#251: The Everything Crisis



Even the most cursory glance at economic and financial history will reveal a litany of bubbles and booms, crashes and crises. We’ve seen numerous instances of speculative manias, real estate bubbles, market collapses and banking crises. Even the dot-com bubble of 1995-2000 wasn’t really ‘a first’, since there’s at least one previous instance – the Railway Mania of the 1840s – of the public being blinded to reality by the glittering allure of the latest vogue in technology.

You’d be wrong, though, if you concluded that “there’s nothing new under the Sun” about what we’re experiencing now. The coming crunch – for which the best shorthand term might be ‘the everything crisis’ – sets new precedents in at least two ways.

First, it’s unusual for all of the various forms of financial crises to happen at the same time. Even the global financial crisis (GFC) of 2008-09 wasn’t an ‘everything crisis’. Now, though, it’s quite possible that we’re experiencing the start of a combined stock, property, banking, financial, economic and technological crisis, with ‘everything happening at once’.

Second, all previous crises have occurred at times when secular (non-cyclical) economic growth remained feasible. This enabled us to ‘grow out of’ these crises, much as youngsters ‘grow out of’ childhood ailments.

No such possibility now exists.

The true story of modern economic and financial history involves, on the one hand, the ending and reversal of centuries of economic expansion and, on the other, an absolute refusal to come to terms with this reality.

What follows is an attempt to tell that story as briefly as possible.

We’ve recently concluded our five-part synopsis of The Surplus Energy Economy, a series which begins here. This means that we don’t need to re-visit now a lot of detailed material that readers can access elsewhere at this site.

It starts here

One of the two core realities of our predicament is that the huge and complex modern economy was built on the abundant, low-cost energy made available by oil, natural gas and coal. Quite naturally, we have accessed lowest-cost energy sources first, leaving costlier alternatives for a ‘later’ which has now arrived. ‘Depletion’ is the term which describes this process, and you would not be far wrong if you concluded that, just as fossil fuel resources have depleted, so has the economy.

Depletion doesn’t mean that we ‘run out of’ the resource in question, but that its supply becomes progressively more expensive. The relevant metric here isn’t financial cost – because we can always create new money – but cost understood as the proportion of energy value which, being consumed in the process of accessing energy, is unavailable for any other economic purpose. This metric is known here as the Energy Cost of Energy, or ECoE.

Global trend ECoE (from all sources of primary energy) has risen from 2.0% in 1980 to almost 10% now, and is likely to reach 13% by 2030, and 17% by 2040. What this means is that, from every 100 units of accessed energy, the ‘available for use’ or surplus component has decreased from 98 units in 1980 to 90 units now, and is likely to have fallen to 83 units by 2040.

It’s important to remember that surplus energy isn’t used just to supply products and services to consumers, but to maintain and replace productive and social infrastructure as well. This means that sensitivity to rising ECoEs is an inverse function of complexity – the more complex an economy is, the greater is the surplus energy required just to sustain the system.

Complexity is highest in the Advanced Economies of the West which has meant, in practice, that prior economic growth in these countries went into reverse first, happening once their ECoEs reached about 5%, a climacteric which was traversed in the early 2000s. EM (emerging market) economies, by virtue of their lesser complexity, have been able to carry on expanding at ECoEs above 5%, but most of these countries have now hit their own inflexion-points, which occur at ECoEs of around 10%.

Accordingly, global prosperity per capita peaked in 2019, and preliminary data indicates that world aggregate prosperity may have peaked in 2022.

‘Affordability compression’ and the leverage of necessities

Any person or family whose economic resources start to decrease faces two main challenges. First, he or she has to devote an ever larger proportion of diminishing income to necessities, spending progressively less on discretionary (non-essential) purchases. Second, it becomes increasingly difficult to keep up the payments on debts and other financial commitments taken on in earlier, more affluent times.

