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Gail Tverberg: Something Has Got To Break

Growing debt faster than your energy supply has hard limits
Sunday, January 3, 2016, 3:01 PM

Actuary Gail Tverberg explains the tight correlation between the rates of GDP growth and growth in energy supply. For decades, energy has been becoming more costly to obtain, and instead of accepting lower GDP growth, we have been using debt to fund further energy exploration and extraction.

That strategy has diminishing returns, Tverberg warns. And we are close to the moment of reckoning: 

The more we look at it the more we see that the rate of growth and energy supply is very closely correlated with the rate of GDP growth. And I know on some of my recent posts I’ve included a chart that goes back to 1820 that shows the same correlation. You have to have an increasing supply of energy in order to get GDP growth. The GDP growth tends to be a little higher than the energy growth. That’s especially the same when we made the change in the mid 70’s, when we had the big first oil crisis and we realized that Japan had already started making small cars, and so we could make smaller cars, too, and save quite a bit of oil very quickly. And we realized then that we didn’t have to burn oil to create electricity; there were a lot of other alternative approaches, including nuclear. So we pulled those off line, and where home heating had been done by oil it was easy to transfer that to other types of energy. So we had a number of different things we could do very quickly back then -- and I think people got the idea that because we could pick the low-hanging fruit, then somehow or other we could do the same thing again. But we’re not getting that same kind of effect any more.

I think the thing that people don’t realize is how closely the growth in debt is tied to the growth in the economy. Even back many years ago we needed to add more debt as the economy attempted to grow, and what you would see very often back then was some country would add debt to fund a war. And if they were successful, maybe they would get some increment into the economy so that the debt made sense. And if they lost the war then somebody got their bonds written off. But what’s happened is that, as the cost of energy has gone up, especially since about the mid 70’s, the amount of debt required to find GDP growth has gone way, way up. And I think this is because it takes a given quantity of energy in terms of BTU’s or in terms of how far it can make a truck go -- if it now costs a whole lot more to do that, we’re going to have to borrow a whole lot more money in order to make the whole system operate. We have a seen a spiraling of debt since the mid 70’s, and I think that’s very much related to the higher cost of energy since then.

That only works for a while. You can dial up your debt growth for a while but then you discover that debt growth has a lot of adverse effects. And one of the big ones is that it tends to funnel money to the wealthier class and take money away from the poor members of society.

I’m afraid what it means is that at some point there’s got to be a discontinuity. Something has got to break. 

Click the play button below to listen to Chris' interview with Gail Tverberg (61m:03s)

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity podcast, I am your host Chris Martenson. Well you’ve heard me say it before and let me repeat it again, energy is the master resource. No energy means no economy, period, end of discussion.

I know here in the waning days of 2015 with steadily falling gasoline prices most people have taken their eye off the energy ball. Many are assuming that low prices mean we’re a wash in oil, that there are no supply issues that we need to worry about and further that peak oil is a defunct concept. But what if none of those things are actually true? What if instead these low prices should concern you more than they calm you? What if we do live in a world with physical limits that couldn’t care less about how clever humans are? For those of us who study the issue of energy broadly and oil more specifically these low prices today are quite concerning and indicate that we should be paying even closer attention rather than letting our focus wander.

Our guest today is the perfect person to discuss these issues. Gail Tverberg runs the blog Our Finite World.com and has penned numerous articles about the inner section between energy and the economy. Gail is trained as an actuary and is a fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries. Gail has been actively researching and exploring the concepts and implications related to oil, peak oil and economic growth for about a decade. Gail welcome back to the show.

Gail Tverberg: Well thank you, thanks for inviting me.

Chris Martenson: Well listen let’s start here Gail. Why is an actuary actually a very appropriate profession and person to be looking at the issues of energy and oil in the economy?

Gail Tverberg: Well basically actuaries are the ones who model how things will play out in the future. Actuaries are especially known for their work with pension plans and forecasting how much money needs to be set aside in a pension plan so that there will be enough money with interest and with the stock market rises and whatnot; so that there will be enough money for each of these people who retire. And of course they also figure out how much contributions need to be to Social Security. There are other types of insurance they’re involved with as well including medical malpractice, workers compensation and auto insurance, homeowners and I came from that side of the tracks. But I still was enough involved that I was very much aware of how this all worked together and I knew how critical it was that the assumptions regarding how high future rates of return would be to making a whole system work. So I could see very early on that if anybody was estimating by based on what was happening in the past they probably were biasing their estimates as of the amount of contributions to the fund as being way too low. If they were assuming that they could fund the pensions much more easily then they really could for example.

Chris Martenson: Well certainly so just economically you know funding a pension there’s a bunch of assumptions that feed into it. You have to make sure that you understand really the inflows and the out flows at a macro level and there’s a lot of variables that go into that. And of course people are just looking at this fully through the economic lens make a bunch of assumptions about how the economy works based on how it used to work. And where I think you and I come into this story and trying to educate people is around the idea that you can’t just look at the economy alone, you have to understand the feed stock to the economy itself and so energy starts to factor into this. Is that fair and second do you think anybody in the pension actuarial system or anybody else looking at the long range trajectories, who is really factoring in energy into their long term calculations of returns?

Gail Tverberg: Well I think your assessment is pretty much right about energy being very important in this long term assessments. And in terms of who is actually factoring it in I know when I started talking about high oil prices back a few years ago when the prices were high, then the casualty actuaries who were busy working out autos and homeowners were extremely interested because they said “Aha, we can raise our rates based on this, that and the other thing” or maybe with the auto, the high oil prices will get people to drive less so maybe we can make more profit. So they were interested in that subject but when it comes to something that looks like “Oh we’ve got a fundamental problem” I know one fellow – one person made a place to talk to a group of life actuaries one time. And I think, this was a breakfast meeting that I was a speaker at and I think they almost choked on their breakfast when they talked about it. They were not nearly so enthusiastic and I did talk at the International Congress of Actuaries last year too or it was a little over a year ago. And they were – the attendance was not nearly as good as it should be. Last year’s problem oil prices are down, why do we care about this anymore? Go away folks, I don’t want to hear about this, is the start of the issue.

There are a few actuaries on the fringe who found my work and have been following it but you know the companies that are – well let’s see, the consulting firms that are doing the work and the companies that are doing the work in it can’t possibly face the problem that would occur if anyone admitted that there is a real downward trend in rates of return and that the whole thing could blow up on them.

