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Prediction: Things Will Unravel Faster Than You Think

Friday, October 1, 2010, 4:26 PM
Part I

By my analysis, we are not yet on the final path to recovery, and there are one or more financial 'breaks' coming in the future.  Underlying structural weaknesses have not been resolved, and the kick-the-can-down-the-road plan is going to encounter a hard wall in the not-too-distant future.  When the next moment of discontinuity finally arrives, events will unfold much more rapidly than most people expect.  

My work centers on figuring out which macro trends are in play and then helping people to adjust accordingly.  Based on trends in fiscal and monetary policy, I began advising accumulation of gold and silver in 2003 and 2004.  I shorted homebuilder stocks beginning in 2006 and ending in 2008.  These were not ‘great' calls; they were simply spotting trends in play, one beginning and one certain to end, and then taking appropriate actions based on those trends. 

We happen to live in a non-linear world; a core concept of the Crash Course.  But far too many people expect events to unfold in a more or less orderly manner, with plenty of time to adjust along the way.  In other words, linearly.  The world does not always cooperate, and my concern rests on the observation that we still face the convergence of multiple trends, each of which alone has the power to permanently transform our economic landscape and standards of living. 

Three such trends (out of the many I track) that will shape our immediate future are:

  • Peak Oil
  • Sovereign insolvency
  • Currency debasement

Individually, these worry me quite a bit; collectively, they have my full attention.

History suggests that instead of a nice smooth line heading either up or down, markets have a pronounced habit of jolting rather suddenly into a new orbit, either higher or lower.  Social moods are steady for long periods, and then they shift.  This is what we should train ourselves to expect. 

No smooth lines between points A and B; instead, long periods of quiet, followed by short bursts of reformation and volatility.  Periods of market equilibrium, followed by Minsky moments.  In the language of the evolutionary biologist Stephen Jay Gould, we live in a system governed by the rules of "punctuated equilibrium."

Complex Systems

Our economy is a complex system.  The key feature of such systems is that they are inherently unpredictable with respect to the timing and severity of specific events.  For the uninitiated, they can look enormously fragile and prone to flying apart at any minute; for the seasoned observer, there is an appreciation that the immense inertia of the economic system will almost always delay and dampen the eventual adjustments. 

Like everybody else, I have no idea exactly what’s going to happen, or precisely when.  Anybody who says they do know should be greeted with a furrowed brow and a frown of suspicion.  As my long-time readers know, I prefer to assess the risks and then take steps to mitigate those risks based on likelihood and impact.

Which means that although we cannot predict the size (exactly how much) or the timing (precisely when) of economic shifts or world-changing events, we can certainly understand the risks and the dimensions of what might happen.  Just as we cannot predict when an avalanche will release from steep slope, or even where or how big it will be, we can readily predict that constant snowfall coupled with the right temperature conditions will lead to an avalanche sooner or later, and more likely in this gully than that one.  Given certain conditions, we might expect one that is larger or smaller than normal.  Although we don't know exactly when or how much, we do know that when snow accumulates, so do the risks of more frequent and/or larger avalanches.

Such is the nature of complex systems.  While inherently unpredictable, they can still be described.  The most important description of any complex system is that it owes its order and complexity to the constant flow of energy through it.  Complex systems require inputs.  This is one way in which we can understand them. 

Given this view, one easy "prediction" is that an economy without increasing energy flows running through it will stagnate.  To take this further, an economy that is being starved of energy becomes simpler in the process -- meaning fewer jobs, less items produced, and a reduced capacity to support extraneous functions.

Accepting "What Is"

The most important part of this story is getting our minds to accept reality without our passionate beliefs interfering.  By ‘beliefs’ I mean statements like these:

  • “Things always get better and are never as bad as they seem.”
  • “If Peak Oil were ‘real,’ I would be hearing about it from my trusted sources.”
  • “Dwelling on the negative is self-fulfilling.”

While each of these things might be true, they also might be false and therefore misleading, especially during periods of transition.  Our job is to remain as dispassionate and logical as possible.  

Let's now examine more closely the three main events that are converging -- Peak Oil, sovereign insolvency, and currency debasement -- using as much logic as we can muster.

Peak Oil

Peak Oil is now a matter of open inquiry and debate at the highest levels of industry and government.  Recent reports by Lloyd's of London, the US Department of Defense, the UK industry taskforce on Peak Oil, Honda, and the German military are evidence of this.  But when I say “debate,” I am not referring to disagreement over whether or not Peak Oil is real, only when it will finally arrive.  The emerging consensus is that oil demand will outstrip supplies “soon,” within the next five years and maybe as soon as two.  So the correct questions are no longer, "Is Peak Oil real?" and "Are governments aware?” but instead, "When will demand outstrip supply?" and “What implications does this have for me?” 

It doesn't really matter when the actual peak arrives; we can leave that to the ivory-tower types and those with a bent for analytical precision.  What matters is when we hit “peak exports.”  My expectation is that once it becomes fashionable among nation-states to finally admit that Peak Oil is real and here to stay, one or more exporters will withhold some or all of their product "for future generations" or some other rationale (such as, "get a higher price"), which will rather suddenly create a price spiral the likes of which we have not yet seen. 

What matters is an equal mixture of actual oil availability and market perception.  As soon as the scarcity meme gets going, things will change very rapidly.

In short, it is time to accept that Peak Oil is real - and plan accordingly.

Sovereign Insolvency

Once we accept the imminent arrival of Peak Oil, then the issue of sovereign insolvency jumps into the limelight.  Why?  Because the hopes and dreams of the architects of the financial rescue entirely rest upon the assumption that economic growth will resume.  Without additional supplies of oil, such growth will not be possible; in fact, we’ll be doing really, really well if we can prevent the economy from backsliding.

Virtually every single OECD country, due to outlandish pension and entitlement programs, has total debt and liability loads that Arnaud Mares (of Morgan Stanley) pointed out have resulted in a negative net worth for the governments of Germany, France, Portugal, the US, the UK, Spain, Ireland, and Greece.  And not by just a little bit, but exceptionally so, ranging from more than 450% of GDP in the case of Germany on the 'low' end to well over 1,500% of GDP for Greece. 

Such shortfalls cannot possibly be funded out of anything other than a very, very bright economic future.  Something on the order of Industrial Age 2.0, fueled by some amazing new source of wealth.  Logically, how likely is that?  Even if we could magically remove the overhang of debt, what new technologies are on the horizon that could offer the prospect of a brand new economic revival of this magnitude?  None that I am aware of.

In the US, the largest capital market and borrower, even the most optimistic budget estimates foresee another decade of crushing deficits that will grow the official deficit by some $9 trillion and the real (i.e., “accrual” or “unofficial”) deficit by perhaps another $20 to $30 trillion, once we account for growth in liabilities.  This is, without question, an unsustainable trend.

It’s time to admit the obvious:  Debts of these sorts cannot be serviced, now or in the future.  Expanding them further with fingers firmly crossed in hopes of an enormous economic boom that will bail out the system is a fool’s game.  It is little different than doubling down after receiving a bad hand in poker. 

The unpleasant implication of various governments going deeper into debt is that a string of sovereign defaults lies in the future.  Due to their interconnected borrowings and lendings, one may topple the next like dominoes. 

However, it is when we consider the impact of the widespread realization of Peak Oil on the story of growth that the whole idea of sovereign insolvency really assumes a much higher level of probability.  More on that later.

For now we should accept that there's almost no chance of growing out from under these mountains of debts and other obligations.  We must move our attention to the shape, timing, and the severity of the aftermath of the economic wreckage that will result from a series of sovereign defaults. 

Currency Wars

We could trot out a lot of charts here, examine much of history, and make a very solid case that once a country breaches the 300% debt/liability to GDP ratio, there's no recovery, only a future containing some form of default (printing or outright).

In a recent post to my enrolled members, I wrote:

The currency wars have begun, and the implications to world stability and wealth could not be more profound. Fortunately, all of my long-time enrolled members are prepared for this outcome, which we've been predicting here for some time.

When pressed, the most predictable decision in all of history is to print, print, print.  So I can't take credit for a 'prediction' that was just slightly bolder than 'predicting' which way a dropped anvil will travel; down or up?

The only problem is, widespread currency debasements will further destabilize an already rickety global financial system where tens of trillions of fiat dollars flow daily on the currency exchanges.

You can be nearly certain that every single country is seeking a path to a weaker relative currency. The problem is obvious: Everybody cannot simultaneously have a weaker currency. Nor can everybody have a positive trade balance.

If a country or government cannot grow its way out from under its obligations, then printing (a.k.a. currency debasement) takes on additional allure.  It is the "easy way out" and has lots of political support in the home country.  Besides the fact that it has already started, we should consider a global program of currency debasement to be a guaranteed feature of our economic future. 

Conclusion (to Part I)

Three unsustainable trends or events have been identified here.  They are not independent, but they are interlocked to a very high degree.  At present I can find no support for the idea that the economy can expand like it has in the past without increasing energy flows, especially oil.  All of the indications point to Peak Oil, or at least "peak exports," happening within five years. 

At that point, it will become widely recognized that most sovereign debts and liabilities will not be able to be serviced by the miracle of economic growth.  Pressures to ease the pain of the resulting financial turmoil and economic stagnation will grow, and currency debasement will prove to be the preferred policy tool of choice. 

Instead of unfolding in a nice, linear, straightforward manner, these colliding events will happen quite rapidly and chaotically.

By mentally accepting that this proposition is not only possible, but probable, we are free to make different choices and take actions that can preserve and protect our wealth and mitigate our risks.

What changes in our actions and investment stances are prudent if we assume that Peak Oil, sovereign insolvency, and currency debasement are 'locks' for the future? 

I explore these questions in greater depth in Part II of this report (enrollment required).

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78 Comments

JAG's picture
JAG
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Re: Prediction: Things Will Unravel Faster Than You Think

I saw this on Zerohedge; it must be TGIF happy-hour over there because this post got some pretty harsh reactions. 

If I haven't thanked the moderators lately: Thank You!

ytterbius's picture
ytterbius
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Re: Prediction: Things Will Unravel Faster Than You Think

"Such shortfalls cannot possibly be funded out of anything other than a very, very bright economic future.  Something on the order of Industrial Age 2.0, fueled by some amazing new source of wealth."

This source of wealth must be the Green Revolution.  It seems to me to be the only hope.  Without it, the financial system will collapse, and there will not enough available energy for any kind of economy till the population drops dramatically.  If it succeeds, then in the long term, even if the paper financial system collapses, then energy will still be available for some kind of economy, even if only in pockets.

r101958's picture
r101958
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Re: Prediction: Things Will Unravel Faster Than You Think

Perhaps you mean the 'Green Revolution' can play an important part in transitioning to a reasonable and sustainable alternative energy/economic system. With, or without it the current financial system will collapse. Currently available alternative energy sources simply do not offer high enough EROEI to sustain the current level of complexity (or anywhere near it).

SingleSpeak's picture
SingleSpeak
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Re: Prediction: Things Will Unravel Faster Than You Think

Thanks again Chris,

Due to you constantly pounding the drum and sending your reports and warnings, I am slowly getting prepared. I have no doubt that I will kick myself for not doing more now while it's "easy", but when I look at those around me that think the worst is over, I feel like I'm way ahead of the game. Still, without your constant prodding, I would become complacent and procrastinate. Ooops, gotta go prepare.

TechGuy's picture
TechGuy
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Observation of a Crisis

Consider the effects of a economic crisis on the global energy complex. Lets supose that in the not too distant future the globe enters a world wide depression with the collapse of the US, Asian and European economies. Factories shutdown, raw material shipments collapse causing mines and other industrial material production to collapse. The oil and gas companies have constant demand to replace parts, and to drill new wells just to keep production in check with demand. Now what happens if Oil and Gas companies can no longer get replacment parts and new materials? This would certainly cause an acceleration of production declines. While perhaps energy companies could manufacture their own replacment parts, it may not be economically viable. The costs of insourcing production of valves metal pipes and other manufactured goods would be expensive without the economy of scale. Since the economy would be weak, its seems unlikely that energy companies could raise prices. So its very likely that an economic collapse would also triggler an collapse in oil and gas production.

