#230. The rule of three


In the autumn of 2008, as the full seriousness of the global financial crisis (GFC) became apparent to investors, markets fell with dizzying speed.

Something very similar happened in the first quarter of 2020, when it became clear that the coronavirus pandemic had severe implications for the economy.

Perhaps the single most striking aspect of the current situation is that markets haven’t – yet, anyway – gone into a tail-spin.

This might seem surprising, given the take-off in inflation, pressures on the supply of energy and other commodities, and a pretty general recognition that the interest rate cycle has turned.

There are, to be sure, what we might call ‘pockets of concern’, of which the obvious examples are the “tech” sector in America, and the value of GBP. These exceptions aside, though, market responses to the current crisis have been restrained, whilst property price bubbles haven’t burst.

As you may know, this site does not provide investment advice, and must not be used for this purpose.

But we’re entitled to look at the general behaviour of markets as a barometer of sentiment ‘at the sharp-end’ of opinion. Thus far, it’s fair to say that markets have behaved like the dog that didn’t bark “in the night-time” in the famous Sherlock Holmes story about stolen racehorse Silver Blaze.

As you may also know, the view here is that surging inflation signifies a fundamental tipping-point, a moment at which the reversal of prior growth in material prosperity moves from unconventional theory to inescapable fact.

If that is indeed the case, the outlook for the financial system is grim, because the entirety of the system is predicated on the presumption of ‘perpetual growth’.

“Won’t get fooled again”?

Why, then, are markets exhibiting comparative insouciance in the face of seemingly-grave economic trends?

There are, in essence, two main explanations for this relative calm. One of these can be labelled “won’t get fooled again”. The other is a belief that all of the bad news is already priced in to the markets.

The “won’t get fooled again” explanation is that investors lost huge amounts of money in the third quarter of 2008, and again in the first quarter of 2020, only to find out that the World hadn’t, after all, come to an end.

Investors seem determined not to fall for this ‘end of the World’ stuff for a third time.

Given that we should never underestimate the role of psychology in the markets, this is a persuasive argument.

The “already priced-in” explanation is slightly more complicated. For starters, falls in the NASDAQ and in GBP can be portrayed as isolated cases.

The prices of American “tech” stocks had, the argument runs, been inflated to absurd extremes, so what we’re seeing now is nothing more than a long overdue correction towards reality. There’s a precedent here, of course, making a ‘dotcom2’ bust a plausible thesis.  

An equally persuasive case can be made that Sterling, like “tech”, is a special case. It’s hard to deny that the British economy has very glaring weaknesses, and the market judgement seems to be that these weaknesses are not replicated, to anything like the same extent, in other Western countries.

This isn’t the place for an assessment of the British economy, but the broad view taken here is that, whilst the UK situation, as measured by SEEDS, is indeed pretty dire, other economies have broadly equivalent problems of their own.

The real question-mark is whether the UK has what it takes to navigate the coming storm.

More generally, the market view seems to be that inflation, whilst clearly not the “transitory” phenomenon claimed until recently by the Fed, can nevertheless be prevented from running wild.

With the coronavirus crisis behind us, it is argued, ruptured supply-chains can now return to normality, and the monetary largesse poured into the economy to counteract “lock-downs” is draining from the system.

Where the war in Ukraine is concerned, there are two ways in which a calm market response can be explained. The first is that, after a period of adjustment, energy and other commodities previously sourced from Russia and Ukraine can be obtained from elsewhere.

A second, more cynical view is that we can already see the outline shape of a conclusion to the conflict. As war cools towards stalemate and settlement – and as the approach of winter demand peaks starts to concentrate minds – the trade freeze might begin to thaw, with Western policy turning out to be no more resolute over Russia than it was in Afghanistan.

Arguing along these lines, whilst rates might indeed rise to perhaps 3% or even 4%, we’re not heading into a re-run of the double-digit rates experienced in the late 1970s and the early 1980s.               

A darker perspective

If you’ve been visiting this site for any length of time, you’ll know that the interpretation of the economy set out here differs starkly from the orthodox view which continues to inform decision-making in government, business and finance. The surplus energy interpretation is summarised briefly here, and in greater detail here.

Once we understand that the economy is an energy system, and not a financial one, it readily becomes apparent that material prosperity is a function of the supply, value and cost of energy.

Within this matrix, the most important determinant is cost, referenced here as the Energy Cost of Energy.

ECoE refers to that proportion of accessed energy which is consumed in the access process, and is not, therefore, available for any other economic purpose.

Largely because of depletion, the ECoEs of oil, natural gas and coal have been rising relentlessly, pushing overall trend ECoE to ever higher levels.

This has pushed prior growth in prosperity into reverse, because prosperity is a function of the surplus (ex-ECoE) energy available to the economy.

As ECoEs rise, surplus energy shrinks, and prosperity contracts.

Important though they undoubtedly are, renewable energy sources (REs), such as wind and solar power, can’t push overall ECoEs back down to levels at which growth is possible. The average person in the West has been getting less prosperous over an extended period and, latterly, the same thing has started to happen in EM economies which, by virtue of their lesser complexity, have higher thresholds of ECoE-tolerance.

Energy transition, though undoubtedly imperative on economic as well as on environmental grounds, cannot stem – still less reverse – this prosperity-sapping trend.

The connections between ECoE and prosperity per capita in America, Britain and China are illustrated in fig. 1. Prosperity per capita turned down in the United States from 2000 and in Britain from 2004, and China is now decelerating rapidly towards its own inflexion-point.

Fig. 1

Meanwhile, the real costs of essentials are rising, primarily because the supply of so many necessities is highly energy-intensive. Examples include food, water, housing, infrastructure, the transport of people and products and, of course, energy used in businesses and in the home.

Accordingly, the scope for the consumption of discretionary (non-essential) goods and services is being squeezed. The SEEDS metric PXE – prosperity excluding essentials – is in decline even in countries (such as China) where top-line prosperity has yet to inflect (fig. 2).

Fig. 2

Depending on how we define “essential”, upwards of 50% of Western economies ranks as discretionary, a proportion reflected in activity, employment and profitability.

One implication of falling PXE is a decline in the value of those discretionary sectors which account for more than half of all the businesses whose shares are traded on the markets.

Another implication is that, as the gap between prosperity and essentials narrows, the affordability of mortgages (and of rents) declines, with adverse implications for property.

These negative tendencies in stocks and property can only be exacerbated by rises in nominal interest rates, even if real rates remain negative because inflation is rising more rapidly than nominal rates.

Denial nears denouement    

None of this is accepted by an orthodox school of thought which depicts the economy entirely in monetary terms, thereby dismissing the possibility of material constraints, and assuring us of the possibility of ‘infinite growth on a finite planet’.

Accordingly, policymakers have tried to counter energy downside with financial stimulus.

As you can see in fig. 3, this has seen liabilities – such as debts and other financial commitments – rise much more rapidly than prosperity. (It should be noted that the financial “assets” shown in fig. 3 are the systemic counterparts of the liabilities of the government, household and corporate sectors).

Fig. 3

Meanwhile, this process has created cosmetic “growth” in metrics such as GDP, because these metrics measure monetary activity rather than material prosperity.

With this understood, it becomes apparent that there has been a relentless widening in the gap between the ‘financial’ or proxy economy of money and credit and the ‘real’ or material economy of goods and services.

This creates an ultimately irresistible force tending towards the restoration of equilibrium between the two economies of money and energy.

Inflation is a logical concomitant of this process, because prices are the point of intersection between the monetary (financial demand) and the material (physical supply). This relationship is illustrated in fig. 4.

Fig. 4

The necessary conclusion of this dynamic is that a large proportion of the monetary claims embedded in the financial system cannot possibly be honoured ‘for value’ by a faltering underlying economy of material prosperity.

The process of excess claims destruction can take place either (a) through an inflationary degradation in the purchasing power of money, or (b) through a process of failure and default driven by a determination to use rate rises to prevent ever-worsening rates of inflation.

In practical terms, what this means is that we face a choice between untamed inflation or a ‘hard default’ slump, both in forward commitments and in asset prices, which are the corollary of the liabilities side of the value equation.

Perhaps the single most disturbing aspect of the present situation is rigid adherence to the fallacy that fiscal and monetary policy can deliver ‘growth in perpetuity’ despite worsening resource (and environmental) limits to expansion.

When governments (and others) assure us that we can “grow out of” current pressures on living standards, and that we can promote policies of “sustainable growth”, they are – perhaps in all good faith – making promises that the material economy simply cannot honour.

100 thoughts on “#230. The rule of three

  1. A very timely post Tim as I watched the excellent documtary film – Inside Job –

    this morning.

    I thought it was time to catch up with it again after 10 years.


  2. Thanks, Dr Tim. From the always interesting Bill Blain of Shard Capital this morning.
    UK – existential crisis

    “…Meanwhile, back in Blighty, the Bank of America has been dishing the UK; analysts writing we face an “existential crisis” which puts the UK on course for something akin to an emerging markets destabilisation event. Problem is – they are right. The outlook for sterling is “grim”, as they describe it.

    It was also completely avoidable. Political Common Sense in the UK seems to have left the rails, lurching from wobble to wobble. Not only is the relationship with Europe heading back into crisis, but communications from The Bank of England are “increasingly challenging” (says BOA), and it’s independence looks threatened. When the central bank loses credibility, time to check the proverbial lifeboats.

    The Bank of America report gels with many of the fears I repeatedly hear from major UK investors – the UK has become a metaphor of Boris Johnson – bumbling from crisis to crisis, and never really solving any of them. Muddling-through has, once again, become the UK’s default mode. To be clear, I’ve met many MPs and most of them are ok, but collectively… they’ve lost the plot. The political headlines are always going to be about crisis, wrongdoing, and political failure – but there is diminishing confidence in whatever path they are supposedly leading the nation.