Chris Martenson: Well let’s talk about that for a second because how much time do we need before we say there’s low rates of return? By my counting we’re well over a decade of global low rates of return. That of course, comports very well with the story that people in the peak oil community have been – at least you and I have been talking about for a while is that as your cost of energy goes up your rates of larger economic return are going to moderate. And particularly when you look at the amount of debt in the rate of debt accumulation and the pace of it at $3.00, $4.00, $5.00, $6.00, $12.00 of debt required to create a new dollar of GDP. Isn’t the decade long enough? Are people getting concerned in that field that maybe we are as Jeremy Grantham says, in a new environment of persistently low rates of return?

Gail Tverberg: Well I think what’s happening you know, from my disadvantage point is that there has been a trend, you know that there has been a trend you know – the ones that we’re assuming on the pension plans 10.5% annual rate of return indefinitely, have brought it down you know, but maybe you get it down to like 8% or 7% you know? And that’s assuming some kind of mix between stocks and bonds. And if the bonds are yielding not very much you have to assume the stock market is just going through the roof. So you know it’s just a crazy world but it’s sort of one of these things well, we were up at this level before so we’ll kind of move it down by increments. And that’s sort of the way I think the business world works. You know if you’ve made an estimate one year and it’s not quite right, you just kind of adjust it a little bit the next year and you keep hoping that you can adjust it down slowly. And nobody says, “Well we made a mistake, we’ll just kind of adjust it” and next year maybe we’ll be closer to right because there’s regression towards the mean and the mean should be way up high like we’re used to it.

Chris Martenson: Well no let’s talk about that mean being way up high. Of course, that was developed during a set of decades 30’s, 40’s, 50’s, 60’s in the 1900’s that we had this very rapid long-term persistent rate of economic growth, 3-4% real rates of growth per year, sometimes higher but a long-term average very high. And compounding of course and that was in an era when we were actually growing our oil production at 1.5, sometimes 2%, sometimes even higher per year. And you’ve got just a fantastic chart from a while ago, maybe well over a year ago now that just shows the rate of oil extraction by period and of course it had a very high slope, 3-4% and then it tipped over and was 2-3% and it’s been very flat, low growth for the past decade or so. To me that seems like an obvious connection between rates of energy, extraction and use and economic growth. Talk to us about energy in the economy for a minute; is that just a correlation or is that a causation in that chart do you think?

Gail Tverberg: Yes the more we look at it the more we see that the rate of growth and energy supply is very closely correlated with the rate of GDP growth. And I know on some of my recent posts I’ve included a chart that goes back to 1820 that shows the same correlation. You have to have an increasing supply of energy in order to get GDP growth. The GDP growth tends to be a little higher than the other – then the energy growth and that’s especially the same when we made the change in the mid 70’s, when we had the big first oil crisis and we realized that you know – say Japan had already started making small cars, and so we could make smaller cars and we could say quite a bit of oil very quickly. And we realized then that we didn’t have to burn oil to create electricity; there were a lot of other alternative approaches including nuclear. So we pulled those off line and there were home heating had been done by oil and it was easy to transfer that to other types of energy. So we had a number of different things we could do very quickly back then and I think people got the idea that because we could pick the low hanging fruit then somehow or other we could do the same thing again but we’re not getting that same kind of effect any more.

Chris Martenson: Well let’s talk about this effect because I know after the Paris Cop 21 meetings about global climate change and the role of carbon in that there was a lot of excitement in some sectors of the population saying “Oh look we finally made an agreement we’re going to get off of fossil fuels. We’re just going to switch to solar or win or something” but at any rate we’re going to go to these alternative energies, we’re going to use those, we’re going to replace oil. You’re saying that so far that hasn’t really happened to any really needle moving sort of a way on the dial. But that the low hanging fruit is gone, talk to us about that because I’m really concerned that some people think that we’re going to be able to just shift from a very highly concentrated delicious tasty energy source which is oil to alternative energies. What are the numbers really, how big of a challenge is that?

Gail Tverberg: Well I think the thing that people don’t realize is how closely debt – the growth in debt is tied to the growth in the economy even back many years ago we needed to add more debt to try as the economy sort of attempted to grow and what you would see very often back then was you know, some country would add debt to fund a war. And if they were successful maybe they would get some increment into the economy so that the debt made sense. And if they lost the war then somebody got their bonds written off. But what’s happened is that as the cost of energy has gone up especially since about the mid 70’s the amount of debt required to find GDP growth has gone way, way up. And I think this is because it takes so much more debt, or so much more – we need a given quantity of energy in terms of BTU’s or in terms of how far can make a truck go. And if it costs a whole lot more to do that we’re going to have to borrow a whole lot more money in order to make the whole system operate. So we have a seen a spiraling of debt since the mid 70’s and I think that’s very much related to the higher cost of energy since then.

Chris Martenson: I’ll go one step further, I total agree with you but an observation of mine is that the compounded nominal rate of growth in debt since the 70’s in the United States has been very close to 8% per anum, it’s at 7.9% and the real rate of economic growth under that is about half, the nominal rate is still less than that. So we’ve been growing our debts faster than the underlying economy. At the same time there’s been this persistent upward increase in the cost of energy at least for oil that it’s very noisy data series but it sort of took some step functions from $20.00 a barrel to $30.00 and $40.00 and then of course spiking well over $100.00, at a couple points it’s back down again. Now at this point very, very noisy series but the trend is obvious it’s been going up.

So what’s interesting is you said there’s a connection that really just hit me was that as the cost of energy goes up we need to increase the amount of debt that we apply to the system and against that back drop I want to put this observation I’ve had which is that we’ve been compounding our debt at roughly twice the rate of the economic growth underneath it; so it feels to me there’s multiple pieces we have to keep track of here but that if I have them right we want economic growth which requires debt growth, debt growth has been happening faster than underlying economic growth itself. Economic growth of course is tied to energy. As energy costs go up what that really means is that if we want all that to keep working as it has been we’re going to have to really dial up the rate of debt growth, is that about right?

Gail Tverberg: Yes and that only works for a while, you know you can dial up your debt growth for a while but then you discover that debt growth has a lot of adverse effects. And one of the big ones is that it tends to fund funnel money to the wealthier class and take money away from the poor members of society. So I think we’ve just – I was just reading an article this morning where they were talking about these microloans in Africa and other such places. They discovered that what happens is this money just funnels money to the wealthy classes; it doesn’t really do anything for the economy as a whole. It just creates sort of a mess but we have that happening everywhere. That as you add more debt the interest tends to go to the banks, to the insurance companies and it pulls it out of the economy. It tends to make the people – it gives businesses relatively less funds to pay out in wages and it tends to reduce the amount of money that the average, I guess we call it non-elite, worker has to pay for goods. So it works in the wrong direction in terms of supporting future ability to buy energy products.