The equivalents of both processes are occurring at the macroeconomic level, but each has a twist. First, a family experiencing a fall in income doesn’t tend to encounter a simultaneous rise in the cost of essentials, but this is happening now in the economy, because so many necessities are energy-intensive. The second twist is that, whilst individuals and households can’t conjure new money out of the ether, those managing the economy itself can do this (though they can’t, of course, create economic value by creating money).

The portmanteau term used here to describe this process is affordability compression. At its most basic, this is very simple to unpack:

  • Prosperity is deteriorating because ECoEs are rising.
  • The costs of necessities are rising because so many of them are energy-intensive.
  • The economy is experiencing relentless downwards pressure on its ability to afford discretionary products and services.
  • Prior financial commitments are proving ever harder to honour.

The great folly

    None of this is entirely new. Between 1990 and 2000, global trend ECoEs rose from 2.9% to 4.2%, the latter pretty close to the inflexion-point of 5% as it applies to the complex economies of the West. The practical consequence of this trend was growing awareness, during the 1990s, of “secular stagnation”, meaning a non-cyclical decline in the rate of growth.

    Intelligent people would have reacted to this phenomenon by enquiring into it, and responding accordingly. The concept of the economy as an energy rather than a financial system had been established well before then, and the remarkably prescient The Limits to Growth (LtG), published back in 1972, had warned us about what to expect.

    Needless to say, intelligent investigation and reasoned response wasn’t what happened back in the 1990s, which is when the story of our current problems arguably begins. The proponents of orthodox economics denied that there was anything to worry about because, according to their most cherished precepts, there was no reason why economic growth should ever come to an end. The broader perception was that LtG was wrong, not because its precepts and techniques were mistaken, but because its conclusions were unpalatable.

    The fundamental error within conventional economics is the presumption that the economy is entirely a financial system, which is not constrained by material limits and is, therefore, capable of delivering ‘infinite growth on a finite planet’. A sub-set of this folly is the belief that the ‘liberal’ process of de-regulation can boost ‘growth’, a fallacy that was particularly fashionable in the decade or so after the collapse of collectivism as represented by the USSR.

    Accordingly, the favoured response to “secular stagnation” was to make it easier to borrow than at any previous time in modern history. This was also required if globalization was to succeed in exporting the process of production to lower-cost countries whilst bolstering consumption in the West, a circle which could only be squared by making it ever easier for Westerners to borrow.

    These processes lead directly to the GFC, which was ultimately the result of reckless credit creation and shortcomings in macroprudential oversight.

    A new model idiocy

    The response to the GFC was a resort to ultra-cheap money. You could have seen this coming if in, say, 2008, you had added up the world’s debts, and then applied a normal interest rate to calculate the aggregate cost of debt service, arriving at a number that was completely unaffordable. This was why the “temporary” expedients of QE, ZIRP and NIRP became permanent fixtures of the system.

    It’s a permissible simplification to state that the general level of asset prices is the inverse of the cost of money. The more cheaply and abundantly capital is made available, the further the prices of stocks, bonds, property and other assets will rise.

    The snag, of course, is that aggregate asset prices are meaningless, because these aggregate valuations can never be turned into money. Just as asset prices soared, so debt and quasi-debt escalated. Obviously enough, we cannot sell the whole stock market – to whom? – to pay off the debts that have been taken on to inflate it. The application of marginal transaction prices to “value” aggregate units is a fallacy that convinces only those willing to be persuaded.

    All of this has left us hoping against hope that ‘something will turn up’ whilst, at the same time, dreading what that ‘something’ might turn out to be. Where sources of hope are concerned, we are really scraping the bottom of the barrel, pinning our faith on replacing dense (fossil) energy with less dense (renewable) alternatives, or backing technology to over-rule the laws of physics. We’re only now starting to discover that creating new money out of the ether is inflationary, a reality that we’ve ignored by persuading ourselves that asset price escalation ‘doesn’t count as inflation’.

    The likeliest course of events now is that the bursting of the “everything bubble” brings on an “everything crisis”. Even unsecured debt is, ultimately, backed by the ‘psychological collateral’ of the assumption that the economy will grow by enough to let us honour our collective obligations.

