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Our debt-based fiat money system poses an existential threat
Friday, September 14, 2018, 5:51 PM

We’re all going to have to be a lot more resilient in the future.

The "long emergency", as James Howard Kunstler puts it, is now upon us.

If ever there was a wake-up call from Mother Nature, it's been the weather events over the past 12 months.

Last year, the triplet Hurricanes Harvey, Maria, and Irma resulted in thousands of deaths (mainly in Puerto Rico) and tens of $billions in destruction.

This year has seen a rash of 120° F (50° C) summer days, droughts, current monster storms like Typhoon Mangkhut and Hurricane Florence -- as well as numerous 100/500/1,000-year floods spread across the globe.

And that's just so far.

It remains nearly impossible to connect climate change directly to any particular weather event. But taken together, it’s becoming increasingly difficult to dismiss the scientific claim that the quantity of heat trapped in the earth’s weather systems impacts the amount of water that now falls (or refuses to fall) from the sky and the high-temperature heat waves that now shatter records with such regularity that once-rare extreme conditions are now becoming routine.

Our “new normal” is quickly diverging from the natural conditions most of us have grown up with. Permafrost isn’t "permanent " anymore -- it melts. The Arctic now can be ice-free. In a growing number of regions in the US, you can leave a screenless window open on an August evening (with the lights on!), and remain unmolested by the swarms of insects that used to prowl the night.

All of these symptoms are connected by a root cause: our society's relentless addiction to growth. And while we do our best here at PeakProsperity.com to continually raise awareness of this existential threat, the rest of the media completely ignores it.

Virtually no major news outlet is talking about how our voracious consumption of ever-more natural resources is fast exhausting and poisoning the Earth's capacity to support human life. But Serena William’s latest court meltdown? That's splashed everwhere...

Which is why the vast majority of people have no clue what's actually happening. And a disturbing portion insist on remaining that way, being led around by the media, wasting their effort, focus and time on the irrelevant.

People are convinced that salvation lies with one political party or another, in the election of one candidate or the defeat of another, when the sad truth is all major political parties are on exactly the same side when it comes to promoting endless growth or waging war. In the US there's simply no alternative political party at this point.

Addicted To Growth

Yes, we’ve been beating this drum for a long time -- over a decade now. But we persist beacuse this critical message is being blunted by very powerful forces that are mainly interested in preserving the status quo.

All the machinery of monetary, political, propagnda and military power is aligned in the quest to keep things headed in precisely the same direction they're already going. Those who control the system today are personally benefitting too much, and so fight change with all their might.

That said, while the new religion embraced by society is Technology, I find it ironic that the very same scientific process that brings us wondrous innovations is simply ignored or dismissed out-of-hand when it return answers that run counter to our pursuit of endless economic growth and consumer comfort.

Here's a recent report that does exactly that. It's by scientists commissioned by the UN who took a look at things along the same line of thinking that we've outlined in the Crash Course. They conclude, as we did over ten years ago, that our unsustainable economic trajectory is almost out of runway.

But have you heard of this report before now? I highly doubt it. It's not a message "they" want the masses to hear.

This is how UN scientists are preparing for the end of capitalism

Sept 12, 2018

Capitalism as we know it is over. So suggests a new report commissioned by a group of scientists appointed by the UN secretary general. The main reason? We’re transitioning rapidly to a radically different global economy, due to our increasingly unsustainable exploitation of the planet’s environmental resources and the shift to less efficient energy sources.

Climate change and species extinctions are accelerating even as societies are experiencing rising inequality, unemployment, slow economic growth, rising debt levels, and impotent governments.

Contrary to the way policymakers usually think about these problems these are not really separate crises at all.

These crises are part of the same fundamental transition. The new era is haracterized by inefficient fossil fuel production and escalating costs of climate change. Conventional capitalist economic thinking can no longer explain, predict or solve the workings of the global economy in this new age.

“We live in an era of turmoil and profound change in the energetic and material underpinnings of economies. The era of cheap energy is coming to an end,” says the paper.

Conventional economic models, the Finnish scientists note, “almost completely disregard the energetic and material dimensions of the economy.”

(Source)

Hallelujah! I really do hope these scientists get as much traction as possible with their message. But my experience tells me their warning will go unheeded.

And it’s not even a hard one to digest intellectually: Every organism can grow into its available energy supply, but no further.

A plant grown in dim light will not be as large or as healthy as one grown in full sunlight. The amount of sugar in a vat determines the maximum number of yeast cells produced. The abundance of fish in the waters surrounding a sea bird rookery will determine the fate of the nesting colony’s population.

Humans are no exception.

All of life is the study of energy flows and transformations. Where conventional economists have gone off the rails is in assuming there will always be sufficient inputs from the natural world to power the economy. That at a high enough price, there always will be more of everything.

And in their defense, up until very recently, that has largely been true. But no longer.

Talk to any oil company operator and ask them how easy it is to find oil these days. Or ask a farmer how quickly crop yields would plummet if N-P-K inputs derived from fossil fuels were not added back each and every year to his topsoil. Or talk to a veteran cod fisherman about the 95% collapse in catch size over the past several decades.

Reality-based systems have limits. And we're hitting them all over the planet.

It’s The Money, Stupid

Debt-based fiat money, like any monetary system, enforces some behaviors and punishes others.

Specifically, debt-based fiat money demands a regime of constant, perpetual growth. As any mathematician will tell you, anything that grows constantly accumulates exponentially.

So each year, there’s exponentially more debt in the system than the year before. If not, our high-leveraged system begins collapsing, as threatened in 2008:

As long as you can have endless growth, the system of money we have in place today is perfectly fine. But if you can't, then once growth peters out, the entire system crashes into nothingness. There’s no in-between territory.

We could choose to have a different monetary system. We could embrace a 'sound money' system, where money can't be conjured out of thin air, at no cost, the way it is today. Instead, it's in limited supply.

Under a sound money system, you either produce more than you consume or you face the consequences (rising interest rates, economic contraction, etc.). No ramping up the printing press to defer the reckoning off to a future date, which will also make it more intense when it eventually arrives.

Wars cannot be financed on the backs of future generations as yet unborn. Either you rally the populace to pay more in taxes to fund a military campaign, or you ramp down the war machine.

Sound money won’t fix everything. But it would be a great step in the right direction.

There are many other indictments against debt-based fiat money, including its proclivity to concentrate wealth into the hands of fewer and fewer winners, with everyone else in debt to that oligarchy (a process already well underway). Given these, busying ourselves with trying to refine our current monetary model is a waste of precious time. 

As long as debt-based fiat money pins us between the harsh dichotomy of either growing exponentially or collapsing, there’s no amount of tweaking, (de)regulating, or rule modifying that’s going to make the slightest bit of difference.

We need a full-blown replacement.

You see, money is at the root of it all.