    Covid, Partygate and leadership challenges are distractions – but they now set the sterling and UK market narrative. The real crisis is a distracted government failing to come up with clear, effective or considered strategies on any of the critical challenges facing the UK:

    How to take advantage of the Brexit opportunity to launch a new economy – too late, that boat has sailed.. (Boris has come up with a new wizard wheeze of a European commonwealth with less rules than the UK.. yawn…)
    How to refine industrial policy in the wake of covid supply chain breakdowns.
    How to address new logistical challenges blockages in the wake of deglobalisation,
    Energy transition strategies and planning long-term strategic energy security remains an absolute mystery.
    And there is much to add to that list; like the NHS, Railways… etc, etc…”

    Mr Blain isn’t far wrong, methinks.

    • Thanks. I enjoy Bill Blain’s commentary, though I’d not read that one yet.

      There are limits to how long any country can go on making mistakes and getting away with it.

      This government is a shambles, but in many ways it continues themes evident over a long period. All too often I just don’t understand the drift of public opinion, which to a significant effect informs the political direction.

      It sometimes seems to me that the UK has absorbed all of the worst traits of extreme economic “liberalism”, not just in economic policy but in attitudes as well.

  3. Hi Tim,
    we see GDP figures adjusted for inflation using a deflator, but we never see stocks, property and commodity prices adjusted in a similar way,

    a person might be delighted their stock portfolio and property valuation had risen by 10% over a year but if they corrected for a 20% inflation rate they might not be quite so pleased?

    just because markets aren’t falling in numerical terms doesn’t mean they aren’t deflating in real terms.
    do you have a current ballpark figure for RRCI?

  4. Dr Morgan,
    After much thought about business and your comments about de-complexification (word?).
    Until 2020 business was about supplying ever increasing demands of the public. Now we are in a situation where the public has to make choices from what is available. I see this in not only goods but services. Airlines are cancelling flights and passengers are getting rerouted into fuller planes. My daughter got 1 1/2 extra days added to a business trip waiting for connecting flights due to cancellations. I personally can tell air traffic is less than pre-pandemic just by looking up and there are fewer contrails.
    I’m expecting businesses will shrink or fail if they don’t provide essentials. You say housing prices are set at the margin and I believe product availability is similar. Reworking a product list to what a business knows it can sell and letting those marginal products get absorbed into specialty on-line retail availability.

    • I’d agree with that, but qualify that it was meeting consumer demands supported by easy access to cheap debt.

      A point I’ve been making for a long time now is that, as prosperity shrinks but the costs of essentials rise, discretionaries will contract. This trend has been deferred, up to now, by cheap credit, but inflation has called time on this prop. As and when this plays out, not just investors but also lenders can be expected to turn wary of discretionary sectors.

      Travel is almost an “ultimate discretionary” for consumers – who very much want it, but don’t need it – whilst businesses learned about virtual conferencing during the pandemic.

  5. What About Promises?
    I’m 81, and I have collected a lot of promises over the years. Inflation effectively reclaims some percentage of those promises. Bankruptcies can upend the great majority of the promises. Wars can render the promises useless. Premature death essentially cancels the promises.

    The stock market is all about the marginal buyer or somebody with a production system or else a persuasive schtick. As you have often pointed out, the “value” of a house is heavily dependent on the marginal buyer.

    I draw an analogy to quantum physics. The photon was fired, but it hasn’t yet decided which slit to go through. The physicist can manipulate the course of the photon by cleverly placing sensors and mirrors and such. Governments can manipulate the course of the promises by controlling the money supply, enforcing or not enforcing market manipulation rules, with inflation, and, lastly, with wars and public health policies.

    At the present time in the US, I would say that governments are strongly biased toward stock markets and keeping marginal prices elevated so that notional wealth is maintained, along with the power structure which the distribution of the notional wealth supports.

    When we are looking at flows of financial claims, we can visualize one flow as being the honestly anticipated future revenue stream from physical resources or intellectual property, delusional expectations of future revenue streams from physical resources or intellectual property, and, from the standpoint of notional wealth, the negative revenues being imposed on previous promises by governments and corporations and financial corporations. While the amount of such promises is somewhat cloudy, you have quoted very large numbers. So it seems to me that the final crash will occur when the promises become simply empty and there is no more “promise renunciation” to keep fueling the stock and bond markets.

    Don Stewart

    • Quite so.

      I know I go on about this quite a lot, but money commands value only as a ‘claim’ on the goods and services provided by the ‘real’ or ‘material’ economy determined by energy.

      This applies, not just to informal or ‘hard’ promises like debt, but to informal, assumed and sometimes collective promises, the latter exemplified by asset markets. The aggregate ‘value’ of stocks is notional, in that there is never any way in which the whole of that value can be monetised into cash. This points towards the ultimate futility of propping up stock markets (or property markets) as an aim of policy.

      There’s a very real sense in which asset values are a story that we tell ourselves about the future.

      If it turns out that this collective forward narrative is fallacious, valuations change accordingly – not just aggregate valuations, but components within those aggregates. What’s happening now in “tech” is a prime example of a changing narrative.

    • @Dr. Morgan
      In my very brief study of national accounts (which were invented about the time I was born), we studied “flow of funds”. But I don’t remember anyone ever talking about “flow of promises to pay”. I see the problems from an accountant’s perspective:
      *The promise is dependent on the use of private force (e.g., the Lord of the Manor) or sovereign force (the national military and a militarized police force)
      *In a sophisticated financial system, there are a multitude of ways to allocate the pain. Some of them are achievable through clever legal maneuvering while taking advantage of human weaknesses. Some of them require the connivance of governments, which can in the modern world be obtained by the usual methods of regulatory capture.

      Still, I think it would be instructive to get some rough estimates of how much more can be stolen from the people in particular segments who hold the formal or informal promises in order to keep the favored children fat and happy. For example, let’s use your approximation that asset prices need to fall by 40 percent. Could ALL of that shortfall be erased if pensions and health care promises and so forth were simply erased in a paroxysm of Neo-liberalism?

      To show that such an eventuality is not entirely unlikely, I can imagine the US Medicare system being reformed to include only diagnostic testing, which is getting a lot cheaper and more available to the public without recourse to the medical profession. The government could simply say “our responsibility is to point to your risk…dealing with your risk is your responsibility…you can work on your lifestyle or you can buy drugs or you can go for counseling…that’s up to you and you pay for it”. Such a step would eliminate around 15 percent of US GDP, and a very high percentage of government obligations. While the step might be distasteful, it might also permit continuance of the Security State…which is a lot dearer to the heart of Washington than public health.

      Don Stewart

    • Lets just say, you ate too much, and you type too much.

      What is it you don’t understand?

    • @houtskool
      I understand why promises were not included in the initial formulation of the National Accounts…they didn’t amount to much in the 1940s. But I do not understand why reputable economists haven’t added them to the National Accounts now that they are huge. The fact that Dr. Morgan has to guess at them should be cause for alarm.
      Don Stewart

  6. “There are limits to how long any country can go on making mistakes and getting away with it.”

    Those words should be immortalized, Tim. Here’s hoping that we reap the whirlwind, long, good and hard, since this seems to be the only way humans learn things, find humility and change – if at all.

    The internet this morning provides us with an excellent case in point. Finland, or at any rate its “leaders”, petitions to join NATO. Russia first warns that there will be consequences, then shuts off gas. Finland, or its “leaders”, says, not to worry, we get less than 10% of our energy from the Evil One, as if the world is awash in supply.

    Mere weeks later, this:

    While it’s a pretty dire situation for us – the subjects who are on the receiving end of this “governance” and seem to have an unlimited ability to put up with it – it is really amusing to watch “leaders” pretend that their countries still have sovereignty when energy, food, steel production and critical components like electrical transformers and microchips are completely globalized and not under any one country’s control. With rare exception in the West, it’s not like – it is – watching emotional and intellectual toddlers rule the world.

  7. We’re in human ecological overshoot, a predicament with no solution and no amount of mathematical formulas can change our disastrous trajectory an iota. Hoping for the best is a waste of time.

  8. Clear as a bell, Dr. Tim. Crunch time is likely this year in my opinion. It is possible that it gets stretched out into 2023 of course. Every tool the Treasuries, Fed, and other CBs can muster will be used to attempt to avoid serious asset meltdown.

    • Thanks, and I agree with you that it’s imminent – could quite possibly be this autumn.

      I think they’ll try almost anything, and fail with pretty much everything.

    • I think things will start to get “interesting” when businesses and individuals run out of savings.
      When will this happen?????
      Rising inflation and interest rates will speed up the process.
      I think the tail end of this year may the start of things if it hasn’t started for some already.

  9. I have just been reading the First Quarter Report from that wise old head, Peter Spiller, of Capital Gearing Trust. Mr Spiller has managed this excellent investment trust for 40 years, with very impressive results (no guide to the future, of course!). Whilst the whole report is well-worth reading, the following paragraph caught my eye.

    “The Fed is confronted with a series of unappetising choices, leaving investors with a wide funnel of potential outcomes: i) unchecked inflation coupled with moderate growth; ii) inflation falling to target and moderate growth (AKA a soft landing); iii) inflation tamed by a Fed induced recession; iv) stubbornly high inflation despite a recession (AKA stagflation). We would judge 1 & 4 the most likely scenarios and 2 the least likely. Whatever the outcome, it is hard to imagine equities performing well under any scenario. Equities don’t like high inflation. Equities don’t like recessions. And, if monetary policy works via financial conditions, they aren’t going to like a soft landing either. Nominal bonds will also struggle under scenarios 1 & 4. What then is an investor to do?”

    Mr Spiller has some thoughts on this, but you will need to look them up, as this isn’t the right forum for me to do so.

    In the interests of full disclosure, I own Capital Gearing Trust shares in my private pension fund.