That said. My best guess is that the US will be able to maintain its high deficit to GDP gov't expenditures for the next Two years. While the US is bad, there are many other places that are much worse. The  analogy that I would like to use is rats fleeing a burning ship and boarding a sinking ship. Investors holding on to sovergn\private debt in collapsing nations such as Greece, Ireland, etc will choose to move their money else where. The US has an advantaged because the US dollar is still the world's reserve currency. We will see more failed sovergn debt, including Spain (Already downgraded this week). France, Italy, and eventually Japan, before the crisis come to US gov't debt. We probably will see some flight from the US Muni bond market, but that would only strengthen the demand for US treasuries as investors dump Munis and buy treasuries. Some investors will move int assets such as PMs, but I think the majority will still with paper assets because they are more easily convertible into other investments.

I think Peak Oil production is a problem that is beyond the time frame of the economic crisis. In my opinion, Convention oil production peaked into 2005, and total oil production peaked in 2008. yet oil prices have stabilized between the $65 to $80 price range, because the economy is weak. Further more, Oil shortages would result in the loss of high oil consumption business, such as air travel and air freight that would release 10's of Mbpd if they ceased operation. Civilization would not cease to exist if air travel disappeared. The near term danger to oil and gas production would be loss of manufacturing required to supply replacement and new equipment to maintain current production and infrastructure that prices energy to end users.

Another threat on the horizon is another global war. Most of the eras of war were triggered by an economic crisis. WW2 was triggered by an economic crisis. Europe abandoned democracy in favor of fasicism during the 1930s. The worse the unemployment crisis grew the worse leaders the population elected. The 21st Century is not likely to be any different than the past 70 Centuries on how populations deal with crisises.  The proof is that we are in another global economic crisis. We have failed to learn from our past mistakes and are doomed to travel the same path as previous crisises. It should have been obvious 10 years ago to the common man that we were heading for a major crisis unless we began to change. Change didn't happen because the population was unable or unwilling to recognize the crisis we were creating for ourselves.

I can't say when the next global war will begin. I can tell you that it will be near when you see a second era of fascism and totaliarism.

Davos's picture
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Re: Prediction: Things Will Unravel Faster Than You Think

Super read!

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shelbymoore3
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Centralized policy causes Minsky moment (abrupt) change

Most people think sovereign bonds interest rates must rise soon, but afaics, they fail to understand the nature of the global debt trap we are in:

http://financialsense.com/contributors/shelby-moore/perpetual-deflation-causes-inflation

Dr. Martenson, the most fundamental aspect that causes abrupt change, i.e. Minsky moments, is that centralization of policy prevents optimum annealing.

Or more generally stated, the universe is trending to maximum disorder, and pockets of exponential order along the way, implode back to trend exponentially. Failure to comprehend the exponential quality of nature, i.e. entropy, is the greatest human inability:

A person I often agree with, the monetary PhD scientist Antal Fekete has postulated that the Yuan is strong:

http://financialsense.com/contributors/antal-fekete/the-donkey-in-the-china-shop

But the reason that I disagree with him is very relevant to why tariffs do not work.

The centralization of fitness is always a weakness.  Maximum annealing to optimum fitness only occurs with a free market of individual trials. I am sure Dr. Fekete understands why I say, this is why only gold is money.

For the specific weaknesses of China's centralized economic and monetary policy, read my recent article:

http://financialsense.com/contributors/shelby-moore/perpetual-deflation-causes-inflation

Note I recently wrote a scholarly research paper about the theory of annealing fitness and free markets:

http://goldwetrust.up-with.com/knowledge-f9/book-ultimate-truth-chapter-6-math-proves-go-forth-multiply-t159-15.htm#3640

That research derives or fits into a theory of the universe that I have proposed as a way to unify Einstein's General Relativity and Quantum Mechanics (Quantum Information): (note I am planning to study "Q-Orders" as potential self-similarity case of "frequency" in my theory)

http://goldwetrust.up-with.com/technology-f8/theory-of-everthing-t124.htm#3681

As for Peak Oil, we have more Natural Gas in the world that we know what to do with, and cars run just as well with CNG as they do on gasoline or diesel, losing only 10% power if a $1000 conversion kit is employed on a gas engine without compression ratio increase.  Honda's CNG Civic is equivalent to gas in performance, except your cost per mile drops significantly due to the fact that CNG is much less expensive per energy unit than gas. And we can make our own CNG in our back yard from human and animal feces, or even from any organic matter:

http://goldwetrust.up-with.com/economics-f4/peak-oil-nonsense-t102-15.htm#3574

Also nuclear and then later nanotech will reduce the cost of energy significantly:

http://goldwetrust.up-with.com/technology-f8/computers-t112-75.htm#3671

Those who like to quote EROEI, forget that energy efficiency is a function of technology, since everything (i.e. my definition of 'matter') that is not infinitely disordered, contains some energy.  It is the relative order that allows energy to do useful work.

However, we are likely to see Minsky moments with respect to oil, because of the non-optimum annealing rate due to centralized policy of many genres. This is just the way nature deals with change.

ytterbius's picture
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Re: Prediction: Things Will Unravel Faster Than You Think

You're probably right.  I'd say definately right in the long term.

My hope is that the Revolution can produce enough value (Energy), and involve enough people that it can hold off a final collapse until such a time as those present (and surviving) the collapse can strongly benefit from the energy sources that were produced under the current financial system.

In other words, I don't want modern fiat capitalism to die until we've got a boatload of Energy sources in place.

Fantasy, perhaps.

However, I see the Chinese giving it a try.

They haven't become the number one producer of Solar Modules in the world just to sell them to Europe forever.  They're going to use them in China.  We expect them to officially release a $700+ Billion over 10 Year Energy Policy, including more Hydro and Nuclear, but also at least $200 Billion for Wind and Solar. 

It could be that the financial system will collapse, and the Chinese will just Nationalize all of their production.  That would suck for the World, and I don't think that that is their preferred option.  It doesn't really benefit them to have the US collapse into chaos.  We have nuclear weapons.

I think that they understand some of the realities that Chris Martinson talks about, unlike too many Americans that don't have a clue about what Energy actually does for us.

In China there are concerted efforts to build "Solar Cities," in which are contained entire supply chains for Solar (presumably they're doing the same thing for other types of technology).  Here in America I see people responding as individuals to Chris's (and others') message on Energy, but in China they're doing it on a mass scale (which hasn't yet been made clear to the World).  This is as efficient as its going to get as far as EROI is concerned. 

Bottom line, though, I think there are still going to be Dollars, Euros, and Yuan involved, for a long time, though the Dollar crisis is very likely immanent.  The west wants China to strenthen their currency, and I think that they'll be suprised when they get it, and it's not going to be pretty.  Feel free to insert a furrowed brow and a frown of suspicion here.

As for EROI, for Solar it's only a few years, and it's decreasing.  With scale, the EROI will decrease, and the scale is increasing ridiculously fast.  There's talk in China of having 40% of their energy supply from Solar in 40 years or so.  They're playing for the long term. 

See a write up I did a couple weeks ago on Global Demand.  http://americansolareconomy.blogspot.com/2010/08/2011-demand-prediction....

truenorth's picture
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Re: Prediction: Things Will Unravel Faster Than You Think

I don't think so.  This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

..

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Re: Centralized policy causes Minsky moment (abrupt) change

Agreed it will be a slow burn in terms of dollar system death, but abrupt volatility along the way, with abrupt end to the current fiat regime at the end.

The psychological support evidence for the slow burn of the dollar is shown on the ongoing GALLUP poll chart at following link, which shows that rising public awareness of real estate being a poor investment is a linear trend since 2002, and the 2007-9 volatility increase in awareness, returned to the linear trendline as if 2007 - 9 never happened!:

http://goldwetrust.up-with.com/economics-f4/stocks-vs-precious-metals-vs-bonds-vs-real-estate-t11-15.htm#3727

I think those who are disagreeing with my comments on peak oil, are looking at the alleged global peak in production of oil and the rising marginal cost of producing oil. I definitely don't disagree with the latter, and the former will eventually happen someday, if not already.

But that is irrelevant to my point, so I don't know what they are logically disagreeing with?

My point is that energy of the universe is abundant, and it only takes technology to get at it.

But the (millions of trial and error annealing of) technology is impeded when you have a centralized elephant dictating false opportunity costs via centralized interest rate policy, enabled by centralized fiat, i.e. socialism:

http://www.marketoracle.co.uk/Article21650.html

http://www.marketoracle.co.uk/Article20857.html#comment92402

http://goldwetrust.up-with.com/economics-f4/is-capitalism-or-is-socialism-increasing-t18-60.htm#3563

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Re: Prediction: Things Will Unravel Faster Than You Think

shelbymoore3 wrote:

My point is that energy of the universe is abundant, and it only takes technology to get at it.

[bold mine].  I hear you Shelby.  But have you read/heard what Chris has to say about how far we are away we are from being ready to scale up such technology?  I've heard some great examples, that unfortunately  I can't quote off the top of my head, regarding how much capability we have in various areas like this (e.g., nuclear, wind) and how much MORE we'd need to meet our current energy demands.  When you see those facts laid down, as I have heard Chris do in talks before, it really hits home re just what a gap therei s between what we now use/need energy-wise, and what it would take to get alternative energy sources up to that level. 

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shelbymoore3
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Re: Peak Oil

pinecarr wrote:

shelbymoore3 wrote:

My point is that energy of the universe is abundant, and it only takes technology to get at it.

[bold mine].  I hear you Shelby.  But have you read/heard what Chris has to say about how far we are away we are from being ready to scale up such technology?...

Wind and nuclear have almost nothing to do with transportation fuel. Nuclear, hydro, etc is a way to supplement (gradually displace) coal, which I understand is no where near a peak any way. Coal is dirty, even leaves more radioactive waste than nuclear, and the waste is dispersed into the environment.

Natural gas is ready to go, to offset the rate at which peak oil will decline. Chris shows how fast individual wells decline precipitously, but the fact is we are still discovering new oil, so the decline is likely to be less abrupt (unless socialism's effect is too great but in that case demand will decline too). And the sooner we get started on building CNG distribution and production, the better.

CNG doesn't have the scale issues that wind and nuclear have. It is not very high tech at all. Capture methane gas from rotting organic matter, then compress it into a tank. There are already CNG refilling stations and CNG production. Afaik, the only thing holding it back is apparently the ignorance of consumer (lower costs) and the lack of convenience of sufficient CNG refilling stations. As for cost of production of methane, I have not researched it sufficiently, but it is much more economic than ethanol. Afaics, at the least, CNG could give us the time to develop other energy technologies.  And/or, we could burn the CNG at the coal plants and convert coal to gasoline via Fischer-Tropsch heat and catalyst process (yes I know very low EROEI, but if methane is very cheap, then go for it).

Also one of the links I provided in my prior comment was about nanotech and energy consumption efficiency improvements, not so much new ways to create input energy. Paradigm shift like that can sweep the world as fast as iPhone and Androids are. One of my links was about the paradigm shift I expect and am working on the existing internet that could reduce physical energy demands (why travel when virtual reality is orders-of-magnitude faster and more fun).

Oil is nationalized (or effectively so with mega corporations-fascism) and heavily taxed+regulated every where in the world.  Can you expect anything that is socialized to not peak and decline? (rhetorical)

Damnthematrix's picture
Damnthematrix
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Re: Centralized policy causes Minsky moment (abrupt) change

shelbymoore3 wrote:
My point is that energy of the universe is abundant, and it only takes technology to get at it.

You're making the classic error of mistaking "technology" with "energy and resources availability"

Yes the energy of the universe is abundant, but........  as I have quoted on this blog many times, a Spanish engineer friend of mine whose job it is to design build and install renewable energy systems in Spain, arguably the world capital of this stuff, has calculated that to merely generate 20% of the global electricity within ten years using wind alone would require:

ALL the world's concrete
DOUBLE the current steel production
THIRTY times the current fiberglass production
HALF the copper currently produced and
HALF the coal.... (not to mention a substantial amount of oil to produce/transport all of the above)

Now Pedro has all the data at his fingertips to work out this stuff (he presented this at an ASPO conference in Madrid a couple of years ago BTW) and I have absolutely no reason to doubt his figures....

So I ask you this:  exactly what else will we do while we implement your "technology"??

Mike

Google "Pedro Prieto" + "renewable Energy"

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Re: Prediction: Things Will Unravel Faster Than You Think

Having suggested googling Pedro's credentials, I did it myself and found this...:

Pedro Prieto, Vice Chairman and co-founder of AEREN and a member of ASPO: "Just one year of decline in petroleum production would require us to install 10 times the capacity of modern renewable energy installed in the world to date"
23/2/2010

In an exclusive interview with Renewable Energy Magazine, Pedro Prieto discusses the concept of peak oil and provides some in-depth insights into the interesting topic of whether or not renewable energies can truly replace oil once it runs out.