Every large, hierarchical assembly of people throughout history has had an organizing principle that kept everyone in line. Where once it was “royal blood” or “direct access to the god(s)”, today it's money. That’s what keeps everyone in line and in their place. (Those interested in understanding this dynamic more deeply should read our foundational report on this topic)

But what happens when your organizing principle that keeps everyone in line marches them towards a cliff?

You need to either change it or perish. As the above article on the UN study continues:

Most observers, then, have no idea of the current biophysical realities – that the driving force of the transition to postcapitalism is the end of the age that made endless growth capitalism possible in the first place: the age of abundant, cheap energy.

And so we have moved into a new, unpredictable and unprecedented space in which the conventional economic toolbox has no answers. As slow economic growth simmers along, central banks have resorted to negative interest rates and buying up huge quantities of public debt to keep our economies rolling. But what happens after these measures are exhausted? Governments and bankers are running out of options.

Capitalist markets will not be capable of facilitating the required changes – governments will need to step up, and institutions will need to actively shape markets to fit the goals of human survival. Right now, the prospects for this look slim. But the new paper argues that either way, change is coming.

I too, will argue that -- like it or not -- change is on the way. However, I would go further than the authors and note that any system, whatever its premise and however it's run, will fail if it's predicated upon an unsustainable idea.

And our system's unsustainable idea is debt-based fiat money.

It's flawed and it's failing. Yet nobody in power can envision a solution because the answer cuts too deeply across our entire social, political and geopolitical constructions. Each is based on infinite growth and has enshrined power based on what we call "money".

Changing the model is just too unpalatable to those who currently benefit most from the current system. Blinded by their spoils, they simply can't realize that if/when the system breaks down, they'll find mob justice offers an even worse outcome.

How To Move Forward

Help is NOT on the way. Not from our leaders, and quite frankly, not from ourselves. Too many people are not going to proactively reject society's pursuit of growth and start embracing having less stuff in their lives.

Materially reducing carbon emissions into the atmosphere would require enormous hits to the economy, lost jobs and quite possible a reduction in total global population. Nobody in politics will go anywhere remotely near that conversation.

And yet the changes are coming. In many cases, they're already here. 

As I type, Hurricane Florence is stalled at the coastline of North Carolina, dramatically increasing the rainfall it is dumping there and exacerbating the flooding damage.

Is global warming to blame for the specific steering currents that brought about this path? Maybe; maybe not. But we can easily make the case that the warmer air and warmer seas of recent years result in more energy that increases hurricane intensity.

We can also easily make the case that the damage inflicted by Florence and future storms to come will be compounded by the extremely short-sighted building practices designed to maximize property values and real estate development. Wetlands and dunes that evolved to absorb storm surge have been bulldozed and paved over in the pursuit of profits. Are the resulting flooding damages worth those extra dollars (and lost ecosystems)?

Shale oil is being pumped out of the ground as fast as possible, surprisingly with no profits to be seen (collectively, the shale oil industry has been a massive loss-making enterprise so far). Drillers have to pump to simply keep the debt and equity that’s already in play in motion. Shale holes aren't being drilled and fracked because it makes sense, or because it's the right thing to do at this moment in time; but simply because all of that money printed by the Federal Reserve had to go somewhere and do something. And right now, it's flooding into the oil patch.

Any sane person should sit back, scan the ratio of mess-to-benefit provided by shale oil and shout: Stop!  But apparently we “need” the jobs, the money, the oil Right Now!

That’s the nature of debt-based money. It enforces the Right Now! mentality at the expense of long-term thinking. Or even any thinking.

So changes are coming. There will be an enormous mess when this third central bank inspired credit bubble bursts and this will be the last one of this size. After this burst, there won’t be any getting around the fact that letting a few banksters fiddle with the price of money in an attempt get more borrowing to fuel even more spending was a terrible, horrible, no good idea.

Meanwhile -- as people are marveled by our shiny rising stock prices, complete with $trillion-dollar companies and price-to-earnings ratios at nosebleed highs -- the weather gets worse, more species disappear, and more people fall into lifelong debt servitude. And the hard conversations that we desperately need to be having aren't happening at all.

So, what can you do about it?

Attend to your own business. Develop resilience to become better prepared for what is surely to come. Don’t fall for the current bogus narrative. Stand fast to what you know to be true and right. Tend your garden, build your wealth, and let go of old ways.

OK, so how to do this?

In Part 2: The Easy Way To Secure A Better Future For Yourself, we highlight the specific collapse risk indicators to watch most closely, and reveal the best path for successfully adopting the behaviors that will serve you (and your loved ones) best through the next crisis. 

We call this path the "easy way", not because it's simple to pursue -- but because it offers a means of avoiding the painful and very *hard* route folks who delay taking prudent action today will be utlimately forced to take.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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32 Comments

richcabot's picture
richcabot
Status: Silver Member (Offline)
Joined: Apr 5 2011
Posts: 226
Great post

Great post.  It's worth reading the whole article Chris quotes from.  I'm amazed The Independent published it.  It's so rare that a mainstream publication will go anywhere near this topic.

Unfortunately, none of the commenters on the Independent article seem to grasp the underlying issue.  There are some talking about climate change, some about globalization, some on Agenda 21, some on Marxism, etc.

I'mm afraid that when the shit really does hit the fan people still won't really understand the underlying predicament.

richcabot's picture
richcabot
Status: Silver Member (Offline)
Joined: Apr 5 2011
Posts: 226
Locomotive Breath

I found an interesting article about the song Locomotive Breath by Jethro Tull.  

http://www.songfacts.com/detail.php?id=12672

"When I wrote it, I wasn't deliberately setting out to write a piece of music on a particular subject. But it evolved during the writing process into being not terribly specific, but about the issues of overcrowding - the rather claustrophobic feel of a lot of people in a limited space. And the idea of the incessant unstoppable locomotive being metaphor for seemingly the unstoppable population expansion on planet Earth.



When I look at it today, it does, for me, become very crystallized in being a song about unmanageable population expansion. It's something that concerns me even more today than it did back when I wrote it, when the population of planet Earth was only about two thirds of what it is today. So in my lifetime alone, we've seen an enormous increase in population, and an enormous increase in the degree to which we devour our limited resources. So the idea of population planning and management is something that I think we ought to be thinking about a lot more than we do."

AllenMarshall's picture
AllenMarshall
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Joined: May 21 2018
Posts: 3
Is communism the solution?

Curious if anyone at PP read the underlying paper (https://bios.fi/bios-governance_of_economic_transition.pdf). I agree with their analysis of the challenges, but their proposed solution scares the hell out of me. They're huge fans of printing money in order to pay for solutions (decrying the need to balance government budgets, which they seem to believe actually happens), and also of governments hiring people to approach full employment in areas they deem to be socially good. Unless I misread this, they're proposing communism, driven by fiat currency. Is that really the path forward?