    • Mark, I find some of the commentaries from certain investment trusts to be exceedingly illuminating; and a useful antidote to much of the trite and facile writings from the MSM. Peter Spiller’s observations are always worth reading, in my opinion. I think that his latest outlook – penned with Alastair Lang and Christopher Clothier – is correct in highlighting financial repression, although I have to confess that I side more with Russel Napier in as much as financial repression has been governments policy for a great many years. To paraphrase Woody Allen, we are at the point where our leaders have two options. Down one road leads disaster, down the other catastrophe. Let’s hope that they have the wisdom to choose wisely. I have Capital Gearing as a core holding – that is not advice or a recommendation, simply transparency to place my comment in context.

  10. Simon Michaux has a new video out from a conference about future problems. His numbers clearly show massive mineral shortages dead ahead…

    Simon is also incredibly conservative in his numbers, the real situation is far worse than he publicly portrays. I’m sure he knows the huge weaknesses in his own numbers, but because of his position must keep a positive attitude. He doesn’t discuss the increasing energy needed just to maintain existing mineral production, let alone a massive increase.

    For example Calvo, Mudd et al had research showing that the 30% increase in copper production between ~2003-2013 came at a 46% increase in energy consumption for that industry. It’s all because of lower grade ores, deeper, more remote etc. Similar for every other metal.

    The catch 22 is that any type of renewable future based on electricity instead of fossil fuels, requires a massive increase in fossil fuel use that we simply don’t have, just to build it.

    The future is very easy to see if you have your eyes open and look at the overall system. We already have all the clues necessary. The periphery is already suffering massively, places like Sri Lanka.
    Those that try to maintain some semblance of modernity via imports of modern goods, fuels etc are falling by the wayside if they don’t have a means to pay the world for these physical goods. The age of just growing debt is over. (though I’m sure some short term IMF or WB borrowings will be tried). Those countries that have physical goods and fuels needed by the rest of the world will be better placed.

    Places like the UK that are net importers of everything are likely to have a very torrid time in the short term. Accelerating decline will be felt by some much more than others, no matter how hard you ‘work’ or how well you save, if in a location with net deficits.

    • Thanks.

      In terms of “incredibly conservative” numbers, I don’t know about Simon, but it’s been said that my own forecasts fall short of how bad things really are, or are going to become.

      Conservatism is appropriate, because we have to remember that no forecaster can anticipate all developments, and some of these might be positive. Nobody wants to be accused of ‘forecasting fifteen of the last three recessions’.

      I use a conservative approach because that’s appropriate where the credibility of forecasting is concerned. The more alarming a situation is, the less alarmist our interpretation needs to be.

  11. Where to start in all of this? The logical problems we face are largely due to falling into a structuralist view of the world which suggests that everything can be understood within terms of simplistic strict binary oppositions leading to a highly reductive view of how things actually function or what they might mean. In this sense the claim that the economy is purely an energy equation is one such simplification. If that claim were true, then following the strict logics of EROEI or ECoE, this would mean that inflation as a result of more expensive energy extraction would be a direct result of such a relationship which has not been the observable case: in which case we need to account for this logical discrepancy. For sure, the economy is ultimately an energy equation but such a view takes no account of ‘latency’ or ‘flexibility’ in how these things eventually work through phenomenally complex systems which can take decades to materialize.

    I remember back in 2008 the legions of people declaring that central bank money printing would directly lead to hyper-inflation within short shrift. It never happened. In the absence of any real inflationary shocks, rather than question their assumptions, they endlessly differed inflation and market crashes into the future, which can always be legitimized by the broken clock principle which is always correct twice a day but never at any given ‘time’ which is no longer verifiable as such. So now we find people like Chris Martenson saying that inflation is the symptomatic outcome and that central bank money printing is the underlying illness. But central banks have been printing money around the world non-stop since 2008. Why would the symptoms appear 14 years after the supposed illness originated? As I have mentioned, we need to factor latency into our economic considerations but we also need to accept that things are far more complicated than we assume.

    As an illustration I will demonstrate how money printing and easy money policy far from being inflationary have actually been dis-inflationary since 2008. A few years back I spent quite a lot of time studying some dubious UK oil companies and the US shale and gas market. To cut a long story short what I realized was that the market price of oil and gas was out of all proportion to the actual EROEI of ECOE and this was largely achieved by accountancy fraud, zero interest rates and money printing. Whilst oil was hovering between prices around $40 a barrel it was actually costing the drillers circa $120 a barrel to get it out of the ground. This price discrepancy was hidden by novel accounting methods by which the oil companies only declared their business models in terms of OPEX and discounted CAPEX as any kind of real or noticeable cost. This was especially true in the shale oil business which sees huge capital depreciation on wells drilled within a very short period of time. The oil business was basically uneconomic but the drillers hid the losses by describing the CAPEX asset depreciation as accidental or incidental ‘impairments’ within their accounts. With low interest rates, in order to survive these oil companies have gone to yield starved investors for funds ever since: issuing new debt and endlessly diluting shareholders with share placings under the consistent promises of a jam tomorrow future wealth which never materializes. In this endeavour they were assisted by the equally corrupt and fraudulent investment banking sector. This means that the ECOE in the energy industry has been artificially deflated for quite some time.

    Here is the weird thing. As a result of all this fraud, billions of people have actually benefitted from artificially low oil prices from 2008 and this has kept inflation lower than it should have been at a negative investment cost for the few, which has not really been noticeable within the wider economy.

    However, it seems to be more and more likely that this artificial energy boom is coming to an abrupt end with shale oil and gas in the US having only about 3 years life left even with the unrecognized subsidies already heaped upon it. As if this situation were not dire enough we have the EU committing economic suicide following oil sanctions on Russia at the worst possible time in order to ‘support’ one of the most corrupt nations in Europe who sacrificed themselves to loans and the neoliberal pillage of the IMF following the CIA orchestrated coup of 2014.

    Looking at our great political and technocratic leaders it is clear that they have no conception of the problems we face or how to deal with them. We live in a globally interconnected world of phenomenal complexity that no-one could really understand in all of its real complexity – yet technocrats at the bank of England believe they can control inflation by the micro adjustment of a notional base interest rate as a lender of last resort. I remember during the GFC that whilst the BoE took interest rates to zero it had little to no effect on my mortgage payments. Those with tracker mortgages might have benefitted but for the most part the majority saw no real difference.

    One has to ask oneself that in a globally interconnected world where markets and prices are driven by computers and algorithms reacting within milliseconds and steered by human misperceptions then how is it that any individual country can think it can raise or lower interest rates as if their country existed in some kind of economically sealed black box that somehow could evade the influence of all the investment and capital flows circulating from all those countries which were either still operating negative interest rates or printing money like there was no tomorrow? If you do not understand the phenomenally complex nature of the economic issues then there is no way that you can ever resolve any of these issues with such criminally reductive thinking and we need to acknowledge those basic truths.

    To be sure, Tim’s thesis is probably sound in the long term but we need to account for how things have not materialized as predicted and acknowledge that a great many of our assumptions about economics are patently false.

    • I’ll try to get back to you on this, but I would contend that there has been significant inflation since 2008.

      This has happened in asset prices, rather than in consumer products, but it very much counts as inflation (just ask any young person trying to buy a home or some stocks).

      Even CPI is routinely understated – shadowstats . com is good on this, and on how it’s been done.

      Given compounding effects, the understatement doesn’t have to be huge to make a big difference. If we raise the world trend inflator from 1.7% (as reported) to 3.7%, for the period between 1999 and 2019, almost all reported “growth” disappears.

      I can’t speak for others but, as you may know, I’ve never predicted imminent collapse, but I’ve always said that growth was ending, and going into reverse. I’m as convinced about that I have been all along – and I think the wider world is on the cusp of learning about it….

    • Yes there has been inflation is certain asset markets but none of this impacts on everyday folk. House prices are difficult because we have such limited land and building restrictions in the UK at least. I really don’t see how the BoE raising interest rates is going to make any difference to inflation in the UK given that it is mostly supply chain and energy constraint driven. Many people have probably overstretched themselves in buying houses in the last few years and IF base rate rises are passed on then many will lose their houses only to be swallowed up cheaply by the likes of Blackrock [part of the plan?]. If you remember back to the GFC central banks did not know how much money had been borrowed at certain rates. If in big finance you borrow at 0.5% and then the central banks raises rates meaning you have to repay at 1.00% then whilst it only seems to be a small move the actual effect is to double repayments. This is obviously entirely dependent on the real amount of borrowing out there at different rates borrowed over time which the central banks don’t seem to take into account.

      If I remember correctly the FED raised interest rates in the mid 2000s around 20 times without ever knowing how much money was owed at different rates and that along with lax lending due to new financial instruments such as CDOs etc which severed lenders from any real responsibility and accountability for their lending led to the GFC.

    • Thanks. I’d have to disagree about the importance of asset price inflation, with particular regard to property.

      If I think back to buying my first house, and then look at the situation of somebody aged, say, 25 today, the change has been very bad for him or her. A personal view is that price-inflating gimmicks like “help to buy” have been cynical, to the point of indefensible, in terms of what they have done to (a) young people, (b) mobility of labour and (c) tied up capital that could otherwise have been available for businesses. Wasn’t it really “help to get into debt”?

      Very low rates build leverage into the equation. If rates rise from 11% to 13%, people can probably manage. But raise them from 1% to 3% and a lot of borrowers are in big trouble. Of course, the initial buying price is, to a large extent, an inverse function of the cost of capital.

      The UK economic model is built on (a) constant borrowing, and (b) the sale of assets to overseas investors to fund trade deficits. Between 1999 and 2019 – i.e. before covid – UK GDP growth averaged 1.8%, but annual borrowing averaged 7.2% of GDP (for 2001-21 those numbers are 1.4% and 7.3%).

      High house prices serve to provide comfort and collateral to support borrowing, which in turn props up GDP. (I would add that this prioritizes the interests of an older demographic over the needs of a younger one).

      Following the B of A’s report on “existential” risk in GBP, I’m running the numbers on the UK (though I won’t necessarily write an article about this).