    To understand why we can’t ‘grow out of’ the unfolding crisis, we need to appreciate that prior economic expansion has gone into reverse. Understanding this issue isn’t difficult, but coming to terms with its implications most certainly is.

    174 thoughts on “#251: The Everything Crisis

    1. @Dr. Morgan
      I read that Warren Buffett met with Biden. Then I had a fantasy flash: Maybe Uncle Warren told Joe that the US simply can’t afford to go to war with Russia and China, and that we need to repair the home front, and prepare for leaner times?

      As the political saying goes: never let a good crisis go to waste.

      Don Stewart
      Hope springs eternal.

    2. Do You Think That Dorothy Was Really Happy Ever After in Kansas?
      One of the recurring parables about our financial condition is that the curtain will finally be parted and the Wizard of Oz will be exposed for all to see. Dorothy will wake up back on the farm in Kansas, where all her boring but faithful family will rejoice that she is back again.

      But do you think that Dorothy really stayed on the farm, and married the neighbor boy, and had 12 children? Or did she go off to Hollywood and become addicted to lots of strange chemicals, while becoming fabulously wealthy in terms of fiat money?

      Full disclosure…I do own some gold, which is its own sort of fiat money. The only “real” money would be something like a bushel of potatoes, which have an immediate and very practical use and can be swapped for other things which have an immediate and very practical use.

      What I see is a desperate attempt to keep the central bank backed money system afloat. Anybody who can do arithmetic can see that it is horribly over leveraged. But the leverage is what keeps lots of people afloat.

      So what we have is an irresistible force (the desire for the balloon to continue to go higher and higher), and (to use a current example), the irresistible object of the US Air Force shooting down 50 dollar balloons with million dollar missiles.

      I really don’t see a way out.

      Don Stewart

      • @Don Stewart.

        I’ve decided that I’m going to “invest” some of my fiat money into something more tangible.

        Now, every time I go to the supermarket I also buy a slab of tinned food and put it in the shed. I’m going for high nutritional content plus a long shelf life.

        Probably totally pointless, but does give me a sense of agency, control and proaction.

        Probably slightly less pointless than having numbers in a bank account going forward.

      • Don,

        I see the world as biology, it is one of the last creations of the fabric of the universe, the rest is rock of various kinds.

        People are to date the highest form of biology, children are the future of biology, they can be taught to adapt and with a bit of “love” they will even help as times goes by to “pay back” what was invested in them. Or, Honor thy father and mother. Simple rules which have worked over time.

        Lastly, life is messy, it is what happens while one is planning it; there is considerable waste, not unlike the fabric of the universe, need some iron, blow up a star.

        Dennis L.

      • The Mandibles: A Family, 2029-2047, by Lionel Shriver does a nice job imagining what happens to gold in a US currency crisis. Well worth a read, and funny too.

        I like the potatoes as currency idea. I still have about a bushel of last year’s harvest in my fridge. Potatoes also provide an incredible return – I put 4 pounds in the ground last March, harvested over 150 lbs from June to August. What else gives a 3750% return over 4 months, except perhaps shorting First Republic?

        @Dennis L
        My vote is for plants as the highest form of biology. They’ve kept their show going for hundreds of millions of years, can turn rocks and sunlight into food, and make the planet habitable for everything else just through their normal process of living and dying. They even gave us fossil hydrocarbons 😉

      • @ Fidra,

        You’re facts about growing potatoes is interesting and chimes with some academic work I did about 15 years ago. While studying for my environmental degree I looked at the EROI on various fruits and vegetables. Potatoes came out as a clear winner, with fruits such as blueberries not doing very well at all. If we believe that price is a useful indicator of embodied energy, then that rings true.
        I based my studies on some work done by professor David Pimental of Cornell University. I recall finding a bit of a glitch in one of his calcs, but nothing that distorted the big picture
        . Actually, he was gracious enough to accept the error I found, which was nice of him, and not what I expected from such an esteemed academic.