S7's picture
S7
Status: Member (Offline)
Joined: Nov 29 2009
Posts: 18
Correction for reason for more hurricanes

I appreciate Peak Prosperity and all the great articles that make my mind think, rather that idle in the mire of societal confusion. The many perspectives and insights from Peak Prosperity would help everyone steer towards a more sustainable, healthy future if they wanted to, however, in my observation of life, human nature without a higher calling or purpose tends to drift towards the passion of hedonism, that the greatest pursuit of mankind is in the pleasure and comfort of oneself. (When I say without a higher calling or purpose, I mean beyond the aquisition of imagined wealth, which is fiat money, and the accumulation of things)

There are many things in the sciences that have progressed so far, where the original base observations and their resulting assumptions and established theories, have created the modeling that is used and gives incorrect results. Case in point is hurricane formation.

There is a formula you can use to calculate the amount of energy that it takes to create a hurricane. Or for that matter a typhoon or tornado or any storm system, and the reality is that there is no way that a cooling effect of ocean waters has the energy to build into an organized storm system like a hurricane. As the 2nd and 3rd law of thermodynamics explains, it is impossible for a system to become more organized. These systems move towards disorder. Unfortunately, most of what is taught and learned in meteorology continues to push the false narrative that hurricanes form from the evaporation of warm water in the ocean. How then, would that explain November, North Atlantic hurricanes? Or the "Perfect Storm" that occured in 1991. It doesn't. There are always explanations or band-aid theories.

The real cause of hurricanes is the vertical electric field of the Earth and the current path down from the ionosphere to the Earth. It is an electrical phenomena. Forgive me if I miss something in my simple example, I cannot explain it as well as the originator of this idea and there is a book to establish the truth of it. This explanation comes from the theoretical work of James McCanney, which explains why hurricanes form and is labratory provable, unlike the current explanation of why hurricanes form.

The Sun produces an excess current of protons that go out through the solar system as the solar wind. This positively charged solar wind interacts with all the planets, and with the Earth, the solar wind goes around the Earths north and south poles, being diverted by our magnetic field. (Imagine an aerodynamic wind tunnel where they use vapor or smoke to show how the wind flows over and around an object) As the current sheet of protons goes over the north and south poles, the poles draw in a portion of the protons into our ionosphere, this is what causes Auroras on Earth and other planets as we are seeing with the information our space probes are sending back. Our ionosphere is like a river of electricity, and when conditions are favorable, the positive charge finds a path to the Earths crust. This discharge of the ionosphere was what Nikola Tesla was attempting to tap into with his Wardenclyffe tower. So around August, the Earth goes through the section of its orbit that James calls the "Return current sheet". In Africa the storm systems that form are caused by this discharge of the ionosphere to the ground and move in the westernly direction due to the equitorial jet stream. Once the discharge gets out over water, there is no longer a direct ground path for the protons and it begins to ionize the water as it creates a vortex which draws the ionized water up the column of the current path, this is the coriolis effect. (Flush your toilet to see the coriolis effect, kind of like our current economic policy. You can guess what the politicians are in my toilet example :-)  The stronger the discharge from the ionosphere the greater the coriolis effect, in effect creating a stronger hurricane. The hurricane moves across the Atlantic ocean, sometimes gaining energy due to atmospheric conditions and the Suns condition, sometimes losing energy. If it makes it to the eastern coast of America, the storm that has traveled some 8000 miles loses energy before travelling another mere  2300 miles to the west coast. Why is this?

It is because the storm that has built up massive amounts of energy from the electrical discharge of the ionosphere to the surface of the ocean, now has a direct ground.

I would encourage anyone who is interested in learning more about this, and also a better explanation, to visit James Mcanneys web page.   jmccsci.com

S7's picture
S7
Status: Member (Offline)
Joined: Nov 29 2009
Posts: 18
Correction for reason for more hurricanes

I appreciate Peak Prosperity and all the great articles that make my mind think, rather that idle in the mire of societal confusion. The many perspectives and insights from Peak Prosperity would help everyone steer towards a more sustainable, healthy future if they wanted to, however, in my observation of life, human nature without a higher calling or purpose tends to drift towards the passion of hedonism, that the greatest pursuit of mankind is in the pleasure and comfort of oneself. (When I say without a higher calling or purpose, I mean beyond the aquisition of imagined wealth, which is fiat money, and the accumulation of things)

There are many things in the sciences that have progressed so far, where the original base observations and their resulting assumptions and established theories, have created the modeling that is used and gives incorrect results. Case in point is hurricane formation.

There is a formula you can use to calculate the amount of energy that it takes to create a hurricane. Or for that matter a typhoon or tornado or any storm system, and the reality is that there is no way that a cooling effect of ocean waters has the energy to build into an organized storm system like a hurricane. As the 2nd and 3rd law of thermodynamics explains, it is impossible for a system to become more organized. These systems move towards disorder. Unfortunately, most of what is taught and learned in meteorology continues to push the false narrative that hurricanes form from the evaporation of warm water in the ocean. How then, would that explain November, North Atlantic hurricanes? Or the "Perfect Storm" that occured in 1991. It doesn't. There are always explanations or band-aid theories.

The real cause of hurricanes is the vertical electric field of the Earth and the current path down from the ionosphere to the Earth. It is an electrical phenomena. Forgive me if I miss something in my simple example, I cannot explain it as well as the originator of this idea and there is a book to establish the truth of it. This explanation comes from the theoretical work of James McCanney, which explains why hurricanes form and is labratory provable, unlike the current explanation of why hurricanes form.

The Sun produces an excess current of protons that go out through the solar system as the solar wind. This positively charged solar wind interacts with all the planets, and with the Earth, the solar wind goes around the Earths north and south poles, being diverted by our magnetic field. (Imagine an aerodynamic wind tunnel where they use vapor or smoke to show how the wind flows over and around an object) As the current sheet of protons goes over the north and south poles, the poles draw in a portion of the protons into our ionosphere, this is what causes Auroras on Earth and other planets as we are seeing with the information our space probes are sending back. Our ionosphere is like a river of electricity, and when conditions are favorable, the positive charge finds a path to the Earths crust. This discharge of the ionosphere was what Nikola Tesla was attempting to tap into with his Wardenclyffe tower. So around August, the Earth goes through the section of its orbit that James calls the "Return current sheet". In Africa the storm systems that form are caused by this discharge of the ionosphere to the ground and move in the westernly direction due to the equitorial jet stream. Once the discharge gets out over water, there is no longer a direct ground path for the protons and it begins to ionize the water as it creates a vortex which draws the ionized water up the column of the current path, this is the coriolis effect. (Flush your toilet to see the coriolis effect, kind of like our current economic policy. You can guess what the politicians are in my toilet example :-)  The stronger the discharge from the ionosphere the greater the coriolis effect, in effect creating a stronger hurricane. The hurricane moves across the Atlantic ocean, sometimes gaining energy due to atmospheric conditions and the Suns condition, sometimes losing energy. If it makes it to the eastern coast of America, the storm that has traveled some 8000 miles loses energy before travelling another mere  2300 miles to the west coast. Why is this?

It is because the storm that has built up massive amounts of energy from the electrical discharge of the ionosphere to the surface of the ocean, now has a direct ground.