Since 2006, the Spanish Association for the Study of Energy Resources (AEREN) has acted on behalf of the Association for the Study of Peak Oil and Gas (ASPO) in Spain. ASPO comprises a network of organisations in over 20 countries dedicated to the study of peak oil and what needs to be done now to react when oil and gas reserves start to decline.

AEREN is responsible for the website Crisis Energética (www.crisisenergetica.org), which has become a reference among Spanish speakers around the world for information about peak oil and the energy crisis.

Pedro Prieto (Madrid, 1950) is Vice Chairman and a co-founder of AEREN and is a member of ASPO’s international panel. Pedro has worked as an engineer in the telecommunications sector since the 1970’s and is a member of the association Scientists for the Environment (CiMA) in Spain. He has managed several photovoltaic solar projects and provides advice on photovoltaic systems to public entities and individuals. Pedro is currently the director of development of alternative energies in a Spanish company.

Interview date: January, 2010

Interviewer: Toby Price

Firstly, what most concerns you about the world’s energy system at present?

Well, the fact that we are close to reaching peak oil – the time when oil production reaches a maximum and the point after which this fuel’s contribution to Humanity will become increasingly smaller. Shortly after, peak gas will also be reached.

The Association for the Study of Peak Oil and Gas (ASPO) declares that peak oil is already upon us, while one of the best known and most optimistic organisations, the International Energy Agency (IEA), estimates that this point will not be reached for another two decades.

The issue of peak oil is so important to Humanity that it could overshadow concerns about climate change. At Humanity’s current rate of demand, no possible or foreseen energy substitutes to oil and natural gas exist that could replace these fuels at the same rate that they decline. This is even truer if the rate of growth we have come to expect as indispensable to a capitalist society is to be maintained.

In a recent interview, you said that renewable energy producers “lack a sense of realism” because “they do not take into account the true cost of the energy and raw materials” required to develop their technologies. Could you expand on this?

Ignoring the energy cost when developing a source of energy or assessing whether or not it should be used is one of the problems faced in the renewables sector. I believe that, not just in the renewables sector but in society as a whole, we should avoid assuming too quickly and easily that renewables can replace fossil fuels as and when these resources start to decline.

My criticism of many who defend modern renewable energies is that they almost always tend to argue in a very superficial way that as reserves decrease, renewables can replace fossil fuels in both volume and at a rate which will enable the world economy to continue to grow. However, when they put the figures on the table, they almost always do so out of context.

Here’s an example. 80% of the primary energy we consume in the world today comes from the third dimension, i.e. the depths of the Earth, the lithosphere. It is not renewable and is, therefore, subject to being used up. Two of the four sources of this energy (oil and gas) are very close to their maximum limits of extraction and point of decline, while the other two (coal and uranium) will also reach their peaks in just a few decades.

The remaining 20% of primary energy comes from the biosphere: 13-14% of which is biomass. However, to use this energy, we have already destroyed almost half of the world’s forests and we continue to destroy them at a rate of close to 1% per annum.

Another 5% of our primary energy demand is met with so-called renewable hydroelectric power. However, to this end and for irrigation ponds, we have had to occupy around 25% of the major river basins around the globe.

Crops take up 12% of the total surface area of the continents, while modern renewable energies hardly appear on the world primary energy map, accounting for just 1% of primary energy production. As such, it is somewhat unrealistic to expect that we will be able to extract 99% more energy using wind turbines and photovoltaic, solar thermal or solar thermal electric solar panels within a few decades from now, and all from our biosphere.

The idea that we can replace 80% of the non-renewable energy we consume now from the lithosphere and extract it from the already abused biosphere, while continuing to increase the amount we consume, is decidedly unrealistic and even less sustainable.

How can we ensure that renewable energy projects have a truly positive impact on energy demand? Should energy audits be based on the Energy Return on Investment (EROI) concept for example?

Fossil fuels have provided a net return that so-called renewable energies cannot provide. The EROI is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource.

In the sweet oil fields close to the surface in the US, where extraction pressures were very high and fields were close to demand, petroleum reached an EROI of 100 over the last 30 years (i.e. it took one barrel of oil to supply society with a hundred more barrels).

Today however, oil in the US only reaches EROIs of between 5 and 20. When the EROI of an oil field reaches 1, it is closed for a purely physical and geological reason, even if the oil costs $10,000 a barrel. This is something which many economists (and quite a few engineers turned economists, who we call flat-earth economists) don’t understand, because they see energy as an asset subject to market forces. However, energy is more than just an asset; it is a prerequisite to obtaining all other assets.

EROI assessments are essential to understanding the possible real usefulness of an energy source. Our modern and highly mobile society demands energy sources that are very easily available, with EROIs that are as high as possible, and which can be stored and transported in huge quantities. This is something that is not taken sufficiently seriously when analysing modern renewable energies, despite the plethora of Life Cycle Assessments (LCAs) of modern renewable systems, especially wind and photovoltaic solar, which, it must be said, , are generally commissioned by interested parties. These theoretically green and clean or “emission free” systems are in reality totally reliant on fossil fuels, receive subsidies from a fossil fuel-based society, and generally have many hidden energy costs that are not often presented in their LCAs.

It would be very interesting if we could demonstrate that these energies can be sufficient and self-supporting in, for example, a closed system with a minimum critical mass. It would also be interesting if these energies could prove that they can make a net energy contribution to society as well as producing the energy required in their manufacture, transport, assembly, operation and maintenance from one end of the life cycle to the other. They would also need to prove that they could work without subsidies, feed-in tariffs, tax credits or any other support from the fossil fuel-based society.

Last year was a record year for renewables around the world. The global recession even represented an opportunity for the sector, as many governments earmarked millions to develop renewable energies to create jobs. Do you believe we are better placed to react to peak oil thanks to the leap the renewables sector has made?

It was undoubtedly a record year but, once again, things need to be put into context. 9,000 MW of new wind capacity, for example, was installed during 2009, taking the total to 140,000 MW worldwide. Meanwhile, around 5,000 MW of photovoltaic solar capacity was installed in 2009, bringing the total to approximately 18,000 MW. Based on the expected average performance of these systems, this equates to additional generating capacity of around 25 TWh/year in 2009 being provided by renewable energies, against a total of 300 TWh/year from these sources of energy.

The problem is that this record renewable capacity installed in 2009 only equates to 0.12% of the total world electric demand in 2008 of 20,000 TWh. The renewable capacity installed in 2009 only covered 8% of the increase in global electricity demand recorded between 2007 and 2008. Figures show that global electricity demand based on fossil fuels is growing some 30 to 100 times more quickly than renewable capacity is being installed. This isn’t exactly worthy of celebration. The records achieved last year are nothing more than a drop in the ocean, especially if one looks at primary energy demand, where the ratios are even greater.

Another way of looking at this is to compare renewables growth with the decrease in the supply of the main energy sources.

If, as the chief economist of the IEA, Fatih Birol, has claimed, oil reaches its peak and starts to decline at a rate of 6.7% per annum, an additional 1,000 to 3,000 TWh would have to be found from other sources. In other words, just one year of decline in petroleum production would require us to install 10 times the capacity of modern renewable energy installed in the world to date.

Thereafter, more and more renewable capacity would have to be installed using every decreasing fossil fuel resources. This is the double challenge we face.

2009 also saw the founding of IRENA (International Renewable Energy Agency). Do you consider this agency will play an important role in resolving current energy problems?

In view of what I have just said and IRENA’s approach, I have serious doubts. The fact that this agency has been located in Abu Dhabi, an important oil producing state, and not in one of the countries that has promoted renewables says a lot about the political undertones running through all the decisions it takes.

The circus surrounding Masdar in Abu Dhabi, the so-called “green city” or “emission-free city” also says a lot about the misleading approach being taken and is a true reflection of the deception that modern renewable energies often represent.

I understand that you do not believe renewables will ever cover 100% of energy demand, unless we reduce consumption. What do we have to do in terms of energy efficiency and saving and renewables development to fill the gap left when fossil fuels disappear?

Energy saving and an improvement in efficiency will have to cover the rest of the gap that renewables cannot fill; which are also, we must not forget, systems that have to be replaced every two or three decades.

In my opinion, energy saving will have to involve not only the use of more technology, but also, and above all, RADICAL changes in the social behaviour of humans, who are very consumerist and are ruled by policies aimed at continuous growth and the use of ever increasing amounts of capital.

Imagine that you were President of the European Union this year. What would be your three top energy priorities?

Good question, but first let me say that no acting president of any supranational organisation, even one as powerful as the European Union, can do a great deal to change the energy sector during the six months they are in office, especially considering the limited powers they have over the policies of individual Member States.

This said, what I would do first would be to raise the alarm and make a proposal to EU citizens, which would be far crueller but equally as necessary and even more critical than that proposed by Churchill when he asked his compatriots to fight Germany with “blood, sweat and tears”. This time, instead of the backdrop of the Second World War (win and return to the good old days), we face a far deeper, long-lasting and structural challenge.

This time the problem is much more dramatic: we have to make citizens – who are accustomed, especially in the EU, to decades of comfort, security and high social advantages – realise that their quality of life exists because of a huge abundance of cheap, accessible and highly versatile fuels and that these fuels will soon start running out.

We have to warn them that it is quite probable that renewables will not be able to replace these other energy sources in the quantity and time and net energy required. We, logically, need to start thinking first about those people who have most benefited from these high levels of energy and how to reduce their consumption, which will lead to radical constitutional changes and changes in the way in which capital is accumulated and distributed.

Mobility will need to be cut dramatically in the most orderly way possible. We will have to start producing goods and providing services as close to demand as possible. Societies need to be guided towards a system for producing food and obtaining water that uses the most natural methods possible (obtain fresh water using gravity rather than pumping, desalination, etc.) and we need a far larger primary sector and far smaller tertiary and secondary sectors, which need to focus more on “needs” and less on “wants”.

In short, we need to instigate a Copernican shift, which will undoubtedly leave many readers very concerned and give them the idea that I have apocalyptic view on the world.

Nuclear energy, yes or no?

Without a doubt, no. Let’s look again at the facts. The approximately 440 nuclear power plants in operation today only generate around 5-6% of the world's primary energy and 15% of the total electricity. The 50 nuclear plants under construction and 200 in development would not cover future energy demands for even a moment once oil and gas supplies begin their inevitable and inexorable decline one, two or three decades from now.

The gap that oil will leave in just one year once production starts to fall will require 200 new nuclear power plants of 1 GW each. A huge amount of infrastructure would also have to be adapted. Don’t forget that each nuclear plant also takes around 10 years to commission. There just isn’t enough time.

Furthermore, Marcel Coderch (Secretary of AEREN and doctor at MIT) has calculated that it will take 50 years just to recover the fossil-based energy used to roll out several thousand nuclear power plants.

Meanwhile, the nuclear agencies themselves admit that there are only proven reserves of uranium for around 100 years, based on the current demand of the 440 plants in operation. Finally, nuclear power is even more dependant on the fossil-fuel society than modern renewables, not to mention the problems of untreatable waste, concerns about terrorism or possible wars.

Do you believe hydrogen has a future as an energy vector?

It could do, although precisely because hydrogen is an energy store and not a source of energy, the question should really be: since hydrogen is not freely available in nature, which energy or energies will be used to separate hydrogen from the molecules it is always connected to? This aspect and the fact that hydrogen is a very light gas from an energy perspective and has too be subject to huge pressure when in gas form or be liquefied at very low temperatures to enable it to be transported, raises its own set of problems. Energy has to be continuously consumed to maintain hydrogen below 250ºC below freezing.

Hydrogen also has the added and costly inconvenience of being able to escape from practically any container. It is capable of escaping from the systems used to contain it at a rate of 1% per day. This means that it would not be wise to leave a vehicle with its hydrogen tank full and then go on holiday, because it would be practically empty when you return. This is a big problem, because oil and gas can be stored very easily in large deposits over long periods of time as strategic reserves. Hydrogen reserves however, would be very difficult to manage.

Furthermore, hydrogen is also highly reactive and bonds with many elements, especially metals, to form hydrides. It generally eats away at metals in a very short period of time. This problem means that the current gas pipelines could not be reused for hydrogen and an immense new transport and distribution network would have to be built from scratch.

I don’t see hydrogen as a vector, except for very specific applications such as for rocket or similar launches or in the chemical industry.

Desertec… the North Sea Offshore Electricity Grid… Are these major projects a solution to our energy problems or should we be concentrating far more on distributed networks and local supply and demand?