        I seem to recall some guys at the Oil Drum did some practical studies measuring the actual energy inputs used in producing home grown potatoes, and came out with a similarly impressive result.

        So there it is. In troubled times ahead, the future is Potatoes and Gold. I wonder how many grams of gold a sack of “Tatties” will fetch in 10 years time?

      • Is it declining productivity or is the evolution of the UK economy ahead of the rest? Again!

      • Conventional measurement of productivity is bizarre. We take output (GDP) and divide it by the number of hours worked. But GDP can be – and routinely is – inflated by credit expansion, whilst human labour is truly tiny proportion of the energy used in the economy. My preferred measure, for which I only have global rather than local data, is underlying output (C-GDP) divided by tonnes of energy used.

        The UK has a dysfunctional economic model, by which inflated property prices are used to support borrowing. This makes it easier to make money by buying property and sitting on it than by productive activity. The resulting gap between consumption and production is bridged by asset sales, compounding into a current account deficit which is covered by more asset sales, plus borrowing from overseas. This puts the UK ‘one property price crash away from a reckoning’.

    3. After reading about how fractional reserve banking works, and knowing about the end of growth, I don’t trust banks.

      • According to professor Richard A. Werner there will be only one bank to ‘trust’?

        “Ultimately the central planners maximise their power by introducing CBDCs. . . .
        It is concerning that for the past decade or so central banks have steadily been working towards the introduction of CBDCs, while at the same time adopting policies that have killed thousands of small banks.
        Once CBDCs are introduced, it just takes a bit of bank run, such as in the case of Silicon Valley Bank, and all deposits will be shifted to the central bank, driving banks out of business. Then we will have arrived at the most centralised form of banking: A Soviet-style economy with only one bank.”?

      • Actually, the issue that worries me isn’t banks as such – bad as the situation undoubtedly is – but broader financial liabilities, especially NBFIs (“shadow banks”). I’m putting together some numbers on all of this, for possible publication, but private broad liabilities seem to be close to $500tn, which compares with global private debt of about $155tn.

        If ALL the world’s central banks decided to create enough new money to double their assets, they could backstop barely 9% of global private liabilities.

    4. Nate Hagen’s meets his soul mate

      At about 6 minutes, his guest hits the sweet spot for Nate. Watch his reaction on the split screen when she says “if we had an infinite source of clean energy we would solve one problem but generate a host of other problems”.

      As I see it, the same type of thinking is involved in questions such as:
      *If we lose oil and the petrodollar, what COULD life look like in the US and the UK?
      *If the huge leverage in the financial system is unwound, what COULD life look like?

      Nate had an interview a few weeks ago on the subject of loss aversion…we are a lot more scared of losing something we think we have than we are excited about new possibilities. Which keeps us in the channel of the status quo. The idea that oil and the petro dollar and enormous leverage were always fantasies with a finite life span is apparently an unthinkable thought.

      Don Stewart

      • Don et al,
        Leeping this Blog on its core contention, namely the increasing cost of energy and its knock on effect to the real economy, Nate Hagens latest guest is hydrogen industry specialist Paul Martin, biggest takeaway, we won’t have an hydrogen economy, although, it has specific uses that should be embraced:

    5. John Rubino on the End of QT

      He mentions Stephanie Pomboy, who has highlighted for some time now the excessive leverage in places like pensions. Of course, most of us would cite Dr. Morgan’s comprehensive work.

      Rubino got his 15 minutes of fame by predicting the 2008 crash, and then fell into relative obscurity as the party got going in earnest again. I guess he is back.

      Don Stewart

      • Don, a guess only.

        Pensions are essentially always levered by having more paying than taking out. Could it be possible that financial leverage is an attempt to restore this on paper? If it is on paper or now the screen, it must work; until it doesn’t work and recognition comes that too much is being taken from two few.

        Demographics meets financial engineering.

        Dennis L.

    6. Stephanie Pomboy on non-bank financial institutions. Not a new thought for her, but very graphic entry on her twitter. (I don’t think it can be copied and pasted.)