I would encourage anyone who is interested in learning more about this, and also a better explanation, to visit James Mcanneys web page.   jmccsci.com

hammer6166's picture
hammer6166
Status: Bronze Member (Offline)
Joined: Apr 30 2010
Posts: 29
Not actually capitalism

FWIW, the Independent's article is a bit of a hit job on capitalism. Throughout the Independent's article, the UN paper is referenced to show that capitalism is the cause of the failure.

By reading the actual UN paper, I found that capitalism was mentioned just once. The UN paper pokes at flaws in Keynesian, Post-Keynesian, and centrally planned economies.

My reaading of the paper is there are growth problems and there are NO major current economic systems that can address the EROI and depletion problems. New systems of governance will be needed. The paper points out that centrally planned economies may be able to make the transition faster than western economies.

Hammer

 

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 913
Nits to pick

Just a couple of points: (1) although tornados are indeed an electrical phenomenon, with DC currents of 1-2 amps through several million volts, I know of no such documentation of electrical flows in hurricanes. Please provide references.

(2) The second law of thermo absolutely does not prohibit an increase in order. It only prohibits a net increase in order. So if you can set up a gasoline engine, and use the gasoline to power a generator, and use the generator to power a robot that sorts 52-card decks by rank and suit... the order of the cards will increase. But you'll be doing more to disorder the gasoline and the environment than you will be ordering the cards.

In the same way, hurricanes can self-organize, because the organization is the fastest way to disorder the nicely ordered warm water/cool air. Moreover, given the economies of scale, even very weak forces such as evaporation are capable of producing very big storms.

newsbuoy's picture
newsbuoy
Status: Gold Member (Offline)
Joined: Dec 10 2013
Posts: 314
FYI:Democracy As Cognitive Dissonance

https://soundcloud.com/guns-and-butter-1/brzezinskis-ghost-the-geopolitics-of-the-trump-administration-f-william-engdahl-388

National Endowment for Democracy an NGO controlled by the CIA; Reagan Administration guarantees Soviets no movement of NATO eastward in return for peaceful reunification of Germany under NATO; top secret CONPLAN 8022 global strike capability activated June 2004 by Rumsfeld; fake NED and NGO democracy apparatus orchestrates both the Ukraine Orange Color Revolution of 2004 and the Georgian Rose Revolution; Soros Foundation deeply involved in both Ukrainian color revolutions; 2018 Armenian Revolution follows the fake democracy script; US economic sanctions on Russian oligarchs; Trump administration abrogation of 2015 nuclear treaty with Iran and European reaction; EU activation of 1996 Blocking Statute symbolic; US secondary sanctions effective; US Treasury becomes a central component of national intelligence council; Secretary of State Pompeo’s twelve draconian conditions for Iran constitute economic warfare on that country; Netanyahu meets Putin on May 9th for talks on future of Syria and Iran; Russia limits its involvement in Syria; continuity of Trump Administration geopolitics; three Eurasian powers – Russia, China and Iran – systematically targeted a la Paul Wolfowitz’s Defense Planning Guidance and Zbigniew Brzezinski’s The Grand Chessboard; US trade war with China; Made in China 2025 policy to replace China 2035 co-written by Robert Zoellick and the World Bank; hyper-instability of global geopolitical situation.

bwh1214's picture
bwh1214
Status: Bronze Member (Offline)
Joined: Jun 1 2011
Posts: 40
A Template For Understanding BIG DEBT CRISES

Chris, 

I hope you read this book.  Ray Dalio wrote a book and is doing everything but yelling from rooftops saying we are about to end a 70 year long debt cycle in the next couple years.  His perscriptions are exactly what you have discussed here, and I have discussed on my site the monetaryreset. com 

https://www.principles.com/big-debt-crises/

What we did in 2008 prevented a depression but was not an effective 'reset' of the debt which is needed.  He discusses all of the things we fear as ways out of this mess, but in a way that shows he understands the problem.  That said I would be very happy to have him in the White House when the crash hits, his book Principles shows he has a good methodology for finding the correct (or at least least bad) path forward, and this book is shows he at least realizes and understands the problem we are facing.

I'd love to hear your feedback, and the book is free, you can't beat that.

Thanks

Brandon

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
Weather Channel - Funny

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
And why does the US

And why does the US government encourage people to move to wetland areas and coastal areas where eventually large storms hit?   Here's another funny one 

S7's picture
S7
Status: Member (Offline)
Joined: Nov 29 2009
Posts: 18
Reference

Atlanta to Tesla, The Kolbrin Connection

Principia Meteorlogia, The Physics of Sun Earth Weather

 

I will not try to convince anyone who has been taught by their professors the incorrect theories to explain weather. I only offer an alternative explanation for what is really happening. The theoretical work behind my somewhat weak explanation is explained in those 2 books. It would take time to read the books, but I understand it is hard to change a personal belief. It is kind of like a religion.

Evaporation can cause a hurricane Florence? Hate to disagree, but I will. Consensus does not make science, and a room full of PhD's agreeing with each other in order to get government funding for their work is nothing more the a mutual admiration society.

Pass the the Unicorn meat please.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5640
debt-based money: not the problem

From my review of history, its not debt-based money that is the problem.  Well, not exactly anyway.  Its that central bankers repeatedly sacrifice the long term monetary system health in order to influence the short-term political situation.

Back during the days of the gold standard, the sign of gold fleeing the country was a very clear sign that the current interest rate policy was out of alignment.  Not always - especially during safe haven moves - but generally speaking.  To stop gold from leaving, they had to raise rates.  It was really simple.

It was during the Nixon era that certain people wanted to keep rates low in order to win a certain election, but they knew if they did this, gold would leave the country so the answer was to slam the gold window shut.  Election win dutifully occurred - Nixon beat McGovern - but then the central bankers no longer had an independent signal to tell them when to raise rates.  They are better now than then, but even now they still can't quite manage it properly.

The most recent (Yellen) Fed almost certainly avoided raising rates - keeping rates too low for too long - in order to facilitate the election of HRC.  And Trump doesn't want his guy to raise rates, so he can stay in power.  That's just what they all do - its always short term political strategy winning over the long term stability of the monetary system.  "Because THIS time its really important to..." whatever.

So gold isn't the best thing ever, but it does provide an independent, non-political signal to the central bankers as to when they need to raise rates.  Without this signal, their brains get clouded by political considerations that seem to be more important at the time.

"My gosh we can't let McGovern win - so lets just drop off the gold standard 'temporarily' so we can make sure Nixon gets elected in order to save the country."

I don't know what the answer is, but I know we need a signal that's independent of the politically-driven judgement of the central bankers.

Ultimately, debt-based money isn't the problem.  The gold standard had debt-based money, created by the bankers, etc, but private debt creation remained largely under control.  Not having a proper market-driven "increase rates now" signal - that's the problem.

But if you give up the ability to control rates, you give up an incredibly effective short term tool you can use to get your friends re-elected.  Or to get that follow-on machine poitician elected.