Chris Martenson: So this is an interesting paradox then because what you’re describing is if we were going to form a hypothesis we would say in a debt based money system as you need to increase the rate of the amount of debt creation you’re going to – the only way to really sustain that over any set of time, say decades is you’re going to have to lower the rate of interest because as more and more debt is out in the system the only way to continue to foster more creation and more debt if that’s what the system depends on, is to lower the rate of interest because obviously a higher rate of interest bankrupts your primary clients, that being the citizens and the governments that are needing to do all that borrowing for you. So isn’t that interesting that ever since energy has been steadily becoming more expensive since the late 70’s, early 80’s we’ve seen our interest rate, again a noisy data series go from 14% on the short end to zero, and even into negative territory. Are you suggesting all this is like we start to form a hypothesis and say these all might be connected?

Gail Tverberg: Yes I would definitely say they’re connected. I think that’s the only way that the economy could keep growing and I think the quantitate easing that was done last year or not just last year, since 2008 it was what helped get the oil prices back up again and it was what helped keep the whole economy from collapsing way back then. If it hadn’t been for that you know we would not have been able to get interest rates even lower and kept the whole system together a bit longer.

Chris Martenson: So the system though ultimately was reliant on cheap energy and it seems like the people who are in charge of maintaining the status quo from my perspective, the Janet Yellen’s, formerly Ben Bernanke, Jean Claude Juncker who ever, Trichet all these people in Europe, Koroda in Japan that all of them are actually fully steeped in the economic side of this. They fully understand that the importance in the world of debt growth and all that. They’re pumping as hard as they can to keep all of that debt growth in there growing. They’ve been pretty successful, early 60 trillion dollars of new debt since the 2007 crisis that you golf clap, they did a great job cramming more debt into the system. But what you’re saying is that until and unless cheap energy persistently comes back to the landscape they are destined to fail.

Gail Tverberg: Exactly, exactly. And you end up with more and more disparities and what happens is that the prices don’t stay up with the cost of production. We hear so often about oil prices being low but it’s not just oil prices. That’s just one little piece of the total problem we have. Its natural gas prices, its coal prices. I believe its uranium prices. It’s metal prices of all kinds, iron ore or steel as it’s made, aluminum, copper, quite a few of the other metals. Some of the food prices too are very low so we end up with is many, many, many parts of society where prices are falling way too low.

Chris Martenson: Now these low prices, let’s talk about that because of course we get a lot of our signals as individuals, as investors of market prices. Market prices clearly in all of those areas you mentioned and a few others beside but across the commodity complex measured in total the commodity complex hasn’t been at this level, this price level since the late 90’s. Of course the cost to product these things has sky rocketed since then. The cost of farm land per acre, the cost of mining equipment, you name it. The cost structure has gone up extraordinarily so we are seeing now many, many different commodities that are currently priced below their marginal cost to production for those listing. That means the cost to produce the next barrel of oil, the next ton of iron ore, the next ton of coal, whatever that is. The marginal cost of production is now higher and so for oils easy – this is an easy one. To get a barrel of oil out of the ground all in cost is probably averaging across the globe, it varies tremendously, is probably $80.00, it could be $120.00 in some deep water. It might be as low as 40 and 50 in certain sweet spots in the Eagleford.

So what does it mean Gail to have – what is that telling us that these commodities are now priced below the marginal cost of production.

Gail Tverberg: Well I’m afraid what it means is that at some point there’s got to be a discontinuity, something has got to break. You know and think you know we talk about the marginal cost of production but it’s the whole economy that has to hang together. It’s not just we have to get it out of the ground but say Saudi Arabia has to have – get enough taxes and the prices have to be high enough that Saudi Arabia gets taxes so it can provide services to its people and many other countries are depending on the oil for their taxes. So when we say that you can get it out of the ground for $80.00 or whatever, that misses the point that it doesn’t really cover all of the costs of keeping the economy together. We really probably need $120.00 or $150.00 or even more dollars per barrel so that say Russia would have enough for its tax structure. And Iraq and Iran and Venezuela all would have enough for their tax structure. And even the US, certainly Brazil could use a whole lot more money for its tax structure from the oil.

Chris Martenson: And I’ll go further and say the United States you mentioned it briefly is the same dynamic people go “Oh yeah look at the kingdom of Saudi Arabia they need $120.00 oil because they take so much of this money and funnel it to their society”. United States we funnel a lot of our cost – we foist them off on the tax payer and pretend they don’t exist; so I’ll talk about Texas. Texas collects severance taxes from the oil industry and that’s great because the oil industry uses things like public roads, bridges, other infrastructure, water, you name it and last year – the last year in 2014 is the last year I have data for Texas collected I think 1.3 billion dollars in severance taxes and incurred 4 billion dollars in road damage alone; so it’s clear that that industry is being subsidized. So when I say you can get oil out of the ground profitably for say $40.00 or $50.00 a barrel in Eagleford, which is in Texas. What I’m really saying is companies can operate profitably but the whole system can’t; so thank you for widening that out because you’re absolutely right. We have to look at the – what does the total system require? Forget about the fact that continental resources makes money at $50.00 a barrel in Eagleford. Our society is steadily getting poorer in total when they’re selling it for $50.00 a barrel because they’re probably incurring $20.00 a barrel in road damage and other social ills. And then ultimately somebody has to cap those wells and yada, yada. There’s a whole associated sea of things that have to happen for the total cost of that oil to really be fully met.

So what you’re saying is at these low prices we’re actually incurring not just the damage to continental resources balance sheet in income statement but something far wider is happening.

Gail Tverberg: Well that is just the fact that you have to keep the whole economy growing and growing, you know in Saudi Arabia it may not be that they’re damaging the roads that much; it’s just the fact that if you don’t want the government overthrown you have to have some kind of programs that will keep people occupied, you know they need some sort of way – there’s a very high unemployment rate as it is. They need to have some kind of programs to keep these people busy and housed and food available to them and so they have to have some kind of very high tax structure from it. But all of the countries depend very much on the taxes. I mean Russia does too, Venezuela does, all of the oil exporters and pretty much all of the oil producers. You go to Alaska they have not had an income tax for many years. In fact, I think every citizen gets a rebate check based on the taxes that the oil company’s pay. So this is very common that the taxes from oil are a big piece of what makes the whole economy work.

