we ‘play the ball, not the man’. This means that we respect the opinions of others, however much we disagree with them. (For example, we might describe someone’s opinion as ‘idiotic’, but not describe him or her as ‘an idiot’). This applies, not just to other commenters, but to members of the public, politicians etc..

      Second, a degree of relevance is required, as is comparative brevity.

      We don’t, in principle, discuss covid here, as it falls outside our areas of specialist knowledge, and the site could easily be swamped with non-energy, non-economic stuff if we opened the doors to this topic.

      Our emphasis here is on the evidential, which is why conspiracy theories are not encouraged.

      Finally, there are various trip-words here which, if used, trigger moderation.

      Also, WordPress itself seems to put some comments into “spam” (I don’t control this).

  35. Electric vehicle enthusiasts should be aware of the downsides: https://www.cfact.org/2022/01/05/imagine-electric-vehicle-usage-in-inclement-weather/

    When the government, rather than the market, picks winners, capitalism and democracy is subverted. It seems to me that the government of China is more aware of the need to respect the votes that are delivered by purchasers in markets (everyday democracy) than the dominant political parties in the UK, Germany and the US.

    Adam Smith would be rolling in his grave.

    • @ erl happ I suggest that you read a tiny bit about biophysical economics (formerly called ecological economics). Add in this article:

      Then you might grasp that the fiat/credit traditional system of evaluating economic prospects is a charade like selling snake oil to cure diseases.

      The electric vehicle article makes some good points. It reinforces the baloney of techno-optimism as the cure for the problems of human population overshoot. I looked at some other articles, and think they are mostly baloney. As a farmer, you surely understand the law of entropy. When your soil is depleted and organic amendments aren’t available, you’re out of business. A few synthetic chemicals might keep you going for a while, but health soil is a complex mix of living organisms.

  36. Dr Tim, I was being facetious but I’m serious about only seeing only the top half of the sentence I post and nothing afterwards. Impossible to proofread.

    • @Sissyfuss I’ve never had the issue you describe. Perhaps it is your browser software.

  37. Somebody Help Me Out
    *The US Government is likely to become the proud owner of lots of houses.
    *But it doesn’t want to manage all those houses, so it sells them to a financial/ management company at bargain prices.
    *The financial/ management company gets its capital through murky mechanisms which boil down to zero interest rates. The Treasury suffers a loss, which the Fed monetizes.
    *The main “asset” held by households is the equity in their house, which has now been reduced to zero.
    *So the households become renters for the companies which bought the distressed mortgages from the US government
    *The population becomes more mobile. After the 2008 crash, households became less mobile because they were under water on their mortgage and couldn’t afford to move.
    *We end up like the Soviet Union, except that instead of the government owning the houses, it’s the financial/ management companies. But the capital of the average household has been destroyed. So that reverse mortgages to pay for expenses in old age are no longer an option.
    *The financial/ management company is dependent on the Fed/ Treasury creating the money they need to operate. Which implies that savings by households becomes irrelevant and something which will not be encouraged. “You will own nothing, and you will be happy”.

    If it works that way, the implications are profound. It seems to me to be a house of cards.

    Don Stewart

    • Don,

      I think your points are part of the picture, but not the complete one. Population growth in the US has slowed. Demand for housing will slow as well. Home builders keep building, and some people traded up with gains in their properties and investments. A slump in home prices was being set up as the frenzy occurred.

      If rates rise from 3 to 4 % on long term mortgages, demand will be affected. If variable rate mortgages rise from 2.5 to 3%, ditto. Increased defaults would be likely there. A recession (maybe longer term) would add to the misery. Rental investing has been going on for some years now. Those houses need to be maintained, and some of the supply will eventually be sold when renting demand slows. This is part of a normal cycle in markets, boom, then correction.

    • Don,

      Don’t forget that almost 50% of the homes in the US are mortgage free.

      Those who own their homes free of debt don’t really care so much what happens to housing prices, even if they need to sell to move. If prices go up, they sell high and buy high. If prices go down, they sell low and buy low. Either way, their living circumstances haven’t changed.

      Taking equity out of a debt-free home is subject to similar forces. If there were a housing price collapse, the price of many other things would likely follow housing prices down, since house prices and essentials prices are likely going to be subject to the same economy-wide supply/demand mismatches. Similar circumstances are likely to occur with rapidly inflating home prices. Other things will be inflating, too.

      That said, inflation adjusted home prices have doubled since the mid-nineties, while for the ninety years before then they were essentially flat. If home prices revert to the mean they will fall by about 50%. This will mean that much of the housing stock that has significant remaining debt will be subject to the default you discuss. People with high levels of mortgage debt will be wiped out. What will happen to their creditors is up to the Federal Reserve (meaning, as you note, probably nothing).

      It’s past time to get out of debt, mortgage or otherwise. If possible, own debt-free land that can grow food. That’s my strategy and I’m stickin’ to it.