That's my sense anyway.

Hmm.  One weakness to my analysis is that it is based on the historical record, which happened during a time of reasonably high net energy.  What system do we need to have during a time of seriously falling net energy?  Such a time is inherently deflationary, in that future expected economic activity will not be able to make the interest payments on the debt load already incurred.  If money were suddenly to become "sound money", however defined, we'd have a deflationary depression as far as the eye could see.

Who wins, if that happens?  Debtholders win, that's who.  They get all the assets.  Except for sovereign debtholders.  They are left with nothing.

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Ok, I like energy

http://www.aoml.noaa.gov/hrd/tcfaq/D7.html

Noaa estimates the energy of a hurricane at 6E12 watts.

Almost all of it is in evaporation; very little of it is in wind.

So, sunlight is absorbed at a rate of 94%, meaning 94% of 1000 W/sq meter is absorbed. All of that sunlght has to go either into chemical energy or thermal rise (and evaporation...storms... hurricanes too).

So a hurricane can easily draw from twice its visible radius, and as we saw from irma (300,000 sq miles), that would draw from a little over a million =1E6 sq miles of solar warming and evaporation. Of course, the clouds probably have a higher albedo, so let's say that the actual cloud cover area doesn't absorb all it's sunlight: you'll have perhaps a 10% reduction, maybe as much as 25% reduction.

So at 1600 meters per mile, Irma would have had available, every minute, 2.56E12 square meters of solar energy, or 2.56E15 watts of power. Knock off that 25% reduction, and you still have 2E15 watts available to power irma -- maybe at twice the size of a normal hurricane, she had 4x- 8x the energy, or 40E12.

So that means that powering a hurricane takes less than 4% of the energy influx from the sun. Since the sun shines half time, I'm going to double it and say less than 10% What that means, is that once a hurricane gets going, it can stay going indefinitely, provided that it stays over the warm ocean. It also means that it is much more likely to be able to start, if you can show that it can continue. .

But it does that by drawing from evaporation of an area much larger than the area it's discharging, and accelerating the evaporation discharge process.

I really don't see where the evaporation energy is a problem.

It isn't that I have trouble accepting new paradigms. I indeed do argue, and had since 1998 before it was popular, that tornados are primarily an electrical phenomenon, in specific, a dc-wind motor. But that was in light of the evidence of actual currents measured; and the two decay mechanisms (lift off, corresponding to a loss of charge, and roping out, corresponding to an overpressure above).

I will even tell you that the crack of thunder is the sound of superheated air; but the boom is the same as a drumhead or a failing capacitor, the bottom surface of the cloud being the drumhead. Nobody likes that explanation yet.

I will tell you that the lightning is generated because the clouds are amorphous crystals; and in changing their pressure as they get whipped around in a cycle, the crystal changes configuration and the surface charges change; and dry air in the region collects it until it exceeds breakdown voltage. Thus the storm functions as a giant van de graff generator. Again, nobody else likes that explanation; it isn't popular; but I do see evidence for it.

Of course, I won't claim those last two are documented, and I won't abuse anyone for not believing them. I can point to articles that document various pieces of it, such as crystals that change configuration being documented to change surface charge; but nobody's put it all together yet.

But believe me when I say, the problem is not that I have trouble seeing things in a new paradigm, it is not that my pseudoscientific view is a religion for me. It is that you haven't made a convincing argument; and part of the unconvincing bit is that you don't understand it well enough to convey it here; while I can pull the numbers and convey the counter argument without too much trouble.

And believe me, if hurricanes are electrical, I'd like to have the argument put. As you can tell from my allusions to other weather phenomena, I find the subject fascinating.

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davefairtex wrote:Hmm.  One
davefairtex wrote:

Hmm.  One weakness to my analysis is that it is based on the historical record, which happened during a time of reasonably high net energy.  What system do we need to have during a time of seriously falling net energy?  Such a time is inherently deflationary, in that future expected economic activity will not be able to make the interest payments on the debt load already incurred.

That's the thought I had -- you have to consider the Nixon shock (closing the gold window) in the historical timeline of Peak Oil in the US. It is a one-way story that has spanned the last century and those policies will not be repeatable. It is a fascinating story as seen through the eyes of energy. It's the most important story in the history of humanity but hardly anyone understands it. Closing the gold window happened in 1971. This was also within a year of the US hitting Peak Oil. Not unrelated, because gold always flows to where the real wealth is.

Up until 1970 the gold price had been pegged in the $35-40 range. The French and others saw that this was artificial considering the inflation and monetary expansion the US was experiencing so they started withdrawing gold (this is an economic law; can't remember the name of it, maybe Gresham's Law? Physical gold always moves against trade deficits). In order to prevent the US from losing all its gold, Nixon closed the gold window.

This marked the effective end of Bretton Woods and the beginning of the US dollar as the world's reserve currency, "petro-dollar".

After this, the US lost control of gold price as it more accurately reflected true inflation. This continued over the next decade's stagflation until the US dollar was firmly entrenched as the world's reserve currency by raising rates to 18% in 1980, with the dollar at that point supported not by gold, but by the expanding American international military empire whcih basically told the rest of the world that they had to use dollars for oil, and also supported by the debt of every American and US government. Effectively, it took America 10 years to transition from a gold backed currency to a debt and military backed fiat petrocurrency.

Critical to the establishment of the US dollar was the London Gold Pool's efforts to manage the price of gold to 1) hide the massive increase of dollars this new role of the dollar would create, and 2) destroy sentiment in the gold sector to keep investors in the dollar instead, away from demanding delivery of the precious remaining physical gold supplies. This was the real beginning of the subverted paper suppression of the gold price (as opposed to the blatant pegging and convertibility to the dollar of previous decades) which was done to shift demand for gold into non-physical places to alleviate demand for physical. This has intensified up until today where gold price now has zero correlation with physical demand (and, as in pre-1970, gold is again moving against trade deficits -- China is buying it all).

After 1980, since the dollar was now a debt-backed fiat currency required for all international transactions, the US was forced to begin running massive perpetual trade deficits to supply the world with the dollars it needed.

One of the big components of this trade deficit, which dramatically picked up after 1980, was oil. The US hit Peak Oil in 1970 and oil imports which had begun in the 1940's really picked up after 1970, no doubt related to all the stagflation of that decade. After 1980 was a dip in the oil imports presumably due to the recession caused by high rates, and then after this imports were off to the races up until today.

Of course as a backdrop to all this was the 30 year bull run in treasuries as interest rates were continually dropped from 1980 to 2015 or so. This was required to stimulate GDP, government deficits, trade deficits, and support the ever-expanding debt universe of the international reseve currency; and of course, to keep investors in treasuries as their value went up with the continually decreasing rate. The short term recession this caused in 1980 was a small price to pay for establishing the US dollar.

If I ever get the time it would be interesting to put all of those above charts on one. The causation / correlation would be undeniable.