      A close relative to what we have been discussing here for some time.
      Don Stewart

    7. Wall Street Mood Turns Apocalyptic With Majority Expecting “Systemic Credit Event” Out Of Shadow Banking Sector: FMS Survey

      Saw this on ZH. Exactly as related here by Dr Tim.

    8. Regional Banks and Money Outflows and Deposit Insurance

      My reading is that the sectors which regional banks are lending to simply don’t offer enough profitable lending opportunity to soak up the deposits. So the regional banks buy long dated government securities. Which gets caught in the meat grinder when the Fed raises interest rates.

      I think this is broadly consistent with Dr. Morgan’s analysis of our current situation. It poses the question as to why it requires a regional bank to properly assess the risks. I can see that in terms of commercial real estate…every corner is a potential location for a traffic sensitive business, but which corners are likely to prosper and which corners are likely to fail? But with more loans being decided not by Jimmy Stewart, but by AI machines, does personal knowledge still have a real value?

      Just from my “conspiracy theory” tendency, the governments would prefer just a couple of big banks that they can bully into doing exactly what they want them to do, rather than a bunch of tough regional bankers who learned the trade from the ground up.

      Don Stewart

    9. A large number of BTL contributions again on this thread, with quite an emphasis on the present financial crisis epitomised by SVP and Credit Suisse.

      At a time of what seems to be ‘perpetual crisis’ since the end of 2019 we have other worrying trends, trends that when slotted in to present geopolitical realities (the move to a multipolar world) and events in Ukraine and the South China Sea, underscore how crass and out of touch the Western elite actually are, i.e., Western/EU sanctions on cheap Russian gas and a turn to US/Middle East LPG/LNG to replace this energy source comes at a time of both peak oil and, especially in the USA, peak fracking of gas/oil.

      Whilst neither Simon Michaex or Hart Hagen focus on geopolitics in the attached YouTube discussion, their talk underscores the stupidity of the EU as far as cutting itself off from cheap Russian fossil fuels is concerned – its a long video, but for the purposes of this Blog and anticipated major economic event prior to the end of this decade, most essential viewing:

      • At some point we had a choice to make, either an industrial economy or a livable biosphere (pick one). It seems that both options are now unsustainable.

      • It is so difficult to concentrate on how Simon is putting this altogether when he keeps getting interrupted by the interviewer. Why is it so difficult for these people to just let Simon finish his presentation then ask all the questions?

    10. First attempt is lost in the ether…….

      After the excellent five part recap of SEEDS, I still think the question “what’s next?” is hanging in the air and could use some more discussion.

      What system might replace or supplement the variable and ephemeral one of money that has only notional value?

      We have moved back to a rural setting, and are homesteading. We have been bartering with neighbors, but find that barter equivalence is a tricky and subjective activity.

      A standardized system that could be the new basis for barter might use inherent and embedded energy as the starting point instead of dollars for a similar item bought in the money economy.

      As the collapse unfolds, barter and the grey economy will continue to grow, and we may well all need to become skilled at barter.

      Potatoes, eggs, or a bale of hay could all be tied to a base of calories, including both the physical calories as well as the energy input to plant, tend, and harvest them.

      Plenty of assumptions and simplifying rules would take some work, especially for things like services rendered and more complex technology like a computer or a bike.

      This tool would be of immediate use in local economy, but over time, might even scale to regional and international trade.

      The forces of supply and demand would still drive adjustments, but at least the starting point is tied to physical reality.

      I think that one reason that Odum’s concept of emergy has not been fleshed out and deployed is that the accounting can get complex, but I think the time may be here where its utility makes the effort worth it.

      I thought this community would be a good place to ask the question. Is this a useful idea? Is the good doctor or anyone else moved to work on this project?

      • For my part, I think you’re right that we need to do more on “what next?” If it helps, I’ll tell you what my own plans are.