    • @Joe Clarkson
      I agree with your choice if one is able to do it. In my case, I do have a garden where I grow mostly green leaves…which are some of the most perishable and expensive things one can buy. For the rest of it, I worked part time at a small farm until I was 75. Then it got to the point that I just couldn’t keep up with kids 50 years younger than me, so I retired. If retired people are living close to small farms, I recommend that as an option. At 81, I am now exposed to most of the same inflation in food prices that everyone else is exposed to. Still, in early January, I am harvesting more green leaves than we can eat. Back in prehistoric times (when I was young) the town library had all these books which reflected Depression thinking. I was very impressed by one which laid out some rules. I remember two of them:
      *Select a good wife. No nonsense. Knows how to keep a house properly.
      *Make your home productive. Nothing wasted. Grow food, etc.

      I don’t know if kids nowadays can find books like that, or if they would even understand what they are reading….but I think that way of thinking may soon be more relevant than people realize.

      My favorite book, however, was a warning about Wall Street. Which was portrayed as the “whore of Babylon”, sweet scents and dangling bracelets and exposed bosom. At the age of 10 I didn’t really understand it, but the lascivious language attracted me. Some things don’t change.

      Don Stewart

  38. Happy new year Tim,
    I have followed the blog for the past two years and I am disappointed that you are still shy about how you calculate your claims re “Peak Prosperity”
    You say again in this post, this;
    on January 3, 2022 at 8:47 am said:
    Thanks Christopher. As I think this is your first comment, welcome.

    “Part of the plan looking forward is to provide more resources, including stats. I like to think that we’ve ‘got the basics right’, giving us a good platform for developing and detailing our interpretation.”
    I have followed the points raised by Erl Happs, I have to say Erl seems more bounded in empirical evidence than your die-hard catastrophist Limits the Growth devotees. For all the claims to efficacy for your own ECOE and Prosperity indexing, we really only have your word for it still, and real-world data shows that we are not living in the Dystopic future you claim is already here, at least not based upon the causes which you are espousing.
    All I can say is I hope you make more progress with what was a promising start 4 years ago and to my own views has stagnated into something of a catastrophist echo chamber the past few years.
    All Hail the Nail, something for the Seeds Hammer to tackle.
    How Global Finance Really Works


    • Thanks Roger, but of course I disagree with you on a couple of points!

      First, I’m not a catastrophist, and I get far more criticism from those who think I understate rather than overstate the risk of collapse.

      My view is that ‘collapse’ is possible, but not inevitable. What we have now is a reversal of economic growth. That’s a situation, but one that admits of more than one possible outcome. The outcome will depend on how the situation is managed. Our current political and broader leadership seems, for the most part, unaware of the underlying reality of de-growth.

      On methodology, the principles I follow are clear. As you may know, SEEDS calculates underlying or ‘clean’ economic output – free, as far as possible, from the gigantic credit and monetary gimmickry/denial of recent years – and then deducts trend ECoE to calibrate prosperity.

  39. http://blog.gorozen.com/blog/the-energy-crisis-is-here-what-is-coming-next?

    “Over the last 20 years, there has been a surge of energy demand, a phenomenon we call the “S-Curve.” As a country gets richer, energy demand grows faster than economic activity for a period of time. We estimate that in 1995 approximately 700 mm people were in the midst of their “S-Curve.” Today, there are almost 4 billion people in this category – the most in history.”

    I want to comment on that S curve a little. I live in what was once a ‘country village’, built on a large dairy and diversified farm acreage. There were zero traffic lights between me and Chapel Hill. Going to the University was a 15 minute drive. But 20 years on, the suburbs have found us with a vengeance. Everywhere one looks big hills are being leveled and sand and gravel hauled and generally a whole lot of low GDP work being done with predominately diesel fuels. And the machines doing the work are a consequence of the high temperatures achievable in industrial processes using a lot of coal. There is, of course, an increase in commuter traffic using gasoline and the occasional electric vehicle. But, overall, what I see is a neighborhood that is in the middle of the S curve. It is, of course, much higher than the S curve experienced by an impoverished person in Southeast Asia. But I believe the phenomenon is correct. The first thing people do in order to achieve a higher living standard is move everything around and invest in a lot of metal and masonry infrastructure. So my hunch is that the analysts are correct to see big growth in the oil and coal consumption in the emerging markets.

    Don Stewart

  40. Dr. Morgan and all

    This may interest you and is very on topic with what we discuss here

  41. Excellent start to 2022 Tim and Happy New Year to All.

    I also welcome the new influx of thinkers who are broadening the viewpoints on what is a very complex and contentious subject and therefore as much as possible, arguments need to be backed up with well sourced empirical evidence, including the near possibility of collapse.

    I say this because socio-behavioural changes are rarely factored into rational modelling because they are so difficult to measure and account for. This I would include behavioural changes that are genetic, epigenetic or memetic in nature.

    As I presently see it, current inflation is indeed being caused by supply constraints, ranging from labour skill shortages to supply chain bottlenecks and of course the rising energy cost of energy as both the energy system expands and therefore more expensive to mainten and as extraction costs becomes more expensive.

    However, as far as I am aware there are no ‘hard’ raw material constraints (including energy), only ‘soft’ raw material constraints with regards to whats available on the open market.