Quote:

Ultimately, debt-based money isn't the problem

The issue I have with debt money and why it is not sustainable is that debt requires someone to take on that debt, which by definition means that they do not have enough assets to get by comfortably in their life and are always hungry for more. If the monetary system is actually functionally based on debt, then this someone is basically "everyone". This creates a society of debt serfs who are constantly chasing wealth -- which is why the average net worth of Americans today has probably neve been lower, adjusting for true inflation, despite all the economic growth over the last century that supposedly creates wealth. Well, it does "create" wealth (I don't like that term but I'll use it for now). The problem has been that population has risen faster than the average wealth accumulation of America. A society of debt serfs must go to work to get money, in order to replenish the wealth that is taken from them by the elites to keep them in a constant state of debt slavery, to keep the whole ever-expanding system going... This work directly correlates with economic growth. It can't be any other way.

Ultimately the problems arise from extreme wealth inequality. I see a functionally simple but politically difficult solution (because people equate it with communism) -- seize all assets of the upper elite class and redistribute back to everyone else. All debt gets extinguished. This will result in a population of people who own homes and cars outright (or bicycles if oil gets expensive) and will have no need to perpetually chase debt in a debt based monetary system. In terms of goods, all they'll have to go to work for is to buy food, energy, and some manufactured goods. They'll need to buy services as well, which will be provided by people needing to work to buy the things listed in the previous sentence. Basically, going back to ECON 101.

Consider this to be a "reset" because obviously the economy could not function sustainably by simply taking from the rich and giving to the poor; some kind of market signals and motivations are required to get people working again, however many hours a week end up being required given their new found wealth. This reset would only be required to correct the failings of the last 100 years of the "market" which has been set up by and to benefit the elites. After this reset, institute some kind of non-debt based "sound money" (whatever that means) system that doesn't require growth. No deflationary collapse required, or if there is one, it won't kill half the population.

In the future as growth really starts to reverse, there will inevitably not be full employmnet. You can't have a debt based currency deriving value from a society of people who don't work much.

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People of the future will work more, not less

You can't have a debt based currency deriving value from a society of people who don't work much.

As energy becomes more expensive people will have to work more to get it.  In the extreme, joules of human labor become less expensive than joules of oil, gas, etc.  Facoring in the asset acquisition cost even "free" energy can become more expensive than human labor.  

As Chris says in the Crash Course, debt is a claim on future labor.  

 

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Weather phenomena

As I originally wrote "forgive me if I miss something in my simple example", I agree I cannot explain to someone that has an above average comprehension on the complex weather systems of the Earth in a brief enough statement that conveys adequate explanation, nor is it my area of expertise or intention. The general hope was to get people to think that there are different explanations, and in my case, reasons the phenomena we witness occur. What I wanted to convey is that the explanation of what is taught by most of the professors in colleges is based on either partially or wholly incorrect base theories from the past, partially or wholly incorrect interpretation of the data, incorrectly engineered instruments to measure the specified phenomena or any combination of the three (and probably there are other factors). There is a 380 page book, referenced earlier, that was written by James McCanney, who has the degrees and area of expertise to thoroughly explain the electrical nature of the Sun/Earth weather relationship. It is not my expectation I will convince everyone, but hope that it may cause some to say," What, the government isn't God, and they have been circulating false information?" (I do not mean you Michael, I love a good debate and you make me think)

The sciences are controlled by the government, and most of the scientists are paid by the government. There is a narrative the government wants to push and control of the population is a part of the narrative. There probably isn't a lot of grant money publishing things that go contrary to the global warming/climate change narrative. Remember the ice age back in the mid 70's the PHd's were all in a consensus about? Or the icey, dirty snowball comets that Fred Whipple and PHd's of his time were all in a consensus about?

I think our population is in serious trouble, and hard times lay ahead, but if people buy some carbon credits from Al Gore, to offset their footprint, he can put an addition on his 24 room house, or whatever size it is, and we will delay the Apocalypse.

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Humility in the face of climate complexity

If ever there was a wake-up call from Mother Nature, it's been the weather events over the past 12 months.

Last year, the triplet Hurricanes Harvey, Maria, and Irma resulted in thousands of deaths (mainly in Puerto Rico) and tens of $billions in destruction.

This year has seen a rash of 120° F (50° C) summer days, droughts, current monster storms like Typhoon Mangkhut and Hurricane Florence -- as well as numerous 100/500/1,000-year floods spread across the globe.

And that's just so far.

It remains nearly impossible to connect climate change directly to any particular weather event. But taken together, it’s becoming increasingly difficult to dismiss the scientific claim that the quantity of heat trapped in the earth’s weather systems impacts the amount of water that now falls (or refuses to fall) from the sky and the high-temperature heat waves that now shatter records with such regularity that once-rare extreme conditions are now becoming routine.

Our “new normal” is quickly diverging from the natural conditions most of us have grown up with. Permafrost isn’t "permanent " anymore -- it melts. The Arctic now can be ice-free. In a growing number of regions in the US, you can leave a screenless window open on an August evening (with the lights on!), and remain unmolested by the swarms of insects that used to prowl the night.

http://thesilicongraybeard.blogspot.com/2018/09/a-little-hurricane-talk-for-my-carolina.html

I long for the days when weather was just weather and not a political cause.  On 9/11, the Washington Post said, "another hurricane is going to batter our shores and Trump is complicit" (paywall or nagware wall - I couldn't read it).  Using the quote that Watts Up With That used:

President Trump issued several warnings on his Twitter feed Monday, counseling those in Florence’s projected path to prepare and listen to local officials. That was good advice.



Yet when it comes to extreme weather, Mr. Trump is complicit. He plays down humans’ role in increasing the risks, and he continues to dismantle efforts to address those risks. It is hard to attribute any single weather event to climate change. But there is no reasonable doubt that humans are priming the Earth’s systems to produce disasters.

There's two main things wrong in that paragraph.  First, they did what they themselves said not to do: they blamed "any single weather event on climate change".  They're mixing climate with weather.  Any given day of any given year could produce just about any kind of weather and it wouldn't reflect climate.  It could snow here tomorrow, and if I didn't die from the novelty of it, I sure wouldn't expect it every year.  Second, the statement "there is no reasonable doubt that humans are priming the Earth’s systems to produce disasters" is just plain wrong.  There's far more dispute about what's going on than this 'droid seems to think.

 

In the '90s and early 2000s, I read some papers by scientists at the National Hurricane Center.  I could find no support for the Al Gore version of hurricane predictions.  It was far from the unanimous opinion among scientists that study hurricanes to think that they're getting worse.  WeatherBELL's Joe Bastardi says that hurricanes in the last 50 years hitting the US are down by a third from the 50 years before that.   This source is a bit dated (published 2012) but brings some numbers based on NOAA's archives:

During the past 5 decades [1960-2010], an average of 5.6 major hurricanes struck the United States. During the preceding 5 decades[1910-1960], an average of 8.4 major hurricanes struck the United States.  [Note - dates in brackets by me, SiG]

The century long average was 7 major hurricanes per year.  We all recall that last year broke an almost-12 year interval in which not one major hurricane hit the mainland US, right?  That's well below the average...