Chris Martenson: And so you said earlier something has to break with these low oil prices in Saudi Arabia it might be social rest, they might break into social unrest. In Alaska people are going to have to get used to the flow of money going the other direction, out of their pockets on a yearly basis. But I want to talk about that something has to break maybe being the price of oil in the future; I’d love to get your point of view on something I’ve been tracking and wondering about is the loss of Capex investment over the past year or year and a half or so. I believe that oil companies, the big ones, the international oil companies. It was in February 2014, even before the price started to decline in June of 2014. They started to pull or freeze their capex budgets backwards because they weren’t able to profitably both invest in new oil production and pay dividends at the same time, so they were trimming capex to push more money back to dividend payments and things like that.

Now that we have I think about a trillion to a trillion and a half dollars of failed capex investments over the last year, year and a half what do you think happens to future oil supplies?

Gail Tverberg: Well I think that we’re going to see a shifting at least of future oil supplies and we can – I think one of the issues is that all of this capex is not going to result in oil production. At the same time we’ve got all of the zero interest money that was put into Iraq that’s going to raise their production and we’ve got Iran sitting there talking about raising its production. So it’s not obvious a particular point in time which direction it goes. We’ve got one group that’s coming off and another group that wants to come online but the direction certainly has to be towards going down or something just breaking within the system just because there’s so many defaults on loans. And that bringing the system down and we can’t afford to pay for it.

I think the other thing I would point out is that we’re reaching points where it’s not clear that we can even store it anymore, oil or refined products because crude oil or reclined products doesn’t look like it’s too far away. But that’s going to be a crisis and that by itself is going to send the price way, way, way down.

Chris Martenson: Right so I agree with you, I’m looking for additional price weakness in the future largely because the demand side of the equation is not all that strong and I’m looking at China of course as the big dog in this particular story whose economy appears to be fraying at the seams. So price is a function of supply and demand for oil in particular because it’s so in elastic in terms of its storage. Once you run out of storage space there’s really not a lot that’s going to happen beyond I think some price destruction. And that price destruction though leads to future supply disruption. So if the world wants to get back to high rates of growth again, so let’s imagine there is some economic crisis, a big deflationary wave that’s really spawn by a variety of intersecting factors and even after the fact we might not know what it was. Was it debt defaults in the oil companies themselves, was it social unrest in some kingdom somewhere that it spilled over, who knows?

But what you’re saying is that this – these low oil prices are going to create their own forms of damage, that’s a self-feeding loop for while fed in part by this mountain of debt. Let’s imagine all of that sort of works itself out of the system. I agree it’s going to happen at some point but then the world wants to pick itself up off the mat and go forward again and it’s going to suddenly start to go through a cycle of growth. Where do you think oil supplies will be at that moment, that can be three or four years from now?

Gail Tverberg: Well I don’t think we’re going to have them there. I think we’re going to end up with a discontinuity in the whole economy. It’s going to be – we can’t get the debt to keep growing high enough to keep the prices up to get to the level and of course it takes a long lead time to put any new capital expenditures in. So the fact that they haven’t been making the investments now says you know, you can’t make up for lost time. You even lost some of the people you had working on it; so it’s going to be very hard to do anything going forward to try to make up for what you lost.

Chris Martenson: So the feedback that you’re talking about because this one worries me a lot, 200 trillion dollars of debt. As we spiral into low economic growth because we’re having these debt deflations and then all of a sudden the oil price goes low and no rational oil company in the world would look at $20.00 or $30.00 a barrel of oil and say “I’m going to invest in $120.00 barrel oil” in the ultra-deep water, off the coast of Brazil. And so the longer those companies wait, the less oil comes out of the ground, the les oil comes out of the ground, the less economic growth we have, the less economic growth we have the more debt defaults we have, the more of those we have it just – you’re talking about a spiral that seems very hard to get out of once it gets started.

Gail Tverberg: Well and I think the derivative come on a lot earlier than that too. And once the derivatives start defaulting and I don’t have a good intuitive feel for exactly what happens and what goes wrong but I think that could start some problems very much earlier than the other things.

Chris Martenson: So what you’re really talking about is several decades of mismanagement and bad ideas, false assumption, bad assumptions. We have some really bad assumptions out there that have led to the accumulation of several hundred trillion dollars of debt, which by the way the only way you can do that and I’m not even talking unfunded liabilities which number in the five to 10 times higher than that depending on the country we’re talking about in terms of their actual debt. But what you’re talking about is several hundred trillion of debt that got built up with the assumption that there would always be future growth necessary to service that; so we could grow our debt at much faster than underlying of economic growth because we were certain about something that turned out not to be true.

Gail Tverberg: Right. And I think part of what confused us in all of this was the fact that there was inflation along with the economic growth and I think this confused actuaries too; they said “Oh the rate of return on these bonds or whatever we’re getting 8%” well it didn’t stop to think that some of that was compensation for the inflation rate. So you know going back there they thought they could continue to grow their debt along with the inflation rate and you know keep raising it. Now when you suddenly go to negative you know deflation then you’re kind of – you have a problem because you can no longer pay back the debt that’s outstanding. Ando of course the value of the assets start falling as you have a problem, if the price of oil and coal and all of these other things was very low, these companies are not going to be able pay back their loans. And the asset prices that are associated, even the farm land prices are going to go down.

Chris Martenson: Well this has got to be a finger on a huge problem which is of course inflation which every central bank is targeting right now. Inflation erodes the future value of your obligations and deflation does the opposite, it actually increases the present value of your future obligations because it means you’re going to have to be paying back in money that’s actually worth more, not less in the future. And who has experience, like do we even have the knowledge to know how to write the formulas to account for that properly at this point in time let alone the institutional knowledge to know how to manage that sort of territory.

Gail Tverberg: Yeah it becomes a question. On the – the opposite direction what we were doing is we were taking all of the – not all of the, part of the excess money was getting funneled to insurance companies, pension plans, banks, whatever all to the elite in the society. But now as you go down you can’t just pull money back out of pension plans and pull it away from whoever the insurance companies, or whoever might have it. I think the elite have discovered the same off shore tax havens that the businesses had; so you’re kind of stuck there that this money that goes to these people is just sort of gone. How do you deal with a negative interest rate? Who do you get it from?