    So in my opinion, attributing inflation to ‘hard’ material constraints is premature and what really needs to be looked at is the ‘soft’ material constraints including the massive productivity gap of inadequate labour skills.

    In other words, in my opinion, the systemic growth imperative has not reached its full potential by any stretch of the imagination. For example, high value commodity chains such as semiconductor microchip manufacture is experiencing a shortfall in the labour necessary to expand as is haulage and other essential sectors.

    In fact I would go so far to say that what we are experiencing is not ‘hard’ limits to growth but a supply chain productivity crisis where supply is being constrained by a severe mismatch in labour skills or an inadequacy of labour skills, so that more raw materials can be processed and distributed.

    In this respect, I would argue supply isn’t meeting demand because it is constrained by severe labour skill mismanagement whereby businesses can’t expand and grow because of labour shortages and a lack in the necessary skills.

    The same might be said of the global energy system. Huge amounts of energy are being systematically mismanaged into activities that do not contribute towards productivity growth.

    And then there is the empirical question of what actually remains of unmined fossil fuels with the Progressive green lobby adamant that growth should be sacrificed on the alter of climate change as if this is a decision that has already been made by an unelected chosen elite few, possibly to destabilise the global economy for political gain.

    Overall, like the Robert Preston’s of the world, rather than accept the social just solution of the Warm Homes Discount which will add a mere £12 per year to the energy bills of the more affluent, the Progressive media emphasis is always on ‘crisis, crisis, crisis’ so that Progressive elites can continue with their chest beating performative politics.


    In conclusion, the fact that there is abundant growth potential within our current system, by better allocating skills at the human level and better allocating resources into more productive activity means unproductive economic activities and unproductive economic lives need to be actively constrained unless it can be demonstrated that they have a high ecological value as an ecosystem service.

    This means policy that doesn’t reward victimhood and economic unproductivity but policy that rewards ambition, adaptability and productivity, particularly in the private sector.

    In my opinion, this would apply within a growth environment of soft material constraints, a post-growth environment of hard material constraints and a de-growth environment of politically imposed hard material constraints.

    In this respect, if we are talking about prosperity, then everything should be about energy productivity, material productivity and human productivity in order to best maximise the utility of our hard and soft resource limits.

  42. And here endeth the lesson. Well said Steve Gwynne, that’s a perfect analysis of where we are at along with some of the Why?
    Is the present “Collapse” Managed, Engineered, or an inevitability of Elitist Hubris?
    I would argue its a combination of Premature transition management engineering, What’s known as the “Great Reset”
    Presently though Central Bank Digital Currencies a new Going Direct solution to the misdiagnosed Banking collapse of the September 2019 New York repo rate spike is being implemented.
    “The BlackRock plan calls for blurring the lines between government fiscal policy and central bank monetary policy – exactly what the U.S. Treasury and the Federal Reserve are doing today in the United States. BlackRock has now been hired by the Federal Reserve, the Bank of Canada, and Sweden’s central bank, Riksbank, to implement key features of the plan. Three of the authors of the BlackRock plan previously worked as central bankers in the U.S., Canada and Switzerland, respectively.”

  43. Rachel Donald and Tim Garrett
    Tim explains why the rate of change of energy consumption is more important for capitalism than the absolute level of energy consumption. Therefore, a steady state economy won’t be capitalist. Tim describes the food system on a South Sea island where he taught for a year…food was not for sale, because family groups self-supplied. He survived on imported fish in cans. He also thinks that cooperation evolves when growth is happening…not when declining resources push people to fighting over what is left.

    I recommend this interview mostly because Rachel hosts some of the most literate discussions available. I don’t think ALL of your questions will be answered. Nevertheless, if the derivative of energy consumption is what drives capitalism, then the cessation of energy consumption growth explains the financial stresses afflicting capitalism.
    Don Stewart

    • n this interview, Mr Garret describes the collapse of civilization as a process where monetary systems become less and less of a consideration for more and more of the things that human societies desire and need. Economic exchange within human societies will be more and more defined by thermodynamic systems than monetary ones.

      He explains that currencies are “pegs for [measuring] growth” and that they will fall into disuse. Imagine that a local government that would ban or otherwise limit to the best of their ability, the use of usury/interest rates within a certain small geographical area. Examples: A township would only issue building permits to entities with zero debt, or property could not be mortgaged when sold. Things like this would be seen as austerity in the short term and could probably only implemented successfully in a time of great crisis. Otherwise the population may not tolerate it well. Can the same currencies that measure growth be used in a post-growth environment? My guess is maybe, in some places, at certain times, for certain things.

      A relative is taking on the family farm. 180 acres with timber and water. The inflated and entirely bankrupting market value? 1.6 million USD. The price is being determined, but most likely there will be no money down and no bank involved. The price of the farm will include an agreement that 1)Grandma has life right to the farm and is provided for physically, 2) the farm cannot be used as collateral against debt, 3) the farm cannot be resold for money if another immediate family member can and wants to farm. We are looking at a future where it is possible NYC becomes a scrap yard for scavenged building materials and Lewistown, Pa becomes the posterchild of social renewal and resilience.

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