No, I don’t believe they are by any means a solution to the world’s energy problems. The most ambitious projects such as Desertec would not cover any more than 20 or 30% of Europe's electricity demand, in the best case scenario. Sarkozy’s Mediterranean Solar Plan would hardly cover 2-3% of the electricity requirements of the countries involved. The volume of materials and energy investment required would be enormous.

Energy security would be complicated due to the vast gap in quality of life between the countries providing the land rights in North Africa, and those providing the technology and merely wanting to consume the energy produced without wanting to raise the quality of life in these areas.

Under these conditions, the question of energy security for Europe would be as much of a concern as it is now in relation to fossil fuels, which in part come from the same areas. These projects would simply change vulnerable gas pipelines, gas liquefaction plants and oil tankers for high-voltage cables crossing the Mediterranean, which would be equally at risk.

It would be far more rational to strive for a world with far lower levels of more localised demand and widely distributed, small and local generation and distribution networks where possible. Although it should be stressed that this reverse would be extremely complex in many parts of the world, and in some cases, impossible.

I am fully aware of the trap in which we find ourselves.

The sustainability of biofuels has been into doubt. Do you consider biofuels are truly viable as an energy source for the transport sector?

Once again, things need to be put into context. If it only concerns producing energy crops locally to move a few tractors to grow the same crops and food, then it may be viable.

However, if we are talking about replacing the almost 4 billion tonnes per annum of petroleum, the 85 million barrels we consume each day to move, among other things, 95% of the world’s transport, then no. There is no sustainable system that could fill the tanks of all one thousand million combustion vehicles on the Planet. It is not in the least bit credible in this context that this type of production will not enter into conflict with food production and the every decreasing supplies of fresh water.

If we return to the estimated 260 MTpes gap that oil will leave only in the first year after peak oil is reached, and if this drop is projected over the decade thereafter, the professor Carlos de Castro estimates that some 300 million hectares would be required to grow energy crops to fill this gap. No, it is not by any means sustainable.

And finally, what are AEREN’s objectives for 2010?

We intend to continue to remain active and independent and work to raise awareness of the problem of the gradual and inexorable decline of fossil fuels and the impact this will have on Humanity, which has developed exponentially over the last century as if this non-renewable resource was never-ending.

For additional information:

Crisis Energética

The Association for the Study of Peak Oil and Gas

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Re: Prediction: Things Will Unravel Faster Than You Think

Mike, thanks for the interview of Pedro Prieto, that's pretty much how I see it too.  Radical changes in society with respect to energy consumption some day is the outcome that seems most likely.

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Re: Centralized policy causes Minsky moment (abrupt) change

Damnthematrix wrote:
shelbymoore3 wrote:
My point is that energy of the universe is abundant, and it only takes technology to get at it.

You're making the classic error of mistaking "technology" with "energy and resources availability"

Yes the energy of the universe is abundant, but........  as I have quoted on this blog many times, a Spanish engineer friend of mine whose job it is to design build and install renewable energy systems in Spain, arguably the world capital of this stuff, has calculated that to merely generate 20% of the global electricity within ten years using wind alone would require:

You quoted me without the relevant context of what I wrote.

We don't have an imminent problem with peak electricity, so wind is not relevant to our discussion about peak oil.

I have stated CNG (compressed natural gas, not LPG, i.e. not liquefied) is sufficient to fill in the gaps as peak oil declines (which afaik even the experts agree won't be an abrupt decline).

Heck here in Philippines, the taxi drivers spend about $300 to covert to CNG (called LPG here, but that means CNG) which is what is used to cook with here (hand carry tanks). They increase their profits too. The economics works.

Damnthematrix wrote:
...what else will we do while we implement your "technology"??

CNG for peak oil.

For increasing electricity demand, just as China is doing, a combination of coal, hydro, and nuclear in that order of priority.  Wind and solar are not relevant. Long-term for electricity, we need to go nuclear, probably breeder reactors so we can maximally recycle the fuel. We have time for that, and besides we are heading in a Greatest Depression EVER, so demand increases will abate at some point.

Damnthematrix wrote:
Pedro Prieto, Vice Chairman and co-founder of AEREN and a member of ASPO: "Just one year of decline in petroleum production would require us to install 10 times the capacity of modern renewable energy installed in the world to date"

Malthusians build meaningless straw-men like that to divert attention from the relevant facts.  "Renewable energy" is the catch phrase of his straw-man. Let him present the statistics on CNG replacing 1 year of oil decline instead, but of course he won't do that, because then he can't hype the non-crisis.

Yes our energy future is undergoing change.  Change is a good thing.  Change is not the end of the world.

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Re: Centralized policy causes Minsky moment (abrupt) change

shelbymoore3 wrote:

Malthusians build meaningless straw-men like that to divert attention from the relevant facts.  "Renewable energy" is the catch phrase of his straw-man. Let him present the statistics on CNG replacing 1 year of oil decline instead, but of course he won't do that, because then he can't hype the non-crisis.

Yes our energy future is undergoing change.  Change is a good thing.  Change is not the end of the world.

Since when has peak gas not been a problem as well? "Peak everything", sounds familiar?

Samuel

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Re: Centralized policy causes Minsky moment (abrupt) change

shelbymoore3 wrote:
We don't have an imminent problem with peak electricity, so wind is not relevant to our discussion about peak oil.

Oh but we are....  The grid's over 50 years old, and needs much maintenance, not to mention  money just to keep it in good repair..  You are ignoring the complexity of the current system.  All the bits that consist the electricity system were all built using cheap and abundant oil... And we haven't even started discussing the possible increase in EV numbers...

shelbymoore3 wrote:
I have stated CNG (compressed natural gas, not LPG, i.e. not liquefied) is sufficient to fill in the gaps as peak oil declines (which afaik even the experts agree won't be an abrupt decline).

I agree with Chris here....  things could unravel much faster than anticipated because we have the perfect storm of Peak Debt, Peak Oil, and fast depleting resources.  The rioting in Europe over austerity measures is the tip of the iceberg...  everything is inter related.

shelbymoore3 wrote:
Heck here in Philippines, the taxi drivers spend about $300 to convert to CNG (called LPG here, but that means CNG) which is what is used to cook with here (hand carry tanks). They increase their profits too. The economics works.

Well I'd hardly use the Phillipines as an example of global transport solutions...  what percentage of the global fleet does the Phillipino fleet represent?  Start creating global demand (ie global scale) for CNG and exactly what do you think will happen to the price?  At a time when Peak Gas is hot on the heels of Peak Oil?

Damnthematrix wrote:
...what else will we do while we implement your "technology"??

shelbymoore3 wrote:
CNG for peak oil.

So why are all car manufacturers going for EV's?

shelbymoore3 wrote:
For increasing electricity demand, just as China is doing, a combination of coal, hydro, and nuclear in that order of priority.  Wind and solar are not relevant. Long-term for electricity, we need to go nuclear, probably breeder reactors so we can maximally recycle the fuel. We have time for that, and besides we are heading in a Greatest Depression EVER, so demand increases will abate at some point.

And you think there will be investments in nukes during the "Greatest Depression EVER"?

Damnthematrix wrote:
Pedro Prieto, Vice Chairman and co-founder of AEREN and a member of ASPO: "Just one year of decline in petroleum production would require us to install 10 times the capacity of modern renewable energy installed in the world to date"

shelbymoore3 wrote:
Malthusians build meaningless straw-men like that to divert attention from the relevant facts.  "Renewable energy" is the catch phrase of his straw-man. Let him present the statistics on CNG replacing 1 year of oil decline instead, but of course he won't do that, because then he can't hype the non-crisis.

The reason "renewable energy" is becoming the catch cry is because everything else, including your precious CNG is non renewable!

shelbymoore3 wrote:
Yes our energy future is undergoing change.  Change is a good thing.  Change is not the end of the world.

At least that's one thing we agree on.....  but the change will be huge reductions in consumptions, not increasing use of non renewable fossil fuels.  And in case you missed it, the total production of liquid fuels already includes natural gas where it is used as a liquid, and the predictions are for declines....

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Re: Centralized policy causes Minsky moment (abrupt) change

Damnthematrix wrote:
shelbymoore3 wrote:
We don't have an imminent problem with peak electricity, so wind is not relevant to our discussion about peak oil.

Oh but we are....  The grid's over 50 years old, and needs much maintenance, not to mention  money just to keep it in good repair..

Not in the developing world, the brand new grid is going up here. The west is bankrupt and they won't be able to afford to use their grid any way. Once the west (especially USA) gives up its inordinate per capita energy consumption due to coming bankruptcy, then I really don't see a problem. The world is rebalancing, the west is decaying and the developing world is coming up.  About time! I just wish it would come sooner so the McMammoths will learn how the rest of the world has been living.

I don't see a problem with it.  I am living in the drastic reduction of energy per capita now, and it works mighty fine. I get everything modern done that I need to get done.

Yeah the 30 - 80 year bond and debt bubble caused the west to mis-allocate energy.  Pay back is coming.

Way of life will change for the better, if you ask me.  I have lived in both places, and I wouldn't wish the western mess on any one, except those who refuse to stop that nonsense.

Damnthematrix wrote:
shelbymoore3 wrote:
...The rioting in Europe over austerity measures is the tip of the iceberg...  everything is inter related.

Spoiled brats. They will get a well deserved spanking by economic reality.

shelbymoore3 wrote:
Heck here in Philippines, the taxi drivers spend about $300 to convert to CNG (called LPG here, but that means CNG) which is what is used to cook with here (hand carry tanks). They increase their profits too. The economics works.

Well I'd hardly use the Phillipines as an example of global transport solutions...  what percentage of the global fleet does the Phillipino fleet represent?  Start creating global demand (ie global scale) for CNG and exactly what do you think will happen to the price?  At a time when Peak Gas is hot on the heels of Peak Oil?

It works fine, and the west has to move back to the way-of-life of the Philippines, it would be a much happier world. Unfortunately, I doubt the west will have to retrench that much.

Damnthematrix wrote:
Damnthematrix wrote:
...what else will we do while we implement your "technology"??

shelbymoore3 wrote:
CNG for peak oil.

So why are all car manufacturers going for EV's?

Honda didn't. Volkswagen didn't. But the subsidies and politics and big auto companies in bed with the big govt and big oil companies...

The west is one giant fraud. Haven't you all realized that yet?

Damnthematrix wrote:
...
shelbymoore3 wrote:
For increasing electricity demand, just as China is doing, a combination of coal, hydro, and nuclear in that order of priority.  Wind and solar are not relevant. Long-term for electricity, we need to go nuclear, probably breeder reactors so we can maximally recycle the fuel. We have time for that, and besides we are heading in a Greatest Depression EVER, so demand increases will abate at some point.

And you think there will be investments in nukes during the "Greatest Depression EVER"?

The developing world won't stop growing, and they will take their share of world resources. The west will either need to contribute technology or fall away into its current fraudulent mess.

Damnthematrix wrote:
...but the change will be huge reductions in consumptions, not increasing use of non renewable fossil fuels...

For the west probably yes. Methane is renewable. Didn't you know the carbon cycle is what gives life on earth?

Btw, statistics lie. So I am not even going to go there. The only thing that matters those who deserve economically to use more, will, and the others will have to use less.  That has been true since the beginning of time.

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Re: Centralized policy causes Minsky moment (abrupt) change

"Wind and solar are not relevant."

LOL!  So wrong.

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Re: Prediction: Things Will Unravel Faster Than You Think

truenorth wrote:

I don't think so.  This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

..

I hope you're right, but I fear you're wrong.

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Re: Prediction: Things Will Unravel Faster Than You Think

truenorth wrote:

I don't think so.  This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

I think this kind of depends on your frame of reference.  For the people who suddenly lost their jobs and are now running out of unemployment insurance, I think the word "significant" already applies.

For all the people who didn't see the housing bubble forming and went in over their heads, the alteration in their fortunes probably qualifies as 'significant,' too.

In both cases I would imagine the participants might describe their change in status as "sudden," and that's the point here.

While it is true that the US is much larger than Greece or Iceland, and will probably face a slower rate of change due to its vast size, we cannot be sure about this.  Remember, back in the1970's the whole of the US - yes, the very same place with a commanding military and the world's reserve currency - faced a very serious monetary crisis that Paul Volker had to fix using short rates that poked over 20% for a while.  Try and imagine the impact of that happening today.

My point here is that even the mighty US faces the risk of a sudden change in fortunes; just because something is unthinkable does not make it impossible (credit: John Hussman).