Chris Martenson: That’s more of a sociological than even a financial question. It’s a whole new way of thinking. It’s not – I don’t even know that economics is the right branch of study, not going to use the word science. I don’t even know if it’s a right branch of study to answer that question, we might have to go to behavioral economics or some other place. So obviously this is about how the pieces fit together. So one of the things we’ve been seeing is a fairly stubbornly low wage growth. You talked about the importance of inflation in the 70’s and how that formed our thinking and all that, but a lot of that inflation in the 70’s was driven by a wage and price spiral. We may well get the price spiral in the future but wages are pretty stubborn; how do you explain the wages in this larger story that we’ve been talking about?

Gail Tverberg: Well I think there are several things that are involved with the low wages, you know wages are a way of distributing what value you’re getting from the economy and if the economy is really growing more slowly you have less to distribute; so that’s part of the problem. Part of what happens is that through all of these interest payments and such things, dividend payments and also growing government programs we end up funneling more and more of the money away from the wage earner and also as it becomes harder and harder to get oil out and to do all of these things you no longer just have little ma and pa businesses that can do the work and that don’t need to depend on very much management, they can just pay their own wages. You start getting the need for bigger, more elaborate, even international businesses. And as they do this they get – add more and more to kind of an overhead expense and these big fancy buildings, they jet from country to country. But the poor little wage earner doesn’t get very much out of the whole system. So it’s these wage earners that can no longer buy new houses and new cars and that tends to hold down the prices because you know if you’re not building more houses and you’re not building more cars there’s less demand for commodities.

Chris Martenson: I think if we – one of the ways I like to look at this and I know it’s overly simplistic but it helps me is to think about net energy per capita and it’s pretty easy to see that at least in terms of the United States oil production and also consumption per capita but looking at net energy, net oil production per capita it’s – it actually peaked out in the mid 70’s and has been steadily going down ever since and wages have been stubbornly not moving very far either. I see those as connected and so the larger thing I see – let me just make it really simple. Once the energy companies are consuming 100% of the capital and are actually almost 100% of the economy because that’s how expensive it is to get energy out of the ground, we will have this really tiny shriveled, shrunken economy around it and nobody will be – the number of jobs available, the number of – the amount of wages that we paid will be a fraction – a tiny fraction of what it is today. So in some respects Gail this is the most important issue we need to look at which is how we are producing energy as a nation? What are long term plans around how we’re going to do that and how are we going to manage this idea that the type of growth and energy and assumptions we had in the 50’s, 60’s, 70’s, 80’s even 90’s those are irretrievably changed into some landscape. To me that seems like the conversation we should be having and we’re not.

Gail Tverberg: Yeah right, and we don’t stop to realize that adding a gazillion new wind turbines and solar panels is not a very efficient way of doing things. We have been – had the luxury of having very efficient method of getting energy and it’s gone away and now we’re choosing a different very inefficient method of doing it.

Chris Martenson: Well let’s talk about that, why is that inefficient?

Gail Tverberg: Well what did they say there were 100 solar panel installers for every coal miner in the US, even though we have 100 times as much coal for energy as we do for wind turbine – no I guess it’s for solar panels, I’m getting confused here. You end up with an awful lot of workers and they’re doing something and somebody is saying this should have some effect in the future but the way calculations are done when they are saying “Well how much energy is used in doing this” they say “Well those workers well we should count the oil in their cars. They drive to install these”. But the fact that we pay them high salaries, or low salaries probably and they use that – those wages for other things like going to the grocery store and such, we don’t consider that because that’s not part of the cost of actually extracting it. So it’s not clear that we have a real good way of measuring it and what the way our economy works it works on what we have in a particular year and the fact that we envision that these solar panels or wind turbines should be operating 10 or 20 years from now is nice but that’s not the way the economy works. It works on what actually is the amount of electricity we’re actually producing this year as opposed to something that’s in a model somewhere.

Chris Martenson: Well that’s interesting. As I put all this together I feel like my country, the United States, has no real strategic plan for how we’re going to measure our energy transitions and the amount of unfortunate misinformation that exists around the whole shale oil story is astonishing to me because even the EIA can look at any particular shale basin and tell you how much is in there, when – at current rates, when it will hit peak production and it will irretrievably tail off and that peak Gail is not far out, you know? It used to be as soon as 2020 for shale oil, it probably got bumped out a few years because of the price hiccups that we’re in right now, but it doesn’t matter. It peaks at some point and not that far out in the future and so we should be saying how much resources there, how many BTU’s or how much work is in that resource, what would we like to do with that amount of work and right now the answer is business as usual. We want to sell more cars, we want to build more houses, you know none of which really conform to what I consider to be useful energy guidelines for efficiency and things like that.

And so as I talk to my listenership and viewership I say the way of the future clearly there is still some low hanging fruit out there but it’s in efficiency, it’s in doing more with less, it’s in building smaller houses, it’s in things we already know. It doesn’t exist in brand new technologies being developed and installed at mass scale. It’s really about how can we run our lives effectively with half the energy or less; it seems like there is some low hanging fruit there, would you agree with that?

Gail Tverberg: Perhaps, I think the big issue is that as you try to get this low hanging fruit you tend to lose jobs and as you tend to lose jobs it makes it harder to keep the financial system going? So while you save something it doesn’t really save anything and when you stop and figure it out you say “We can build smaller houses” well actually when you look at it we could all just group together in the houses we have, what’s the point? Do we really need to be building a whole bunch more houses? Maybe they need to be in different places but the different places probably aren’t the places that the planners would put them; they’d probably put them in the middle of New York City or something. So you know it’s not as easy a problem as it sometimes looks like especially when you think about the wage problem.

Chris Martenson: Well yeah I agree with that but you put your finger on something I would love to get your view on which is you mentioned what the financial system requires; so the financial system clearly requires well at least from my observation, as someone who has seen three cycles of this – well two, coming on a third cycle. It seems to either be growing or collapsing. It doesn’t seem to have a great awesome middle of the road territory place, at least when it comes to debt growth. How do you see this playing out in the financial system?