      The content of the BofA report seems more nuanced than the stark title, but I agree with them that the UK and GBP are in a very serious predicament.

    • I agree that inflation has been manipulated to an extent and this has been masked by the increasing number of wage earners required to finance any given household. However we need to put this current inflation into perspective and it shows no or very very little relation to money printing. Indeed given the fact that the sums of money officially printed are so huge the question for me is why is house price and asset inflation so ridiculously low. We have to abandon the economic dogma around these issues. So lets look at house price and asset inflation with regard to house prices and the FTSE 100 in the periods from 1971 – 1990 and 2002 – 2021.

      Lets start by looking at house prices. At the start of the 1970s the average house price in the UK was £4057. In 20 years by 1990 the average house price was £57,683 an increase of 1322%. There was no QE and money printing during those 20 years. In 2002 the average UK house price was £106,406. 19 years later in 2021 it was £231,000 an increase of 117%. This covers the period where £trillions of QE and funny money movement has taken place. So I think we should agree that there is not a lot of house price inflation to be seen in the last 19 years. Current inflation now is nothing like the 1970s. Incidentally the baby boomer generation did rather well out of that inflation in the 1970s. House prices doubled between 1970 and 1973 and for most who bought houses in the late 60s and 70s they had no real debt at all on their houses in a very short time.

      What about asset inflation in markets? Let’s look at the FTSE. On Dec 24th 1999 according to Google finance it reached a high of 6,806. Fast forward 22 years to today and despite £trillions on global QE it is trading at just 7,533 – a colossal rise of 10.7% in 22 years. Such ‘inflation’ is hardly going to keep the pension firms afloat is it?

      I think the question we need to be asking ourselves is given the massive amount of QE and funny money manoeuvres that have consistently taken place with central banks passing the printing baton from one to the other since 2008 – then where is the real inflation? £trillions have just about kept market heads just above water in the last 20 years. The explanation I gave as to how zero interest rates drove speculative money into a US fraudulent shale oil and gas market helps explain how the cost of oil and gas were kept artificially to a low of $40-50 a barrel from 2007 onwards when the real cost was probably closer to $120 and this certainly had an dis-inflationary effect [I am reluctant to use the term ‘deflationary’ in these circumstances].

      What conclusions do we draw from all of this? One conclusion it seems to me, is that we cannot adhere to economic dogma that states that printing money directly leads to inflation. It clearly doesn’t.

      The questions that seem most relevant to me at the moment revolve around tangible and intangible assets. In the early 1970s the asset book of companies in the S&P 500 were 90% tangible and 10% Intangible. By the time we get to 2010 we find that this has entirely reversed and that 90% of assets are booked as intangible and just 10% are tangible. This places real questions about the real ‘value’ and safety of most of these companies and markets in general and this is the reason that in the last few years we have seen key figures such as Bill Gates buying up tangible farmland in the US and Blackrock buying as much tangible property as it can. This seems to me to indicate a rush to real assets and commodities and a break of faith with virtual intangible assets as they are subject to fraudulent accounting principles just like shale oil and gas in the US. When this becomes common knowledge it’s going to lead to huge inflation in real world assets and commodities which is probably why Russia has become such a geopolitical focal point. It is the largest country in the world with the most natural resources and a lot of its northern coast line borders the Arctic and its largely unexplored resource potential.

    • @Simon Hodges Re:

      “One conclusion it seems to me, is that we cannot adhere to economic dogma that states that printing money directly leads to inflation. It clearly doesn’t.”

      Using UK or any single country’s numbers is not valid evidence. Try Germany early last century, or many in Africa and S. America. see:

      Currency devaluations often result from money printing, and it is a confidence game to persist…like a game of chicken.

    • If you read my post, it began with the fact that figures from one country are useless. It is your responsibility to apply your logic to the many countries with high inflation, including Weimar Germany and ‘banana republics’ who print with abandon. Note that you have had zero supporters on this forum so far, including our learned host. I’ve been here for years, and have 40 years of currency expertise including being on a panel at the NY Fed.

    • Your evidence is Weimar Germany and 3rd world countries??? We are talking about first world countries in the 21st century when everything has changed. Or are you going to make the Marxist assertion that all Western countries are still industrially based as opposed to service economies?

    • Mainstream economies? If you think the QE, ZIRP, Covid payments of thousands per family, and income tax easing didn’t increase demand for goods and services in the US, perhaps you don’t grasp supply-demand dynamics. Increased money in circulation is stimulus. Rant all you like and show UK stats, but you’ll not likely convince this audience otherwise. I’ll not clutter this blog with more.

    • Tim. I think it worthwhile to discuss these issues further but think this might not be the appropriate context for such a discussion. Do you still have your (XX)model email address so I can contact you directly?

  12. Our Concerns and General Complex Systems Functioning
    This will be a 5 minute excursion into the way complex systems signal that they are breaking down. The particular application is estimating the stability, or lack thereof, in the North Atlantic currents, which send tropical water north to warm Europe. A breakdown in that system will change everything in terms of a prosperous Europe:

    Leaving the ocean current catastrophe aside, does the litany of signals that Paul Beckwith describes in the first 5 minutes ring any bells in terms of the energy system, the monetary system, and the political system?

    Don Stewart

  13. @Simon Hodges

    As you say, the world we live in is very complicated.

    But in a way, it is all very simple.
    The complexity is due to the harnessing of stored sunlight in the form of fossil fuels.

    Virtually all usable energy comes from the sun. Pure and simple.

    The complex societies that we humans have created with that stored energy is indeed hard to fully understand, but for sure, without a constant input of vast amounts of energy the complexity is unsustainable.

    Predicting how that unsustainability will unravel is a fools game perhaps, but unravel it surely will.

    Whether we are there yet is up for debate, but a rising ECoE will eventually call time on the world we all experience at present.

    • Predicting how that unsustainability will unravel is a fools game

      No, predictions are not foolish, they are very difficult … and essential. As complex societies simplify dramatically everyone should have a strategy geared toward surviving the drama. To do otherwise is suicidal.

      Strategy making requires predictions about the future. It is hard, but we have to try our best. Waiting for the future to become history before making a decision is the fool’s game.

  14. @Joe Clarkson

    Yes, well, perhaps “fools game” is not the correct term.

    But I think that any planning for the coming de-growth is at best, just an exercise in the self delusion that we as individuals have agency and control over events.

    There is no historical equivalent that we can take guidance from.
    If the present complexity is beyond an individual’s understanding, how can we
    effectively prepare for its unraveling?

    We will all be swept along by events beyond our control.

    • how can we effectively prepare for its unraveling?

      There will indeed be many powerful events beyond anyone’s control. There may very well be massive wars, including nuclear war, and a collapse of food production resulting in widespread famine. This is a tentative, but very plausible prediction about what individuals and their families and friends are likely to face as the complexity of modern civilization unravels.

      You prepare for these kinds of earth-shaking events not by trying to control them but by preparing to avoid them as much as possible. Live in a place that is not likely to get nuked or covered in fallout and be ready to supply your own food, water and shelter. Help others in your community to make the same preparations (better yet, find a community where large numbers of people are already somewhat prepared).

      Making these kinds of plans requires just a bit of imagination but also a large amount of courage, courage to leave whatever you are doing now to make a life in a city, give it all up and move to a safer and more survivable situation. I’ve been watching this situation develop for many decades, so it’s been relatively easy to gradually and persistently prepare for the calamity to come during that time. My family started preparing in the 1970’s, ever since the limits to growth became obvious (and as the cold war persisted and worsened).

      If you have no other people in your life to whom you owe any responsibility, then you can allow yourself to act without any agency and accept what comes. For me, who has family, friends and neighbors who are dear to me, I find it prudent to make preparations, for their protection as well as my own. I would find it unconscionable to do otherwise.

      My preparations may well be in vain, the odds of surviving collapse are not good no matter what the level of preparation, but that is no excuse for doing nothing to improve one’s chances (at least to me). And even if I don’t live to see everything fall apart, the preparations I’ve made will be useful to my younger family members or even complete strangers who might take over my farm after I’m dead. Fertile soil, lush pastures, sound fences, durable shelter and solid, independent infrastructure will always be useful to someone. Given the present circumstances, I think these are the kinds of things that everyone should be working on as much as they possibly can. We need to create as many lifeboats as possible before the flood arrives. We can all see it coming.

    • @Joe Clarkson.

      Here in the UK, the options are very limited.

      If the three largest cities in the UK (London, Glasgow and Birmingham) are Nuked there is nowhere in the country that won’t be effected by the fall-out.

      Buying up land is not an option. It’s expensive and non of it is remote except the least hospitable places which are the hardest to farm.

      Running to the hills is not an option. There are already people there!!!!!

      Even if I could afford a small farm, how would I fend off the hungry masses???
      Buy lots of guns and ammo? It’s not a legal option here.

      If law and order breaks down, things will get pretty ugly, pretty quick. Could all be over in a year.
      Can I really protect my nearest and dearest from it all?

      In a way, if it was just me then “prepping” would actually be easier. But I have family and friends to think of.
      Try telling my teenage daughter that she has to “up sticks” and move to the Outer Hebrides!!!!!!??
      Or my partner that we have to dig up the flower beds and start planting spuds!!!!!!

      I’ve built a rocket stove. It’s been a fun project but I’m not kidding myself that it is a survival “game changer”.

      I haven’t discussed with my kids any of what is being discussed on this blog. They need to enjoy their adolescence/early adulthood without all this to worry about. Climate Change is worry enough for them

      What’s more irresponsible? Telling them what’s coming down the line, or not telling them?????

      I’m not convinced that farming will be the answer anyway. If the Holocene is coming to an end then maybe an agrarian existence is not the best option.

      Learn to ride and follow the buffalo 🐃.??????? Again, not an option in the UK.

    • @John Adams,

      Isn’t it pretty easy for a British citizen to move to another Commonwealth country? How about moving to New Zealand, or Canada, or Australia? Lot’s more room and the southern hemisphere it’s likely to be far less affected by fallout than the northern hemisphere.