        First of all, we have the issue of banking sector stability. Little of what I’ve read anywhere provides useful guidance. This isn’t about the regulated deposit-taking banking sector (with assets – i.e. customer loans – of c$92tn), or even the banking sector including its broader exposure.(about $215tn). Rather, it’s about private financial asset exposure, which, though available data is incomplete, I calculate as just short of $500tn. Even if central banks did enough QE to double their assets from where they are now, all of that newly-created money would cover less than 10% of this exposure.

        Is this being discussed or quantified anywhere? If it is, I’ve not encountered it.

        At the same time, I’m reading that there’s been a ‘sudden’ blow to investor and depositor confidence in the banking system, or that this has been ’caused’ by CB monetary tightening. Actually, real rates are still deeply negative, and the situation we are now in can be traced right back to the 1990s.

        Again, where’s the process explanation that people need if they’re to make sense of this?

        So what I plan to do next is to write about this.

        I hope that this will give us some new perspectives and information to continue our discussions about “what next?”

      • Tim,
        this depositor lack of confidence in banking,
        isn’t it the case that if you have a big chunk of cash in a bank you can now earn a greater return by pulling it out and buying bonds?
        I don’t really understand bonds but I was told that since the interest rates have started rising the price of bonds has fallen, but the yield, the dividends they pay, has increased?
        the run on SVB was large depositors, those above the $250k deposit insurance threshold, they were converting their cash deposits into bonds,
        correspondingly, the fall in price of bonds undermined SVB assets and made it impossible for them to cash them in to cover the deposit withdrawals,
        this is Michael Hudsons take on the recent events.
        it explains why Biden suddenly raised the $250k deposit insurance threshold to ‘unlimited’, to damp down this withdrawal run of big deposits,

        I do think the shadow banking sector is worth scrutiny, but it is difficult to scrutinise because it is in the shadows!
        do they hold a lot of bonds valued at their purchase price and are they also finding that they now can’t sell them without taking a big loss?

        the size of the figures now are getting comical, you mention 500 trillion, that’s half a quadrillion!
        Egon von Greyerz recently estimated derivatives to represent another $2 quadrillion of debt,

        $2.5 quadrillion of debt hanging around the neck of an $85 trillion GDP global economy sounds so horrific you have to laugh!

        it’s like having an $85k turnover and a $2.5 million loan, how the hell do you service that debt?!
        are we facing a sovereign bond crisis which threatens a sovereign currency crisis?
        will currencies have to be hyperinflated to cover the debts?
        will G7 currencies end up rapidly weakening in relation to those increasingly outside the US dollar zone?

      • The point about bonds is that they pay a fixed coupon, so the yield changes inversely with the price. In principle, if a bond is priced at, say, $100, and pays $2.50 annually, the yield is 2.5%. If the market yield rises to 5%, then the bond price falls to $50, because $2.50 is 5% of the $50 price. There are lots of complications around this, but that’s the principle.

        Shadow banking is the huge risk. The numbers are incomplete, but $500tn is my calculation based on the data that we have. That figure references private liabilities, leaving out the public sector component. My view is that derivatives are a separate issue, and that what we should concentrate on are the debt and quasi-debt liabilities of the private sector (households and businesses).

      • scarr0w,
        I’ve thought about your example quite a bit, a perfect solution is far too complex to be practical,
        so what did earlier less complex societies do?
        they used precious metals as a trading token, barter is trade, the bartering process is negotiating the trade,
        my best suggestion is that in your small scale ‘grey economy’ you use a semi precious metal such as copper, it’s pegged to the financial economy via metal markets so it is convertable, but if you keep your capital in copper you can avoid taxation,
        you set a formal standard, copper of 95% purity or greater and in units of 1oz and 1lb,
        95% purity copper is well within the scope of recycled bright clean electrical wire and plumbers scrap copper pipe,
        you can capitalise your mini copper economy by recycling and the value embedded in the copper is the time and effort invested in scavanging it from waste flows and processing it into standardised units,
        people will recognise the value of copper from it’s convertability to national currency via metal markets, but appreciate keeping their capital in copper because it helps avoid taxation if you never convert it into national currency.
        you establish the price of your potatoes in copper by negotiation,
        you progressively build up copper profit as capital,
        when you want a laptop an amenable shop owner can price it in copper,
        he can take copper for a secondhand laptop and avoid taxation,
        he can then continue buying your potatoes with that copper,
        if he needs cash quickly he can sell some copper to the metal markets (local scrap dealer)