Gail Tverberg: Well I am afraid that we’re going to hit a discontinuity and it’s hard to tell exactly how far away it is, but the banks are the ones – well and insurance companies and the pension plans are the ones where there’s going to be a big problem. And of course the bond market too but what happens is we’re going to start seeing a lot of debt defaults and we may have some derivative problems at the same time as we get these debt defaults. And then the problem is how does this flow through the system? Back in 2008 the governments bailed out the banks. Well this year or in the recent years they’ve tried to figure out how they can avoid bailing out the banks. And I was just reading now too that they’ve come up with a scheme where they’re trying to move the mortgage you know, if the mortgages default like they did back in 2006, 2007, 2008 2009, 2010 period. If they start defaulting again you know what – they’re trying to move that away from government support and to the supposed individual investors. But when I look at it they’re moving that to derivatives. So what happens is that you have more and more out in derivatives, when I read what Ellen Brown says, she says that derivatives have first priority or they’re considered – those assets come before the bank account that investors have. So what happens is if you have a big derivative problem is that it may end up getting pushed over to the individual investors getting haircuts on their loans. It could be individual folks like us or it could be employers who need their funds to make their payroll payments, regardless of which it is. You know if we can’t use our bank accounts to buy things or if employers can’t use their bank accounts to pay their employees we’ve got a problem either way.

Chris Martenson: So you say discontinuity – thank you for the euphemism it’s – to me that means anything from a complete failure of the financial system to banking holiday’s, to capital controls, to increasingly chaotic extremely volatile market conditions. You’re worried about derivatives, I am too. I think that my simple statement that I put out, when you have this much debt on the books and our growth prospects are obviously dishampered and that discontinuity, that gap between reality and friction grows, I think that there’s only one question we have to answer at this point and that is this who is going to eat the losses? And obviously the banks are very interested in rewriting the rules to make sure that the derivatives get paid off because of course a derivative is just a bet. It has an equal set of winners and loser; it’s not this magic thing that can create losses that wouldn’t otherwise exist. It’s a bet and the banks want to make sure that their bets with each other get paid off at the expense of somebody which in this case would be the depositors in the bank. Why people aren’t more freaked out about that, I don’t know. But when you say there’s some sort of discontinuity that to me I translate that you’re saying that there’s really no fix to this at this point in time. We really just have to figure out how we’re going to unwind a whole bunch of bad bets that have already been made, places and run their course.

Gail Tverberg: Yes what happens is you know we’ve heard about Ponzi schemes when there’s individual investments where somebody comes in and says “Oh invest in this, it’s growing and growing and growing” and you know “If you just contribute to my plan you’ll get your money back plus 40%” or something. And in fact they’re making 2% on it but what they do is they attract enough new investors that they can keep this whole scheme going for a while and they more and more money in and they make their money by the funds they skim off the top. Well what happens is that all of this debt growth looks more and more like a Ponzi scheme because we’ve had this growth and we’d more and more and more of this growth but at some point you get to a point where you can’t get enough additional debt to keep the whole thing going. And it looks like something that could fall over from its own weight.

Chris Martenson: That’s exactly the dynamic that happened with the housing bubble in the United States. I think that’s about to visit a number of other housing localities Australia, are you listening? Canada, hello? A number of places, London. But what you’re describing is a basic dynamic which humans are prone to, we named it after Charles Ponzi but those schemes have been going on a long time. What you’re describing though is that the big Ponzi scheme which is the Ponzi scheme of debt as a concept as it’s been used and expressed currently; so you’re talking potentially something even larger, a sovereign debt crisis or a truly massive corporate debt crisis or even just a crisis in the belief in debt itself as it’s currently practiced, something larger, very systemic is that right?

Gail Tverberg: Right, what happened is that as long as we had economic growth which we seem to be able to sustain you know it started right after World War II when we used a whole lot of debt to try to get the world economy going quickly and such and then it continued after that. But as we had all of this rapid growth we got this belief that of course this rapid growth would continue in the future. So as we did that we made whole changes in the system so we believe that we could have pension plans and we could have insurance companies and we could have all of these other things that would depend on this whole system continuing according to the way we had seen things in this fairly short period. But of course you can’t really assume that that’s going to go on forever. It was sort of a temporary phenomenon but at that time we put in place our retirement program, well I guess we started that way back in 32 or something. But as you went forward we put in more and more different programs assuming we could really financialize this debt, we could make use of it and we could built layers and layers upon it that instead of debt, if you had a bond you’d say “Oh this is an asset of mine” because now I can depend on getting the repayment of it and I can depend on the interest. And so once you had that you could build a whole system around it and you could make pile upon pile of oh this is how the system will work in the future.

I think if you go back 200 years or 100 years you’ll find that it was much more the governments that granted loans to the individuals or you know they were the ones who took our debt and they were for wars, but they also might give loans to farmers or something of that sort. So you have a very different kind of a system forming and that system is quite vulnerable to collapses.

Chris Martenson: Well of course debt isn’t anything real, it’s an agreement. It’s like wages. It’s a means of laying claim to and then distributing the actual real productive output of an economy and the real productive output of course is real goods, real services, real things. There are claims that we lay on top of that but what you’re describing is that this whole idea of retirement was really a way of distributing the excess surplus that could come out of an economy itself a function of growth, that itself a function of energy at the root of all of that. So if I could translate this and skinny it down what you might be saying is that retirement itself as a concept may be two to three generation long artifact of the fossil fuel bonanza we tapped into.

Gail Tverberg: We were talking about it a little bit earlier before we started this phone call and I got to thinking about it a little further when the retirements plans were put in place was during the depression and the reason they were put into place the Social Security and such things was to get rid of some of the excess workers, to take them off the street and so this was – you know if they didn’t have very many that they put into the plan at that point in time but that – at that point they had a problem similar to what we had today of low wages and low prices. And they were trying to fix that kind of problem. So I would agree that they – it very much depends on the surplus energy of the society but it’s tied in different ways then you would necessarily expect – it promises things that may very well not be there unless you have the system growing rapidly you can’t make it actually work.

Chris Martenson: Right and lots and lots and lots of factors robotization, global work force and lots of factors sort of playing in on all this but I think if I could summarize this as we get to the end here is that the assumptions we’ve held in the past may not necessarily be the right ones. In fact we’ll go further and say the assumptions of the past are the wrong ones to be relying on and depending on that perhaps there are some things we can carry from the past and we need some new thinking. We need some new ways of looking at this. We need to cast aside our assumption about how the world works and how finance works and how the growth works in all of that because really at the tail end of a four decade long experiment of trying unbacked fiat currency system across an increasingly integrated global banking system that was more than happy to shake hands, look the other way and allow debts to accumulate, pile up, pile up, pile up – well now they’re all piled up and you and I hare having the conversation that says “Well now what”? And the answer is neither of us can really see a way out of this now what besides reconciling with the idea that that wasn’t really a good idea or something like that.