      In the 1980’s, when my family was considering moving to get away from the number one strategic nuclear target in the world at that time (probably still true today), our first choice was New Zealand. Unfortunately, it was impossible for Americans to emmigrate to New Zealand without a lot of investment capital. You’re lucky to have that option. I know it would be tough to uproot everyone and travel halfway around the world, but it makes a lot more sense than staying in the UK. As to abandoning a career, this is a time where it’s more important where you live than what you do for money.

      Kids are probably more adaptable than adults. No matter what you do, your kids will adapt. They also need to get ready for a world with a lot less civilization in it. If they express any interest at all in working with their hands on any kind of craft, art or trade, I would encourage it as much as possible. The same goes for working with plants and animals.

      The main thing is to convince one’s spouse or partner of the seriousness of the situation. Without that, you’re pretty much stuck.

    • “Isn’t it pretty easy for a British citizen to move to another Commonwealth country?”. The days of a British Citizen being able to easily move to other countries, such as Australia and New Zealand, are long gone. I think it all ended when UK joined the European Common Market and severed the close links that there were. Now we have to jump through the same hoops and have the same costs as others.

    • @Joe Clarkson.

      Alas, the days of the “£10 Poms” has long gone.

      The Aussies and Kiwis are fussy about which Poms they let in these days.

      Being nearer 60 than 50, unfortunately I am well down the list!!!!!!

      Australia is becoming unliveable due to climate change. Or at least uninsurable, so not sure if it’s a good bet anyway?

      New Zealand has higher property prices than the UK. Partly due to foreigners buying up property as a “bolt hole” as you suggest. I think the NZ government was going to stop foreign purchasing of NZ property.

      I’ve always felt that if there is ever a nuclear exchange, I’d want to get taken out in the first salvo. So not too worried about fallout.

      One of my kids is autistic, so not so sure he will “adapt”. Has difficulty tying his own shoe laces!!!!🤣

      Partner definitely not going to be persuaded to leave friends and family and head overseas and start afresh knowing no-one.

      I think my future, for better or for worse, is going to be here in “Olde Blighty”, which severely limits my “prepping” options.

      Here in the UK any solutions are going to have to be “collective”. Individual actions are not an option for the vast majority. We either find solutions together or we all fall together. Too many people on too little land for anything else.

  15. Rachel Donald and Asher Miller
    I link to the transcript, but you can also find the video easily enough.

    Anyone looking for easy answers will be disappointed. I think the title is somewhat misleading. I don’t think either of the participants is actually creating a complex solution. I would characterize it more as the search for the needles in the haystack…identifying things of value which CAN survive the disaster and grabbing them to the extent of one’s ability.

    Don Stewart

  16. “how can we effectively prepare for its unraveling?”

    The world’s people use approximately 50 percent of total habitable land for agriculture.

    Overall, there is a 14-fold difference in land requirements across national diets. If we were to achieve equitable diets using less land than we currently do, the world would have to converge towards the dietary compositions of South Asia and Sub-Saharan Africa.

    Assuming the energy inputs needed to build and maintain agricultural infrastructure will be available, which they won’t be, practically all habitable land in the world would have to be converted to agriculture & farms to feed everyone globally if everyone had the diet of the UK in 2011. We’d need twice the available land to sustain the average diet in New Zealand. And half or less for the average African diet. (Organic practices can sustain far fewer numbers of people / unit of land area than the assumed Petro chemical fertilizer based agriculture data offered here).

    Running away to set up a farm living in the UK with a population density of 282 people / Km2 is only a luxury option for a tiny number of very wealthy people who are lucky enough to get there first – and presumably then have to defend it with their pitch-forks from the starving thieving hoards? Same for much of world’s habitable land area.

    Also, humans live in a deep ‘gravity well’ on a lonely ‘pale blue dot’ and the energy needed to escape does not exist down here.

    Conclusion: Current human population numbers are not sustainable. The crash is likely to faster than the rise in numbers enabled by fossil fuels in the last 200 or so years. The best we can do is manage the descent. Trouble is psychopaths have taken all the power. But we’re not allowed to have that conversation.

    Meanwhile, a pleasant way to “prepare for its unraveling” is first stimulating the search for, and then sharing knowledge and data on reality, so big thanks to Dr Tim Morgan for hosting us here!

  17. Oil and GeoPolitics

    US Presidents and the US Security State have understood the relationship between oil, and particularly Middle Eastern oil, and “the American Way of Life”. Everything I see happening in Ukraine is consistent with the knowledge and behavior of every American President since Roosevelt.

    I’m less confident about European leaders. Why have they chosen to shoot themselves in the foot? And civilian leaders like Bezos and Musk may be genuinely grasping for straws, as is discussed in the conversation between Rachel Donald and Asher Miller.

    Don Stewart

    • If only it were true that the world’s financial elites were going to drive a transition to a net zero carbon future! A 50% reduction by 2030! Show us your plan!

      The reality is that McCoy-Ward has nothing to fear from the folks at the WEF. Powerful people have been talking about carbon reductions for decades to no effect. And that’s what the WEF actually is, all talk and no effect.

      McCoy-Ward fears for the impact on ordinary people, but the longer carbon emissions keep increasing, the greater the impact, not only on the people alive today, but on trillions of people yet to be born. If the WEF is somehow being subverted into driving the global economy off a cliff, as McCoy-Ward fears, more power to them, and hurry up about it.

      Unfortunately, it’s all “blah, blah, blah”. Carbon emissions will keep on increasing until something shuts down our global industrial civilization. We don’t know what that might be, a war, a pandemic, or something else, but it won’t be the WEF.

  18. Without comment from me…
    Don Stewart
    The supply chain crisis: Transitory or systemic?

    By Antonio Turiel, Richard Heinberg, La Casa Encendida

    Five decades should have been enough for us to find the path to prosperity without growth. Apparently, we didn’t take the lesson to heart.

  19. Big Thoughts and Little Thoughts
    On a discussion group organized around the idea that there ARE solutions, we just have to find them…I posted a very short summary of what I have begun to suspect is true about our human predicament. What it boiled down to is that keeping one’s sanity may involve looking at the biggest issues and also the smallest…and mostly avoiding all the stuff in the middle. The stuff in the middle has been the bread and butter of political and social thought over the last few centuries.

    Dave Pollard posted his version of the “new political map” a few days ago, and Indi in Sri Lanka posted his mark-up:

    When I look at these maps, I simply don’t see a way forward. The way we in the rich Western countries who have achieved middle class status is, to my eyes, on the verge of changing to something else entirely. We just don’t know for sure what it is, and opinions have become more polarized and actions more violent.

    So I look at the biggest questions and the smallest questions. The biggest question was probably the one posed by the Buddha 2500 years ago. He lived in an age of great disparities in wealth and constant warfare led by competing rich people. His conclusion was that human suffering resulted from craving something we could not, in fact, have. Yesterday evening, my wife and I went to our local food coop for dinner on the lawn. There was a little girl who had just learned to stand, although she still mostly held her father’s hand. Every step that she managed was an exercise in controlled falling. She was the happiest person on the lawn, I think. Walking is one of those things we can all learn to do, and can be very enjoyable and empowering. That is either a very big solution or else an entryway into craving once she discovers the limitations and begins to want an automobile.

    At the smallest scale, I put things like “where will I get drinking water when it all goes down?”. And “how can I sleep soundly when the night time temperatures resemble New Delhi in May and there is no air conditioning?” The smallest questions are, in principle, subject to a lot of answers, as exemplified by the retro-tech people. I try to work at that level most of the time.

    I agree with Dr Morgan that, in principle, it doesn’t all have to fall apart. We have enough exogenous free energy for the enjoyment of a little girl learning to walk. But wishing that I could unite all the “varieties of religious experience” laid out on Indi’s map may very well be craving something that won’t happen.

    Don Stewart

  20. “Euro-zone inflation is breaking record after record… The scale ranges from Malta — where consumer prices advanced 5.6% last month, to Estonia — where inflation hit 20.1%. That’s a difference of more than 14 percentage points, more than at any time since the dawn of the euro in 1999.”


    Could someone be so kind and explain to me why this is happening? I was under the impression that inflation is mostly driven by energy prices. Thanks!

    • Energy and food were the main drivers of Estonian inflations. The European countries with the highest inflation rates were all in the northeast, where they very likely got their fossil fuels from Russian pipelines. As the EU decided to close these down, the countries had to bid in the open markets. Not surprisingly, the have to pay top dollar. Malta has imported all of its fossil fuels for a long time, and has a special dispensation from the EU relieving them of complying with EU regulations. They undoubtedly had contracts with various suppliers, and did not have the same level of disruption as the northeastern countries. Malta also uses LNG for all its imports, so they have the infrastructure to buy gas from anyone.

      You will note that France, highly dependent on nuclear for electricity, was next lowest on the list.

  21. More on Malta:
    “As a country, when it comes to Liquified Natural Gas (LNG), we’re not dependent on Russia,” Dalli said.

    “We don’t have any contracts with Russia whatsoever. We are all the time, however, monitoring what’s happening on the market because we understand the EU has a number of agreements when it comes to Russia.”

    You will note that, in the run-up to the war in Ukraine, the EU had prohibited gas contracts, insisting on spot prices, as a means to insult Russia. Then the spot prices of gas started increasing rapidly. I don’t know if the EU is still prohibiting long term contracts, but Malta is not bound by the EU regulations. (Ain’t the EU wonderful???)

    Russia has favored pipelines over LNG. Putin has said that pipelines will always be more economical than LNG ships. But, of course, he was assuming an eager customer in the EU. So Russia ended up building a pipeline to nowhere, which Germany and the EU decided to kill by stalling and the maneuvers in terms of spot prices. Pipelines, of course, take a long time to build and I don’t think anyone would want to build them if the spot price regulations stays in effect.