That's our job here, to consider all the possibilities, weigh the risks, and then decide what, if anything, we wish to do in response.

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Re: Prediction: Things Will Unravel Faster Than You Think

"Methane is renewable. Didn't you know the carbon cycle is what gives life on earth?"

Yes I do.....  but Methane is created over millions of years, just like oil!  I know one can make one's own biogas (we are about to embark on just such a project you may be surprised to know - my wife's a potter, and we want to build her a self sufficient biogas fired kiln), but biogas can never replace the fossil gas currently in use, the numbers are astronomical.

Like I said, what will occur will be a drastic reduction in energy usage (I believe 90%!), the first world will join the third world....

There is no way known the third world can ever consume even a quarter of the first world's levels....  there are not the resources to do it with, all the best stuff, the low hanging fruit, all the best ores, the best oil, the best coal, the best arable land, has all already been used up.  Largely wasted on trivial non essential things in fact...

"The only thing that matters those who deserve economically to use more, will, and the others will have to use less.  That has been true since the beginning of time."

And who (and how?) decides who is more deserving?  Is that not what wars are for?  And, "since the beginning of time" may apply to the natural world, but not the human one....  in fact, I'd argue the exact opposite has occured!

Mike

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Re: Prediction: Things Will Unravel Faster Than You Think


truenorth
 wrote:

I don't think so.  This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

I totally disagree.

First the banks are in bad shape. Mark to Fantasy FASB accounting didn't help. The foreclosure mess is now turning into Foreclosure Gate, expect TARP II and expect Congress to write a draconian law allowing the banks to send a postcard and take a home - no foreclosure hearing required. Right now Title Insurance is going to be next to impossible on foreclosed homes and REO. This disaster is phase II of the unmitigated disaster the banks and Wall Street did. It'll blow up in our faces sooner than 5 years. WAY sooner.

Look also at the derivatives, 200 tn on the banks here. All off balance. Having 1.7tn in assets and 87 tn in off balance derivatives is not salvageable. Let me say that again, just prolonging one big bank would be a Herculean task. Without a doubt it is "un-bailoutable". 

Consumers make up for 70% of GDP. Look at this: they de-leveraged by 20 billion voluntarily and 600 involuntarily. 

Before housing tanked consumers got their money from HELOCs. Jim Quinn's piece on this was phonemail, in the middle of it he shows that consumers borrowed 9 billion dollars in 2008 to to spend on 4 dollar coffees at Starbucks, after the crash they closed 900 stores. They knew where a lot of their consumers were getting their spending money from.

In the last five years, our live-for-today Boomers sucked over $3 trillion of equity out of their homes to fund their selfish lifestyles. At the end of June, there were 2.72 million mortgage loans in default at an annualized rate. For all of 2008, defaults will hit 3 million, up from approximately 1.5 million in 2007, and 1 million in 2006.

What “essentials” do the Boomers invest all this borrowed money in every year? The U.S. Census bureau provides the answers:

  • $200 billion on furniture, appliances ($1,900 per household annually)
  • $400 billion on vehicle purchases ($3,800 per household annually)
  • $425 billion at restaurants ($4,000 per household annually)
  • $9 billion at Starbucks (SBUX) ($85 per household annually)
  • $250 billion on clothing ($2,400 per household annually)
  • $100 billion on electronics ($950 per household annually)
  • $60 billion on lottery tickets ($600 per household annually)
  • $100 billion at gambling casinos ($950 per household annually)
  • $60 billion on alcohol ($600 per household annually)
  • $40 billion on smoking ($400 per household annually)
  • $32 billion on spectator sports ($300 per household annually)
  • $150 billion on entertainment ($1,400 per household annually)
  • $100 billion on education ($950 per household annually)
  • $300 billion to charity ($2,900 per household annually)

Of course we have 22% unemployment. Part II of this weeks Financial Sense News Hour with John Williams and Jim Puplava spell this out.

Then you have the fact that with our insane debt - 127.5 trillion dollars in debt and unfunded liabilities so the average consumer now works from January 1 until August 15th to pay for Uncle Scam. Of course, with Globalization we now compete agains some poor soul in a LCD who makes 2 bucks a day, so our wages are 4 decades stale, circa 1973. That helps the economy.

Of course, Wal-Mart's CEO recently did a disclosure on our 40 million on food assistance - his little blurb revealed modern day bread lines, they form at midnight, on the last day of the month when the food stamp electronic cards get filled up, the poor folks were out there buying baby formula. Now THAT is an economy that has rebounded.

Profits And Baby Formula – Our pal, Rich Yamarone, over at Bloomberg picked up an eye-opening statement made by the Wal-Mart CEO last week.

I don't need to tell you that our customer remains challenged…You need not go farther than one of our stores on midnight at the end of the month. And it's real interesting to watch, about 11 p.m. customers start to come in and shop, fill their grocery basket with basic items – baby formula, milk, bread, eggs – and continue to shop and mill about the store until midnight when government electronic benefits cards get activated, and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.

Worse our purchasing power has been and continues to head south. Dollar to gold.

So, in a nutshell you have:

  1. 22% unemployment.
  2. Consumers who work 7 months of the year giving all their money to Uncle Scam.
  3. Consumers who get 5 months of pay for themselves, that pay is circa 1973 wages, so they are maxed out on debt and servicing minimum payments.
  4. 1 in 8 are on food assistance.
  5. 1 in 10 I think is the number for in poverty.
  6. Their borrowing ability is kaput now that their home values have tanked.
  7. Our deficit can't be paid with tax revenues, it can't be paid with tax revenues plus what Communist China et al will loan us. So Bernanke counterfeits it so Congress doesn't have to restrain itself. 

This all is, by definition an iced cliff. It is just a matter of time before feet are flailing above heads. You can't put a 5 year date on a slip like this. 

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Re: Prediction: Things Will Unravel Faster Than You Think

'Green Revolution' in my mind is the boom in agribusiness that enables such a small number of professional farmers to feed such an astonishingly high percentage of mankind, not a pie-in-the-sky "energy policy" that probably won't last more than an election cycle or two.  Unfortunately.

I'd like to refer this excellent article by John Mauldin, on the topic:

http://seekingalpha.com/article/228111-best-ideas-of-the-week-energy-economy-and-the-morality-of-chinese-growth?source=email

Thanks,
Mike 

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Re: Prediction: Things Will Unravel Faster Than You Think

Hi Davos,

The number of people living in poverty is actually 1 in 7, not 1 in 10 -- I know you were wondering whether that was correct or not.

But a little bit of statistical digging and a little use of one’s brain reveals that the number living in poverty is as high as 1 in 5, especially depending on what one considers “poverty” to be.

The most shocking social statistic to me that really reflects the fact that we are indeed peeking over an ice-clad cliff (you should be wearing crampons if you’re that close!) is that 77% of Americans are living paycheck-to-paycheck.

Say that aloud a couple of times and let it really sink in.

Our economy and social fabric are so delicate right now that a repeat of 2008’s oil price spike would be a bullet to the brain. Speaking of that, isn’t oil starting a potential death-creep right now?

Here’s an article that has a pretty good breakdown on the poverty issue.

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Re: Prediction: Things Will Unravel Faster Than You Think

mainecooncat wrote:

Hi Davos,

The number of people living in poverty is actually 1 in 7, not 1 in 10 -- I know you were wondering whether that was correct or not.

But a little bit of statistical digging and a little use of one’s brain reveals that the number living in poverty is as high as 1 in 5, especially depending on what one considers “poverty” to be.

The most shocking social statistic to me that really reflects the fact that we are indeed peeking over an ice-clad cliff (you should be wearing crampons if you’re that close!) is that 77% of Americans are living paycheck-to-paycheck.

Say that aloud a couple of times and let it really sink in.

Our economy and social fabric are so delicate right now that a repeat of 2008’s oil price spike would be a bullet to the brain. Speaking of that, isn’t oil starting a potential death-creep right now?

Here’s an article that has a pretty good breakdown on the poverty issue.

WOW! Worse than I thought. This thing is so last minutes of Enron baked in the oven for anyone to even utter 5 years is beyond comprehensible. From your article:

  • 43.6 million Americans lived in poverty in 2009
  • National Academy of Science did its own study and found that 47.4 millionAmericans actually lived in poverty in 2008. The
  •  Census missed 7.6 million Americans living in poverty that year.
  • MY NOTE: Since from 2009 to 2010 there was a 4 million number bump we can assume that the 47 million NAS study if done today would be significantly higher.
  • Now let’s look at the poverty line that these numbers are based on: $22,050 for a family of four. Let me repeat that: $22,050 for a family of four. That breaks down to $5513 per person, per year.
  • 50.7 million Americans do not have health insurance.
  • Let’s also consider the staggering amount of Americans - 52 million, roughly 17% of the population - who are currently enrolled in “anti-poverty” programs. Over 50 million are on Medicaid, 41 million are on food stamps, 10 million are on unemployment, 4.4 million receive welfare. Not counted in this “anti-poverty” total are 30 million children enrolled in the National School Lunch Program.
  • “The number of multifamily households increased by 11.6 percent from 2008 to 2010, and the proportion of adults 25-34 living with their parents rose from 12.7 percent in 2008 to 13.4 percent in 2010. The poverty rate for these young adults was 8.5 percent when they were considered part of their parents’ household, but would have been 43 percent if they had been living on their own.”
  • In their most recent survey, this number exploded to a mind-shattering 77 percent. Yes, 77 percent of Americans are now living paycheck to paycheck. This means in our nation of 310 million citizens, 239 million Americans are one setback away from economic ruin.
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Re: Centralized policy causes Minsky moment (abrupt) change

ytterbius wrote:

"Wind and solar are not relevant."

LOL!  So wrong.

Can not be deployed rapidly enough, i.e. they can't scale-- wind because it is only efficient in certain places and not at an individual's economy-of-scale, and solar because its extreme opportunity cost, doesn't have a positive ROI compared to most any other investment (except with statism subsidies, wherein statism is inefficient and peaking too).

Wind has no where near the scale of hydro. Solar is a joke. Solar radiation is too dispersed and even the mirrors to concentrate it are not economic.  I even studied the equations for Stirling engine concentrators, also solar chimneys, in detail and concluded they are not economic.

Sorry but I have done my research and thinking for several years now.

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Re: Centralized policy causes Minsky moment (abrupt) change

shelbymoore3 wrote:

ytterbius wrote:

"Wind and solar are not relevant."

LOL!  So wrong.

Can not be deployed rapidly enough, i.e. they can't scale-- wind because it is only efficient in certain places and not at an individual's economy-of-scale, and solar because its extreme opportunity cost, doesn't have a positive ROI compared to most any other investment (except with statism subsidies, wherein statism is inefficient and peaking too).

Wind has no where near the scale of hydro. Solar is a joke. Solar radiation is too dispersed and even the mirrors to concentrate it are not economic.  I even studied the equations for Stirling engine concentrators, also solar chimneys, in detail and concluded they are not economic.

Sorry but I have done my research and thinking for several years now.

I've done the above studies also. One thing we need to take into account: When oil demand exceeds oil supply, unless we have demand destruction, we are modeling our exercises predicated on "normal" prices. That could change.

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Re: Prediction: Things Will Unravel Faster Than You Think

earthwise wrote:
truenorth wrote:
I don't think so.  This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

I hope you're right, but I fear you're wrong.

Rather we should hope he is wrong, because the long slow delay of return to sanity is the one that maximizes the mis-allocation of capital and thus maximizes the rationing, war, and probability of being enslaved in a new global statism paradigm (NWO).  I have written extensively about that, here is an interesting recent one:

http://www.marketoracle.co.uk/Article23142.html#comment95191

cmartenson wrote:
...I think this kind of depends on your frame of reference.  For the people who suddenly lost [...] might describe their change in status as "sudden" and that's the point here.

Individual volatility is good free market, and it is how nature anneals fitness.

Most complexity is good and synonymous with free markets and optimum fitness.  The bad versions of complexity are where the explosion of possibilities, is centrally controlled, thus is actually a decrease in possibilities (or lets say the possibilities will overrun their controller):

http://www.marketoracle.co.uk/Article22098.html#comment94393

cmartenson wrote:
...1970's the whole of the US - yes, the very same place with a commanding military and the world's reserve currency - faced a very serious monetary crisis that Paul Volker had to fix using short rates that poked over 20% for a while.  Try and imagine the imapct of that happening today.