In our hyper-politicized, outrage-driven society, it seems everything has to be politically contentious.  Because only about a third of Americans can name the three branches of government and another third can't name even one of them, it puts an aura on the president as being "in charge of everything", instead of being the leader of one branch of the three.  The nation polarizes into two camps that blame the weather on the president or not.  So we get news reporters or editorial writers who probably never took an actual science class in college disparaging scientists and engineers who took far more and far more relevant classes as being stupid deplorables.  



It's dysfunctional and there's no difference between blaming the weather on the president and blaming it on the witches, like in Salem.  The Salem witch trials were probably a result of conditions from the Little Ice Age, which was an actual global cooling.  Caused by the Sun and not CO2. 

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Debt-based system application

In many lands and through many times, controling the supply of any commodity allows you to dictate the terms. In agriculural terms, we have always referred to "next-year-country" as the plight of those who work the land. Your value has always been seen to be on your ability to deliver on your assets. Who controls the assets is the critical factor. 

Genesis 23: Then Joseph said to the people, “Behold, I have today bought you and your land for Pharaoh; now, here is seed for you, and you may sow the land. 24 [c]At the harvest you shall give a fifth to Pharaoh, and [d]four-fifths shall be your own for seed of the field and for your food and for those of your households and as food for your little ones.” 25 So they said, “You have saved our lives! Let us find favor in the sight of my lord, and we will be Pharaoh’s slaves.” 26 Joseph made it a statute concerning the land of Egypt valid to this day, that Pharaoh should have the fifth; only the land of the priests [e]did not become Pharaoh’s.

 

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people who move to wetlands

Kugscheese

I am not sure why the govt may encourage it, but I can say that I know several people who have moved to these areas (coastal Florida, the Carolinas) because New York has become far far too expensive and the taxes here are beyond their ability to pay. In my area the flood zones are in the less desirable areas but I know that's not always the case. It's just cheaper there than here. I feel very bad for them until you have lived through one of those storms you really cannot imagine how bad it can get....

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VeganDB12
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people who move to wetlands

Kugscheese

I am not sure why the govt may encourage it, but I can say that I know several people who have moved to these areas (coastal Florida, the Carolinas) because New York has become far far too expensive and the taxes here are beyond their ability to pay. In my area the flood zones are in the less desirable areas but I know that's not always the case. It's just cheaper there than here. I feel very bad for them until you have lived through one of those storms you really cannot imagine how bad it can get....

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oil just a part

The peak oil thing was just a part of the problem.  I constructed a bunch of charts to detangle as best I could what really happened post-1971.  As best I could tell, the primary problem was that the Fed didn't raise interest rates for 2 years in order to get Nixon elected.  That created a fantastic economy - for a time - with some pretty ridiculous levels of both activity, private debt creation, and then inflation.  This happened prior to the oil shock.

What I also noticed was that during the rest of the 70s, the Fed would never keep rates low enough, for long enough, to really stamp out inflation.  The conclusion I draw is that, without gold to provide guidance, they were just guessing, and their guesses weren't very good.

If you think about it, they had a system in place since 1913.  Institutional memory for 60 years told them how to deal with rates.  Then, suddenly, no more gold to help them decide.  They were just clueless about what to do, and it took them 10 years to figure it out.

Here's the key chart. 

1) rates kept too low from 1971-1973.  This gets Nixon elected.

2) Because rates are too low for too long, private debt explodes (20% change y/y is just crazy)

3) With a 2-year lag, this causes inflation (measured by producer prices) to just go nuts in 1973.

4) Then in 1974, we have the oil price shock.  You can see that inflation is already going gangbusters a year before oil prices triple.  Certainly the oil price shock causes another PPIACO jump a year later, but the proximate cause of the inflation problem in 73-75 was the Fed keeping rates low to help Nixon in 71-72.

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Excellent observation. Dave!

Your explanation bears further examination. To what does one attribute value? And, what is the relative value of the commodity used to set that benchmark:

If you think about it, they had a system in place since 1913.  Institutional memory for 60 years told them how to deal with rates.  Then, suddenly, no more gold to help them decide.  They were just clueless about what to do, and it took them 10 years to figure it out.

The political machinations of those in charge will always default to those with the most to lose. Wars, revolutions, riots, etc., will always be the result. Again, go back to oil and realize the point (I think) Mark_BC was making; that oil allows "stuff" to happen. 5000 years ago, food, land, cattle, etc. were the benchmark indicators(hence the Biblical reference). As long as we have a fiat currency system, the ability to control the availability of that commodity, calls the shots!  The ability to sustain ourselves will be and is becoming the future. What we be the cost of Florence's impact or Mandkhut's wake. The PP outlook says a great deal about the coming years and, yes, resilience will be the key. Forcing debt repayment will rule, unless governments, seriously, examine the options.

https://www.cbc.ca/news/world/typhoon-mangkhut-china-1.4826248

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newsbuoy
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An Aside: Solar Research

As the mystery of what happened at the Sunspot Obseratory deepens (and likely espionage arrest) let us consider what we don't know, about the state of Solar Coronal Research.

http://www.ioffe.ru/LEA/SF_AR/webinar.html

Do you know what these acronyms are?

HAARP

HAMMER

SMACC

[strange alien giggles in background]

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So what's the ideal inflation rate?

After nixon, the fed kept it pretty much at 5% until 2000, when they drove it to zero.

So... if inflation is zero, and everything is past peak production and declining, and population is increased, it should be harder to get stuff, right?

And if inflation is forced to zero, what does that do to wages? Doesn't that force wage declines (credit to my father on this)?
And if wages must decline, what does that do to peoples' ability to pay existing debt?

So didn't the zero inflation response to the dotcom crash cause the 2008 crash?

And if that is true, then inflation can be too low... and the question begs to be answered, what is the right inflation rate for best economic stability?

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I don’t disagree with your

I don’t disagree with your year-to-year analysis. I just think that access to energy played a greater role than you may be suggesting because the tools that they had available at the time were ultimately a function of energy availability. And the reason their tools didn’t work in the early 1970’s as they expected based on their history back to 1913 was because domestic oil was becoming significantly scarcer, as shown in the production chart post-1970. The difference in oil needed to supply the mini boom brought on by lower rates came from imports and a new and increasing trade deficit, which then placed pressure on the dollar and the need to subsequently raise rates.

But ultimately, the decade-scale trends in interest rates were driven by the invisible hand of energy, not by whether rates were too low for a couple years. What you are describing is small scale movement of someone walking back and forth on a moving bus. But the overall speed and direction of the bus and everyone on it is determined by energy.

If you look at the downward trend in rates since 1982, it is consistent. But there are variations and short reversals along that path that deviate by a few years. I’m sure many of those deviations had political origins similar to what you describe for Nixon in the 70’s. But ultimately, any of those short term trends were part of a larger 35 year trend which was shaped and constrained by energy availability; and any temporary increase or decrease in rates was followed by a more dramatic reversal to bring the trend back in line.