    Don Stewart

    • @Don Stewart.

      I think the EU is in for a humiliating climb down.

      It hasn’t figured out what a weak position it is in re Russian gas.

      I would not be surprised if Russia doesn’t renew the contracts as they expire one at a time.

  22. https://consciousnessofsheep.co.uk/2022/06/04/in-brief-the-lamps-are-going-out-dear-keith-leave-this-well-alone/

    When the UK gets tired of rationing energy by price, perhaps it will resort to rationing by government control. That may produce more equity in energy consumption, but it will mean a nationalization of now private energy companies. Food distribution will probably be next. The real trouble comes when there is not even enough left to ration, but that may be a few years off. What’s truly sad is the waste of decades of time in which to prepare for this inevitability.

    • @Joe Clarkson.

      The privatised energy market in the UK has always been a farce.

      Based on ideology rather than sense.

      Present government will do all it can to resist nationalisation for fear of a domino effect through all the utility industries.

    • This is a particularly good article by Tim Watkins.

      I think he said, in a recent article, that the British economy is “collapsing”. I wouldn’t argue with that. The current government seems remarkably incompetent. But Mr Johnson was given an emphatic majority by the voters, and Labour seems to offer nothing, in the economic sphere, that is really different.

      For things to be different – in this context meaning “better” – the public, in this case the British public, have to want things to be different. I’ve yet to be convinced that they do. Perhaps they want to stick with things as they are?

    • @Dr Tim.

      I’m not sure that Boris was given an “emphatic majority” by the voters.

      The Conservatives got an 80 seat majority on 43% of votes cast, on a turnout of 65%.

      That roughly means that only just over one third of the electorate voted form them. The joys of “First Past The Post”!

      I agree that politics here in the UK is in a dire place. All personality and no policy. From both Tories and Labour.
      They see themselves as celebrities more than law makers.
      (Didn’t Bruce Forsyth say that “politics is showbusiness for ugly people”?!)
      Some people seem to need to feel important.

      No-one is really talking about the real issues as discussed here.
      Even Corbyn had an economic policy based on growth.

      I’m not sure that the electorate is ready for the reality of a rising ECoE..

      I think that events will dictate policy, not the other way round.

      I’ve read quite a lot round the subject of de-growth, but no-one really has a strategy to achieve it in a controlled manner??????
      Maybe it is too much to expect from our politicians?

    • Thanks. This is certainly an interesting article, and is persausive on the ways in which ‘the powers that be’ are trying to hold back the tide.

      Whilst individual politicians may be advocates of change – imagine if Britain had elected Mr Corbyn, or America Mr Sanders – systems themselves are always defenders of the status quo.

      It seems pretty clear that ‘things are starting to fall apart’, and that excuses are being sought (covid, Ukraine) to explain away this process as no more than ‘a little local difficulty’.

      It isn’t clear to me – at a first read – whether the article says that the collapse being held at bay is caused by capitalism itself, or by other factors (the kind of energy, resource and environmental constraints that I see as the issues).

      My view is that we have reached the point at which prior growth in economic prosperity has gone into reverse. This itself is physics (thermodynamics) rather than politics. But our political and financial systems are based on the assumption of ‘growth in perpetuity’.

      Extremism is seldom optimal, and our political norm is ‘extreme liberalism’, which yet – ironically – no longer holds to the tenets of market capitalism. But the same indictment might have been made against extreme collectivism in the USSR.

      My hope – and I stress it’s more hope than expectation – is that what emerges is a mixed economy, balancing the best of the public and private sectors.

    • Dr. Tim’s comments are good. I question the author’s statements about conspiracy amongst the global financial elite to fool the world. These folks are all worried about their own investments, properties, reputations, and careers (if in the public eye). They are ruthless competitors unless in temporary monopolistic partnerships.

    • Thanks Steve.

      I think I should clarify my own position on this a bit.

      There may well be cunning plans, which are second nature to many politicians and others. I don’t think we can know about this, though of course we can speculate.

      But what interests me isn’t whether such schemes exist, but whether they can succeed. Perkin Warbeck and Lambert Simnel schemed to depose Henry VIII, and Guido Fawkes and his chums wanted rid of James I. They failed.

      A lot of theories suppose that economic deterioration, as we discuss it here, is known to ‘the powers that be’. If businesses and investors knew about what we contend here, and believed it, markets would already have crashed. Nobody would invest in, or lend to, anything in the discretionary economy.

      So we’re left with politicians, or mysterious figures, perhaps at the top of a Swiss mountain or the bottom of a Californian valley. Put another way, ‘Bond villains’. I’ve not seen any Bond film bar one, but aren’t these villains (a) fictional, and (b) always thwarted in the end?

      Then there’s competence. The US authorities couldn’t manage a competent policy in Afghanistan. The British leadership couldn’t even manage a constructive Brexit.

      Neither Trump, nor Biden, nor Johnson looks much like an Alexander or a Bonaparte. ‘Out of their depth middle managers’ might be nearer the mark.

    • Tim,

      The author implies that there is an international cabal of elites scheming together to cause pandemics, wars, shortages, etc to simplify their imposition of a fascist world government. I say that is beyond a stretch.

  23. @TimMorgan
    ‘I think he said, in a recent article, that the British economy is “collapsing”. I wouldn’t argue with that. The current government seems remarkably incompetent. But Mr Johnson was given an emphatic majority by the voters, and Labour seems to offer nothing, in the economic sphere, that is really different.

    For things to be different – in this context meaning “better” – the public, in this case the British public, have to want things to be different. I’ve yet to be convinced that they do. Perhaps they want to stick with things as they are?’

    I agree that things feel extremely precarious in the UK, various systems are already failing and I can see things escalating so much more later in the year.
    I find the comment about whether or not the British public want things to be different interesting.
    A few thoughts:
    I think some want change but can’t see any current political option capable of delivering that change. I think people just shrug their shoulders in a resigned way and carry on.
    I think there is a general lack of interest in Politics, Economics and Sociology in the UK compared to some other countries. Perhaps partly the fault of the education system and perhaps perhaps the British dislike of confrontation (Politics isn’t seen as a suitable dinner party subject).
    I think there is a dearth of information in the MSM and many people believe what they read (in the Daily Mail, often).
    I think there is a general lack of critical thinking.
    I think the class based system is still a significant factor and a lot of people still look up to the Eton/ Oxford educated elites running things currently and assume that they know better despite the clear evidence to the contrary!
    I think there is a significant gap in thinking and satisfaction levels between older and younger voters. More older voters have done very well out of the current Capitalist system, have enjoyed large gains in the values of their assets. They could often afford a house at a younger age, on one salary leaving more time and energy to raise children and their quality of life has been better than that of their parents. They had opportunities for free education, jobs for life and excellent pensions.
    I think there is significant resentment amongst younger people that they do not have all of this and that their quality of life and opportunities are significantly lower than that of their parents. I think some feel ‘fixed up’ by their elders.
    I wouldn’t be surprised if we see unrest later in the year even though protests or even riots are not very British.

    I very much doubt there is any organised collection of elites with a huge plan. I do think that their greed and self importance is so great that they will happily sacrifice everyone else to try to preserve their own interests which is what they have been doing and continue to do.

    • I can see things going horribly wrong in the UK, quite possibly as early as this autumn. What I’m trying to understand is the ‘culture’ (for want of a better word) that would rather let this happen than make changes. Your choice of “greed and self-importance” goes close, but I would add “aggression”, “entitlement” and “blind self-interest” to that.

    • Just saw a headline on Bloomberg tv that Boris expects a no confidence vote soon.

    • @NHS Doctor.

      “I do think that their greed and self importance is so great that they will happily sacrifice everyone else to try to preserve their own interests”.

      I think Boris is the perfect example of this.
      (Trump too)

      Boris has no political conviction/vision for the country.
      He will do whatever is in the best interests of Boris.
      Staying in power at all costs is his driving motivation.

    • @Dr Tim

      I think there is a desire for “change” out there.

      I think Trump, Brexit etc shows that and has tapped into that general discontent.

      I think people can see that things are “unraveling” but don’t understand why and are looking for answers.

      People like Trump and Farage are happy to tell them who is to blame.

      No-one as yet on the MSM (as far as I am aware) has explained it in terms of energy depletion.

      Maybe Ukraine/Russia will put the role of energy, central to the public’s understanding of the world????

    • Things are very much the same in the US. And I agree about there being no evidence of a grand scheme. The Bilderberger Group is as close as I’ve seen, and they are quite diverse.

  24. @ Steven B Kurtz:
    “The author implies that there is an international cabal of elites scheming together to cause pandemics, wars, shortages, etc to simplify their imposition of a fascist world government. I say that is beyond a stretch.”

    Had a quick read through that article and whilst that author does not express his views eloquently enough and without enough knowledge to back up his claims I can assure you there is an international cabal that has been for decades if not centuries been plotting for a totalitarian world government socialist/communist system.

    I have been studying it for over 10 years.

    I will attempt in a future post to show this but it is not an easy topic to explain due to the complexity and the difficulty in proving that it exists.

    The problem is unless you hear a world leader or figure come out on TV and say we are aiming to enslave you all then nobody takes it seriously.

    Obviously they are never going to do that. The political class are just servants of those international money lenders who on the whole are degenerates and intellectually bankrupt who just want the power, wealth and status. Most of them just take orders from more powerful organisations and people further up in the hierarchy.

    They all have a common goal which is to maintain and keep hold of their vast accumulated extreme wealth that has been extracted through a parasitic system and to ensure that nobody else gets the opportunity to climb the ladder and knock them off their perch.

    However, whilst they are very well organised (at the very top) their objectives will ultimately fail as they are so far from reality that they cannot see the major flaws in their plans but due to their arrogance and megalomania they will go all out including taking the whole world down with them in trying to succeed in their goals which they believe will come to fruition.

    Another flaw in their collective psyche is the psychopathic traits carried by many of the elites.