It can't now because of our debt levels. We didn't have $quadrillion in global derivatives then also. We are in the death spiral from which the end game is radical economic implosion, there will be no more interest rates rises in the current fiat system:

http://financialsense.com/contributors/shelby-moore/perpetual-deflation-causes-inflation

The interest rates rises will come in the new financial system which is the End Game:

http://www.marketoracle.co.uk/Article20327.html

cmartenson wrote:
...My point here is that even the mighty US faces the risk of a sudden change in fortunes

Agreed, at the end game, it will be abrupt, and along the way there will be sectors which face the free market realities abruptly, but the overall global statism is likely to persist, because people do not want to change their culture of  "man controls and can insure the future" (see my first link above) and this includes the love of usury, insurance, and futures contracts (all forms of pooling, which is socialism and causes socialism to proliferate):

http://www.marketoracle.co.uk/Article21650.html

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Re: Prediction: Things Will Unravel Faster Than You Think

What do you guys think if part of the initial solution was instead of giving money to the banks to give checks to big part of population and at the same time shrinking the money supply.

This way you could have reverted the pyramid, the first to get the money would have been the general population and then went back in the banks (paying debt for example).

This could have had double effect spurring spending and paying debt. (you can't say you cant pay your debt to your lender because you get money directly from the gov. i.e. you can't foreclosure, you have the money.. i.e we give you the money but you first pay your debt then spend what is left. ). And whoever was frugal will have money to buy things he needs or gold or just keep it like "interest".

Again I'm speculating of this measure as one of the measures, not the only one.

I think also less money would have been needed. Foreign holders wont lose in the long run too, cause the money would have been withdrawn. And I mean also the money for this should just have been printed not borrowed.

And again clear mandate print X$ in Y steps, then withdraw them for Z time...in a law or something, so there can be no shenanigans. The money can't be used for anything else.

The gov. borrowing for its need is separate thing.

I think such approach would have not generated sustainable high-inflation... just see-saw waves of inflation/deflation.

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Re: Centralized policy causes Minsky moment (abrupt) change

"and solar because its extreme opportunity cost, doesn't have a positive ROI"

I agree with most everything else you say, but that statement is plain wrong.....  Our panels paid off (in sunny Australia) in just 2.5 years..

The problem with the alternatives is that all the infrastructure, resources, and energy needed to manufature them all have to be rolled out up front.  A similar thing is necessary with your precious CNG too you know....  there are ZERO places in Australia where I live where you'd be able to fill up even if our cars could be converted.

Mike

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Re: Prediction: Things Will Unravel Faster Than You Think

raptor wrote:
What do you guys think if part of the initial solution was instead of giving money to the banks to give checks to big part of population and at the same time shrinking the money supply.

As I've said since I started posting on this site right at the beginning.....  I think all debts should be cancelled.  JUBILEE time!

Now I'm not holding my breath, but... debt cancellation of sorts is already happening.  Lots of people are defaulting on (unsecured) credit cards, and now mortgages, and often people are "allowed' to remain in their homes without paying a cent off their housing loans...

Cancelling debts is better than giving people fat cheques. The banks only ever issued monopoly money....  let'em fail!

Mike

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Re: Prediction: Things Will Unravel Faster Than You Think

Damnthematrix wrote:
shelbymoore3 wrote:
"Methane is renewable. Didn't you know the carbon cycle is what gives life on earth?"

Yes I do.....  but Methane is created over millions of years, just like oil!  I know one can make one's own biogas (we are about to embark on just such a project you may be surprised to know - my wife's a potter, and we want to build her a self sufficient biogas fired kiln), but biogas can never replace the fossil gas currently in use, the numbers are astronomical.

  1. We only need to replace the decline in oil, not all of it immediately.
  2. See my prior post about complexity-- don't underestimate the scale of things that individuals can do by themselves. Why do you think TPTB make the ethanol gin illegal to own and operate without a license? It wasn't just because one can make liquor, it is because it is a scalable economic threat to statism. Ditto why hemp is illegal to grow in USA.

Damnthematrix wrote:
Like I said, what will occur will be a drastic reduction in energy usage (I believe 90%!), the first world will join the third world....

That would be great because the third world lifestyle is much healthier physically, spiritually, socially, mentally, etc.. I speak from experience in both cultures. I think Chris has described the positive changes to his life in moving towards a more natural lifestyle. Nevertheless, it is only the people who are mis-allocating capital who will see themselves imploded.

Damnthematrix wrote:
There is no way known the third world can ever consume even a quarter of the first world's levels....  there are not the resources to do it with, all the best stuff, the low hanging fruit, all the best ores, the best oil, the best coal, the best arable land, has all already been used up.  Largely wasted on trivial non essential things in fact...

They don't need to. Haven't you noticed that Gini coefficients are rising? Nature abhors an equal (highly ordered) distribution, the trend of entropy is towards maximum (2nd law of thermo from 1856).

This is the fundamental (math = physics = economics) reason that China will implode too, because they have been concentrating (mis-allocating) resources with their Yuan peg:

http://www.marketoracle.co.uk/Article23142.html#comment95152

Damnthematrix wrote:
shelbymoore3 wrote:
"The only thing that matters those who deserve economically to use more, will, and the others will have to use less.  That has been true since the beginning of time."

And who (and how?) decides who is more deserving?  Is that not what wars are for?  And, "since the beginning of time" may apply to the natural world, but not the human one....  in fact, I'd argue the exact opposite has occured!

The free market (good non-centralized complexity) can, but when it is oppressed by statism (the culture of "we can control nature and insure ourselves", see my links in my prior comment), then yes the end game is rationing and war.

Davos wrote:
truenorth wrote:
...This will take a lot longer than anyone can possibly imagine.  The United States will continue to sell paper to fund its deficit successfully for many years.  Americans will continue to spend more money than they have as well, for many years.

Think five to ten years before anything significant happens. It's a slow roller, folks..

I totally disagree.

First the banks are in bad shape. Mark to Fantasy FASB accounting didn't help. The foreclosure mess is now turning into Foreclosure Gate, expect TARP II and expect Congress to write a draconian law allowing the banks to send a postcard and take a home - no foreclosure hearing required. Right now Title Insurance is going to be next to impossible on foreclosed homes and REO. This disaster is phase II of the unmitigated disaster the banks and Wall Street did. It'll blow up in our faces sooner than 5 years. WAY sooner.

Look also at the derivatives...

As long as interest rates keep declining, which the Fed can always do with QE, then none of that matters. The only thing that matters is the destruction of production that the perpetually declining interest rates cause, as the public sector displaces the private sector. Eventually this implodes into rationing and war.

Dr. Fekete is the one who taught me the math on this:

http://professorfekete.com/

The key thing to realize is that as interest rates decline for the public sector, the private sector can not avail of these, and thus the private sector is eaten by the public sector. And then I refer you to my prior comment about bad complexity being the one that is centrally managed. Unfortunately Fekete thinks a centralized gold standard ("open the mints") is a solution. I am trying to teach him now, that only free market development of technology and billions of individual trial and errors is fitness. Statism will take down everything dependent on it in its wake (caveat emptor, reap what you sow). Remember what Jesus said about the birds, "if God can feed them, then certainly he can feed the humans" (paraphrased). The problem is men love what men have created so much, that they resist their ability to adapt to nature and constant change. The exponential function creeps up on statists and then obliterates them (see my link in first comment on first page of this blog).

Note that hyper-inflation is impossible (as in 10,000% increase in prices) unless the central banks hand out cash to masses, because the masses don't have 99 times more cash than the value of all commodities now:

http://financialsense.com/contributors/shelby-moore/perpetual-deflation-causes-inflation

mainecooncat wrote:
The number of people living in poverty is actually 1 in 7, not 1 in 10 -- I know you were wondering whether that was correct or not.

But a little bit of statistical digging and a little use of one’s brain reveals that the number living in poverty is as high as 1 in 5, especially depending on what one considers “poverty” to be.

Include the developing world and it is 1 in 1.x. Nature abhors the "everyone must be equal" as I pointed out mathematically above.

If men would not fear change, then without the statism parasite, even the lowest members of society would have 1000 times more than they need. But men can never listen to 1 Samuel 8 and the economic facts in that ancient book.

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shelbymoore3
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Re: Centralized policy causes Minsky moment (abrupt) change

Damnthematrix wrote:
shelbymoore3 wrote:
"and solar because its extreme opportunity cost, doesn't have a positive ROI"

I agree with most everything else you say, but that statement is plain wrong.....  Our panels paid off (in sunny Australia) in just 2.5 years..

You don't understand economics well enough. The key word is "opportunity cost". Calculate the relative rates of return in percentage terms, and you can see that solar is a mathematical poverty paradigm (you never catch up in relative terms to the person who invested the same amount of capital else where). Sure you can subsidize it personally, because the relative opportunity cost is small enough nominally for you, but replicate that on any significant scale, and you will see economic implosion.

Also the fiat system is mis-pricing many things, so even the price of grid power or the solar panels may be subsidized. This is how centralization messes up our decision making processes and causes implosion.

Please understand that nature is a competition.  Everything is relative opportunity cost.

For individual cases, solar may provide economic benefits over grid, which justify the opportunity cost. For resiliency (kudos to Chris!), I would have enough solar to support portable needs, e.g. foldable solar plans that you can carry in backpack:

http://www.amazon.com/Brunton-Watt-Foldable-Solar-Array/dp/B000GEFFBO

http://www.lenmar.com/web/ProductDetails.aspx?ProductID=PPU916 ($70 for 61Whr)

Portability is the main benefit of solar imo (the fuel travels with it). For reserve power if grid goes down, I would have propane generator and huge propane (methane) tank. Has a very long storage life and much more opportunity cost effective than solar for that need.

I appreciate the discussion, it helps me refine my explanations and test my conclusions.

Damnthematrix wrote:
The problem with the alternatives is that all the infrastructure, resources, and energy needed to manufature them all have to be rolled out up front.  A similar thing is necessary with your precious CNG too you know....  there are ZERO places in Australia where I live where you'd be able to fill up even if our cars could be converted.

We don't need to put CNG every where to start, only a fraction of  a percent of the world's geography, in the most population dense areas. That is why CNG is already prevalent in mass transportation.

Are you sure you don't have cooking gas in your area? I think it is already widely distributed.

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Re: Prediction: Things Will Unravel Faster Than You Think

shelbymoore3 wrote:

That would be great because the third world lifestyle is much healthier physically, spiritually, socially, mentally, etc.. I speak from experience in both cultures. I think Chris has described the positive changes to his life in moving towards a more natural lifestyle. Nevertheless, it is only the people who are mis-allocating capital who will see themselves imploded.

I will have to disagree with you on that statement:

1. Why does the majority of the third world want to consume energy, live in nice homes, by TV, cars, just like us if they already enjoy a better lifestyle?

2. The medium life expectancy in Third world nations is significantly lower than Western nations, and probably falling.

3. Most of the Third world is a trash bin of the west, taking our toxic and e-waste, and the working conditions are absolutely horrible. Water polution is terrible, I am pretty sure population illness is rising faster in the Third world than the West because of all the pollution as the become industrialzed. Not only did the west export manufacturing jobs, it also exported all its pollution, since all of the dirty manufacturing production was built in countries with little to no pollution controls or laws. Companies dump toxicins into the rivers, oceans and into the air with no equipment to clean it up because it costs money.

4. Most people in Third world countries want to immigrate to the West. Only the Rich and Middle class in Third world nations has a desire to stay but, but they are the minority of the population in Third world countries.

Note that hyper-inflation is impossible (as in 10,000% increase in prices) unless the central banks hand out cash to masses, because the masses don't have 99 times more cash than the value of all commodities now:

Not  true. If people lose faith the the currency it can quickly loose value. In the case of Zimbabwe, Foriegners lost faith in the gov't to honor its debt payments. Then the Zimbabwe dollar lost buying power and then the gov't starting printing money to make up for the declining purchasing power. Consider the collapse of the Soviet Union Ruble, In the early 1990's just before the collapse of the Soviet Union, In four weeks its lost 90% of its value even though they didn't anywhere near the amounts required to devalue the currency that much. Similar event happped with the collapse of the Argentine dollar back in 2001. In Zimbabwe, the Soviet Union, or Argentine, the citizens didn't have rising wages. All three where suffering very high employment and the majority of the population were living in poverty.

Hyper-inflation isn't a monatery phenomenon, its a political one. When people lose faith (mostly foriegners) in a currency, it collapses rather quickly. Money printing isn't usually the cause of hyper-inflation, its the aftermath of a currency collapse. Currency loses value first, then the gov't prints money to make up for the loss of puchasing power. If a gov't prints money and increases the money supply it causes inflation, as it takes a while for the increased money supply to get in the hands of the population.