Gail Tverberg: Yeah well I guess I’m – one thing I’m struck by is how important debt is though. So think of you being a worker in a company they aren’t going to pay you day by day. The government – or that employer has a debt to you that they will pay you wages. The debt is very much part of this whole system. If you don’t debt you can’t get oil out of the ground. Well especially at today’s high cost level; if you just took a little shovel and you could get it out that would be one thing or if you could pick up sticks off the ground and you could burn them, that doesn’t require much debt. But once you have a system where you have many different people involved and they have to do work in advance of actually getting the prediction out there they either have to have debt or they have to have some kind of an equity based arrangement, you know where they’re going to get dividends and they’re going to share in the profit. But the two are pretty close to equivalent when it comes out to how this works in terms of transferring funds to the wealthier class of society. So this debt isn’t something you can just sort of walk away from if you’re going to have the big businesses that we have today. You know if you just have little family arrangements you can have kind of agreements that you know I’ll build your house if you’ll build my house and there’s no real debt involved. But once you start having big businesses building the houses and such things you have to have some sort of a debt arrangement or people just cannot afford to have the houses built.

Chris Martenson: So we’ve built a giant very complex functioning economy with lots and lots of moving pieces, it’s global now. To get oil out of the ground doesn’t just require a drilling rig with a few guys on it. It requires dozens, if not hundreds of associated companies producing all of the high technology pieces that are involved even just in creating a single down bore tool that measures and drills or does whatever happens down there. So to function for our economy to function requires this extraordinarily complex machine to continue running, our entire method of financing which includes debt especially is integral to the functioning of that machine and so you can’t just take debt away because what you do is you ruin the machine and boy we don’t have any answer for that. So what you’re describing is a machine that requires increase in complexity, increasing energy to function. Hey what do we know about complex machines and systems? Well they’re inherently unpredictable –

Gail Tverberg: Right.

Chris Martenson: They do require constant inputs to maintain that complexity – inputs of energy in particular.

Gail Tverberg: Right.

Chris Martenson: Fascinating. Well we’ve been talking with Gail Tverberg and she runs the blog, the cite Our Finite World.com, excellent articles there, everybody listening you really, really owe it to yourself to read and read carefully what Gail puts together there because it’s some of the best thinking and it’s essential thinking and by the way it’s not very common thinking but it really should be because it’s just such common sense when you sit down and put it together. Gail is there anything else that we can let people know about your work and how to follow it?

Gail Tverberg: I think you’ve covered it pretty well and you kind of have to go back through some of my old articles. I unfortunately don’t have a book put together.

Chris Martenson: Well maybe that will come someday but I absolutely agree that people would dig through the articles and start reading them because you do make a very compelling case so with that I want to thank you for your time today and we’ll do this again because this story obviously is just beginning to unfold and it’s one of the most important stories out there; so thank you for your work.

Gail Tverberg: Well thank you.

About the guest

Gail Tverberg

Gail Tverberg is an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.

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11 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
There is a Plan.

But unfortunately it does not include you. 

I've got to run but I cannot resist observing that the obvious conclusion of company  buy-backs comes when there are no more shareholders. (There's got to be a graph for that. ) Once the companies have no shareholders my understanding is that they no longer need to be listed on the Stock Exchange. They become private. Or is that pirate?

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Carl Page comments

Brother of Larry Page,  whoever he is, has made a comment on LENR. 

It's a bit long so if you want the full thing follow this link.

http://edge.org/response-detail/26753

It is strange that LENR is neglected by the DOE, industry and the Pentagon. But no stranger than the history of nuclear power—if it weren't for the leadership Admiral Rickover, and his personal friends in Congress, nuclear fission power for submarines and power plants would never have seen the light of day. The best endowed institutions rarely disrupt the status-quo.

The point being is that it was not receiving any attention, but people are noticing.  If there is a war I anticipate that lethal competition  will suffice to shatter the inertia. 

EDIT  Not quite Carl, Pamela Mosier Bose of the Navies SPAWAR  is right on to it. And they were granted a patent.

http://coldfusionnow.org/navy-lenr-patent-granted-transmutes-radioactive...

Thanks Alain.

http://www.lenr-forum.com/forum/index.php/Thread/2433-Carl-Page-on-Edge-...

Luc's picture
Luc
Status: Bronze Member (Offline)
Joined: Dec 3 2009
Posts: 57
Overwhelming force / réality update

This interview clearly articulate a highly plausible scénario. I sensé that we are very very close to the scenario of de-complexification of m. Tainter. All the bells and whistles are either currently being silenced, or on a fréquency that we and/or the system just can not hear/discerne. overwhelming force, tsunami are the images poping up.  We have been préparing methodically in the PP spirit.  The in coming speed of the de-complexification seems to be on a différent magnitude than the rate of improvement of our préparation. Thank you for the clarity with which the steps are brought forward.  We will update our project timelines. 

jandeligans's picture
jandeligans
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Posts: 23
What breaks first?

Excellent discussion, Chris and Gail - thank you for your data driven common sense and willingness for total honesty. It is so refreshing these days to hear blunt but truthful analysis. It's what keeps me reading here at PP.com

I've had a question for a while that you (or others) can maybe answer though. That is are the death rates of people worldwide or in some countries going up? So many issues out there that would make me think people will die earlier than otherwise due to pollution and environmental degradation and even cultural collapse. I have seen a report that in white people in their middle ages in the US that the death rate is up due to suicide and drug use. In Brazil thousands of babies have been born with tiny brains and face a short and painful life from the virus of a mosquito bite which has now been found in Puerto Rico too. I have seen estimates of 1.6 million people a year die prematurely from air pollution in China. Some fish in the US are going extinct from endocrine disrupters that can't be doing us any good. Farmworkers are getting cancer. Toxic mercury is in the fog in San Francisco, etc, etc, etc. The chemical soup that we all breathe, drink and eat will take it's toll in shortened life spans at some point, won't it? My question is: is it already showing up in actuary data?

And a comment: I thought Gail's use of the word "discontinuity" was spot on. (dictionary: Unpredictable, unforeseen, natural or man-made sudden change, consequence, event, or force that confounds or disrupts earlier expectations or estimates.) The reason is that we really don't know which aspect of our predicament will break first and then how that will affect the other aspects. I rather think that industrial agriculture will be the breaking point first and that it might cause massive die-off. That would change everything else. I don't say that with any glee or undue pessimism - I just think the industrial agricultural system has cancer and is not being treated. It is terminally ill and is making us sick too. And I don't think the governmental powers will have any effect once the final effects of destroying the ecosystem are in full view. They can print money and create weird monetary schemes but they can't print food or soil. That's just a hunch on my part based on observations. But my point is that the discontinuity that has to come to stop the unsustainable could come from many directions and we can't really predict how it will play out. So I liked the word "discontinuity" and consider it quite precise and accurate. 