I’m not suggesting that the powers that were at that time understood the role of oil in this multi-decade trend in rates; and I doubt they do even today. But at any point they were making short term reactions to the situations they faced at the time and making decisions using the tools they had available to them – monetary, fiscal, political, and military. Those tools were all constrained by the energy situation at that time. That’s why policy makers do not have the same tools available today, because the energy situation is now totally different. Most policy makers today probably don’t understand why they don’t have these tools available, but they are still bound by this regardless. The perfect example would be Bernanke and his Keynesian experiments he was playing on the western financial world, and wondering why it didn’t work (and then hastily retreating so a future governor would take the blame for the ultimate consequences).

Clearly, any debt based economy weighted down by 18% interest rates MUST have access to plentiful cheap energy in order to be able to continue growing in such a harsh financial environment. But the US hit Peak Oil in 1970; it clearly didn’t have plentiful oil when rates were 18%. What changed in the early 1980’s was that the US suddenly gained access to the entire world’s oil supplies via its new reserve currency status, and global oil at that time was still nowhere near Peak, which is what allowed, Volker etc. to have access to those new tools including jacking up rates so high. Without access to this global supply of energy, rates could never have been raised anywhere near that.

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Debt to the Penny

How long does it take to add $1tn of new debt?  According to DttP debt was $20.493tn on 1 Jan and it hit $21.494tn on 19 Sept 2018.  Exponential???

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IOU's To the Penny
Brunel wrote:

How long does it take to add $1tn of new debt?  According to DttP debt was $20.493tn on 1 Jan and it hit $21.494tn on 19 Sept 2018.  Exponential???

That's just the debt.

The un(der)funded liabilities of the US accumulate at roughly 4x to 5x of the rate of cash burn, so on an accrual basis the total future 'load' of the US is growing by roughly 5 trillion dollars per year.  

It doesn't really matter though because it cannot ever be paid back, so it won't.

All that's left to be done is to continue to the lie for a bit longer and then shaft the bagholders at some later point.

Generational theft has already happened.  The Boomers went from "peace, love and question authority" to the most warmongering, selfish and short-sighted generation on record.  Quite the cultural whiplash when you consider the moral distance traveled in one brief generational lifespan.

At any rate, the only question left to answer is "who's going to eat the losses?"

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richcabot wrote: People of
richcabot wrote:

People of the future will work more, not less

I've been thinkning about this and I can't magine a scenario where there will be greater demand for human labour than today. The only one I can think of would be if there is a complete collapse of civilization and population is reduced to a fraction of what it is today, with a loss of electronic technology and we have to revert to a hunter / gatherer / farming way of life. That situation is so extreme I don't think it is really relevant. I do think we'll eventually get there though.

What would be the source of all these jobs requiring people to work so much?

  1. Consumption? Today, 70 % of the economy is consumption of stuff (made elsewhere) which provides jobs for people in the service sector to sell to other people. I think we all agree here that the consumption side of the economy is going to die.
  2. Will people instead be employed in manufacturing? Manufacturing what? Stuff for people to consume? The consumption economy will be over. Plus we have robots in factories to take their jobs now.
  3. Energy? This is one place where I agree that we will see an increase in demand for labour as EROEI drops and getting the energy out becomes more difficult and complicated. But there will be a limit constrainign this, due to the dropping oil production rate and minimum realistic EROEI of the extracted energy.
  4. Agriculture? As energy becomes more expensive, the theory is that manual human labour will become more competitive. However, a barrel of oil is energy equivalent to the output of 1 to 5 years of human labour (let's say $100,000). Oil will have to go WAAAYYYY more expensive to be on a par with human labour. And it's a bit of a catch 22 because the worker would need to be supported by that very same food they are "producing". The only way this situation would be possible is if EROEI of food once again dropped below 1:1. This would require a population far less than what we have today so again, this situation will undoubtedly arise in the distant future but it is such an extreme change to what we have now that I don't see it as something to be seriously considering for the next century or so.

People in the future will be serfs or worse, more likely just forgotten. They will NEED and WANT to work more in order to get money to survive, but the jobs won't be there. So instead, I see large portions of the population just ending up in forgotten shantytowns where they are basically left to die. We are starting to see this today with all the tent cities everywhere; no one really wants to help re-integrate them back into society, and there wouldn't be any jobs for them anyways.

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Inflation rate or interest rate

I am not sure I understand this question.  The Fed currently has been proposing an "ideal" inflation rate of 2% for at least the last 9 or 10 years. As many have mentioned, this is a statistical quagmire because of what is included to determine the rate.  Everyone's rate varies markedly even if the average is 2%.  Having an inflation rate that is postive tends to increase the circulation of the currency instead of having it hoarded or saved since its value is shrinking.  Greater inflation would encourage greater spending until at Venezuelan or Turkish or Argentinian rates one would be tempted to unload whatever currency you received as soon as possible.  

Now the ideal interest rate is supposedly a market determined phenomenon.  We all have a time preference for money today vs money tomorrow.  If I get nothing for loaning it to someone I fail to see why I shouldn't just put it under my mattress.  Loaning it involves at least some risk.  The ability to force a zero interest rate is quite puzzling actually.  It stems in my mind from the ability of Central Bankers to create even more money.  In fact all the money they need, to do whatever they have in mind to finance.  When Reagan was going on about the national debt and deficit in 1980, the national debt was less than a trillion.  Today of course it is over $21 Trillion.  Interest rates have fallen the whole time.  The bond vigilantes have not been very vigilant....

If money actually meant something ie was "Real"--then an ideal rate might fluctuate between 2%-5% per annum based upon conditions and opportunities. Real money is a unit of account and store of value in addition to its role as a medium of exchange.  So if a dollar was defined as something, anything it might have greater utility and less tendency to be abused. I don't think an ideal rate could be set--it should fluctuate.  

RocketDoc's picture
RocketDoc
Status: Member (Offline)
Joined: Aug 28 2013
Posts: 16
Inflation rate or interest rate

Double posting deleted.

I have discussed some of these issues on my blog at [email protected].

 

Mohammed Mast's picture
Mohammed Mast
Status: Silver Member (Offline)
Joined: May 17 2017
Posts: 198
Boomers

THIS THIS THIS AND MORE OF THIS

"The Boomers went from "peace, love and question authority" to the most warmongering, selfish and short-sighted generation on record.  Quite the cultural whiplash when you consider the moral distance traveled in one brief generational lifespan."

This has been one of the biggest conundrums for me i the last 30 ywars. This is fertile ground for analysis.

What the hell happened to the generation that gave you Woodstock, the Summer of Love, SDS, the Black Panthers, the Grateful Dead, the Merry Pranksters, the Anti war movement, and all the rest of the 60's.

They grew up and gave you perpetual war and an over one trillion military budget.

Lucy you got some splainin to do

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