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Re: Prediction: Things Will Unravel Faster Than You Think

Meant to add to my prior post, that note how fast computers are being miniaturized and made more power efficient, e.g. smartphones, while notice how fast batteries (e.g. since 2005 Lithium polymer, NiMh low-discharge) are adding energy density (by weight and volume) and recharge cycles. Technology is already solving the energy problem, it is just dinasours don't like to change their habits. I haven't driven my 25MPG Isuzu Crosswind large SUV diesel in past 10 days (been too busy on the computer to leave the house), and I have my 90MPG Kymco Super-8 CVT-automatic scooter (with my custom fabricated vinyl roof and extended relaxed position foot pegs-- only one in the world I think) cost me about $2000 total brand new.

TechGuy wrote:

shelbymoore3 wrote:

That would be great because the third world lifestyle is much healthier physically, spiritually, socially, mentally, etc.. I speak from experience in both cultures. I think Chris has described the positive changes to his life in moving towards a more natural lifestyle. Nevertheless, it is only the people who are mis-allocating capital who will see themselves imploded.

I will have to disagree with you on that statement:

1. Why does the majority of the third world want to consume energy, live in nice homes, by TV, cars, just like us if they already enjoy a better lifestyle?

Because the youth in the city here watch too much TV-- the mind programming machine. Seriously though, every human wants to have everything and more and more and more. There is nothing wrong with that, except when humans use debt to obtain it, then it is mathematically socialism which always ends in massive social failure:

http://www.marketoracle.co.uk/Article21650.html

More directly to the point, the filipinos smile more and have more fun. They hate  to plan too much. The live for the day, love life to the fullest, and they love abundant children.  They even celebrate death, and have week long party with an open casket at home. I think you will find this is true in most native and rural cultures, that their quality of life is ALIVE and western urban and suburban culture is lonely and dead (but "well controlled and well planned"-- ahem for failure to anneal). Filipinos hate to be alone. They love to be impinged upon at random times by relatives, neighbors, and total strangers. Try that in the USA! My car engine blew up in the middle of the California desert, and when I approached people at well lighted rest stop to ask for ride to nearest town, people tried to ignore me or tell me they would call the sheriff if I asked them another question.  In the Philippines, I have run out of gas at 2am and been able to wake up an entire community to find someone who has some gas in a coke bottle.

TechGuy wrote:
2. The medium life expectancy in Third world nations is significantly lower than Western nations, and probably falling.

People die here with a much more full life of love and happiness. People here are more exposed to the environment so yes they die of things like snake bites, water borne infections, etc.. But actually for those who stick with their ancient customs, they have a drastiscally lower rate of heart disease, because of the virgin coconut oil is the best oil you eat.  Our media in west lies to us and gets us to eat the oils which actually increase our heart disease, because the medical industry is another big fraud racket, just like the illegal drug racket, etc.. it is all tied together at the banksters, go read Catherine Austin Fitts at solari.com (former US Asst Secretary of HUD).

In short, statistics lie.

TechGuy wrote:
3. Most of the Third world is a trash bin of the west, taking our toxic and e-waste, and the working conditions are absolutely horrible. Water polution is terrible, I am pretty sure population illness is rising faster in the Third world than the West because of all the pollution as the become industrialzed. Not only did the west export manufacturing jobs, it also exported all its pollution, since all of the dirty manufacturing production was built in countries with little to no pollution controls or laws. Companies dump toxicins into the rivers, oceans and into the air with no equipment to clean it up because it costs money.

You are describing some parts of over-industrialized China (that Yuan peg fraud again!), but not the majority of the developing world, which is beautiful and modernizing and has a nice mix of nature and modern life.

TechGuy wrote:
4. Most people in Third world countries want to immigrate to the West. Only the Rich and Middle class in Third world nations has a desire to stay but, but they are the minority of the population in Third world countries.

Of course they want to come get some of that free money too, before the End Game. But they bring it back home to the place they love in their heart and for many it is their home country, although if they are young and materialistic enough when they immigrate and especially if they are female, then yes they get sucked into the western culture morass.

Indeed the youngest generation in the developing countries are nearly indoctrinated by TV into the western addiction.  It is sad and I am doing everything I can to change this. I am working on a massive internet social network now. But somethings are just meant to be. Mankind is meant to go into the global statism. I am speaking mainly to those pockets who want to hang on to love, nature, and good quality of life (not materialist statistics).

TechGuy wrote:

Note that hyper-inflation is impossible (as in 10,000% increase in prices) unless the central banks hand out cash to masses, because the masses don't have 99 times more cash than the value of all commodities now:

Not  true. If people lose faith the the currency it can quickly

Sorry you are mathematically wrong.  Every time I explain this, people respond with that same Jim Sinclair "it is a monetary, stampede phenomenon" which does not apply to a global debt trap.

The masses can't spend more cash than they have.  Read my statement above again.

The impetus for hyper-inflation is a shortage of cash, and the government then tries to relieve the shortage in a spiral.  Without the central banks handing ever more cash to the masses (not to the large banks but to the masses), then any move to commodities will peak and then fall back down again (because a move to commodities will bankrupt production and people need to spend their savings).

Also the masses have a negative networth and thus any cash they spend on commodities has a margin call.

TechGuy wrote:
In the case of Zimbabwe, Foriegners lost faith in the gov't to honor its debt payments. Then the Zimbabwe dollar lost buying power and then the gov't starting printing money to make up for the declining purchasing power. Consider the collapse of the Soviet Union Ruble, In the early 1990's just before the collapse of the Soviet Union, In four weeks its lost 90% of its value even though they didn't anywhere near the amounts required to devalue the currency that much. Similar event happped with the collapse of the Argentine dollar back in 2001. In Zimbabwe, the Soviet Union, or Argentine, the citizens didn't have rising wages. All three where suffering very high employment and the majority of the population were living in poverty.

Hyper-inflation isn't a monatery phenomenon, its a political one. When people lose faith (mostly foriegners) in a currency, it collapses rather quickly. Money printing isn't usually the cause of hyper-inflation, its the aftermath of a currency collapse. Currency loses value first, then the gov't prints money to make up for the loss of puchasing power. If a gov't prints money and increases the money supply it causes inflation, as it takes a while for the increased money supply to get in the hands of the population.

But we don't have one country to run from, we have the entire globe in the same debt spiral. There is no place to run to.  If everyone runs to commodities, then the price of commodities goes so high while the debt based economy implodes, then people have no more cash and have to sell commodites, so the price declines again.

The only way to get hyper-inflation is for the government to print the currency and hand it to the masses. It won't happen because the governments know that is suicide and the governments are run and owned by the banksters who want to use this debt slavery to get their global statism state (NWO).

The end of the nation-state is coming, but at the end game where the whole system devolves.  That won't be hyper-inflation, but rather a slow withering. In 10 years, most people won't even have a toothpick (being dramatic), much less any cash to go buy commodities. The point is there won't be any cash.  The cash will have all moved to the gold owners, and the Gini coefficients will be very high. Then comes war and 90% tax rates, so all the gold is stolen back to banksters again.

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Re: Prediction: Things Will Unravel Faster Than You Think

shelbymoore3 wrote:

Meant to add to my prior post, that note how fast computers are being miniaturized and made more power efficient, e.g. smartphones, while notice how fast batteries (e.g. since 2005 Lithium polymer, NiMh low-discharge) are adding energy density (by weight and volume) and recharge cycles.

See........  there you go again!  Ever heard of an element called Hafnium?

METALS SHORTAGES.

It is not only an impending gap in demand and supply of oil that imposes upon the conservation of human civilization, the pressing and imminent depletion of world metals threatens all developments in solar energy and communications via LCD screens etc. and also nuclear power. The rate of of platinum recovery makes vehicles powered by hydrogen-fuel cells an unlikely possibility on any significant scale comparable with oil-powered transportation. Simple strategies for reusing "scrap" metals will not alleviate the shortage of metals, but ultimately recycling needs to be deliberately designed into an integrated paradigm of extraction, use and reuse, rather than treating it as an unplanned consequence.

We live on a planet with finite resources, and yet consume them with alacrity in the false assumption of limitless expansion. Demand for metals rises inexorably due in large part to roaring economic growth in China and India, at a level that production of them struggles to meet. In consequence, the price of copper and iron ore has doubled during the past two years. The price of rhenium, used for highly fuel-efficient aircraft engines, has jumped to a record $11,250 per kilogram, which is almost twelve-times its price in 2006. Indeed, it is now only half the price of gold, which is a major boon to the main countries that mine rhenium-ore: Chile and Kazakhstan. Reserves of indium, used for solar cells and LCD's along with those of hafnium, an essential component of computer-chips and also employed as a thermal-neutron absorber in nuclear control-rods, may literally run-out within 10 years.

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guardia
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Re: Prediction: Things Will Unravel Faster Than You Think

Shelby, it's great to have you here, but please spend a bit more time thinking and researching than writing. I'm telling you, there is still much that you do not understand...

Samuel

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Re: Prediction: Things Will Unravel Faster Than You Think

shelbymoore3 wrote:

The only way to get hyper-inflation is for the government to print the currency and hand it to the masses. 

Wrong.

I don't have time to read your other counter points, but this one jumped out at me like it was bold, in red, and 3D with large font.

You might want to go back and look at  your monetary history. The inflation/deflation debate is neither here-nor-there. What matters is that you make the correct decision to protect yourself and your family. It is a 50-50 crap shoot if you want to make this without facts. If you use no facts you will likely chose the wrong door.

I wrote a piece on hyperinflation - you of course don't have to read it, but I'd encourage you to look at the table at the bottom of the page. I took the time to type in about 40 currencies that have recently hyper-inflated and died. Show me the ones where they handed the money out to the masses.

BTW, in that article I did a graph of gold to the German Mark and discussed Weimar Germany's hyperinflation. They couldn't pay their debt, France and Belgium came in and took their industrial complexes and revenues, so Germany printed. Look at us. We gave our industrial base away with Globalization, we can't pay our debt, so we print.

There is NO difference. None.

By the way: Just what do you think Food Stamps, Social Security, Medicare, Medicaid, Unemployment Benefits, Public Works and the litany of other handing the people money programs are?????????????

H-E-L-L-O ????? 

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Re: Prediction: Things Will Unravel Faster Than You Think

shelbymoore3 wrote:

Damnthematrix wrote:
shelbymoore3 wrote:
"The only thing that matters those who deserve economically to use more, will, and the others will have to use less.  That has been true since the beginning of time."

And who (and how?) decides who is more deserving?  Is that not what wars are for?  And, "since the beginning of time" may apply to the natural world, but not the human one....  in fact, I'd argue the exact opposite has occured!

The free market (good non-centralized complexity) can, but when it is oppressed by statism (the culture of "we can control nature and insure ourselves", see my links in my prior comment), then yes the end game is rationing and war.

I didn't really wanna get involved here, but I notice you keep bringing up this idea of free markets leading to "good" complexity and that this will equalize wealth distribution if central institutions just get out of the way. I'm sure you realize that there are movements in many third world countries that feel the exact opposite, and have seen their national sovereignty effectively wiped out by "free trade agreements" and globalization in general. The truth is that free market fundamentalism leads to exactly what you keep criticizing, namely a complex economic system based on the concentration of wealth and resources (as you mentioned Gini coefficients have been rising). Central governments definitely have not done much to help reverse this trend, as they try to correct almost every instability that arises with more complexity and concentration of wealth. Could we maintain this complexity if we just had access to a lot more energy and let the free markets operate? I don't know. Would we even want to based on moral principles of fairness, empathy, compassion, etc.? I doubt it.

Here are some pieces I wrote about the intersection of our current economic prediction and complexity if you are interested:

"The Limits to Complexity" -  http://peakcomplexity.blogspot.com/2010/09/limits-to-complexity.html

"A Complexity Manifesto" - http://peakcomplexity.blogspot.com/2010/09/complexity-manifesto.html

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Re: Prediction: Things Will Unravel Faster Than You Think

Davos wrote:

By the way: Just what do you think Food Stamps, Social Security, Medicare, Medicaid, Unemployment Benefits, Public Works and the litany of other handing the people money programs are?????????????

Your question begs an answer.

Is it...Slavery for all!...Perpetual war on poverty!...or Forced Industry!? 

This is an important question...going deeper down the rabbit hole... 