This discussion brought up for me again the urgency I now have to make myself and family able to live outside of our money system. I am going to double down on my ability to provide food, shelter and other needs without money or at least without much money. The timing of the Prosper book is great. 

Uncletommy's picture
Uncletommy
Status: Silver Member (Offline)
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Posts: 169
Good new - we have 50 years of oil; Bad news. . .

My new Year's contribution, after my weekly PP check-in, cheap oil will probably last another 5 years(given no major geo-political issues) and contribute to a deflationary course. Oil companies will continue to economize and look for sweet spots to keep cash flows positive(just barely). Whether peak oil becomes a reality or Iran and Saudi Arabia do something to interrupt supplies to the world, prices will eventually start heading back up to maybe $50-$60 bbl. However, we will be so overdrawn at the bank that inflation will come back, uncomfortably for consumers/taxpayers - happily for Ben and Janet and friends, and we will be forced to cut back our spending, affecting, as Gail points out, jobs.

For all you oil nuts, Rusty Braziel's 2016 outlook is the best summation I've read on the current US/Canadian energy situation.

https://rbnenergy.com/the-top-ten-rbn-energy-prognostications-for-2016-year-of-the-monkey

His concluding paragraph sums the future situation up, wonderfully. For the rest of us in the oil patch, I think we're. . . :

144979_600.jpg

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Uncle Tom.

I gave you a thumbs up for being foolhardy enough to prognosticate.

cheap oil will probably last another 5 years

I'm not saying you are wrong by any means. I'm saying you are inspiring. 

Here is another old codger making predictions.

http://www.businessinsider.com.au/money-markets

He sees more of the same?  2% Growth? (Got to love that word.  It is on every economists lips.)  

I predict that the economy will deflate like air going out of a balloon. There,  I've said it. Pulled the pin. Everyone run for cover. She's gonna blow! 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1220
There will be a great reckoning

Yes, there will be a great reckoning.  Globally.   Wages are not ordained to stay high.  The Central Banks have totally distorted market prices and input costs so I expect much disruption before defaulting currencies are reformulated. R.I.P. EURO.

KugsCheese's picture
KugsCheese
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Posts: 1220
Last Great American Whale

Luke Moffat's picture
Luke Moffat
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Joined: Jan 25 2014
Posts: 237
Yes! Thank You!

Thanks PP, I'm a big fan of Gail's work!

Running with the debt theme I've been circling Dr.Tim Morgan's Surplus Energy Economics blog for about a year which seems to echo a lot of Gail's points about energy and debt.

Currently working my way through his Perfect Storm paper (free to view - written in 2013 I believe). Here are a few snippets to whet your appetites;

Quote:

Research set out in this report suggests that the global average EROEI, having fallen from about 40:1 in 1990 to 17:1 in 2010, may decline to just 11:1 by 2020, at which point energy will be about 50% more expensive, in real terms, than it is today, a metric which will carry through directly into the cost of almost everything else – including food.

and

Quote:

For a start, anyone who believed that a globalisation model (in which the West unloaded production but expected to consume as much, or even more, than ever) was sustainable was surely guilty of wilful blindness. Such a state of affairs was only ever viable on the insane assumption that debt could go on increasing indefinitely. Charles Mackay chronicled many delusions, but none – not even the faith placed in witchcraft – was ever quite as irrational as the belief (seldom stated, but always implicit in Western economic policy) that there need never be an end to a way of life which was wholly dependent on ever-greater debt.

Even to those who were happy to swallow the nonsense of perpetually expanding indebtedness, the sheer scale of debt – and, relevantly in this context, of quasi-debt commitments as well – surely should have sounded warning bells. From Liverpool to Los Angeles, from Madrid to Matsuyama, the developed world is mired in debts that can never be repaid. In addition to formal debt, governments have entered into pension and welfare commitments which are only affordable if truly heroic assumptions are made about future prosperity.

As both Gail and Tim point out, the need for growth to fund both future entitlements and pay down debt in a world of diminishing energy returns is simply insane. Needless to say, I think that we're going to see a lot of disappointed people.

Meanwhile in the UK our government is currently issuing fracking licences to drill below national parks despite market price being well under the cost of production. Any guesses as to where the next bailout will be directed? The madness continues...

Tim W_UK's picture
Tim W_UK
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Joined: Jan 7 2016
Posts: 1
Mainstream Media

Hi Chris, this is a great interview. The content seems like obvious conclusions (clarified, brilliantly articulated and explained in detail by Gail) that any sensible observer might arrive at when looking at the world around him or her, and the way that the developed economies seem to be working. Living in 'democracies' with educated citizens and 'free media', you might expect that these sorts of discussions would be taking place in our parliaments and debating chambers and all over mainstream media. What is utterly amazing is that our legislators and rulers are NOT having these discussions (or at least if they are, then they are NOT being broadcast to the majority of the citizens.)

Hats Off to You and Adam for your fantastic efforts!

cmartenson's picture
cmartenson
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Joined: Jun 7 2007
Posts: 4621
That's why we have these conversations here

Tim W_UK wrote:

Hi Chris, this is a great interview. The content seems like obvious conclusions (clarified, brilliantly articulated and explained in detail by Gail) that any sensible observer might arrive at when looking at the world around him or her, and the way that the developed economies seem to be working. Living in 'democracies' with educated citizens and 'free media', you might expect that these sorts of discussions would be taking place in our parliaments and debating chambers and all over mainstream media. What is utterly amazing is that our legislators and rulers are NOT having these discussions (or at least if they are, then they are NOT being broadcast to the majority of the citizens.)

Hats Off to You and Adam for your fantastic efforts!

Thank you Tim.

The reason I started the work of opening up the sorts of discussions we have here is precisely because they were not happening at the higher political or institutional levels.

At a recent talk at Berkeley a couple of college students came up afterwards and wanted to know why the obvious and utterly serious data I presented was not being taught to them, and was there a way they could become involved with our work?

And, yes, it is utterly amazing that these critical discussions are not happening among our legislators and rulers.

But they're not, and that's why we each have to prepare ourselves as best we can based on the best information we can access.

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