    They all want to be sat on the throne of world power and so this if not anything else will end up destroying their plans as the sharks will begin to eat each other when the going gets tough.

    Right now they can feed on the peasants but when the peasants have less and less wealth to be extracted then ultimately they must feed on each other.

    • @freemarketthinker

      “I have been studying it for over 10 years.

      I will attempt in a future post to show this but it is not an easy topic to explain due to the complexity and the difficulty in proving that it exists”

      I look forward to reading it!

    • @freemarketthinker
      Your certainty is religious-like. When you have peer reviewed, sharable evidence, serious people might pay attention.

  25. @ drtimmorgan.

    As a UK citizen it is a difficult process trying to understand the psyche and culture of a whole nation.

    I will try to give you what I think is a general mindset of the British population.

    Firstly, for some reason which I still cannot fathom to this day is that a significant majority of the population are obsessed with “owning” their own property.

    They all want to be on the “property ladder” with many aspiring to have multiple dwellings for an ideal retirement as the collective thinking is “property always goes up” and “the only way to beat inflation is property” and so on.

    I have not read any anthropological books on the British population but my assumption is due to our history of serfdom and feudal lords and the fact that for a lot of its history (if not most if we end before the onset of the industrial revolution) we have been a very poor class of people which has created some kind of inferiority type complex that drives us to “own” our own property and be “part of the landed gentry”.

    Anyway, the political class obviously like all political classes of all nations know this as it is in their self interest to know and understand their voters better than the voters themselves in order to get elected.

    Hence any policies that help keep the housing ponzi going must be adhered to at all costs as any other alternative is political suicide.

    Secondly, like most other nations around the world the general population are completely ignorant of basic economic principles such as cause and affect that exacerbate our whole situation.

    Take for example the recent £400 energy handouts for this coming winter. Instead of investing and encouraging businesses to build our energy infrastructure on the most efficient way feasible such as gas or coal in order to help reduce future energy costs they have done the exact opposite which will over time increase our costs and bring us back to the cycle we are at now.

    Which is when prices go up again next year or in 2024 then the public will be angry again and the government will respond by more handouts and so on in a constant negative feedback loop which is the danger we are now in with the onset of socialism and more government intervention.

    We have a combination of public ignorance and parliamentary irresponsibility and lack of leadership which takes us further down the Road to Serfdom.

    Lastly, The UK public (perhaps excluding Scotland and Northern Ireland especially with the recent Sinn Fein local election victory) has always voted either Conservative or Labour going back nearly a century or so.

    It is so ingrained in the consciousness that any other way of thinking would be almost sacrilege.

    It was generally Conservative for middle class well earners and small business owners and Labour for working class people such as minimum wage earners, miners, & bricklayers and so on.

    Labour rose to be a political force via funding from labour unions.

    However, as unions are nowhere near the power they once was the funding dried up to where we are in today’s world.

    Both parties now basically sell to the highest bidder which is lobbyists from big house building companies (help to buy scheme), green energy companies (wind turbines, solar etc) and any other crony capitalist with their hand out who has the funding to first give their masonic handshake with the right people in the right party.

    A problem I see on the horizon however is that even regular people are starting to see that “meet the new boss same as the old boss” both parties are peas of the same pod.

    They might start to look at alternatives. The incompetence is so astounding that it is now a real possibility that a new populist leader could enter the fray.

    And what does not help is that both political parties are so complacent, corrupt and smug from the fact that the English always vote either Labour or Conservative is that they do not see the writing on the wall and cannot see anyone disrupting the apple cart.

    But there is a real possibility.

    And his name his Nigel Farage.

    He has recently stated that he intends to end this “green energy madness” and try to encourage Britain to focus on other means of energy and he might get some momentum.

    The next general election will be interesting.

    There really could be a major disruption to our parliamentary balance of power.

    • Isn’t there an alternative interpretation, which identifies the problem as a culture of self-interest, encouraged from the top for a very long time?

      Unless this has changed, parking officials in the UK get a percentage of every penalty ticket they issue. This is designed to make them more zealous, which apparently it does – motorists can get ticketed with seconds over the specified time. But what does that do for relations between people, in this example motorists and officials? One sees this sort of thing everywhere in the UK, and also, as I understand it, in the US – priority lanes at airports, as just one example. People – including relatives, and even employees – have to pay to park at NHS hospitals.

      This culture of incentive is a culture of self-interest. In the examples you cite – and I don’t disagree – it’s my house price, my accumulation of wealth, and so on – a culture described as ME, ME, ME! Voters cast their votes on the basis of what makes them better off, not what serves society as a whole.

      Is there any room at all in this for my house price might have to fall (for example) for our society to be more harmonious, and our economy to be more efficient?

      This, it seems to me, is what happens when one valid observation (in this case, self-interest as a motivating factor) is isolated, and taken to extremes.

      One is tempted to wonder whether the flag of self-interest will still be flying as the ship goes down. As the survivors swim around looking for life-rafts, someone is heard to say “yes, I know the ship sank, but we kept house prices high until the very end!”

    • Why are people “obsessed with owning their own property”. After a few years mortgage payments become cheaper than renting. I could never have continued to live in London if I had to pay ever increasing rents. Also I now live on a pension and I have paid off my mortgage. There is no way I could now afford to rent the house I live in. Nothing to do with being obsessed with owning my own property or being part of the landed gentry, it is the insane cost of housing – buying or renting.

      As for the voting system. Yes, most people vote Conservative or Labour. And yes, I agree it is a very poor choice. But we have a system that means it is almost impossible for a third party to gain power. To get one party out you have to vote for the other. Only if the votes collapse of one of the two major parties will that party be replaced.

    • Thanks, this makes a lot of sense.

      Politically, the two party system explains why the British public ends up with Tory or Labour, without the flexiblity than enables America to have, say, a Democrat in the Oval Office but Congress controlled by the GOP.

      Why, though, does voting Conservative mean getting Mr Johnson rather than Mrs May, and to what extent do voter attitudes result in a Labour opposition led by Mr Starmer rather than, say, Mr Corbyn?

      I note from the media that Mr Johnson might face, and perhaps lose, a confidence vote. Didn’t senior Tories say just recently that the country can’t change it’s leader ‘during a war’?*. Whatever happened to consistency?

      *Factually, of course, this was drivel – Britain is not at war with anyone; France has just held a presidential election; and Mr Churchill replaced Mr Chamberlain during April 1940.

  26. @Dr Tim

    I also think that owning your own home gives people a sense of security (so long as they can make the mortgage payments!)

    Knowing where you are going to live in the near to long term future allows people to make plans.
    Knowing that you could be kicked out of your home with a few weeks notice, must be very stressful, being at the mercy of the whims of a private landlord.

    Also, it cheaper to pay a mortgage than rent each month.

    If the rental sector was better regulated, with price controls and secured tenancy, then renting might be an attractive alternative.
    Historically this has not been the case though, with the exception of social housing between 1945 -1979.
    (In 1979, a third of all housing was social!)

    • @JohnAdams- totally agree with what you said above about Boris Johnson being greed/ self interest/ entitlement personified. As you say, he appears to have no principles either personal or political.
      That ties in with what @TimMorgan said about the culture of immense selfishness and lack of concern for others pervading through society from the top downwards, even to the point of taking the entire system down rather than make changes. It seems to me that the leadership is absolutely key to the culture in any organisation, large or small, and a country is just a huge example of this. I find quite a lot of aspects of UK ‘culture’ unattractive and this ‘me, me, me’ attitude is one example. I remarked above on the generational divide and Tim’s example of ‘my house, my wealth and why should I sacrifice anything for the young, poor, etc’ is a good example of this. I was too young when Thatcher was in power to have been very aware of her politics but it seems that at least some of these problems have arisen from her principles and decisions. I think she said, ‘there is no such thing as society just individuals..’. I think there is a far less cohesive and caring society now, more ‘every man for himself’. Although, strangely, I think there is less of a culture of people taking responsibility for their actions too. We seem to be encouraged to blame someone else if things go wrong (the poor, foreigners, the work shy, etc).
      I don’t know how to bring about a change and it seems that we are just as likely to have a change for the worse rather than for the better if we do ever vote in a new political party.
      Regarding the British house ownership obsession. I think it was initially aspirational, encouraged by policy and now it is seen a certain way to become wealthy, an excellent investment. Having said that, as JohnAdams says, if the rental sector was properly regulated and secure (as it is in many other countries), things would be different. If you are faced with the prospect of potentially being given 2 months notice and being expected to find a new home, arrange a move, find deposits, potentially find new schools for all your children, etc, one can understand it. In a sensible market, rent would surely be cheaper than a mortgage and this may yet change.

    • @NHS Doctor.

      I think the electoral system we have in the UK is a major factor as well.

      Sorry for repeating myself but, at the last General Election Boris got an 80 seat majority on 43% of the vote, with a turnout of 67% (or there abouts). That means only 35% of the electorate voted for him.

      In the UK you can win a commanding majority with policies that only appeal to just over one third of the adult population.

      The trick is to make sure that the other two thirds don’t coalesce around another political party. Divide and rule through culture wars, spreading discontent, division and the blame game. (Immigrants, benefit cheats etc)
      All very confrontational and corrosive.

      “First Past The Post” also makes it difficult/impossible for new political parties with new ideas to gain power. It’s a Labour/Conservative two horse race.

      There is no consensus politics.

    • Yes, the election system doesn’t work fairly at all. Agree that there is a very deliberate ‘divide and rule’ strategy so that we attack each other rather than blaming the failing government. It’s sad that most people can’t see past it.
      It would be great if more young people could be encouraged to take an interest in politics and at least use their vote. A social media campaign perhaps?!

    • I think the full Thatcher quote has a slightly different connotation than is sometimes described. However you are probably correct in saying that we are a less cohesive society than we used to be. Maybe it is because we are more diverse and mobile than say 50 years ago.