...check out Wikipedia under William Henry Beveridge:

William Henry Beveridge, 1st Baron Beveridge KCB (5 March 1879 – 16 March 1963) was a British economist and social reformer. He is perhaps best known for his 1942 report Social Insurance and Allied Services (known as the Beveridge Report) which served as the basis for the post-World War II Welfare State put in place by the Labour government.

Wartime work

Three years later, Ernest Bevin, Minister of Labour in the wartime National government, invited Beveridge to take charge of the Welfare department of his Ministry. Beveridge refused, but declared an interest in organising British manpower in wartime (Beveridge had come to favour a strong system of centralised planning). Bevin was reluctant to let Beveridge have his way but did commission him to work on a relatively unimportant manpower survey from June 1940 and so Beveridge became a temporary civil servant. Neither Bevin nor the Permanent Secretary of the Ministry Sir Thomas Phillips liked working with Beveridge as both found him conceited.[1]

An opportunity for Bevin to ease Beveridge out presented itself in May 1941 when Minister of Health Ernest Brown announced the formation of a committee of officials to survey existing social insurance and allied services, and to make recommendations. Although Brown had made the announcement, the inquiry had largely been urged by Minister without Portfolio Arthur Greenwood, and Bevin suggested to Greenwood making Beveridge chairman of the committee. Beveridge, at first uninterested and seeing the committee as a distraction from his work on manpower, accepted only reluctantly.[2]

The Report to the Parliament on Social Insurance and Allied Services was published in 1942. It proposed that all people of working age should pay a weekly national insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed. Beveridge argued that this system would provide a minimum standard of living "below which no one should be allowed to fall".

Support for eugenics

Beveridge was a proponent of Eugenics. He argued in 1909 that "those men who through general defects are unable to fill such a whole place in industry, are to be recognised as 'unemployable'. They must become the acknowledged dependents of the State... but with complete and permanent loss of all citizen rights — including not only the franchise but civil freedom and fatherhood."[6]

-littleone

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Re: Centralized policy causes Minsky moment (abrupt) change

shelbymoore3 wrote:

ytterbius wrote:

"Wind and solar are not relevant."

LOL!  So wrong.

Can not be deployed rapidly enough, i.e. they can't scale-- wind because it is only efficient in certain places and not at an individual's economy-of-scale, and solar because its extreme opportunity cost, doesn't have a positive ROI compared to most any other investment (except with statism subsidies, wherein statism is inefficient and peaking too).

Wind has no where near the scale of hydro. Solar is a joke. Solar radiation is too dispersed and even the mirrors to concentrate it are not economic.  I even studied the equations for Stirling engine concentrators, also solar chimneys, in detail and concluded they are not economic.

Sorry but I have done my research and thinking for several years now.

Typical American vision.

On scaleability, the Global PV market this year is running around 17GW, compared to about 7.5GW last year.  How's that for growth.  The cost of PV Solar has dropped by half in the last two years.  Another drop like that and we WILL be competitive with traditional sources of Energy.  Take a 20% utilization ratio, and that 17GW is equivalent on a kWh to kWh basis to 3.4 GW worth of Nuclear Power (averaged over the year).  Give it a few more years and people will forget about spending 10 years to get a single nuclear plant up and running.

There will be numerous niches to fill in the absense of cheap oil / coal, but if you ignore Solar then you're making a huge error in judgement.  There is more Solar potential available on the planet than any other source of Energy, and it's going to be the cheapest of them all.  There are no moving parts and minimal maintenance on modules that are warranteed for 25 years but will last much longer than that in the end.

Look to China to make it clear.  Their manufacturers are doubling their capacities AGAIN over the next year, and the Government has already provided 10's of Billions of Dollars in credit to the Industry.  More is coming as China intents to create local demand for their Alt Energy products (all types). 

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Re: Centralized policy causes Minsky moment (abrupt) change

When discussing cost of a solar cell, please use EROEI. 

Nate

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Re: Prediction: Things Will Unravel Faster Than You Think

ytterbius wrote:
This source of wealth must be the Green Revolution.  It seems to me to be the only hope.  Without it, the financial system will collapse, and there will not enough available energy for any kind of economy till the population drops dramatically.  If it succeeds, then in the long term, even if the paper financial system collapses, then energy will still be available for some kind of economy, even if only in pockets.

My question in response to this is "What will be the cost?"  The United States has clean water and air, if not in absolute terms, then at least relative to other countries, and the cost of that has been the 10% of the population that used to be employed in manufacturing.  The EPA hasn't made anything cleaner on a global scale, we have merely exported industrial waste to other countries so that our standard of living could continue as it had been.  It is not cheaper to produce "clean" energy in absolute terms so the question becomes "What are we going to give up to have a Greener life?"  

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Re: Centralized policy causes Minsky moment (abrupt) change

Nate wrote:

When discussing cost of a solar cell, please use EROEI. 

Nate

Here's a nice little doc from NREL on Solar EROEI ( http://www.nrel.gov/docs/fy04osti/35489.pdf ).  It's old, but gives a ballpark.

A couple notes.  Energy invested per Watt for Solar is / will decrease over time as industry scaling continues.  In addition, a large part of the energy cost of silicon-based PV is in the purifying of the Polysilicon.  Efficiencies in this area are increasing nicely as reactors get larger, and as improved process-control software comes on the market. ( http://www.aegps.com/en/company/news_events/2010/09_Thyrobox_PI.html ).

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Re: Prediction: Things Will Unravel Faster Than You Think

finaltable

Quote:
The United States has clean water and air, if not in absolute terms, then at least relative to other countries, and the cost of that has been the 10% of the population that used to be employed in manufacturing.

Can you cite authority for that statement? 

Thanks,

Doug

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Re: Prediction: Things Will Unravel Faster Than You Think

finaltable wrote:

ytterbius wrote:
This source of wealth must be the Green Revolution.  It seems to me to be the only hope.  Without it, the financial system will collapse, and there will not enough available energy for any kind of economy till the population drops dramatically.  If it succeeds, then in the long term, even if the paper financial system collapses, then energy will still be available for some kind of economy, even if only in pockets.

My question in response to this is "What will be the cost?"  The United States has clean water and air, if not in absolute terms, then at least relative to other countries, and the cost of that has been the 10% of the population that used to be employed in manufacturing.  The EPA hasn't made anything cleaner on a global scale, we have merely exported industrial waste to other countries so that our standard of living could continue as it had been.  It is not cheaper to produce "clean" energy in absolute terms so the question becomes "What are we going to give up to have a Greener life?"  

It will be cheaper to produce clean energy pretty soon (yes, it's still an industrial process, and will have its byproducts, but certainly nothing like nuclear or coal).

It's not a matter of giving things up.  Without Energy you have nothing.  We need Energy, and we have options, some better, some worse.  In 10 years there won't be these arguments because it will be abundantly clear that Solar is, at least for several large niches, entirely cheaper than any other alternative. 

It's made harder by the fact that the cost is upfront, as opposed to being distributed over many years by purchases of fuel, so the lenders are going to have to continue to get on board with programs and underwriting standards for the sector.

It's also not just a matter of thinking about only the US.  The developing World is going to keep trying to grow, and they'll continue to need more and more energy.  They're going to take a different path than we did in many ways.  Having a grid tie to every business and house on the planet is going to be unrealistically expensive (never mind all of the line losses involved).  This is where the distributed nature of Solar is a strength.  You can construct localized microgrids using Solar anywhere where there is Sun, and so support localized economies rather than depending on everyone to rush to the cities.

And it's not just large scale farming that should be thought about....  why the heck am I forced to plug in my cellphone to charge it?  Ok, so for heavy use, the option to plug in will not go away soon, but for cellphones and all manner of "remote" devices, a solar trickle charge would hardly add to the cost of the device, but would add significantly to the devices "remote" useability.  Let's freakin get rid of half of the chargers that sit plugged into the grid all day and night and that just leak away power with no purpose.

Blah blah blah...

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Re: Centralized policy causes Minsky moment (abrupt) change

ytterbius wrote:

]On scaleability, the Global PV market this year is running around 17GW,

Thats grossly misleading since 17 GW is the panel rating, not the actual energy production. The Sun simply does not shine 7/24/365, nor does it produce the full amount of power unless the sun is perfectly pointing at the panels and there is no optical obstructions (clouds,dust collected on the panels, shadows etc). On average (world wide) solar panels will produce 5.5 Hours out of 24 hours at there power rating. so a 100W panel will product about 550 Watt-hours of electricity instead of 2400 Watt-hours. A Coal fired plant, Nuclear, Hydro will produce a constant power output 7/24/365. PV panel  (and wind turbines) ratings should be changed to provide real world power production, not there maximum power rating which a useless value, except for marketing.

PV power ratings doesn't  include the voltage conversion loss and other associated losses, such as charging losses when the energy is dumped into batteries for storage. Dumping on the Grid also reduces efficiency because AC power is sinesoidal, You can only deliver 70.7% of the energy of a PV into a AC direct conversion system. Google "RMS and AC power" if you don't understand.

PV is the worse ROI alternative energy, since it costs the most and produces the small amount of watt hours per dollar, than Wind, Hydro, Nuclear, etc. That said PV has a market, that is to provide low power where access to the grid is no feasible, such as remote monitoring stations and isolated devices that need a small amount of power.  Wind, Hydro, Nuclear, etc are better suited for large scale power production. I haven't even gone into the production issues with PV manufacturing (excessive water pollution from the production of sililcon and mining of rare earth dopients to make the N-P Junctions, Nor the enormous about of NatGas\electricity that is used to make PV panels. FWIW: There are no PV powered PV manufactured plants. All PV power plants use fossil fuels to make them).

That said Wind has it flaws, since wind turbines also cannot produce power at the rating 7/24/365 either. They need a huge investment in storage systems and 1.5 to 3 times power production than demand to make up for periods when the wind isn't blowing. The Grid needs power 7/24/365, while the load does vary during the day at any given point in time the load remains constant. Decreasing the power into a static load cause system failures as the voltage drops, and increases the strain on transmission lines. When voltage drops current levels rise causing thermal stresses on transmission lines. High voltage systems can not be switched or adjusted fast enough to constantly switch from one wind farm to the other to make sure the grid remains in balance..  Large scale energy storage for volatile energy systems such as Wind and PV present a severe challenge as its difficult and very expensive to construct Gigawatt storage systems. The only real feasible power storage system for volatile systems (ie Wind, PV, etc) is pumped water storage. where the Wind farm power is used to pump power into a large reservoir, and hydro turbines tap the resevior to supply power to the grid. The problems are is that there is insufficent land resource where you can set up these large reservoirs, since they need a large gravity differential and a large area to store water. Much of the developed world has already developed all the best land suited for these storage systems. Its very difficult to move millions of people to free up the land for water energy storage systems. In addition there are significant losses in Pump storage system. A pump storage system needs between 4 and 8 times the base load power consumption to ensure there is sufficient water in the reservior. There is also a water shortage problem. Since many regions (such as the American West) that is too little water to support existing infrastructure (cities, agraculture). Currenly the US West is rapidly draining the aquifiers to meet demand, There is no spare water capacity for pumped water energy storage systems.

My advice is to fully understand large scale electricity production and distribution, then learn the shortcomings of PV and wind systems. Do the math and you'll see it comes up short and no way will PV or Wind ever eplace fossil power plant production.

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ytterbius
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Re: Centralized policy causes Minsky moment (abrupt) change

Techguy, a couple things.

First, if you'll note where I pointed out a 20% utilization ratio, that is where I take into account the fact that energy isn't being constantly produced by PV Solar.  20% is about baseline, but depending on location, or possible tracking systems you can beat that percentage by 10-15%.  What I'm pointing out in using the 17GW number is the growth of the industry.  In any case, it's certainly not grosly misleading to use industry standards to describe the industry.

As for your 70.7% stat, how about you link to the details.  Yes, there are losses in the system, as there are in all systems, but your modern inverters run at worst about 95% efficient.  In any case, if you're not generating the energy at the site, then you've got to deal with significant line losses, so this offsets much of the loss from your local Solar Installation.

Oh, and you want to talk about the fact that Solar Manufacturing uses conventional energy to run the processes?  Come on, that's cheap.  The fact is that with Solar's EROEI, this is all paid back WELL before the solar equipment hits its end of life, so even if you are using coal to power the production of Solar in some location, and then you sell the produced equipment elsewhere, you are still cutting emissions.  Do your preferred sources of Energy not depend on today's Conventional Energy for Manufacturing?

And yes, I do understand.  I'm no whiz at math, but I have gotten a BS in physics, so have put in more than my time in considering Energy.

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