        copper, although bulky, seems to work in all the theoretical models I’ve run, it could expand locally then regionally as an informal currency,
        it could become part of a dual currency economy, the orthodox and the grey,
        you could legally employ someone paying them the minimum hourly rate up to the threshold of taxation and from that point on you could then garnish their renumeration for any further work done ‘voluntarily’ with copper,
        maybe, one day, a local authority might accept copper in lieu of local taxation because they can use it to supplement their own wages and pay for some local services,
        large sums in copper could be transacted via promisary notes backed by a quantity of copper held in a local vault,
        oops, you’ve just invented your own paper money!

        if the orthodox economy truly collapsed, an existing ‘grey’ copper economy could simply take over.
        food for thought?

    11. Dmitry Orlov on money. creation in the US…which amounts to claims on future production of real value:
      “And yet once in a while a statistic catches my eye that describes the situation quite eloquently. Here is one: 83% of all the US dollars that now exist in the world have been summoned into existence during just the past 22 months; since May 2021, that is. Four out of every five dollars in existence has been conjured up pretty much yesterday in historical terms.”

      I, of course, can’t vouch for his numbers, but it is clear that an enormous amount of fiat money and claims has been produced in recent months. One of the peculiarities, as revealed by Shadowstats statistics, is that M1 has grown much more than any of the other measures of money.

      Don Stewart

      • Per FRED, 83% percent of the cumulative M2 money supply has been created since January 1996 so Orlov is … mistaken.

        What is amazing is that M2 has increased by 37% since February 2020. Lots of pandemic stimulus going on apparently. It’s not exactly Orlovian but still impressive.

    12. @Joe Clarkson
      If we were looking at a human, we would be observing a ton of insulin not creating very much in the way of usable metabolic output. We call it insulin resistance…a key component of diabetes.

      One of my references above cited the notion that the problem with regional banks is that they have too much money on deposit and no productive way to loan it out. So the regional banks suffer from “money resistance”?

      Might we not expect such effects if Dr. Morgan’s model is correct?
      Don Stewart

    13. Consider Shadow Banking
      Lots of money has been driven into shadow banking, desperately looking for some return which exceeds the rate of inflation. BUT, it turns out that the shadow banks don’t have any good place to invest the money. Shale, for example, was one idea, which no longer looks attractive. Crypto once looked attractive, but no longer has the same shine.

      Are the Shadow Banks and the Regional Banks suffering from the same malady…M1 resistance?

      And if the US Government continues to run monumental fiscal and trade deficits, and the profligacy is financed by government backed securities, won’t money slosh over to those instruments?
      Don Stewart

      • No place to put money, no return on investments. Hard choices.

        Recent sale(verified two reliable sources) of farmland, SE MN, $13.7K/acre. It can’t be farmed profitably at that price.

        Dennis L.

    14. @ Matt – “my best suggestion is that in your small scale ‘grey economy’ you use a semi precious metal such as copper …”

      Far better – use silver coins for barter/trade, and gold for capital preservation.

      And in the UK, they’re Capital Gains Tax free!

      Imagine the “price” of an ounce of gold when the £ collapses and the consequent huge nominal gain in £s.
      The CGT would be huge – but in the UK there’s no CGT!

      The wealthy know this.
      That’s why it’s called the Golden Rule.

      “The man with the gold, he makes the rules.”

      wink* wink*

      • LOL, the Golden rule came from a cartoon strip called ‘The Wizard of Id’..

        A lonely man on a road with bags of gold meets a man with a bow and arrow, a sword and a knife. Who makes the rules?

    15. Now that I think about it, A few short-sellers may actually get quite wealthy from the end of growth.

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