      Who is society? There is no such thing! There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business …

      In the U.K. we had a referendum on changing the electoral system back in 2011 to the single transferable vote. I thought it a good idea but was in the minority it appears.

    • @David

      (The referendum wasn’t for STV, it was for AV.)

      “Who is society? There is no such thing! There are individual men and women and there are families,……….”

      I disagree. This “atomisation’ of people as individual “actors” is corrosive. Divide and rule.

      I admit, that it is difficult to define what society is. There are many sub- groups and is constantly in flux but we do collectively live under the same set of rules.

      I’m not under the elusion that I am an autonomous “player”.
      I am able to function/live the life that I live, due to thousands of people that I will never even meet. We all function because of eachother.

      That is Society.

  27. @freemarketthinker

    I’m not sure Nigel Farage has a handle on de-growth and what to do about it.?????🤔

  28. Futility of Hand Wringing
    I periodically fall victim to the lure of coming up with ways to reform society. A few of the more modest ones might possibly offer some way forward (at least in the sense of finding leverage points to move the system). But, overall, it seems hopeless. Energy Skeptic takes a sledgehammer to solar:

    “All solar (and wind) do is add to the giant bonfire of burning fossil fuels — which still provide two-thirds of the power for the electric grid. Electricity is just a fraction of how we use energy, over 80% is fossil fueled because electricity can’t replace their use in fertilizer, transportation, half a million products made out of fossil fuels (i.e. plastic) and so on. Without natural gas, the electric grid won’t be able to stay up since there are no other options for storage that scale up. All of this explained at great length in my books.

    When you hear things like “solar power provided 100% of California’s power today”, no it didn’t. For a few hours it provided 100% of ELECTRIC power, and the money lost by all the other power providers that had to shut down, the ones that actually assure reliability to the grid since solar and wind are extremely unreliable and seasonal, means that they have to spend less to maintain their facilities, shortening their lifespan, especially coal and nuclear which take many hours to ramp up or down.”

    If she is correct, and she marshalls a lot of data, then fundamental change in the way we live will be necessary. And that challenge is on the table in very few families and companies and countries and religions and philosophies.

    BTW…California may be hitting walls in terms of how badly one can screw up energy systems and importing from other states and the use of water in a desert and population density and welfare states. It was possible for Native Americans to thrive in California and live peaceably, but nobody wants to think about the way they lived. So all the cheerleading by “change agents” may have been a huge mistake. So the question before the house is whether modest adjustments will suffice, or whether they may just delay collapse by a week or two.

    Don Stewart

    • Rachel Donald just posted this. If the analysis is correct, then my frustration is understandable. I’m still stuck using the master’s tools???
      Don Stewart

      “Coming from a systems perspective, you need a diverse approach to solving a problem like the climate crisis and you need multiple things happening at the same time, converging, and interacting together, to create something that’s equally complex as the world that we live in, and also to battle the complexities of the world that we live in.

      “Maybe what’s happened in the past is that we failed to understand that the tools that we use the beginning cannot be the tools that we then continue to use. So you can tear down the master’s house, maybe with the master’s tools, but then if you’re going to rebuild, you definitely have to use something else.

      “That that ties into what we know about the beginning stage of systems, so that explosive growth. For that explosion to happen, perhaps it would be violent, it typically is. But then to reach a period of stasis, it’s very, very different. Even if you look at ecosystems. How ecosystems create and use energy during a period of stasis versus explosive growth is extremely different, and I think what happens is we get stuck in explosive growth.

      “We don’t quite know what to do with all of that energy which then devolves into violence. And then rather than getting into the complexities of whatever it is that we are trying to build, we end up throwing up a mirror image of what came before: another oligarchy, another form of capitalism.”

    • A search found an eco-journalist with that name. Please post a link. Thanks.

    • An email from Rachel Donald
      Every week, I produce a short bonus video exploring the key ideas raised in the podcast interview. This video covers how to tear down the master’s house with the master’s tools, inspired by this week’s episode with Asher Miller on Creating Complex Solutions.
      Then follows the part I posted, along with a video excerpt.

      Here is a link to the whole interview:

      Don Stewart

    • Don Stewart says, “If she is correct, … fundamental change in the way we live will be necessary”.

      Alice Friedemann is mostly correct, but Don is 100% correct that changes in the way we live are going to be necessary. I harp ad nauseum on getting ready for those changes. They will be dramatic, life and death changes and they are probably coming sooner than we think.

    • Don, the mode of human organization we call civilization — and maybe, humanity itself — is itself a slow-mo suicide pack, relentlessly destroying its support or, in more high-falutin’ but accurate terms, the very ground of its being. Industrial civ is a hyper-acceleration of this suicide pack made possible when we figured out how to use and exploit energy dense fossil fuels.

      Think of it like a just-getting-by, ne’er-do-well do-well dreaming of Trumpian style wealth and riches, preferably gold-plated and adorned with chandeliers, multiple homes, luxury cars and sportscars, parties, hookers and blow, and a trip into space to really show how special he is, who suddenly wins the Lottery and who, within 1 to 3 years spends it all and has nothing to show for it, and is back where he started (Olduvai theory). That’s not just the ne’er-do-well Lotto winner at whom everyone laughs for his lack of prudence and wisdom, that’s us as an entire species. Collectively, this is our mentality.

      IMO, the master’s tools will themselves tear down the house that the master built. It’s happening all around us right now.

    • @tagio, civilization itself is a giant ponzi scheme based on energy. All is good while we have rising energy availability, just like more cash into a ponzi scheme, but when the input slows to a ponzi everyone heads to the exits at the same time and the scheme collapses.
      Right now with energy there is all sorts of discussions about saving energy for local use, gas exports being targeted by some on the East coast of Australia, similar in other places. IMHO when it becomes obvious to everyone that energy growth is over there will be a rush to conserve what current owners have, while those that rely on buying in their energy will have a very hard time, and probably start using any means to grab others energy. It’s where we have been heading ever since the US invaded Iraq as the US way of life was not negotiable, or more likely since the dawn of agriculture.

      The price of all ‘renewables’ are going up because of the vast energy inputs in their manufacture (mining, transport of ores, heat processes, embedded energy in new factories, delivery and installation), most likely the same for Nuclear power plants and new hydro schemes. The price of these will only fall when the energy to make them declines. If energy prices keep rising as most here are fairly certain they will, then the cost of building Renewables, Nuclear, Hydro will become so high as to be niche’ additions only.

      If we learn anything from history it is that as energy inputs decline, the complexity of a system unravels, no matter if it’s past human civilizations, natural ecosystems, or stars. The decline is also more rapid than the growth in every case. We need a high level of complexity for ‘renewables’ and/or nuclear to be viable alternatives, which means increased energy use.

      No-one is predicting the replacement of the current ~170,000 Twh/yr use of energy with alternatives to fossil fuels, we simply do not have the resources. Every plan I’ve read states replacing everything with ‘electric’ and a much lower overall energy use. Using the latest figures from the World Bank of expected world growth of 3% pa for 2023 and 2024, extrapolated out to 2050, and also using the correlation of energy use with ‘growth’ (remembering we are mining lower grade, deeper, more remote and harder ores), we would need to be producing 388,000 Twh of energy in 2050 to avoid collapse, such is the power of the exponential path ‘we’ have been on over the last couple of centuries.

      All we can do is hope the collapse of the civilization ponzi scheme is a lot slower than other ponzi collapses, but I fear it isn’t, nor is there any evidence it will be slower. Depletion of oil resources (and ECOE) will send prices of coal and gas higher as both require lots of diesel in exploration, extraction and transport.
      Energy will become a scarcer commodity, leading food to be scarcer (because of situations like current fertilizer costs), which will lead to countries or communities holding on to what they have and collecting what they need by any means if possible..

  29. FYI
    Just published in the US:
    Fossil Future: Why Global Human Flourishing Requires More Oil, Coal, and Natural Gas–Not Less

    Don Stewart

    • I tend to leave this sort of thinking to others.

      To explain, we are now close to – within months of? – a major financial crisis, whilst economies, including at least one of the major ones, are right on the edge. A lot of this simply isn’t understood. Right now, for instance, I’m trying to write a succinct explanation of the current predicament, and work out how to make some of the data available to readers here.

      At the level of opinion, mine is that, if the big players understood this, markets would already have crashed. Most political leaders look – to me – like over-promoted middle-management types, trying to bluff their way through things they don’t understand. There might or might not be conspiracies at some very deep or very elevated level but, if there are, I’d rate their chances of success at a few percentage points either side of zero.

    • I’ll add one more point which I think I’ve made before. The power elite benefit from the cash flows in an economy. They own major percentages of debt instruments, productive infrastructure (via corporate shares and privately held businesses). A shrinkage of population in the developed world is a direct threat to their investments. Note the open border policies of the US and Europe. Note the reversal of China’s one child policy to three.

      The general population of the planet would benefit if there were half (or fewer) of us as was the case 50 years ago. Per capita resources including exosomatic energy, arable land, potable water, forests, river flows…would be twice as plentiful. Pollution would be lower. However, debt based economies would be severely threatened. And those owning most of the assets (bonds, stocks, infrastructure, land…) would lose the most. The pension system would be severely hurt too. This is likely without any schemes by the elite (against their self interest as I explained). Limits to growth has arrived, and shrinkage will be unavoidable…the hard, natural way. It will not be pleasant.

    • Thanks Steve.

      I agree with you on all of this. I would add that, when we lists of “the richest” people, most of what we’re seeing is the market value of stockholdings. These are likely to fall very sharply if, as I suspect, we’re heading for a major market slump.

      I’ve just posted a new article. I think a lot of people want a succinct statement of where we are and where things are likely to go.

    • @Steve B Kurtz.

      I would add to that, that the present economic system is “powered” by growth.

      A big driver of growth is an expanding population to consume all that growth in economic activity.

      “Elites” power comes from money. The last thing they would want to do is crash the economy by stopping growth by killing off 50% of the population and destroy their wealth in the process.

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